Exhibit 10.1

ACCOUNTS RECEIVABLE PURCHASE AGREEMENT

THIS ACCOUNTS RECEIVABLE PURCHASE AGREEMENT (this “Agreement”) is made on this
11th day of December, 2015, by and between REPUBLIC CAPITAL ACCESS, LLC, a
Delaware limited liability company having its principal place of business at 790
Station Street, Herndon, Virginia 20170 (“Buyer”), and IMPLANT SCIENCES
CORPORATION, a Massachusetts corporation, having its principal place of business
at 500 Research Drive, Unit 3, Wilmington, MA  01887 (“Seller”).

WHEREAS, Buyer and RCA have performed, or have caused to be performed, all
necessary due diligence and have determined that Seller is an Eligible
Contractor; and

WHEREAS, Seller desires to sell certain Receivables that it now owns and from
time to time hereafter will own to Buyer, and Buyer is willing, on the terms and
subject to the conditions contained in this Agreement, to purchase such
Receivables from Seller at such time.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:

SECTION 1

DEFINITIONS

1.1

Definitions. Certain terms used in this Agreement are defined in this
Section 1.1.  These terms, and the additional terms defined above, shall have
the meanings assigned wherever the terms appear in this Agreement. These
meanings are also applicable to the singular and plural forms of the terms
defined.

“Acceptance Date” shall have the meaning set forth in Section 2.2 hereof.

“Account Balance” shall mean, on any given day, the gross amount of all the
Purchased Receivables or any portion thereof unpaid on that day.

“Account Debtor” shall have the same meaning set forth in the UCC and shall
include any person liable on any Purchased Receivable, including, without
limitation, the Government, any prime contractor of the Government approved by
Buyer, and any guarantor of such Purchased Receivable approved by Buyer.

“Accrual Period” shall mean, with respect to any Residual Payment Date, the
period from, and including, the immediately preceding Residual Payment Date
through, but excluding, such Residual Payment Date; provided, however, that the
initial Accrual Period shall commence on the date hereof.

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“Applicable Law” shall mean all provisions of laws, statutes, rules,
regulations, codes, ordinances, judgments, writs, decrees and orders of any
Governmental Authority or arbitrator applicable to the Person in question,
including judgments, writs, decrees and orders of all courts and arbitrators in
Proceedings in which the Person in question is a party.

“Anticipated Collection Date” shall mean, with respect to any Purchased
Receivable, the date which Buyer estimates in good faith to be the date that all
Collections related to such Eligible Receivable will be directly deposited to
the Segregated Account by the Account Debtor.

“Assignment of Claims Act” shall mean the United States Assignment of Claims Act
of 1940, 31 U.S.C. § 3727, 41 U.S.C. § 15, as amended.

“Availability Period” shall mean the period from and including the date hereof
to November 30, 2016, provided, however, that if the term of this Agreement is
extended in accordance with Section 10.10 hereof, the Availability Period will
be extended as determined by Buyer in its sole discretion.   

“Bankruptcy Code” shall mean Title 11 of the United States Code (11 U.S.C. §§
101 et seq.).

“Business Day” shall mean any day that is not a Saturday, a Sunday or other day
on which commercial banking institutions in the Commonwealth of Virginia are
authorized or obligated by Applicable Law to close.

“Buyer Indemnified Liabilities” shall have the meaning set forth in Section
10.3.1 hereof.

“Collections” shall mean all amounts received with respect to the Purchased
Receivables, including scheduled payments (whether received in whole or in part;
whether related to a current, future or prior due date; or whether paid
voluntarily by an Account Debtor or received in connection with the realization
of the amounts due under any Purchased Receivable or upon the sale or
disposition of any property acquired in respect thereof), all partial payments,
all full prepayments and all recoveries.

“Commitment Fee” shall have the meaning set forth in Section 3.4 hereof.

“Compliance Certificate” shall mean a certificate, in a form provided by Seller
to Buyer, which contains the certification of an officer of Seller that, among
other things, the representations and warranties set forth in this Agreement are
true and correct as of the date such certificate is delivered.

“Confirmation List” shall mean a list, made either in writing or via email,
delivered to Seller on the Acceptance Date that shall set forth (i) each
Eligible Receivable Buyer agrees to purchase pursuant to any related Offer
Notice and (ii) the Initial Purchase Price that shall be paid to Seller with
respect to each such Eligible Receivable.

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“Contract Disputes Act” shall mean the Contract Disputes Act of 1978, 41 U.S.C.
§§ 601-613, as amended.

“DCAA” shall mean the Defense Contract Audit Agency of the United States
Government.

 “Deemed Collections” shall mean all reductions, adjustments, discounts,
credits, allowances, rebates, refunds, returns, disputes, counterclaims,
offsets, defenses, rights of recoupment, rights of return, warranty claims or
short payments, asserted by or on behalf of any Account Debtor with respect to
any Purchased Receivable.

“Direct Costs” shall have the meaning ascribed to such term in 48 C.F.R. Section
2.101.

“Discount Factor” shall have the meaning set forth in Section 3.5 hereof.

“Discount Factor Rate” shall have the meaning set forth in Section 3.5 hereof.

“Eligible Contractor” means a Person that (a) is a U.S. resident or Person
organized under the laws of any state of the United States, (b) is not an
affiliate of RCA or Buyer, (c) is a party to a Government Contract with an
Account Debtor pursuant to which it is entitled to receive payments from such
Account Debtor, (d) has been approved by RCA or Buyer and has been deemed to be
“responsible” in accordance with the FAR and to have been determined by the
Account Debtor to be satisfactory after reviewing the United States Government
Contractor Performance Assessment Reporting System, (e) has not been notified of
the reduction or suspension of contract payments upon a finding of fraud, or of
the investigation of fraud, pursuant to FAR 32.006, (f) does not have a billing
rate error of more than two percent (2%) with respect to billings to the
applicable Account Debtor within the last twelve (12) months prior to the
purchase of any receivable generated by such Contractor by RCA, (g) has not
experienced any set-off or withholding of funds under any contract with the
Account Debtor as a result of a failure to pay its employees in accordance with
any federal wage and hour statutes, including, but not limited to, the Service
Contract Act, 41 U.S.C. § 351 et seq., or the Contract Work Hours and Safety
Standards Act, 40 U.S.C. § 3701 et seq., nor has it been notified of an
investigation of the foregoing matters, (h) has not experienced any set-off or
withholding of funds under any contract with the Account Debtor as a result of
its Indebtedness to the Account Debtor, including any monies owed for
overpayment by the Account Debtor, nor has it been notified of an investigation
of such matter, (i) with respect to which no event has occurred and no condition
exists that may result in the debarment or suspension of such Person from any
contracting with any Governmental Authority, and which has not been subject to
any such debarment or suspension, and (j) satisfies all of the representations
and warranties it makes under this Agreement.  

“Eligible Receivable” A bona fide receivable arising from an invoice that has
been sent to and approved by an Account Debtor (to the extent required by Buyer)
pursuant to a contract between an Account Debtor, as obligor, and an Eligible
Contractor, and all Related

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Security thereof: (a) that is either (i) a “Service Contract” (as defined in FAR
37.101) between an Eligible Contractor and the Account Debtor, provided,
however, that an Eligible Receivable shall not be deemed to arise from a
construction contract, or (ii) a contract between an Eligible Contractor and the
Account Debtor for the delivery of products, provided that the delivery of such
products can be verified by Buyer; (b) that is aged not later than 60 days from
the date of the initial invoice therefor; (c) that has been purchased by the
Buyer from the Seller in accordance with this Agreement; (d) that has been
executed by an authorized officer of the Eligible Contractor who has verified
that adequate funds are available and no appropriations approval is required for
the Eligible Contractor to enter into the contract; (e) that satisfies all of
the criteria of any due diligence review conducted by Buyer or RCA; (f) that is
denominated and payable only in U.S. dollars by electronic funds transfer and
only in the United States and no later than the later of (i) sixty (60) days
from the Account Debtor’s receipt of the invoice and (ii) sixty (60) days after
the Account Debtor has accepted the supplies delivered or the services performed
to which the invoice relates; (g) that has been validly assigned to Buyer
pursuant to the Assignment of Claims Act or a commercial assignment, as
applicable, and all payments with respect thereto have been validly directed to
be made directly to the Segregated Account; (h) with respect to which,
immediately following the transfer of such Eligible Receivable to Buyer as
contemplated by this Agreement, the Buyer shall have good title to such Eligible
Receivable, free and clear of any Liens; (i) the sale and assignment of which by
Seller to Buyer does not contravene or conflict with any applicable laws or
contractual obligation or other restriction, limitation or encumbrance, and does
not require any consent that has not been obtained; (j) the contracts,
documents, instruments and other items with respect to which (i) contain
customary and enforceable provisions such that the rights and remedies of the
holder thereof are adequate for the practical realization against any related
collateral or purchased assets of the benefits of the security or ownership
thereof and (ii) do not contain any confidentiality (or any other) provisions
that would restrict the ability of Buyer to exercise its powers,  rights and
remedies under this Agreement; (k) as to which the right to receive payments
thereunder is an “account” or a “payment intangible”, within the meaning of the
UCC; (l) which arises under contracts, documents, instruments and other items
that (i) have been duly authorized, are in full force and effect and constitute
the legal, valid and binding obligations of the related Account Debtor and
Eligible Contractor, enforceable against such Account Debtor and Eligible
Contractor in accordance with their terms (except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and the effects of general principles of equity) and
(ii) are not subject to any dispute, claim, defense, offset or counterclaim; (m)
as to which no portion of the Related Security has been released (in whole or in
part) from any Lien or security interest therein granted by the related Account
Debtor to the Eligible Contractor; (n) which, together with the contracts,
documents, instruments and other items related thereto, do not contravene in any
material respect any Applicable Laws; (o) which arises under contracts,
documents, instruments and other items, none of the parties to which have done
or failed to do anything that would or might permit any other party thereto
(other than the Buyer in exercising its rights or remedies thereunder) to
terminate any such contracts, documents, instruments and other items or to
suspend or reduce any payments or obligations due or to become due thereunder at
any time after it becomes an Eligible Receivable; and (p) which at no point in
time has failed to meet each of the criteria to

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constitute an Eligible Receivable set forth in subsections (a) through (o)
above. Notwithstanding anything in this definition to the contrary, the first
three (3) invoices or the last invoice with respect to any contract shall not be
deemed an “Eligible Receivable” unless (i) any such receivable is submitted and
validated through a web-based system such as “Wide Area Workflow” (WAWF) or (ii)
Buyer, in its sole discretion, is satisfied with the electronic mail
confirmation that Buyer has received from an appropriate government official
that any such receivable is proper and will be submitted for payment.

