LOAN AGREEMENT

Exhibit 10.1

LOAN AGREEMENT

Among

GE GOVERNMENT FINANCE, INC.,

as Lender,

and

CITY OF CLARKSVILLE, ARKANSAS,

as Issuer,

and

GREENVILLE TUBE COMPANY,

as Borrower

Dated as of December 1, 2007

_______________________________

This instrument constitutes a security agreement

under the Arkansas Uniform Commercial Code.

_________________________________

LOAN AGREEMENT

Lender:

GE Government Finance, Inc.

Suite 470

8400 Normandale Lake Boulevard

Minneapolis, MN  55437

Telephone: (800) 346-3164

Telecopier: (952) 897-5601

Issuer:

City of Clarksville, Arkansas

205 Walnut Street

Clarksville, AR  72830

Attn: Mayor

Telephone:

(479) 754-6486

Telecopier:

(479) 754-4052

Borrower:

Greenville Tube Company

2505 Foster Avenue

P.O. Box 389

Janesville, WI  53547-0389

Attn: Barry Nuss

Telephone:

(608) 531-3137

Telecopier:

(608) 754-0889

THIS LOAN AGREEMENT dated as of December 1, 2007 (this “Agreement”) among GE Government Finance, Inc., a Delaware corporation, as lender (with its permitted successors and assigns, “Lender”), City of Clarksville, Arkansas, a municipality duly organized and validly existing under the laws of the state of Arkansas (the “State”), as issuer (“Issuer”), and Greenville Tube Company, a Delaware corporation, as borrower (“Borrower”).

WHEREAS, Issuer is authorized and empowered under the laws of the State, including  the Municipalities and Counties Industrial Development Revenue Bond Law, Section 14-164-201 et seq., Arkansas Code Annotated, as amended, and the Revenue Bond Act of 1987, Section 19-9-601 et seq., Arkansas Code Annotated, as amended (collectively, the “Act”), to issue industrial development revenue bonds and to enter into loan agreements, contracts and other instruments and documents necessary or convenient to obtain loans for the purpose of facilitating the financing of certain projects as described in the Act; and

WHEREAS, in furtherance of the purposes of the Act, Issuer proposes to finance all or a portion of the Project (as hereinafter defined) for Borrower pursuant to this Agreement by issuing an industrial development revenue bond and lending the proceeds thereof to Borrower; and

WHEREAS, Borrower proposes to borrow the proceeds of the Bond (as hereinafter defined) upon the terms and conditions set forth herein to finance the Project Costs (as hereinafter defined); and

WHEREAS, Borrower shall make Loan Payments (as hereinafter defined) directly to Lender as assignee of Issuer and holder of the Bond; and

WHEREAS, this Agreement and the Bond shall not be deemed to constitute a debt or liability or moral obligation of the State or any political subdivision thereof, or a pledge of the faith and credit or taxing power of the State or any political subdivision thereof, but shall be a special obligation payable solely from the Loan Payments payable hereunder by Borrower to Lender as assignee of Issuer;

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and in consideration of the premises contained in this Agreement, Lender, Issuer and Borrower agree as follows:

ARTICLE I

DEFINITIONS AND EXHIBITS

Section 1.01.  Definitions .  The following terms used herein will have the meanings indicated below unless the context clearly requires otherwise:

“ Agreement ” means this Agreement, including all exhibits hereto, as any of the same may be supplemented or amended from time to time in accordance with the terms hereof.

“ Bond ” means Issuer’s $2,000,000 Industrial Development Revenue Bond (Greenville Tube Company Project), Series 2007 in the form attached hereto as Exhibit E.

“ Borrower ” means Greenville Tube Company, a Delaware corporation.

“ Borrower Documents ” means, collectively, this Agreement, the Escrow Agreement, the Tax Regulatory Agreement and any other agreements, documents or certificates executed by Borrower in connection with the Loan contemplated by this Agreement.

“ Business Day ” means a day other than a Saturday or Sunday on which banks are generally open for business in New York, New York.

“ Code ” means the Internal Revenue Code of 1986, as amended, and United States Treasury regulations promulgated thereunder.

“ Collateral ” means (a) the Equipment, (b) all general intangibles, software intangibles and other property relating thereto, (c) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed or used in connection with any of the foregoing property, (d) all warehouse receipts, bills of lading and other documents of title now or hereafter covering

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any of the foregoing property, (e) all securities, funds, moneys, deposits and other property at any time held in or subject to the Escrow Fund, (f) all accessions thereto, (g) all substitutions for any of the foregoing property, and (h) all products and proceeds of any of the foregoing property (including, without limitation, any property acquired by Borrower with such proceeds).

“ Damaged Collateral ” means any portion of the Collateral that is lost, stolen, destroyed or damaged beyond repair.

“ Damaged Collateral Amount ” means an amount equal to the product of (a) the then current Prepayment Amount and (b) a percentage equal to the original cost of the Damaged Collateral divided by the original cost of all of the Collateral.

“ Default ” means an event that, with giving of notice or passage of time or both, would constitute an Event of Default as provided in Article XI hereof.

“ Determination of Taxability ” means any determination, decision or decree by the Commissioner of Internal Revenue, or any District Director of Internal Revenue or any court of competent jurisdiction, or an opinion obtained by Lender of counsel qualified in such matters, that an Event of Taxability shall have occurred.  A Determination of Taxability also shall be deemed to have occurred on the first to occur of the following:

(a)

the date when Borrower files any statement, supplemental statement, or other tax schedule, return or document, which discloses that an Event of Taxability shall have occurred; or

(b)

the effective date of any federal legislation enacted after the date of this Agreement or promulgation of any income tax regulation or ruling by the Internal Revenue Service that causes an Event of Taxability after the date of this Agreement; or

(c)

if upon sale, lease or other deliberate action taken with respect to the Project within the meaning of Treas. Reg. § 1.141-2(d), the failure to receive an unqualified opinion of bond counsel to the effect that such deliberate action will not cause interest payable by Borrower hereunder to become includable in the gross income of the recipient.

“ Environmental Laws ” has the meaning ascribed thereto in paragraph (h) of Article V hereof.

“ Equipment ” means the equipment, goods and other property financed or refinanced with the proceeds of the Bond and the Loan and the property identified in Exhibit A hereto.

“ Escrow Agent ” means Marshall & Ilsley Trust Company, N.A., as escrow agent under the Escrow Agreement, and its successors and assigns permitted under the Escrow Agreement.

“ Escrow Agreement ” means the Escrow Agreement dated as of December 1, 2007 among Lender, Issuer, Borrower and Escrow Agent.

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“ Escrow Fund ” means the fund established and held by Escrow Agent pursuant to the Escrow Agreement.

“ Event of Taxability ” means if as the result of any act, failure to act or use of the proceeds of the Loan, a change in use of the Project or any misrepresentation or inaccuracy in any of the representations, warranties or covenants contained in this Agreement or the Tax Regulatory Agreement by Issuer or Borrower or the enactment of any federal legislation after the date of this Agreement or the promulgation of any income tax regulation or ruling by the Internal Revenue Service after the date of this Agreement or for any other reason, the Interest is or becomes includable in Lender’s gross income.

“ GAAP ” means generally accepted accounting principles applied on a consistent basis.

“ GE Capital Entity ” means GE Government Finance, Inc., General Electric Capital Corporation or any of its or their affiliates.

“ Gross-Up Rate ” means, with respect to any Interest payment (including payments made prior to the Event of Taxability), the rate necessary to calculate a total payment in an amount sufficient such that the sum of the Interest payment plus an additional payment would, after reduced by the federal tax (including interest and penalties) actually payable thereon, equal the amount of the Interest payment; provided, however, the Gross-Up Rate shall in no event exceed the Maximum Rate.

“ Guarantor ” means RathGibson, Inc., a Delaware corporation.

“ Guaranty Agreement ” means the Corporate Guaranty Agreement dated as of December 1, 2007, executed by Guarantor in favor of Lender.

“ Interest ” means the portion of any payment from Issuer to Lender designated as and comprising interest as shown in Exhibit A hereto.

“ Issuer ” means City of Clarksville, Arkansas, acting as issuer under this Agreement.

“ Lender ” means (a) GE Government Finance, Inc., acting as lender under this Agreement, (b) any surviving, resulting or transferee corporation of GE Government Finance, Inc. and (c) except where the context requires otherwise, any assignee(s) of Lender.

“ Loan ” means the loan from Issuer to Borrower pursuant to this Agreement.

“ Loan Payments ” means the loan payments payable by Borrower pursuant to the provisions of this Agreement and the Bond as specifically set forth in Exhibit A hereto.  As provided in Article II hereof, Loan Payments shall be payable by Borrower directly to Lender, as assignee of Issuer and holder of the Bond, in the amounts and at the times as set forth in Exhibit A hereto.

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“ Loan Proceeds ” means the total amount of money to be paid pursuant to Section 2.02 hereof by Lender to (a) Borrower or any Vendor for the Project Costs or (b) Escrow Agent for deposit and application in accordance with the Escrow Agreement.

“ Material Contract ” means any instrument, agreement or other document with an indebtedness or other monetary obligation of Borrower or Guarantor of $100,000 or more, and which would allow the holder thereof the right to accelerate payment or performance by Borrower or Guarantor upon default thereunder by Borrower or Guarantor.

“Maximum Rate” means nine and seventy five hundredths percent (9.75%) per annum.

“ Prepayment Amount ” means the amount which Borrower may or must from time to time pay or cause to be paid to Lender as assignee of Issuer and holder of the Bond in order to prepay the Loan and the Bond, as provided in Section 2.07 hereof, such amounts being set forth in Exhibit A hereto, together with accrued interest and all other amounts due hereunder.

“ Principal ” means the portion of any Loan Payment designated as principal in Exhibit A hereto.

“ Project ” means the acquisition and installation of the Equipment.