 “Enrollment Fee” shall have the meaning set forth in Section 3.1 hereof.

“Environmental Law” shall mean all requirements of applicable law and any
permit, approval, authorization, license, concession or permission from any
governmental authority imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources, including the United States Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. §§ 9601 et
seq.), the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. §§ 5101 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Toxic
Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Clean Air Act (42 U.S.C.
§§ 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et
seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the
Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), all regulations
promulgated under any of the foregoing, all analogous requirements of law and
any environmental transfer of ownership notification or approval statutes,
including the Industrial Site Recovery Act (N.J. Stat. Ann. §§ 13:1K−6 et seq.).

“ERISA” shall mean the United States Employee Retirement Income Security Act of
1974, as codified at 29 U.S.C. § 1001 et seq. and the rules and regulations
promulgated thereunder.

“Event of Default” shall have the meaning set forth in Section 9.1 hereof.

“Face Amount” shall mean, with respect to a Purchased Receivable, the face
amount of such Purchased Receivable as of the date Buyer shall have delivered
the Initial Purchase Price to Seller related to such Purchased Receivable.

“FAR” means the United States Federal Acquisition Regulations, 48 C.F.R. 1.00 et
seq.

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time consistently applied (except for accounting
changes in response to releases of the Financial Accounting Standards Board, or
other authoritative pronouncements).

“Government” means the United States of America or any agency or instrumentality
thereof.

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“Governmental Authority” shall mean any federal, state, municipal, local or
other governmental or regulatory department, commission, board, bureau, agency,
instrumentality, court or tribunal, in each case whether of the United States of
America, any political subdivision thereof or any foreign jurisdiction.

“Government Contract” shall mean a Government Prime Contract or a Government
Subcontract.

 

“Government Contract Bid” shall mean quotations, bids and proposals for awards
of new Government Contracts made by Seller for which no award has been announced
and for which Seller believes there is a reasonable prospect that such an award
to Seller may yet be made.

“Government Prime Contract” means any prime contract, purchase order, task
order, delivery order, teaming agreement, joint venture agreement, strategic
alliance agreement, basic ordering agreement, pricing agreement, letter contract
or other similar arrangement of any kind that is currently active in performance
between Seller, as an Eligible Contractor, and the Government, which shall
result in Eligible Receivables owed to Seller which may be purchased by Buyer in
accordance with this Agreement. A task, purchase or delivery order under a
Government Prime Contract shall not constitute a separate Government Prime
Contract, for purposes of this definition, but shall be part of the Government
Prime Contract to which it relates.

“Government Subcontract” means any subcontract, purchase order, task order,
delivery order, teaming agreement, joint venture agreement, strategic alliance
agreement, basic ordering agreement, pricing agreement, letter contract or other
similar arrangement of any kind that is currently active in performance between
Seller, as an Eligible Contractor, and any prime contractor of the Government in
its capacity as a prime contractor, which shall result in Eligible Receivables
owed to Seller which may be purchased by Buyer in accordance with this
Agreement. A task, purchase or delivery order under a Government Subcontract
shall not constitute a separate Government Subcontract, for purposes of this
definition, but shall be part of the Government Subcontract to which it relates.

 

“Indebtedness” shall mean, with respect to any Person, without duplication, any
of the following, whether or not matured:  (a) all indebtedness for borrowed
money, (b) all other obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all reimbursement and all other obligations with
respect to (i) letters of credit, bank guarantees or bankers’ acceptances or
(ii) surety, customs, reclamation or performance bonds (in each case not related
to judgments or litigation), (d) all obligations to pay the deferred purchase
price of property or services, (e) all obligations created or arising under any
conditional sale or other title retention agreement, regardless of whether the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property, (f) all matured
obligations under any swap, cap, collar, forward purchase or similar hedging
agreements or arrangements dealing with interest rates, currency exchange rates
or commodity prices, either generally or under specific

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contingencies, (g) all obligations of such Person under all leases which are
capitalized in accordance with GAAP and any financing leases involving
substantially the same economic effect, (h) any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing, or indemnifying
any Person against losses in respect of, any Indebtedness of any other Person,
(i) all Indebtedness referred to above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property or other assets (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness and (j) all other
obligations that would be recorded on a person’s balance sheet as a liability in
accordance with GAAP.

“Indirect Costs” shall have the meaning ascribed to such term in 48 C.F.R.
Section 2.101.

“Initial Purchase Price” shall have the meaning set forth in Section 2.3.1
hereof.

“Initial Purchase Price Rate” shall have the meaning set forth in Section 2.3.1
hereof.

“Lender” shall mean any bank, financial institution or other funding source
providing a line of credit to Buyer or RCA with respect to the purchase of
Receivables as contemplated under this agreement.

“Lien” shall mean any lien, security interest or other charge, encumbrance, or
other type of preferential arrangement having the practical effect of a lien or
security interest, of or on any assets or properties of any Person in favor of
any other Person, including a conditional sale or title retention agreement.

“Material Adverse Effect” shall mean a circumstance or condition affecting the
business, assets, operations, properties, condition (financial or otherwise), or
prospects of Seller and/or the Purchased Receivables that could materially
adversely affect (a) the business, assets, operations, properties, condition
(financial or otherwise) or prospects of Seller, (b) the ability of Seller to
perform any of its obligations under this Agreement, (c) the rights and remedies
of Buyer under this Agreement, (d) the value, existence or ownership of the
Purchased Receivables or (e) the collectability of the Purchased Receivables.

“Offer Notice” shall mean a notice, made either in writing or via email,
delivered to Buyer by Seller through which Seller shall offer to sell Eligible
Receivables for an amount greater than or equal to ten thousand dollars
($10,000).

“PAF Rate” shall have the meaning set forth in Section 3.3 hereof.

“Person” shall mean any individual, corporation, partnership, limited liability
company, limited liability partnership, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization
or government or any agency or political subdivision thereof.

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“Plan” shall mean an employee benefit plan within the meaning of Section 3(3) of
ERISA which is subject to Title IV of ERISA and maintained or contributed to by
Seller, or any other plan covered by Title IV of ERISA that covers the employees
of Seller.

“Proceeding” shall mean any action, suit, proceeding or litigation in equity or
at law, or any other judicial or administrative proceeding or investigation.

“Program Access Fees” shall have the meaning set forth in Section 3.3 hereof.

“Purchased Receivables” shall mean all Eligible Receivables arising out of any
invoice and other agreements identified on or delivered with any Receivables
Invoice delivered by Seller to Buyer which Buyer elects to purchase pursuant to
Section 2.2 hereof.

“RCA” shall mean RCA Funding, LLC.  

“Receivables” shall mean (i) all of Seller’s receivables listed on any
Receivables Invoice and all rights to, but not the obligations under, such
contracts and any and all rights and security arising thereunder, (ii) all
monies due or to become due with respect to the foregoing and (iii) all books
and records related to any of the foregoing.

“Receivables Invoice” shall have the meaning set forth in Section 2.1 hereof.

“Related Security” shall mean, with respect to any Eligible Receivable or other
receivable, all of the Seller’s right, title, interest and remedies in, to and
under any and all contracts, documents, instruments and other items related
thereto, and all proceeds of the foregoing, including, without limitation, (i)
the right of the Seller to receive all scheduled and unscheduled payments of all
amounts payable in connection with such Eligible Receivable or other receivable,
(ii) the right, if any, of the Seller to cause the repurchase of the Seller’s
interest in such Eligible Receivable or other receivable  and to receive the
purchase price, (iii) the right to enforce the Seller’s rights and remedies
under any purchase and sale, transfer or other applicable assignment agreement,
if any, with respect thereto, (iv) all Liens or security interests and property
subject thereto from time to time purporting to secure any of the foregoing
rights or interests, and the right to all collections in respect thereof, if
any, (v) all guarantees, casualty and other insurance policies (including,
without limitation, the right to receive all returned premiums related thereto)
and other agreements or arrangements of whatever character from time to time
supporting or securing or otherwise related to such Eligible Receivable or other
receivable and the related contracts, documents, instruments and other items
related thereto, (vi) all Collections and all accounts to which Collections in
respect of such Eligible Receivable or other receivable are deposited (including
the Segregated Account), (vii) all other information, documents, instruments,
servicing files, records and computer-readable media, personal property,
contract rights, servicing rights, escrow funds, and general intangibles of
whatsoever kind evidencing, comprising or relating to the ownership or transfer
of such Eligible Receivable or other receivable or the servicing thereof and all
other documents or instruments delivered to the Seller with respect thereto and
(viii) all proceeds of the foregoing.

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“Residual Calculation Date” shall mean the second Business Day immediately
following the date that any Collections are collected with respect to any
Purchased Receivable; provided that the amount of such Collections exceed the
sum of the Initial Purchase Price of such Purchased Receivable, plus the
Discount Factor related to such Purchased Receivable, plus any accrued Program
Access Fees owed during the applicable Accrual Period.

“Residual Payment Date” shall mean the Business Day immediately following the
Residual Calculation Date.

“Residual Purchase Price” shall have the meaning set forth in Section 2.3.2
hereof.

“Sale and Contribution Agreement” shall mean that certain Amended and Restated
Sale and Contribution Agreement dated as of April 3, 2012, by and between RCA,
as purchaser, and Buyer, as seller.  