“ Project Costs ” means the acquisition and installation costs of the Project, including those to be paid to any Vendor or reimbursed to Borrower for any portion thereof, and any administrative, engineering, legal, financial and other costs incurred by Lender, Issuer, Borrower, Escrow Agent or any Vendor in connection with the acquisition, installation and financing by Lender of such Project and the costs of issuance which may be paid pursuant to the Tax Regulatory Agreement, which Project Costs are set forth in Exhibit F hereto.

“ Purchase Agreements ” means Borrower’s purchase agreements with Vendors of the Project.

“ State ” means the State of Arkansas.

“ Tax Regulatory Agreement ” means the Tax Regulatory Agreement of even date herewith among Borrower, Issuer and Lender, as such Tax Regulatory Agreement may be amended from time to time in accordance with its terms.

“Terrorism Laws” means Executive Order 13224 issued by the President of the United States of America, the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations) and the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), and all other present and future federal, state and local laws, ordinances, regulations, policies and any other requirements of any governmental authority (including, without limitation, the United States

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Department of the Treasury Office of Foreign Assets Control) addressing, relating to, or attempting to eliminate, terrorist acts and acts of war, each as hereafter supplemented, amended or modified from time to time, and the present and future rules, regulations and guidance documents promulgated under any of the foregoing, or under similar laws, ordinances, regulations, policies or requirements of other states or localities.

“ UCC ” means the Uniform Commercial Code as adopted and in effect in the State.

“ Vendor ” means the manufacturer or vendor of any portion of the Project, as well as the agents or dealers of the manufacturer, from whom Borrower has purchased or is purchasing portions of the Project.

Section 1.02.  Exhibits .  The following exhibits are attached hereto and made a part hereof:

Exhibit A :

Schedule of Equipment and Loan Payments describing the Equipment and setting forth the Loan Payments and Prepayment Amounts.  Issuer hereby authorizes Lender to insert in Exhibit A the serial or other identifying numbers relating to the Equipment when available.

Exhibit B :

Form of opinion of counsel to Borrower and Guarantor.

Exhibit C :

Form of opinion of counsel to Issuer.

Exhibit D :

Form of opinion of special tax counsel.

Exhibit E :

Form of Bond.

Exhibit F :

Schedule of Project Costs.

Exhibit G :

Form of Certificate of Chief Financial Officer.

Section 1.03.  Rules of Construction .  (a) The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa.  The use herein of a word of any gender shall include correlative words of all genders.

(b)

Unless otherwise specified, references to Articles, Sections and other subdivisions of this Agreement are to the designated Articles, Sections and other subdivision of this Agreement as originally executed.  The words “hereof,” “herein,” “hereunder” and words of similar import refer to this Agreement as a whole.

(c)

The headings or titles of the several articles and sections shall be solely for convenience of reference and shall not affect the meaning, construction or effect of the provisions hereof.

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ARTICLE II

FINANCING OF PROJECT AND TERMS OF LOAN

Section 2.01.  Acquisition of Project .  Borrower either has ordered or shall order the Project pursuant to one or more Purchase Agreements from one or more Vendors.  Borrower shall remain liable to the Vendor or Vendors in respect of its duties and obligations in accordance with each Purchase Agreement and shall bear the risk of loss with respect to any loss or claim relating to any portion of the Project covered by any Purchase Agreement, and neither Lender nor Issuer shall assume any such liability or risk of loss.

Section 2.02.  Loan .  Lender hereby agrees, subject to the terms and conditions of this Agreement, to purchase the Bond in the amount of $2,000,000.00; Issuer hereby agrees, subject to the terms and conditions of this Agreement, to issue the Bond and to lend the proceeds thereof to Borrower; and Borrower hereby agrees to borrow such proceeds from Issuer.  Upon fulfillment of the conditions set forth in Article III hereof, Lender shall deposit the Loan Proceeds in the Escrow Fund to be held, invested and disbursed as provided in the Escrow Agreement.  Issuer’s obligation to make payments on the Bond, and Borrower’s obligation to repay the Loan, shall commence, and interest shall begin to accrue, on the date that Loan Proceeds are deposited in the Escrow Fund.

Section 2.03.  Interest .  The principal amount of the Bond and the Loan hereunder outstanding from time to time shall bear interest (computed on the basis of 12 30-day months) at the rate of five and thirty two hundredths percent (5.32%).  Interest accruing on the principal balance of the Bond and the Loan outstanding from time to time shall be payable as provided in Exhibit A and in the Bond and upon earlier demand in accordance with the terms hereof or prepayment in accordance with the terms of the Bond and Section 2.07 hereof.  Upon the occurrence of a Determination of Taxability, Borrower shall, with respect to future interest payments, begin making Loan Payments calculated at the Gross-Up Rate.  In addition, Borrower shall make immediately upon demand of Lender a payment to Lender sufficient to supplement prior Loan Payments to the Gross-Up Rate.

Section 2.04.  Payments .  Issuer shall pay the principal of, premium, if any in accordance with Section 2.07 hereof, and interest on the Bond, but only out of the amounts paid by Borrower pursuant to this Agreement.  Borrower shall pay to Lender, as assignee of Issuer, Loan Payments, in the amounts and on the dates set forth in Exhibit A hereto.  Additionally, Borrower shall pay to Lender, as assignee of Issuer and holder of the Bond, an amount equal to the product of (i) the Maximum Rate and (ii) the delinquent amount of any Loan Payment not paid when due.  As security for its obligation to pay the principal of, premium, if any in accordance with Section 2.07 hereof, and interest on the Bond, Issuer assigns to Lender all of Issuer’s right to receive Loan Payments from Borrower hereunder and all of Issuer’s rights hereunder, and Issuer irrevocably constitutes and appoints Lender and any present or future officer or agent of Lender as its lawful attorney, with full power of substitution and resubstitution, and in the name of Issuer or otherwise, to collect the Loan Payments and any other payments due hereunder and under the Bond and to sue in any court for such Loan Payments or other payments, to exercise all rights hereunder with respect to the Collateral, and to withdraw or settle any claims, suits or

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proceedings pertaining to or arising out of this Agreement upon any terms.  Such Loan Payments and other payments shall be made by Borrower directly to Lender, as Issuer’s assignee and holder of the Bond, and shall be credited against Issuer’s payment obligations hereunder and under the Bond.  No provision, covenant or agreement contained in this Agreement or any obligation imposed on Issuer herein or under the Bond, or the breach thereof, shall constitute or give rise to or impose upon Issuer a pecuniary liability, a charge upon its general credit or taxing powers or a pledge of its general revenues.  In making the agreements, provisions and covenants set forth in this Agreement, Issuer has not obligated itself except with respect to the application of the Loan Payments to be paid by Borrower hereunder.  All amounts required to be paid by Borrower hereunder shall be paid in lawful money of the United States of America in immediately available funds.  No recourse shall be had by Lender or Borrower for any claim based on this Agreement, the Bond or the Tax Regulatory Agreement against any director, officer, employee or agent of Issuer alleging personal liability on the part of such person, unless such claim is based on the willful dishonesty of or intentional violation of law by such person.

Section 2.05.  Payment on Non-Business Days .  Whenever any payment to be made hereunder or under the Bond shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day.

Section 2.06.  Loan Payments To Be Unconditional .  The obligations of Borrower to make the Loan Payments required under this Article II and to make other payments hereunder and to perform and observe the covenants and agreements contained herein shall be absolute and unconditional in all events, without abatement, diminution, deduction, setoff or defense for any reason, including (without limitation) any failure of the Project to be delivered or installed, any defects, malfunctions, breakdowns or infirmities in the Project or any accident, condemnation, destruction or unforeseen circumstances.  Notwithstanding any dispute between Borrower and any of Issuer, Lender, any Vendor or any other person, Borrower shall make all Loan Payments when due and shall not withhold any Loan Payments pending final resolution of such dispute, nor shall Borrower assert any right of set-off or counterclaim against its obligation to make such payments required under this Agreement.

Section 2.07.  Prepayments .  

(a) Borrower may, in its discretion, prepay the Loan and the Bond in whole at any time by paying the applicable Prepayment Amount.

(b)

Borrower shall prepay the Loan and the Bond in whole or in part at any time pursuant to Article IX hereof by paying the applicable Damaged Collateral Amount.

(c)

Borrower shall prepay the Loan and the Bond in full immediately upon demand of Lender after the occurrence of an Event of Default by paying the applicable Prepayment Amount.  A portion of such prepayment may be made with funds remaining in the Escrow Fund pursuant to the Escrow Agreement.

(d)

Borrower shall prepay the Loan and the Bond in full immediately upon demand of Lender after the occurrence of a Determination of Taxability by paying the applicable

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Prepayment Amount plus an amount necessary to supplement the prior Loan Payments to the Gross-Up Rate.

(e)

The amounts due hereunder shall be repaid, and the amounts due under the Bond shall be paid, in part with funds remaining in the Escrow Fund upon termination of the Escrow Agreement as provided in Section 2.03 of the Escrow Agreement and, if less than 80% of the amount deposited in the Escrow Fund has been disbursed pursuant to the Escrow Agreement, together with a prepayment premium calculated at the percentage used to determine the Prepayment Amount at the date of such prepayment.

Upon any prepayment in part of the Loan, the prepayment shall be applied to the Loan Payments and any other amounts due hereunder as determined by Lender.

ARTICLE III

CONDITIONS PRECEDENT

Lender’s agreement to purchase the Bond and to disburse the Loan Proceeds shall be subject to the condition precedent that Lender shall have received all of the following, each in form and substance satisfactory to Lender:

(a)

This Agreement, properly executed on behalf of Issuer and Borrower, and each of the Exhibits hereto properly completed.

(b)

The Bond, properly executed on behalf of Issuer.

(c)

The Tax Regulatory Agreement, properly executed on behalf of Issuer and Borrower.

(d)

The Escrow Agreement, properly executed on behalf of Issuer, Borrower and Escrow Agent.

(e)

The Guaranty Agreement, properly executed on behalf of Guarantor.

(f)

A certificate of the Secretary or an Assistant Secretary of Borrower, certifying as to (i) the resolutions of the board of directors and, if required, the shareholders of Borrower, authorizing the execution, delivery and performance of the Borrower Documents and any related documents, (ii) the bylaws of Borrower, and (iii) the signatures of the officers or agents of Borrower authorized to execute and deliver the Borrower Documents and other instruments, agreements and certificates on behalf of Borrower.