“Segregated Account” shall mean that segregated bank account specified by Buyer
to Seller, in which any and all Collections shall be deposited.

“Seller Obligations” shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature, present or future, arising under or in
connection with this Agreement, whether or not evidenced by any note, guarantee
or other instrument, whether arising on account or by overdraft, whether direct
or indirect (including those acquired by assignment) absolute or contingent,
primary or secondary, due or to become due, now owing or hereafter arising and
however acquired, including, without limitation, all Initial Purchase Prices,
Program Access Fees, interest, Deemed Collections, fees, expenses, professional
fees and attorneys’ fees and any other sums chargeable to Seller hereunder or
otherwise.

“Termination Fee” shall have the meaning set forth in Section 3.2 hereof.

“Truth in Negotiations Act” shall mean the Truth in Negotiations Act of 1962, 10
U.S.C. § 2306(a), 41 U.S.C. § 254(b), as amended.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the Commonwealth of Massachusetts, provided, however, that, in the event that,
by reason of mandatory provisions of law, any of the attachment, perfection or
priority of the Purchased Receivables under this Agreement is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the
Commonwealth of Massachusetts, the term “UCC” shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.

“Unpurchased Receivable” shall mean any Receivable that is not a Purchased
Receivable.

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“USA Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title II of
Pub. L. 107-56 (signed into law October 26, 2001)).

SECTION 2

PURCHASE AND SALE OF RECEIVABLES

1.1

Delivery of Invoices; Validation of Receivables.  During the Availability
Period, and simultaneously with the delivery of the same to any Account Debtor,
Seller shall deliver to Buyer any and all invoices prepared relating to
Receivables arising under contracts with an Account Debtor for which Seller has
assigned the rights to receive payments therefrom to Buyer or Buyer’s designee
(each, a “Receivables Invoice”). Invoice copies should be submitted by
electronic mail to invoices@republiccapitalaccess.com. Upon receipt of any
Receivables Invoices, Buyer shall perform, or shall cause another Person to
perform, any and all due diligence necessary to determine which Receivables set
forth in the Receivables Invoices are Eligible Receivables.

1.2

Offer and Acceptance of Receivables.  At any time during the Availability
Period, provided that there does not then exist any Event of Default or any
event that, with notice, lapse of time or otherwise, would constitute an Event
of Default, Seller may deliver to Buyer an Offer Notice by electronic mail to
offernotice@republiccapitalaccess.com; provided, however, that Seller shall not
deliver more than three (3) Offer Notices to Buyer in any calendar week. Within
two (2) Business Days of Buyer’s receipt of an Offer Notice (the “Acceptance
Date”), Buyer shall (i) deliver to Seller a Confirmation List and (ii) and pay
to Seller by wire transfer an amount equal to the Initial Purchase Price of each
Eligible Receivable set forth on such Confirmation List, it being hereby agreed
to and accepted that the satisfaction of items (i) and (ii) above shall evidence
Buyer’s acceptance to purchase the Eligible Receivables set forth on the
Confirmation List. Upon Buyer’s acceptance of any Eligible Receivable as set
forth in this Section 2.2, such Eligible Receivable shall become a “Purchased
Receivable”; provided, however, that it shall be a condition to the payment of
each Initial Purchase Price that: (i) all of the conditions, representations,
warranties and covenants set forth herein be true and correct on and as of the
Acceptance Date as though made at and as of each such date, (ii) no Event of
Default, or any event or condition that with notice, lapse of time or otherwise
would constitute an Event of Default, shall have occurred and be continuing, or
would result from the payment of such Initial Purchase Price, and (iii) the
Account Balance shall not exceed two million dollars ($2,000,000.00) (“Facility
Limit”) as a result of the purchase.

1.3

Purchase Price of Receivables.  

1.3.1

Initial Purchase Price.  As set forth in Section 2.2 hereof, Buyer shall pay to
Seller an amount equal to ninety percent (90%) if the Account Debtor is an
agency of the United States government, and eighty-five percent (85%) if the
Account Debtor is not an agency of the United States government, of the Face
Amount of each Eligible Receivable set forth in any

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Confirmation List (each, an “Initial Purchase Price”).  The Initial Purchase
Price Rate shall remain in effect throughout the term of this Agreement, as set
forth in Exhibit A attached hereto.

1.3.2

Residual Purchase Price.  Provided that there does not then exist an Event of
Default or any event or condition that, with notice, lapse of time or otherwise,
would constitute an Event of Default, Buyer shall pay to Seller by wire transfer
on the Residual Payment Date, the amount, if any, which Buyer owes to Seller on
such Residual Payment Date, according to the accounting prepared by Buyer as of
such Residual Calculation Date (the “Residual Purchase Price”). For each
individual Purchased Receivable, the Residual Purchase Price shall be an amount
equal to: (A) the total amount of Collections related to such Purchased
Receivable as of the Residual Calculation Date; minus (B) the sum of (i) the
Initial Purchase Price paid for such Purchased Receivable, plus (ii) the
Discount Factor owed with respect to such Purchased Receivable, plus (iii) the
total as of the Residual Calculation Date of (a) any and all accrued and unpaid
Program Access Fees multiplied by a fraction, the numerator of which is equal to
the total amount of Collections collected in such applicable Accrual Period and
the denominator of which is the average daily Account Balance during such
applicable Accrual Period, (b) Deemed Collections related to such Purchased
Receivable, and (c) any other amounts due, including professional fees and
expenses, as set forth in Section 10.2 hereof for which written demand has been
made by Buyer to Seller as of the Residual Calculation Date to the extent Buyer
has agreed to accept payment thereof by deduction from the Residual Purchase
Price.  

1.4

Effectiveness of the Sale to Buyer.  Effective upon Buyer’s payment of the
Initial Purchase Price, and for and in consideration therefor and in
consideration of the covenants of this Agreement, Seller hereby absolutely
sells, transfers and assigns to Buyer, all of Seller’s right, title and interest
in and to each Purchased Receivable and any Related Security and all monies due
or which may become due on or with respect to such Purchased Receivable and any
Related Security. Buyer shall be the absolute owner of each Purchased Receivable
and any Related Security. Buyer shall have, with respect to any goods related to
the Purchased Receivable and any Related Security, all the rights and remedies
of an unpaid seller under the UCC and other applicable laws, including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.

1.5

Unpurchased Receivables.  In the event that any collections deposited into the
Segregated Account relate to an Unpurchased Receivable, Buyer shall remit, or
shall cause RCA to remit, all such collections to Seller within the two (2)
Business Days immediately following such collection. Buyer, in its sole
discretion, may charge a fee in an amount no greater than the actual
administrative costs related to the collection and remittance of any Unpurchased
Receivables.

1.6

True Sales.

1.6.1

Each of Buyer and Seller intend the transactions hereunder to constitute true
sales of Purchased Receivables by Seller to Buyer providing Buyer with the full
benefits of ownership thereof, and no party hereto intends the transactions
contemplated hereunder to be, or for any purpose to be characterized as, a loan
from or through Buyer to Seller.

1.6.2

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In the event, but only to the extent, that the conveyance of Purchased
Receivables by Seller hereunder is characterized by a court or other
governmental authority as a loan rather than a sale, Seller shall be deemed
hereunder to have granted to Buyer effective as of the date of the first
purchase under this Agreement, a security interest in all of Seller’s right,
title and interest in, to and under all of the Purchased Receivables sold by it,
whether now or hereafter owned, existing or arising. Such security interest
shall secure any and all rights of, and payments owed to, Buyer under this
Agreement, whether now or hereafter existing or arising, due or to become due,
direct or indirect, absolute or contingent. Buyer shall have, with respect to
the property described in this Section 2.6.2, and in addition to all the other
rights and remedies available to Buyer under this Agreement and applicable law,
all the rights and remedies of a secured party under the UCC, and this Agreement
shall constitute a security agreement under applicable law.

SECTION 3

FEES; ACCOUNTING

2.1

Enrollment Fee. Immediately upon the execution of this Agreement, Seller shall
pay to Buyer an amount equal to five thousand dollars ($5,000.00) (the
“Enrollment Fee”) in consideration of Buyer’s commitment to purchase Receivables
hereunder.

2.2

Termination Fee.  In the event that Seller terminates this Agreement prior to
the end of the term of this Agreement as set forth in Section 10.10 hereof,
Seller shall pay to Buyer an amount equal to zero dollars ($0.00) (the
“Termination Fee”) in consideration for such early termination of this
Agreement.

2.3

Program Access Fees.  On each Residual Payment Date, RCA shall deduct from any
Collections an amount equal to the sum of seventeen thousandths of one percent
(.017%) (the “PAF Rate”) of the daily ending Account Balance for each day during
the applicable Accrual Period (the “Program Access Fees”). At all times
throughout the term of this Agreement, as set forth in Section 10.10 hereof,
Buyer shall have the right to adjust the PAF Rate as Buyer may deem necessary to
account for any material changes in the direct, third party charges that are
payable by Buyer in connection with the Purchased Receivables, including,
without limitation, any servicing fees, underwriting fees and licensing fees;
provided, however, that the PAF Rate shall be adjusted no more frequently that
once per calendar quarter and any increase shall be effective upon thirty (30)
days prior written notice to Seller. Notwithstanding the foregoing, Seller herby
agrees that the PAF Rate shall not be changed during the six (6) months
following the date of this Agreement.

2.4

Commitment Fee.   Seller shall pay to RCA a commitment fee (the “Commitment
Fee”) computed daily in an amount equal to the sum of the Facility Limit minus
the daily ending Account Balance, multiplied by one percent (1.00%) divided by
three hundred and sixty (360), for each day during the applicable Accrual
Period. The Commitment Fee shall be billed to Seller by RCA following the end of
each month for the prior month throughout the term of this Agreement, as set
forth in Section 10.10 hereof. The Commitment Fee shall be paid to Buyer within
ten (10) days of the invoice date and may be offset from any Residual Purchase
Price or Unpurchased Receivable payments owed to Seller if the Commitment Fee is
not paid when due.