(g)

A certificate of the Secretary or an Assistant Secretary of Guarantor, certifying as to (i) the resolutions of the board of directors and, if required, the shareholders of Guarantor, authorizing the execution, delivery and performance of the

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Guaranty Agreement and any related documents, (ii) the bylaws of Guarantor, and (iii) the signatures of the officers or agents of Guarantor authorized to execute and deliver the Guaranty Agreement and other instruments, agreements and certificates on behalf of Guarantor.

(h)

Currently certified copies of the Articles of Incorporation of Borrower.

(i)

Currently certified copies of the Articles of Incorporation of Guarantor.

(j)

A Certificate of Good Standing issued as to Borrower by the Secretary of State of the state of Borrower’s incorporation not more than 20 days prior to the date hereof.

(k)

A Certificate of Good Standing issued as to Guarantor by the Secretary of State of the state of Guarantor’s incorporation not more than 20 days prior to the date hereof.

(l)

Certificates of the insurance required hereunder, containing a lender’s loss payable clause or endorsement in favor of Lender.

(m)

A completed and executed Form 8038 or evidence of filing thereof with the Secretary of Treasury.

(n)

A resolution or evidence of other official action taken by or on behalf of Issuer to authorize the transactions contemplated hereby.

(o)

Evidence that the issuance of the Bond for the purpose of financing of the Project has been approved by the “applicable elected representative” after a public hearing held upon reasonable notice.

(p)

A true and correct copy of any and all leases pursuant to which Borrower is leasing the property where the Collateral will be located, together with a landlord’s disclaimer and consent with respect to each such lease.

(q)

A true and correct copy of any and all mortgages, deeds of trust or similar agreements (whether or not Borrower is a party to any such agreement) relating to the property where the Collateral will be located, together with a mortgagee’s waiver with respect to each such mortgage, deed of trust or similar agreement.

(r)

Financing statements authorized by Borrower, as debtor, and naming Lender, as secured party, and/or the original certificate of title or manufacturer’s certificate of origin and title application if any of the Collateral is subject to certificate of title laws.

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(s)

Financing statements authorized by Issuer, as debtor, and naming Lender, as secured party.

(t)

Current searches of appropriate filing offices showing that (i) no state or federal tax liens have been filed and remain in effect against Borrower, (ii) no financing statements have been filed and remain in effect against Borrower relating to the Collateral except those financing statements filed by Lender, and (iii) all financing statements necessary to perfect the security interest created pursuant to this Agreement have been filed.

(u)

An opinion of counsel to Borrower and Guarantor, addressed to Lender and Issuer, in the form attached hereto as Exhibit B or otherwise acceptable to Lender.

(v)

An opinion of counsel to Issuer, addressed to Lender and Borrower, in the form attached hereto as Exhibit C or otherwise acceptable to Lender.

(w)

An opinion of special tax counsel, addressed to Lender, in the form attached hereto as Exhibit D or otherwise acceptable to Lender.

(x)

Payment of Lender’s fees, commissions and expenses required by Section 12.01 hereof.

(y)

Payment of Issuer’s reasonable fees, commissions and expenses incurred in connection with this Agreement and the transactions contemplated hereby.

(z)

Any other documents or items required by Lender.

Lender’s agreement to consider approval of any disbursement from the Escrow Fund shall be subject to the further conditions precedent that on the date thereof:

(aa)

Lender shall have received each of the items required for a disbursement pursuant to the Escrow Agreement;

(bb)

Lender shall have received in form and substance satisfactory to Lender Vendor invoice(s) and/or bill(s) of sale relating to the Project and, if such invoices have been paid by Issuer or Borrower, evidence of payment thereof and, if applicable, evidence of official intent to reimburse such payment as required by the Code;

(cc)

the representations and warranties contained in Articles IV and V hereof are correct on and as of the date of such disbursement as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date; and

(dd)

no Default, Event of Default or Determination of Taxability has occurred.

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ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF ISSUER

Issuer represents, warrants and covenants for the benefit of Lender and Borrower, as follows:

(a)

Issuer is a political subdivision (a city of the first class) duly created and validly existing under the Constitution and laws of the State.

(b)

Issuer will exercise its best efforts to preserve and keep in full force and affect its existence as a body politic and corporate and a public instrumentality.

(c)

Issuer is authorized under the Constitution and laws of the State to issue the Bond and to enter into this Agreement, the Escrow Agreement, the Tax Regulatory Agreement and the transactions contemplated hereby and to perform all of its obligations hereunder.

(d)

Issuer has duly authorized the issuance of the Bond and the execution and delivery of this Agreement, the Escrow Agreement and the Tax Regulatory Agreement under the terms and provisions of the ordinance of its governing body or by other appropriate official approval, and further represents, covenants and warrants that all requirements have been met and procedures have occurred in order to ensure the enforceability of the Bond, this Agreement, the Escrow Agreement and the Tax Regulatory Agreement against Issuer, and Issuer has complied with such public bidding requirements as may be applicable to the Bond, this Agreement, the Escrow Agreement and the Project.  Issuer has taken all necessary action and has complied with all provisions of the Act, including but not limited to the making of the findings required by the Act, required to make the Bond, this Agreement, the Escrow Agreement and the Tax Regulatory Agreement the valid and binding obligation of Issuer.

(e)

The officer of Issuer executing the Bond, this Agreement, the Escrow Agreement, the Tax Regulatory Agreement and any related documents has been duly authorized to issue the Bond and to execute and deliver this Agreement, the Escrow Agreement and the Tax Regulatory Agreement and such related documents under the terms and provisions of a resolution of Issuer’s governing body, or by other appropriate official action.

(f)

The Bond, this Agreement, the Escrow Agreement and the Tax Regulatory Agreement are legal, valid and binding obligations of Issuer, enforceable in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights.

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(g)

Issuer has assigned to Lender all of Issuer’s rights in this Agreement (except any indemnification payable to Issuer pursuant to Section 7.06 hereof and notice to Issuer pursuant to Section 12.03 hereof).

(h)

Issuer will not pledge, mortgage or assign this Agreement or its duties and obligations hereunder to any person, firm or corporation, except as provided under the terms hereof.

(i)

None of the issuance of the Bond or the execution and delivery of this Agreement, the Escrow Agreement or the Tax Regulatory Agreement, the consummation of the transactions contemplated hereby or the fulfillment of or compliance with the terms and conditions of the Bond, this Agreement, the Escrow Agreement or the Tax Regulatory Agreement violates any law, rule, regulation or order, conflicts with or results in a breach of any of the terms, conditions or provisions of any restriction or any agreement or instrument to which Issuer is now a party or by which it is bound or constitutes a default under any of the foregoing or results in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Issuer under the terms of any instrument or agreement.

(j)

There is no action, suit, proceeding, claim, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best of Issuer’s knowledge, threatened against or affecting Issuer, challenging Issuer’s authority to issue the Bond or to enter into this Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other action wherein an unfavorable ruling or finding would adversely affect the enforceability of the Bond, this Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other transaction of Issuer which is similar hereto, or the exclusion of the Interest from gross income for federal tax purposes under the Code, or would materially and adversely affect any of the transactions contemplated by this Agreement.

(k)

Issuer will submit or cause to be submitted to the Secretary of the Treasury a Form 8038 (or other information reporting statement) at the time and in the form required by the Code.

(l)

The issuance of the Bond for the purpose of financing the Project has been approved by the “applicable elected representative” (as defined in Section 147(f) of the Code) after a public hearing held upon reasonable notice.

(m)

Issuer will comply fully at all times with the Tax Regulatory Agreement, and Issuer will not take any action, or omit to take any action, which, if taken or omitted, respectively, would violate the Tax Regulatory Agreement.

(n)

Issuer will take no action that would cause the Interest to become includable in gross income for federal income tax purposes under the Code (including, without limitation, intentional acts under Treas. Reg. § 1.148-2(c) or consenting to a

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deliberate action within the meaning of Treas. Reg. § 1.141-2(d)), and Issuer will take and will cause its officers, employees and agents to take all affirmative actions legally within its power necessary to ensure that the Interest does not become includable in gross income of the recipient for federal income tax purposes under the Code (including, without limitation, the calculation and payment of any rebate required to preserve such exclusion).

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

Borrower represents, warrants and covenants for the benefit of Lender and Issuer, as follows:

(a)

Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has power to enter into the Borrower Documents and by proper corporate action has duly authorized the execution and delivery of the Borrower Documents.  Borrower is in good standing and is duly licensed or qualified to transact business in the State and in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary.  Borrower’s exact legal name is as set forth on the execution page hereof.

(b)

Borrower has been fully authorized to execute and deliver the Borrower Documents under the terms and provisions of the resolution of its board of directors, or by other appropriate official approval, and further represents, covenants and warrants that all requirements have been met, and procedures have occurred in order to ensure the enforceability of the Borrower Documents and the Borrower Documents have been duly authorized, executed and delivered.

(c)

The officer of Borrower executing the Borrower Documents and any related documents has been duly authorized to execute and deliver the Borrower Documents and such related documents under the terms and provisions of a resolution of Borrower’s board of directors.

(d)

The Borrower Documents constitute valid and legally binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights.

(e)

The execution and delivery of the Borrower Documents, the consummation of the transactions contemplated hereby and the fulfillment of the terms and conditions hereof do not and will not violate any law, rule, regulation or order, conflict with or result in a breach of any of the terms or conditions of the articles of incorporation or bylaws of Borrower or of any corporate restriction or of any agreement

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or instrument to which Borrower is now a party and do not and will not constitute a default under any of the foregoing or result in the creation or imposition of any liens, charges or encumbrances of any nature upon any of the property or assets of Borrower contrary to the terms of any instrument or agreement.

(f)

The authorization, execution, delivery and performance of this Agreement by Borrower do not require submission to, approval of, or other action by any governmental authority or agency, which action with respect to this Agreement has not been taken and which is final and nonappealable.