2.5

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Discount Factor. On each Residual Payment Date, Buyer shall, or shall cause RCA
to, deduct from any Collections an amount equal to the percent, as shown on
Exhibit A Rate Schedule, or as otherwise agreed to between Seller and Buyer,
(the “Discount Factor Rate”), of the Face Amount of each Purchased Receivable
for which the Residual Purchase Price, if any, is paid on such Residual Payment
Date (the “Discount Factor”). At all times throughout the term of this
Agreement, as set forth in Section 10.10 hereof, Buyer shall have the right to
adjust the Discount Factor Rate in its sole discretion as Buyer may deem
necessary to account for adjustments in the purchase prices of Receivables
hereunder; provided, however, that the Discount Factor Rate may only be adjusted
as of the first day of each calendar month

2.6

Accounting.  Buyer shall prepare and send to Seller on each Residual Calculation
Date, an accounting of the transactions as of such Residual Calculation Date,
including the amount of all Purchased Receivables, Collections and Program
Access Fees. The accounting shall be deemed correct and conclusive unless Seller
makes written objection to Buyer within thirty (30) days after Buyer delivers
the accounting to Seller.

SECTION 4

NO RECOURSE; DEEMED COLLECTIONS

3.1

No Recourse.  Subject to Section 4.2 hereof, the purchase and sale of
Receivables under this Agreement shall be without recourse to Seller for
non-payment of Purchased Receivables due to credit problems of the Account
Debtor; provided, however, that Seller shall be liable to Buyer for (i) any and
all fraudulent statements related to any Receivable contained in the Receivables
Invoices or otherwise and (ii) all representations, warranties, covenants and
indemnities made by Seller pursuant to the terms of this Agreement, it being
understood that such Obligations of Seller will not arise on account of the
failure of the Account Debtor for credit reasons to make any payment in respect
of a Purchased Receivable.

3.2

Deemed Collections; Repurchase

3.2.1

If on any day the Account Balance is reduced or adjusted as a result of any
defective, rejected or returned merchandise or services, any cash discount, any
credit, any incorrect billing, pricing adjustment or any other adjustment by
Seller or is reduced or canceled as a result of a setoff in respect of any claim
by the Account Debtor thereof against Seller (whether such claim arises out of
the same or a related or unrelated transaction) or as a result of any dispute or
any obligation of Seller to pay to the related Account Debtor any rebate or
refund, or to rework any product or service, Seller shall directly deposit into
the Segregated Account in immediately available funds an amount equal to the
Deemed Collections of such reduction or adjustment.

3.2.2

If on any day any of the representations or warranties herein are not true with
respect to any Purchased Receivable as of the date it was sold hereunder, Seller
shall directly deposit into the Segregated Account in immediately available
funds an amount equal to the portion of the Account Balance related to such
Purchased Receivable for application by RCA to the same extent as if Collections
pertaining to such Purchased Receivable had actually been received on such date.

3.2.3

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If and to the extent that Buyer shall be required for any reason to pay over to
the Account Debtor (or any trustee, receiver, custodian or similar official in
the event of bankruptcy, etc.) any amount received by it hereunder, such amount
shall be deemed not to have been so received but rather to have been retained by
Seller and, accordingly, Buyer shall have a claim against Seller for such
amount, payable when and to the extent that any distribution from or on behalf
of Seller is made in respect thereof.

3.2.4

If on any day, and for any reason, a Purchased Receivable is determined to not
have qualified as an Eligible Receivable as of the date such Purchased
Receivable was purchased by Buyer from Seller in accordance with this Agreement
or at any time thereafter, Seller shall deposit directly into the Segregated
Account in immediately available funds an amount equal to the Initial Purchase
Price plus any Residual Purchase Price paid with respect to such Purchased
Receivable and any and all costs incurred by Buyer in connection with such
determination and adjustment, including reasonable fees and disbursements of
counsel, within twenty-five (25) days of Seller’s receipt of notice of such
determination. Seller shall deposit directly into the Segregated Account any
amounts arising under this Section 4.2.4.

SECTION 5

POWER OF ATTORNEY; SERVICING OF PURCHASED RECEIVABLES; ADDITIONAL RIGHTS

4.1

Power of Attorney.  Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller’s true and lawful attorney in fact, and hereby
authorizes Buyer, regardless of whether there has been an Event of Default, (i)
to sell assign, transfer, pledge, compromise or discharge the whole or any part
of the Purchased Receivables, (ii) to demand, collect, receive, sue, and give
releases to any Account Debtor for the monies due or which may become due upon
or with respect to the Purchased Receivables and to compromise, prosecute or
defend any Proceeding relating to the Purchased Receivables, including the
filing of a claim or the voting of such claims in any bankruptcy case, all in
Buyer’s name or Seller’s name, as Buyer may choose, (iii) to prepare, file and
sign Seller’s name on any notice, claim, assignment, demand, draft or notice of
or satisfaction of lien or mechanics’ lien or similar document with respect to
Purchased Receivables, (iv) to notify all Account Debtors with respect to the
Purchased Receivables to pay Buyer directly, (v) to receive, open and dispose of
all mail addressed to Seller for the purpose of collecting Purchased Receivables
(provided, however, that any mail of Seller not related to collecting Purchased
Receivables shall be promptly returned to Seller), (vi) to endorse Seller’s name
on any checks or other forms of payment on the Purchased Receivables, (vii) to
execute on behalf of Seller any and all instruments, documents, financing
statements and the like to perfect Buyer’s interests in the Purchased
Receivables, as set forth herein, and (viii) to do all acts and things necessary
or expedient in furtherance of any such purposes. If Buyer receives a wire
transfer or item which is payment for both a Purchased Receivable and another
Receivable, the funds shall first be applied to the Purchased Receivable and, so
long as there does not exist an Event of Default or an event that with notice,
lapse of time or otherwise would constitute an Event of Default, the excess
shall be remitted to Seller. Upon the occurrence and continuation of an Event of
Default, all of the power of attorney rights granted by Seller to Buyer
hereunder shall be applicable with respect to all Purchased Receivables.

4.2

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Servicing of Purchased Receivables. Subject to Buyer’s ownership of the
Purchased Receivables, Buyer shall have the sole right to service, administer
and collect the Purchased Receivables, to assign such right and to delegate such
right to others. In consideration of Buyer’s purchase of the Purchased
Receivables, Seller agrees to cooperate fully with Buyer to facilitate the full
and proper performance of such duties and obligations for the benefit of Buyer
and RCA. To the extent that Buyer has granted or grants powers of attorney to
RCA or the Lender, Seller hereby grants a corresponding power of attorney on the
same terms to RCA or the Lender. Seller hereby acknowledges and agrees that
Buyer, in all of its capacities, may assign to RCA which in turn may assign to
the Lender for the benefit of RCA such powers of attorney and other rights and
interests granted by Seller to Buyer pursuant to Section 5.1 hereof, and agrees
to cooperate fully with the Lender or RCA in the exercise of such rights.
 Notwithstanding anything herein to the contrary, to the extent that Seller
desires to withdraw a contract with an Account Debtor from eligibility under the
Receivables purchase program contemplated by this Agreement, then Buyer, for
itself and on behalf of its Affiliates, agrees to cooperate with Seller to cause
such contract and any and all accounts receivable arising thereunder to be
reassigned to Seller.

4.3

Rights of Buyer; Enforcement Rights.

4.3.1

Except as set forth in Sec. 2.3.2, Buyer shall account for all collections of
receivables, but, subject to Section 2.3.2 hereof, shall have no obligation to
replace, to substitute or to return any Purchased Receivables to Seller. Buyer
shall have no obligation to account for, or to return to Seller, Collections, or
any interest or fees collected pursuant thereto, without regard to whether such
Collections and fees are in excess of the Initial Purchase Prices paid for such
Purchased Receivables.  Notwithstanding anything contained herein to the
contrary, Buyer shall be obligated to return any and all collections of
Receivables to which Seller is entitled after all of Seller’s obligations
arising under this Agreement have been paid in full.

4.3.2

Buyer shall have the unrestricted right to further assign, transfer, deliver,
hypothecate, subdivide or otherwise deal with the Purchased Receivables, and all
of Buyer’s right, title and interest in, to and under this Agreement, on
whatever terms Buyer shall determine.

4.3.3

Buyer shall have the sole right to retain any gains or profits created by
buying, selling or holding the Purchased Receivables and, except as expressly
set forth in the this Agreement, shall have the sole risk of and responsibility
for losses or damages created by such buying, selling or holding.

SECTION 6

CONDITION TO PURCHASES

5.1

Conditions Precedent to Initial Purchases. The initial purchase of Purchased
Receivables under this Agreement is subject to the condition precedent that
Buyer shall have received each of the following , on or before the date of such
purchase, each in form and substance satisfactory to Buyer :

5.1.1

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This Agreement, duly executed by the parties hereto, together with evidence
reasonably satisfactory to Buyer that all conditions precedent to the initial
purchase of Purchased Receivables shall have been met;

5.1.2

Certificates of officers of Seller certifying (i) a copy of the resolutions of
its Board of Directors, or similar governing body, approving this Agreement to
be delivered by it hereunder and the transactions contemplated hereby; (ii) the
names and true signatures of the officers authorized on its behalf to sign this
Agreement to be delivered by it hereunder, (iii) a copy of its by-laws or
operating agreement, as the case may be, and (iv) all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement;

5.1.3

Seller’s certificate of incorporation or formation, as the case may be, duly
certified by the appropriate government official in the state where Seller is
organized, as of a recent date acceptable to Buyer;

5.1.4

If necessary, acknowledgment copies or time stamped receipt copies, of the
proper financing statements that have been duly executed and name Seller as the
debtor and Buyer as the secured party and purchaser of the Receivables or other,
similar instruments or documents, which will be assigned to RCA to the extent
that such receivables are purchased by RCA under the Sale and Contribution
Agreement,  as may be necessary or desirable under the UCC or any comparable law
of all appropriate jurisdictions to perfect Buyer’s ownership interest in all
Receivables in which an ownership interest may be assigned to it hereunder; and

5.1.5

Such other agreements, instruments, UCC financing statements, certificates,
opinions and other documents as Buyer may reasonably request.

5.2

Conditions Precedent to All Purchases Each purchase under this Agreement is
subject to the condition precedent that the agreement of Seller to sell
Receivables, and the agreement of Buyer to purchase Receivables, shall not have
terminated under the terms of this Agreement, and shall be subject further to
the conditions precedent that:

5.2.1

In the case of each purchase, Seller shall have delivered to Buyer prior to such
purchase (i) all Receivables Invoices with respect to the immediately preceding
calendar month and (ii) an Offer Notice, together with such additional
information as may be reasonably requested by Buyer;

5.2.2

Seller shall have delivered acknowledgment copies of proper financing
statements, if any, necessary to release all security interests and other rights
of any Person in the Purchased Receivables previously granted by Seller;

5.2.3

Seller shall have delivered to Buyer any and all financial statements of Seller
required under this Agreement or reasonably requested by Buyer;

5.2.4

Prior to the sale of any Receivables hereunder, Seller shall (i) execute all
other agreements, instruments, notices, forms and documents and shall perform
all further acts which Buyer may require with respect to the Purchased
Receivables to ensure compliance with the

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Assignment of Claims Act and all applicable regulations issued pursuant thereto,
or a commercial assignment, as applicable (ii) cause to be filed or submitted
with the Government any and all agreements, instruments, notices, forms and
documents required pursuant to the Assignment of Claims Act and all applicable
regulations issued pursuant thereto, as applicable, and (iii) have received,
prior to the sale of any Purchased Receivables under this Agreement, any and all
necessary and applicable approvals and consents from the Government pursuant to
Assignment of Claims Act and all applicable regulations issued pursuant thereto,
as applicable;

5.2.5

Since September 30, 2015, no event or events shall have occurred which have had
or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;

5.2.6

No Event of Default or shall have occurred and be continuing or be imminent or
pending or result from the purchase of the Purchased Receivables;

5.2.7

Buyer shall have received any information reasonably requested by it under or in
connection with the USA Patriot Act;

5.2.8

Buyer shall have completed any due diligence or shall have received and be
satisfied in its sole discretion with any and all confirmations related to
Seller as an Eligible Contractor or the Receivables as Eligible Receivables;

5.2.9

Buyer shall have completed and be satisfied in its sole discretion of any and
all due diligence performed by Buyer relating to Seller, the Receivables or any
transactions contemplated herein, and Buyer shall have approved the invoice
relating to, and be satisfied with, the Initial Purchase Price being paid by
Buyer for each Purchased Receivables sold under this Agreement;

5.2.10

The representations and warranties contained herein are true and correct on and
as of such day as though made on and as of such day and shall be deemed to have
been made on such day (except that any such representation or warranty that is
expressly stated as being made only as of a specified earlier date shall be true
and correct in all material respects as of such earlier date).

5.3

Certification as to Representations and Warranties.  Seller, by accepting the
Initial Purchase Price paid for each purchase of Purchased Receivables on any
day, shall be deemed to have certified that its representations and warranties
contained herein are true and correct on and as of such day, with the same
effect as though made on and as of such day (except that any such representation
or warranty that is expressly stated as being made only as of a specified
earlier date shall be true and correct in all material respects as of such
earlier date).

5.4

Effect of Payment of Purchase Price.  Upon the payment of the Initial Purchase
Price for any purchase of Purchased Receivables, title to such Purchased
Receivables shall vest in Buyer, whether or not the conditions precedent to such
purchase were in fact satisfied; provided that Buyer shall not be deemed to have
waived any claim it may have under this Agreement for the failure by Seller in
fact to satisfy any such condition precedent.

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SECTION 7

REPRESENTATIONS AND WARRANTIES

6.1

Representations and Warranties.  In order to induce Buyer to enter into this
Agreement and to make purchases thereunder, Seller hereby represents and
warrants as follows:

6.1.1

Organization and Good Standing.  Seller has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its organization, with power and authority to own its properties and to conduct
its business as such properties are presently owned and such business is
presently conducted.

6.1.2

Due Qualification.  Seller is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business requires such qualification, licenses or approvals
except where the failure to so qualify or have such licenses or approvals has
not had, and could not reasonably be expected to have, a Material Adverse
Effect.

6.1.3

Power and Authority; Due Authorization.  Seller (A) has all necessary power,
authority and legal right to (i) execute and deliver this Agreement, (ii) carry
out the terms of this Agreement, and (iii) sell and assign the Receivables on
the terms and conditions herein provided and (B) has been duly authorized by all
necessary corporate and other action to the execute, deliver and perform its
obligations under this Agreement.

6.1.4

Binding Obligations.  This Agreement constitutes a legal, valid and binding
obligation of Seller, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a Proceeding.

6.1.5

No Violation.  The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not (i) conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under Seller’s articles of
incorporation or certification of formation, by-laws or operating agreement,
each as the case may be, or any other Obligation, (ii) result in the creation or
imposition of any Lien upon Seller’s properties pursuant to the terms of any
such contractual obligation, other than this Agreement, or (iii) violate any
applicable law.

6.1.6

No Proceedings.  There is no litigation, Proceeding or investigation pending or,
to the best of Seller’s knowledge, threatened, before any governmental authority
or arbitrator (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the sale and assignment of the Receivables, the collectability of the
Receivables or the consummation of any of the other transactions contemplated by
this Agreement, or (iii) seeking any determination or ruling that could
reasonably be expected to have a Material Adverse Effect.

6.1.7

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Government Contract Matters.

6.1.7.1

  Compliance with Contract Requirements.  (i) Seller has fully complied with all
material terms and conditions of each Government Contract to which it is a
party, and has performed in all material respects all obligations required to be
performed by it thereunder, (ii) Seller has complied with all statutory and
regulatory requirements, including, without limitation, the Federal Property and
Administrative Services Act, the FAR, any applicable agency specific acquisition
regulation, related cost principles, and the cost accounting standards, where
and as applicable to each of the Government Contracts and the Government
Contract Bids, and (iii) the representations, certifications and warranties made
by Seller with respect to the Government Contracts or Government Contract Bids
were accurate as of their effective dates and Seller has fully complied in all
material respects with all such certifications. Seller has not received a
substantially adverse or negative government past performance evaluation or
rating for the past ten (10) years that could be reasonably expected to
adversely affect the evaluation by the Government or proposals for future
Government Contracts.  

6.1.7.2

  Notice of Non-Compliance. With respect to any Government Contract with Seller,
neither the Government, any prime contractor or higher-tier subcontractor under
a Government Contract nor any other Person has notified Seller in writing of any
actual or alleged violation or breach of any statute, regulation,
representation, certification, disclosure obligation, contract term, condition,
clause, provision or specification, including, without limitation, the
Procurement Integrity Act, the Service Contract Act, the Trade Agreements Act
and the Buy American Act, that could be reasonably expected to adversely affect
the collectability of any Purchased Receivable or adversely affect the award of
Government Contracts to Seller in the future.

6.1.7.3

  False Claims, Defective Pricing and Requests for Pricing Reductions.  Seller
is not party to any ligation and has taken no action that could reasonably be
expected to give rise to a request for a material reduction in the price of any
Government Contracts, including, without limitation, any (i) liability under the
False Claims Act or (ii) claim for price adjustment under the Truth in
Negotiations Act.

6.1.7.4

  Termination for Default or Convenience.  (i) Seller has not received any
written or oral show cause, cure, deficiency, default or similar notice relating
to any Government Contracts, (ii) no termination for default, cure notice or
show cause notice has been issued or threatened and remains unresolved with
respect to any Government Contract or Government Contract Bid, and no event,
condition or omission has occurred or exists that would constitute grounds for
such action, (iii) no past performance evaluation received by Seller with
respect to any such Government Contract has set forth a default or other
material failure to perform thereunder or termination or default thereof, (iv)
there has not been any material withholding or setoff under any Government
Contract, (v) all invoices and claims (including requests for progress payments
and provisional costs payments) submitted under each Government Contract were
current, accurate and complete in all material respects as of their submission
date and (vi) none of the execution, delivery or performance of this Agreement
and any other

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consents, certificates or deliverables required herein does or will conflict
with or result in a material breach of or default under any Government Contract
or cause a termination of any Government Contract due to loss of preferential
status.  Seller has not received any written or oral notice terminating any of
the Government Contracts for convenience or indicating an intent to terminate
any of the Government Contracts for convenience.  

6.1.7.5

  Disputes and Claims.  Seller has not received any written notice of any
outstanding material claims or contract disputes to which Seller is a party
(i) relating to the Government Contracts or Government Contract Bids and
involving either the Government, any prime contractor, any higher-tier
subcontractor, vendor or any third party; or (ii) relating to the Government
Contracts under the Contract Disputes Act or any other federal statute.

6.1.7.6

  Suspension and Debarment.  Neither Seller, any of Seller’s affiliates nor any
of Seller’s respective managers, directors, officers or employees in connection
with the performance of the duties for or on behalf of Seller or any of Seller’s
affiliates has been debarred, suspended, proposed for suspension or debarment
from bidding on any Government Contract, declared nonresponsible or ineligible,
or otherwise excluded from participation in the award of any Government Contract
or for any reason been listed on the List of Parties Excluded from Federal
Procurement and Non-procurement Programs.  Within the last ten (10) years, no
debarment, suspension or exclusion proceeding has been initiated against Seller,
any of Seller’s affiliates or any of their respective directors, officers or
employees in connection with the performance of the duties for or on behalf of
Seller or any of Seller’s affiliates.  No circumstances exist that would warrant
the institution of suspension or debarment proceedings against Seller, any of
Seller’s affiliates or any of their respective managers, directors, officers or
employees in connection with the performance of the duties for or on behalf of
Seller or any of Seller’s affiliates.