(g)

There is no action, suit, proceeding, claim, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower, challenging Borrower’s authority to enter into this Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other action wherein an unfavorable ruling or finding would adversely affect the enforceability of this Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other transaction of Borrower which is similar hereto, or the exclusion of the Interest from gross income for federal tax purposes under the Code, or could reasonably be expected to have a material adverse effect on the financial condition, operations, business or prospects of Borrower.

(h)

The property at which the Collateral is located is properly zoned for its current and anticipated use and the use of the Collateral will not violate any applicable zoning, land use, environmental or similar law or restriction.  Borrower has all licenses and permits to use the Collateral. Borrower has obtained all permits, licenses and other authorizations which are required under federal, state and local laws relating to emissions, discharges, releases of pollutants, contaminants, hazardous or toxic materials, or wastes into ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or hazardous or toxic materials or wastes (“Environmental Laws”) at Borrower’s facilities or in connection with the operation of its facilities.  Except as previously disclosed to Lender in writing, Borrower and all activities of Borrower at its facilities comply with all Environmental Laws and with all terms and conditions of any required permits, licenses and authorizations applicable to Borrower with respect thereto.  Except as previously disclosed to Lender in writing, Borrower is also in compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in Environmental Laws or contained in any plan, order, decree, judgment or notice of which Borrower is aware.  Except as previously disclosed to Lender in writing, Borrower is not aware of, nor has Borrower received notice of, any events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance with, or which may give rise to any liability under, any Environmental Laws.

(i)

The Project is of the type authorized and permitted to be financed with the proceeds of the Bond pursuant to the Act.

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(j)

Borrower owns or will own the Project and intends to operate the Project, or cause the Project to be operated, for industrial purposes within the meaning of the Act, until the date on which all of the Loan Payments have been fully paid or the applicable Prepayment Amount has been fully paid.

(k)

Borrower will not take any action that would cause the Interest to become includable in gross income of the recipient for federal income tax purposes under the Code (including, without limitation, intentional acts under Treas. Reg. § 1.148-2(c) or deliberate action within the meaning of Treas. Reg. § 1.141-2(d)), and Borrower will take and will cause its officers, employees and agents to take all affirmative actions legally within its power necessary to ensure that the Interest does not become includable in gross income of the recipient for federal income tax purposes under the Code (including, without limitation, the calculation and payment of any rebate required to preserve such exclusion).

(l)

Borrower has heretofore furnished to Lender the audited financial statements of Guarantor for its fiscal years ended January 31, 2004, January 31, 2005, January 31, 2006 and January 31, 2007, and the unaudited financial statement of Guarantor for the quarter ended July 31, 2007, and those statements fairly present the financial condition of Guarantor on the dates thereof and the results of its operations and cash flows for the periods then ended and were prepared in accordance with GAAP.  Since the date of the most recent financial statements, there has been no material adverse change in the business, properties or condition (financial or otherwise) of Guarantor.

(m)

Borrower has paid or caused to be paid to the proper authorities when due all federal, state and local taxes required to be withheld by it.  Borrower has filed all federal, state and local tax returns which are required to be filed, and Borrower has paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due.

(n)

Borrower has or will have good and absolute title to all Collateral and all proceeds thereof, free and clear of all mortgages, security interests, liens and encumbrances except for the security interest created pursuant to this Agreement.

(o)

Borrower has authorized Lender to file financing statements, and such financing statements when filed will be sufficient to perfect the security interest created pursuant to this Agreement.  When such financing statements are filed in the offices noted therein, Lender, as holder of the Bond, will have a valid and perfected security interest in the Collateral, subject to no other security interest, assignment, lien or encumbrance.  None of the Collateral is or will become a fixture on real estate.  None of the Collateral constitutes a replacement of, substitution for or accessory to any property of Borrower subject to a lien of any kind.  Borrower leases the real property where the Collateral will be located.

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(p)

Borrower will aid and assist Issuer in connection with preparing and submitting to the Secretary of the Treasury a Form 8038 (or other applicable information reporting statement) at the time and in the form required by the Code.

(q)

Borrower will comply fully at all times with the Tax Regulatory Agreement, and Borrower will not take any action, or omit to take any action, which, if taken or omitted, respectively, would violate the Tax Regulatory Agreement.

(r)

Expenses for work done by officers or employees of Borrower in connection with the Project will be included as a Project Cost, if at all, only to the extent (i) such persons were specifically employed for such particular purpose, (ii) the expenses do not exceed the actual cost thereof and (iii) such expenses are treated or capable of being treated (whether or not so treated) on the books of Borrower as a capital expenditure in conformity with GAAP.

(s)

Any costs incurred with respect to that part of the Project paid from the Loan Proceeds shall be treated or capable of being treated on the books of Borrower as capital expenditures in conformity with GAAP.

(t)

No part of the Loan Proceeds will be used to finance inventory or rolling stock or will be used for working capital or to finance any other cost not constituting a Project Cost.

(u)

No person other than Borrower is in occupancy or possession of any portion of the real property where the Project is located.

(v)

The Project is property of the character subject to the allowance for depreciation under Section 167 of the Code.

(w)

Neither Borrower nor any individual or entity owning directly or indirectly any interest in Borrower, is an individual or entity whose property or interests are subject to being “blocked” under any of the Terrorism Laws or is otherwise in violation of any of the Terrorism Laws.

ARTICLE VI

TITLE TO COLLATERAL; SECURITY INTEREST

Section 6.01.  Title to Collateral .  Legal title to the Collateral and any and all repairs, replacements, substitutions and modifications to the Collateral shall be in Borrower.  Borrower will at all times protect and defend, at its own cost and expense, its title from and against all claims, liens and legal processes of creditors of Borrower, and keep the Collateral free and clear of all such claims, liens and processes other than the liens created hereby.

Section 6.02.  Security Interest in Collateral .  This Agreement is intended to constitute a security agreement within the meaning of the UCC.  As security for Borrower’s payment to

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Lender, as assignee of Issuer, of Loan Payments and all other amounts payable to Lender hereunder, Borrower hereby grants to Lender a security interest constituting a first lien on the Collateral.  To the extent that the same entity (or an affiliate thereof) is the lender under this Agreement and under any other document or agreement with Borrower, the security interest in the Collateral shall secure all of Borrower’s obligations under all such agreements, but shall not secure Borrower’s obligations under any such agreements under which a different entity is the lender.  Borrower ratifies its previous authorization for Lender to pre-file UCC financing statements and any amendments thereto describing the Collateral and containing any other information required by the applicable UCC.  Borrower authorizes Lender, and hereby grants Lender a power of attorney (which is coupled with an interest), to file financing statements and amendments thereto describing the Collateral and containing any other information required by the applicable UCC and all proper terminations of the filings of other secured parties with respect to the Collateral, in such form and substance as Lender, in its sole discretion, may determine.  Borrower agrees to execute such additional documents, including demands for terminations, assignments, affidavits, notices and similar instruments, in form satisfactory to Lender, and take such other actions that Lender deems necessary or appropriate to establish and maintain the security interest created by this Section, and Borrower hereby designates and appoints Lender as its agent, and grants to Lender a power of attorney (which is coupled with an interest), to execute on behalf of Borrower such additional documents and to take such other actions.  Borrower hereby waives any right that Borrower may have to file with the applicable filing officer any financing statement, amendment, termination or other record pertaining to the Collateral and/or Lender’s interest therein.  If requested by Lender, Borrower shall obtain a landlord and/or mortgagee’s consent and waiver with respect to the property where the Collateral is located.  If requested by Lender, Borrower shall conspicuously mark the Collateral with appropriate lettering, labels or tags, and maintain such markings, so as clearly to disclose Lender’s security interest in the Collateral.

Section 6.03.  Change in Name or Corporate Structure of Borrower; Change in Location of Borrower’s Chief Executive Office or Principal Executive Office .  Borrower’s chief executive office and principal executive office are located at the address set forth above, and all of Borrower’s records relating to its business and the Collateral are kept at such location.  Borrower hereby agrees to provide written notice to Lender and Issuer of any change or proposed change in its name, corporate structure, chief executive office or principal executive office or change or proposed change in the location of the Collateral.  Such notice shall be provided 30 days in advance of the date that such change or proposed change is planned to take effect.  

Section 6.04.  Liens and Encumbrances to Title .  Borrower shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, deed of trust, pledge, lien, charge, encumbrance or claim (together, “Liens”) on or with respect to the Collateral other than as created by this Agreement or on or with respect to the real property where the Collateral will be located; provided, however, Borrower may create, incur, assume or suffer to exist a mortgage, deed of trust or similar lien on the real property where the Collateral will be located if Borrower provides Lender with a mortgagee’s waiver or similar waiver in form and substance acceptable to Lender.  Borrower shall promptly, at its own expense, take such action as may be necessary to discharge or remove any such Lien or to provide Lender with a mortgagee’s waiver or similar

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waiver.  Borrower shall reimburse Lender for any expenses incurred by Lender to discharge or remove any Lien or for obtaining such waiver.

Section 6.05.  Personal Property .   The parties hereby agree that the Collateral is, and during the period this Agreement is in force will remain, personal property and, when subjected to use by Borrower hereunder, will not be or become fixtures.

Section 6.06.  Assignment of Insurance .  As additional security for the payment and performance of Borrower’s obligations hereunder, Borrower hereby assigns to Lender any and all moneys (including, without limitation, proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of Borrower with respect to, any and all policies of insurance now or at any time hereafter covering the Collateral or any evidence thereof or any business records or valuable papers pertaining thereto, and Borrower hereby directs the issuer of any such policy to pay all such moneys directly to Lender.  Borrower hereby assigns to Lender any and all moneys due or to become due with respect to any condemnation proceeding affecting the Collateral.  At any time, whether before or after the occurrence of any Event of Default, Lender may (but need not), in Lender’s name or in Borrower’s name, execute and deliver proof of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy or party in any condemnation proceeding.

Section 6.07.  Occupancy .  (a) Borrower hereby irrevocably grants to Lender the right to occupy the property where the Collateral is located (the “Premises”