6.1.7.7

  Responsibility Determinations. No negative determination of responsibility has
been issued against Seller since its inception with respect to any quotation,
bid or proposal for a Government Contract.

6.1.7.8

  Audits, Investigations and Enforcement Actions.  Except as described in
Schedule 7.1.7.8 attached hereto, no audit, review, inspection, investigation,
survey or examination of Seller’s records by an Account Debtor is threatened or
pending; (ii) Seller has not received any official notice that it is being
specifically audited or investigated by the Government Accountability Office,
the DCAA, any state or federal agency Inspector General, the contracting officer
with respect to any Government Contract, or the U.S. Department of Justice
(including any U.S. Attorney); and (iii) Seller has not received any written
notice or otherwise become aware that any audit, review, inspection,
investigation, survey or examination of records described in the attached
schedule, has revealed any fact, occurrence or practice which could reasonably
be expected to adversely effect Seller.  

6.1.7.9

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  Disclosure.  Seller has not made any disclosure to the Government or other
customer or prime contractor or higher-tier subcontractor related to any
suspected, alleged or possible violation of a material requirement of a
Government Contract, any apparent or alleged material irregularity, misstatement
or omission arising under or relating to a Government Contract or Government
Contract Bid, or any violation of Law or regulation relating to a Government
Contract or Government Contract Bid.

6.1.7.10

 No Violations.  Seller has not engaged in or been charged with, or received or
been advised in writing of any charge, investigation, claim or assertion of, nor
has Seller nor any of its directors, officers or employees in their capacities
as such been subject to any criminal indictment or information, lawsuit,
subpoena, civil investigative demand, discovery request, administrative
proceeding, voluntary disclosure, claim, dispute, mediation or arbitration with
regard to, any material violation of any requirement pertaining to a Government
Contract or Government Contract Bid, including material violations of any
statutory or regulatory requirements or violations of any applicable laws
relating thereto.

6.1.7.11

 No Litigation.  Seller has not taken any action and is not a party to any
litigation that could reasonably be expected to give rise to a request for a
material reduction in the price of any Government Contract, including but not
limited to (i) claims based on actual or alleged defective pricing or (ii) a
claim for price adjustment under the Truth in Negotiations Act.  To Seller’s
best knowledge, there exists no basis for a claim of any liability of Seller by
the applicable Account Debtor as a result of defective cost and pricing data
submitted to the Account Debtor. Seller is not participating in any pending
claim and Seller is unaware of any potential claim under the Contract Disputes
Act against the Government or any prime contractor, subcontractor or vendor
arising under or relating to any Government Contract or Government Contract Bid.

6.1.7.12

 DCAA-Approved Rates.  All Direct Costs and Indirect Cost rates are being billed
by Seller under the Government Contracts consistent with DCAA-approved rates or
provisional rate agreements.

 

6.1.7.13

National Security Obligations.  Seller is in compliance with all applicable
national security obligations, including those specified in the National
Industrial Security Program Operating Manual, DOD 5220.22-M (January 1995), and
any supplements, amendments or revised editions thereof.

 

6.1.7.14

 No Events of Omissions.  To Seller’s best knowledge, there are no events or
omissions that would reasonably be expected to result in (i) a material claim
against Seller by the Government or any prime contractor, subcontractor, vendor,
or other third party arising under or relating to any Government Contract or
Government Contract Bid; or (ii) a material dispute between Seller and the
Government or any prime contractor, subcontractor, vendor, or other third party
arising under or relating to any Government Contract or Government Contract Bid.

 

6.1.7.15

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Losses and Cost Overruns; No Improper Payments.  No Government Contract has
incurred or currently projects losses or cost overruns in an amount exceeding
fifty thousand dollars ($50,000).  No payment has been made by Seller, or by a
Person acting on Seller’s behalf, to any Person (other than to any bona fide
employee or agent of Seller, as defined in subpart 3.4 of the FAR) which is or
was improperly contingent upon the award of any Government Contract or which
would otherwise be in violation of any applicable procurement law or regulation
or any other applicable laws.  

6.1.7.16

Costs Allowable.  All of Seller’s costs (both Direct Costs and/or Indirect
Costs) that have been, prior to the date hereof, charged to any Government
Contract are allowable in accordance with applicable cost accounting standards
(except for costs properly charged to a reserve account appearing on Seller’s
balance sheet as of the close of September 30, 2015).  

6.1.8

Directed Payments; Assignment of Claims Act.  Prior to each sale of Purchased
Receivables hereunder: (a) all necessary and appropriate steps shall have been
taken to ensure that all payments and Collections with respect to Purchased
Receivables have been validly directed to be made directly to the Segregated
Account and (b) all steps shall have been taken necessary or appropriate under
the Assignment of Claims Act with respect to Government Prime Contracts to
insure that (i) each Purchased Receivable being sold has been validly assigned
to Buyer, or Buyer’s designee, (ii) Seller has validly assigned such Purchased
Receivables to Buyer, or Buyer’s designee, and (iii) all payments and
Collections with respect to such Purchased Receivables have been validly
directed to be made directly to the Segregated Account.

6.1.9

Government Approvals.  Except as set forth or required herein, no governmental
action, approval or consent is required for the due execution, delivery and
performance by Seller of this Agreement.

6.1.10

Quality of Title; Valid Sale; No Other Liens.

6.1.10.1

Seller is the sole legal and beneficial owner of the Receivables, free and clear
of any Lien. Without limiting the generality of the foregoing, no security
agreement, financing statement or other public notice with respect to all or any
part of the Receivables that evidences a Lien securing any indebtedness of
Seller is on file or of record in any public office, except such as may have
been filed in favor of Buyer pursuant to this Agreement.

6.1.10.2

Seller acquired its rights in the Receivables in good faith without notice of
any Lien as defined in the UCC, except as set forth in Section 7.1.10.1 hereof.

6.1.10.3

Seller has not authorized the filing of and is not aware of any financing
statements against Seller that include a description of collateral covering the
Receivables other than any financing statements relating to any Receivables sold
to Buyer hereunder.

6.1.10.4

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There are no judgment lien or tax lien filings against Seller. Except as set
forth in this Agreement, Seller has not, pledged, assigned, sold, granted a
security interest in or otherwise conveyed or disposed of any interest in any of
the Receivables.

6.1.10.5

Each Receivable constitutes an “account” as such term is defined in the UCC.

6.1.11

Accuracy of Information.  Each report, information, exhibit, financial
statement, document, book, record or report furnished or to be furnished at any
time by or on behalf of it to Buyer or RCA in connection with this Agreement is
or will be accurate in all material respects as of its date or as of the date so
furnished, and no such item contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained therein, in the light of the circumstances
under which they were made, not materially misleading.

6.1.12

Offices; Billing Address.  The principal place of business and chief executive
office of Seller, and the location where Seller keeps all of its books, records
and documents evidencing or relating to Purchased Receivables, is located at the
address set forth on the first page of this Agreement. Seller has a billing
address located in the United States, its territories or possessions.

6.1.13

Maintenance of Books and Records.  Seller has accounted for each sale of
Purchased Receivables in its books and financial statements as sales, consistent
with GAAP.

6.1.14

[Reserved]  

6.1.15

Compliance with this Agreement.  Seller has complied with all of the terms,
covenants and agreements contained in this Agreement applicable to it.

6.1.16

Corporate Name.  Seller’s complete corporate name is as forth on the first page
of this Agreement, and Buyer does not use and has not during the last six (6)
years used any other corporate name, trade name, doing business name or
fictitious name.

6.1.17

Eligible Receivables.  Each Purchased Receivable sold by Seller to Buyer
hereunder that is designated as an Eligible Receivable on any Offer Notice is in
fact an Eligible Receivable.

6.1.18

No Termination Events.  No event has occurred and is continuing, or would result
from a purchase, in respect of the Receivables or from the application of
proceeds therefrom, which would cause the early termination of this Agreement.

6.1.19

No Consents.  Subject to Section 6.2.4 hereof, no authorization, consent,
license, order or approval of, or registration or declaration with, any
governmental authority or other Person is required to be obtained, effected or
made by Seller in connection with the execution

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and delivery by Seller of this Agreement or its performance of its obligations
under this Agreement or the transactions contemplated hereby, or for the
exercise by Buyer of its rights hereunder except, for filings required hereunder
and those that have been obtained, effected or made.

6.1.20

No Default.  No Event of Default has occurred and is continuing, both before and
immediately after giving effect to this Agreement.  Seller is not in default in
the performance, observance or fulfillment of any contractual obligations
applicable to it or its property.

6.1.21

ERISA.  Seller has complied in all material respects with ERISA and has not
incurred and does not expect to incur any liabilities to the Pension Benefit
Guaranty Corporation (or any successor thereto) under ERISA.  Seller is not a
sponsor of, or a member of a controlled group of any Person that is a sponsor
of, any Plan.

6.1.22

Anti-Money Laundering Laws; Patriot Act.  Seller is in compliance, in all
material respects, with the (a) Trading with the Enemy Act, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (b) any applicable anti money laundering
laws and regulations, including the USA Patriot Act.

6.1.23

Taxes  Seller has filed or caused to be filed all federal and material state,
local and foreign tax returns which are required to be filed with any
governmental authority after giving effect to applicable extensions, and has
paid or has caused to be paid all taxes as shown on said returns or on any
assessment received by it in writing, to the extent that such taxes have become
due other than those (a) not yet delinquent or (b) being diligently contested in
good faith by appropriate Proceedings as to which adequate reserves have been
provided in accordance with GAAP and which if unpaid, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
No tax return is under audit or examination by any governmental authority and no
notice of such an audit or examination or any assertion of any claim for taxes
has been given or made by any governmental authority, except such audits,
examinations or claims that have been disclosed to Buyer in writing, none of
which could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Seller believes that the charges, accruals and reserves
on its books in respect of taxes or other governmental charges are adequate.

6.1.24

True and Complete Disclosure.

6.1.24.1

Neither this Agreement nor any agreement, document, certificate or written
statement furnished to Buyer by or on behalf of Seller in connection with the
transactions contemplated hereby, at the time it was furnished, contained any
untrue statement of  material fact or omitted to state a material fact, under
the circumstances under which it was made, necessary in order to make the
statements contained herein or therein not misleading, it being understood that
for purposes of this Section 7.1.24.1, such factual information and data shall
not include pro forma financial information or projections (including financial
estimates, forecasts and other forward looking information or information of a
general economic or general industry nature).

6.1.24.2

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The written projections (including any financial estimates, forecasts and other
forward-looking information) contained in the information and data referred to
in paragraph (a) above were based on good faith estimates and assumptions
believed by the Person making such projections to be reasonable at the time
made, it being recognized by Buyer that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.

6.1.25

Material Adverse Effect. Since September 30, 2015, there have been no events,
circumstances, developments or other changes in facts that, individually or in
the aggregate, would have or could reasonably be expect to result in a Material
Adverse Effect.

6.1.26

Environmental Matters. (a)  The operations of Seller are and have been in
compliance with all applicable Environmental Laws, including obtaining,
maintaining and complying with all permits required by any applicable
Environmental Law, other than non-compliances that, in the aggregate, would not
have a reasonable likelihood of resulting in liabilities exceeding ten thousand
dollars ($10,000) in the aggregate, (b) Seller is not party to, and no real
property currently or, to the knowledge of Seller, previously owned, leased,
subleased, operated or otherwise occupied by or for Seller is subject to or the
subject of, any contractual obligation or any pending or, to the knowledge of
Seller, threatened, order, action, investigation, suit, Proceeding, audit,
claim, demand, dispute or notice of violation or of potential liability or
similar notice under or pursuant to any Environmental Law other than those that,
in the aggregate, are not reasonably likely to result in liabilities exceeding
ten thousand dollars ($10,000) in the aggregate, (c) no Lien in favor of any
governmental authority securing, in whole or in part, environmental liabilities
has attached to any property of Seller and, to the knowledge of Seller, no
facts, circumstances or conditions exist that could reasonably be expected to
result in any such Lien attaching to any such property, (d) Seller has not
caused or suffered to occur a release of hazardous materials at, to or from any
real property of Seller and each such real property is free of contamination by
any hazardous materials except for such release or contamination that could not
reasonably be expected to result, in the aggregate, in liabilities exceeding ten
thousand dollars ($10,000) in the aggregate, (e) Seller (i) is not or has not
been engaged in, or has permitted any current or former tenant to engage in,
operations, or (ii) does not know of any facts, circumstances or conditions,
including receipt of any information request or notice of potential
responsibility under any Environmental Laws, that, in the aggregate, would have
a reasonable likelihood of resulting in liabilities exceeding ten thousand
dollars ($10,000) in the aggregate and (f) Seller has made available to Buyer
copies of all existing environmental reports, reviews and audits and all
documents pertaining to actual or potential environmental liabilities, in each
case to the extent such reports, reviews, audits and documents are in their
possession, custody or control.

6.1.27

Transfer Filings.  Each Purchased Receivable been validly sold or contributed to
Buyer free and clear of all Liens and rights of others; all filings (including
filings under the UCC) necessary in the United States to give Buyer an ownership
interest in such Purchased Receivables have been duly executed and delivered to
Buyer; all such filings indicate that they are being made in order to perfect
absolute assignments (rather than pledges) of the Purchased Receivables; and all
fees in connection with such filings have been paid.

6.1.28

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Eligible Receivables; Eligible Contractor.  Each Purchased Receivable sold by
Seller hereunder shall at the time of such sale meet in all respects all
requirements to constitute an “Eligible Receivable” within the definition of
such term set forth herein. Without limiting the foregoing, Seller meets or
shall at the time of such sale of any Purchased Receivables shall meet in all
respects the requirements to constitute an “Eligible Contractor” within the
definition of such term set forth herein.

6.1.29

Origination of Purchased Receivables.  All Purchased Receivables purchased or to
be purchased by Buyer (a) were originated or shall at the time of such purchase
have been originated in the regular course of business of Seller in accordance
with applicable laws and (b) were or will be purchased Buyer from Seller and no
adverse selection procedures have been or will have been utilized in selecting
such Purchased Receivables from all other similar Receivables owned by Seller.

SECTION 8

COVENANTS

7.1

Affirmative Covenants.  From the date hereof until the termination of this
Agreement:

7.1.1

Compliance with Laws, Etc.  Seller will comply in all material respects with all
applicable laws, including those with respect to the Receivables, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect, and Seller shall provide Buyer with a Compliance Certificate, in a form
substantially similar to that as shown in Exhibit B, (i) on a quarterly basis to
be received by Buyer not later than the fifth calendar day following each
calendar quarter, and (ii) on a more frequent or other basis if and as requested
by Buyer.

7.1.2

Preservation of Corporate Existence.  Seller will preserve and maintain its
corporate or limited liability existence, rights, franchises and privileges in
the jurisdiction of its formation, and qualify and remain qualified in good
standing as a foreign corporation or organization in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises, privileges
and qualification could reasonably be expected to have a Material Adverse
Effect.

7.1.3

Audits.  (A) Seller will at any time and from time to time during regular
business hours, permit Buyer, Lender or any of their agents or representatives,
(i) to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in its
possession or under its control relating to Purchased Receivables, (ii) to visit
its offices and properties for the purpose of examining such materials described
in clause (A)(i) above, and with the permission of Seller’s senior management,
which permission shall not be unreasonably withheld, to discuss matters relating
to Purchased Receivables or its performance hereunder with any of its officers
or employees having knowledge of such matters, and (iii) to verify the existence
and amount of the Purchased Receivables; and (B) without limiting the provisions
of clause (A) above, from time to time on request of Buyer, permit certified
public accountants or other auditors acceptable to Buyer to conduct, at Seller’s
expense, a review of its books and records with respect to the Purchased
Receivables; provided that unless this Agreement

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is terminated early, Seller shall not be responsible for the cost of more than
three (3) such audits during the twelve (12) month period beginning on the date
of the initial purchase of Purchased Receivables, or one such audit in any
calendar year thereafter.

7.1.4

Keeping of Records and Books of Account.  Seller will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Purchased Receivables in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Purchased Receivables (including, without limitation, records
adequate to permit the daily identification of each new Purchased Receivable and
all Collections of and adjustments to each existing Purchased Receivable).
Further, Seller shall indicate in its consolidated financial statements and
computer records that the Purchased Receivables have been absolutely
transferred, conveyed, sold and assigned to Buyer or its designee, and Seller
will not otherwise claim in its records ownership of any of the Purchased
Receivables or the proceeds thereof. Seller shall not take any action that is
inconsistent with Buyer’s ownership of the Purchased Receivables. Without
limiting the foregoing, Seller shall treat the sale of the any Purchased
Receivables as a sale for federal, state and local income tax purposes.

7.1.5

Financial Statements; Reports. Seller shall furnish or cause to be furnished to
Buyer, at the time Seller files its Form 10-K with the Securities and Exchange
Commission, the audited balance sheet of Seller (or, if audited financial
statements are not available, unaudited balance sheet and unaudited combined
statements of income, stockholder or member equity and cash flows of Seller
together with a certificate of an officer of Seller, to the effect that such
financial statements present fairly in all material respects the financial
positions of Seller as at the end of the fiscal year and the results of
operations for the fiscal year then ended in conformity with GAAP)  as at the
end of, and the related audited combined statements of income, stockholder or
member equity and cash flows for, such fiscal year, together with a certificate
signed by an officer of Seller, to the effect that such financial statements,
present fairly in all material respects the consolidated financial condition and
results of operation of Seller as of the dates and for the periods indicated in
accordance with GAAP applied on a basis consistent with that of the preceding
year or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such year; and (ii) at the time Seller files its Form 10-Q
with the Securities and Exchange Commission after the end of each of the first
three (3) fiscal quarters of each fiscal year of Seller, commencing with the
fiscal quarter ending March 31, 2016, the unaudited consolidated balance sheets
of Seller and the related unaudited consolidated statements of income,
stockholder or member equity and cash flows of Seller for, such fiscal quarter,
and for the portion of the fiscal year through the end of such fiscal quarter,
together with a certificate signed by an officer of Seller, to the effect that
such financial statements present fairly in all material respects the financial
positions of Seller as at the end of the fiscal quarter and the results of
operations for the fiscal quarter then ended in conformity with GAAP, subject to
normal year-end audit adjustments and the absence of footnotes. Seller shall
furnish or cause to be furnished to Buyer a copy of the Federal payroll tax form
941 submitted to the Internal Revenue Service within forty-five (45) days after
the end of each calendar quarter.

7.1.6

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Due Diligence.  Seller agrees to satisfy or cause to be satisfied any and all
due diligence or confirmation requests of Buyer related to this Agreement, as
deemed necessary in Buyer’s  sole discretion.

7.1.7

Deemed Collections; Repurchase.  If it is determined that Seller is obligated to
Buyer or its designee any amounts with respect to any Deemed Collections or
repurchase amounts arising pursuant to Section 4.2 hereunder, Seller will,
within two (2) Business Days of such determination, pay such amounts to the
Segregated Account. Seller shall also pay promptly to the Segregated Account
upon demand any reasonable out-of-pocket expenses incurred by Buyer or Lender in
connection with any such Deemed Collection or repurchase, including reasonable
fees and disbursements of counsel. All payments under this Section 8.1.7 shall
be paid by Seller in immediately available funds directly to the Segregated
Account, without any withholding, deduction, set-off or counterclaim.

7.1.8

Notices.  Seller will give written notice to Buyer  promptly, but in any event
within three (3) Business Days, upon becoming aware of the occurrence of (i) any
Event of Default or pending or anticipated Event of Default; (ii) the submission
of any claim or the initiation or threat of any legal process or Proceeding, or
rule making or disciplinary proceeding by or against Seller, or the promulgation
of any proceeding or any proposed or final rule which could reasonably be
expected to have a Material Adverse Effect; (iii) any damage to or loss,
elimination or destruction of any portion of the Purchased Receivables or (iv)
the receipt of notice that (a) any license, permit, charter, registration or
approval necessary for the conduct of Seller’s business is to be, or may be,
suspended or revoked or (b) Seller is to cease and desist any practice,
procedure or policy employed by Seller in the conduct of its business, and such
suspension, revocation or cessation may reasonably be expected to have a
Material Adverse Effect.

7.1.9

Maintenance of Insurance.  (A) Seller shall (i) maintain or cause to be
maintained in full force and effect all policies of insurance of any kind with
respect to Seller’s property and business (including policies of life (including
“key man” coverage, as applicable), fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity, workers’
compensation, business interruption and employee health and welfare insurance)
with financially sound and reputable insurance companies or associations (in
each case that are not affiliates of Seller) of a nature and providing such
coverage as is sufficient and as is customarily carried by businesses of the
size and character of Seller’s business and in any event in form and substance
reasonably acceptable to Buyer and (ii) cause all such insurance relating to any
property or business Seller to name Buyer, as additional insured or loss payee,
as appropriate and shall use its commercially reasonable efforts to provide that
no cancellation, material addition in amount or material change in coverage
shall be effective until after thirty (30) days (or ten (10) days in the case of
a payment default) notice thereof to Buyer. Buyer shall be entitled, upon
reasonable advance notice, to review Seller’s insurance policies carried and
maintained with respect to the Grantors’ obligations under this Section 8.1.9.
 Upon request, Seller shall furnish Buyer with copies of all insurance policies,
binders, and cover notes or other evidence of such insurance.  Notwithstanding
anything to the contrary herein, no provision of this Section 8.1.9 or any
provision of this Agreement shall impose on Buyer any duty or obligation to
verify the existence or adequacy of the insurance coverage maintained by Seller,
nor shall Buyer be responsible for any representations or warranties made by or
on behalf of Seller to any insurance broker, company or

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underwriter. Buyer, at its sole option, may obtain such insurance if not
provided by Seller and in such event, Seller shall reimburse Buyer upon demand
for the cost thereof together with interest.  Seller shall also carry and
maintain, should Seller’s risk profile change during the term of this Agreement,
any other insurance that Buyer may reasonably require from time to time.  

7.1.10

Location of Records.  Seller will keep its principal place of business and chief
executive office, and the offices where it keeps its records concerning the
Purchased Receivables, at its address set forth on the first page of this
Agreement or, upon thirty (30) days’ prior written notice to Buyer, at such
other locations acceptable to Buyer.

7.1.11

Further Assurances.  Seller, upon the reasonable request of Buyer, shall duly
execute and deliver, or cause to be duly executed and delivered, at the cost and
expense of Seller, such further agreements, documents and instruments, and do
such other acts and things, as may be necessary or reasonably requested by Buyer
to carry out the provisions and purposes of this Agreement.

7.1.12

Maintenance of Licenses.  Seller shall maintain all licenses, permits, charters
and registrations the loss or suspension of which could reasonably be expected
to have a Material Adverse Effect.

7.2

Negative Covenants.  From the date hereof until the termination of this
Agreement without Buyer’s prior written consent:

7.2.1

Sales, Liens, Etc.  Seller will not, except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Lien upon or with respect to, any Purchased Receivable or
any interest therein.  

7.2.2

Extension or Amendment of Receivables.  Seller will not extend, amend or
otherwise modify, or permit any Person to extend, amend or otherwise modify, the
terms of any Purchased Receivable.

7.2.3

Change in Business or Credit and Collection Policy.  Seller will not make any
change in the character of its business, which change could impair the
collectability of any Purchased Receivable or otherwise adversely affect the
interests or remedies of Buyer under this Agreement or result in a Material
Adverse Effect.

7.2.4

Termination.  Seller will not terminate, or take or permit any action that would
cause the termination of this Agreement other than in accordance with the terms
herein.

7.2.5

Consolidation; Merger.  Seller will not, without the consent of Buyer, which
consent shall not be unreasonably withheld, consolidate or merge with or into
any other Person or convey, transfer or dispose of its properties and assets in
one or more transactions substantially as an entirety to any Person, or wind up,
liquidate or dissolve its affairs, in each case if such actions would have any
adverse or potentially adverse effect on the validity or effectiveness of this
Agreement or the Purchased Receivables.

7.2.6

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Impair Effectiveness.  Seller will not permit the validity or effectiveness of
this Agreement to be impaired, or permit any Person (other than Buyer) to be
released from any covenants or obligations with respect to this Agreement,
except as may be expressly permitted hereby.

7.2.7

Prohibited Transactions. Seller will not engage in a “prohibited transaction”,
as defined in Section 406 of ERISA or Section 4975 of the Code, with respect to
any Plan or knowingly consent to any other “party in interest” or any
“disqualified person”, as such terms are defined in Section 3(14) of ERISA and
Section 4975(e)(2) of the Code, respectively, engaging in any “prohibited
transaction”, with respect to any Plan; or permit any Plan to incur any
“accumulated funding deficiency”, as defined in Section 302 of ERISA or
Section 412 of the Code, unless such incurrence shall have been waived in
advance by the Internal Revenue Service; or terminate any Plan in a manner which
could result in the imposition of a Lien on any property of Seller pursuant to
Section 4068 of ERISA; or breach or knowingly permit any employee or officer or
any trustee or administrator of any Plan to breach any fiduciary responsibility
imposed under Title I of ERISA with respect to any Plan; engage in any
transaction which would result in the incurrence of a liability under Section
4069 of ERISA; or fail to make contributions to a Plan which could result in the
imposition of a Lien on any property of Seller pursuant to Section 302(f) of
ERISA or Section 412(n) of the Code, if the occurrence of any of the foregoing
events (alone or in the aggregate) would result in a liability which would be
reasonably likely to result in a Material Adverse Effect.

7.2.8

Instructions to Account Debtors.  Seller will not provide any instructions to
Account Debtors contrary to the requirement that Collections be deposited
directly into the Segregated Account.

7.2.9

Waiver of Stay or Execution of Laws.  Seller covenants (to the extent it may
lawfully do so) that it shall not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
execution law, including filing a voluntary petition under Chapter 11 of the
Bankruptcy Code, wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of or the exercise of any remedies
under this Agreement. Seller (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
Buyer, but shall suffer and permit the execution of every such power as though
no such law had been enacted.

SECTION 9

DEFAULT

8.1

Events of Default.  The occurrence of any one or more of the following shall
constitute an “Event of Default” hereunder:

8.1.1

Seller fails to pay any amount owed to Buyer or its designee as and when due
under this Agreement or otherwise;

8.1.2

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There shall be commenced by or against Seller any voluntary or involuntary case
under the Bankruptcy Code, any assignment for the benefit of creditors or
appointment of a receiver or custodian for any of its assets;

8.1.3

[Reserved]  

8.1.4

Any voluntary Lien, garnishment, attachment or the like is issued against or
attaches to the Receivables;

8.1.5

Seller shall breach any condition, warranty, representation or covenant set
forth herein other than as set forth in Section 9.1.1, unless the same is cured
to Buyer’s satisfaction within five (5) days after Buyer has given Seller oral
or written notice thereof; provided, that if such breach is incapable of being
cured within such five (5)-day cure period, it shall constitute an immediate
default hereunder;

8.1.6

Subject to the provisions set forth in Section 9.1.5 above, Seller is not in
compliance with, or otherwise is in default under, any term of any document,
instrument or agreement evidencing a debt, obligation or liability of any kind
or character of Seller, now or hereafter existing, in favor of Buyer or any
division or affiliate of Buyer, regardless of whether such debt, obligation or
liability is direct or indirect, primary or secondary, joint, several or joint
and several or fixed or contingent, together with any and all renewals and
extensions of such debts, obligations and liabilities, or any part thereof; or

8.1.7

 This Agreement or any material provision herein shall terminate in whole
(except in accordance with the terms hereof), or shall cease to be effective or
to be the legally valid, binding and enforceable obligation of Buyer or Seller.

8.2

Remedies upon Default.  Upon the occurrence of an Event of Default, (i) without
implying any obligation to buy Receivables, Buyer may cease buying Receivables
or extending any financial accommodations to Seller, (ii) all or a portion of
the Seller Obligations shall be, at the option of and upon demand by Buyer, or
with respect to an Event of Default described in Section 9.1.2 hereof,
automatically and without notice or demand, due and payable in full, and (iii)
Buyer shall have and may exercise all the rights and remedies under this
Agreement and under applicable law, including the rights and remedies of a
secured party under the UCC, all the power of attorney rights described in
Section 5.1 hereof with respect to the Purchased Receivables and the right to
collect, dispose of, sell, lease, use and realize upon such Purchased
Receivables in any commercially reasonable manner. Seller and Buyer agree that
any notice of sale required to be given to Seller shall be deemed to be
reasonable if given five (5) days prior to the date on or after which the sale
may be held.

SECTION 10

MISCELLANEOUS

9.1

Accrual of Interest.  If any amount owed by Seller hereunder is not paid when
due, including, without limitation, any Deemed Collections or repurchases due
under Section 4.2 hereof or amounts due under Section 10.2 hereof, such amounts
shall bear interest at a per annum rate

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equal to the PAF Rate until the earlier of (i) payment in immediately available
funds or (ii) entry of a final judgment thereof, at which time the principal
amount of any money judgment remaining unsatisfied shall accrue interest at the
highest rate allowed by applicable law.

9.2

Fees, Costs and Expenses.  Seller will pay to Buyer immediately on demand all
fees, costs and expenses (including attorneys’ and professional fees and their
costs and expenses) that Buyer or its designee incurs or may impose in
connection with any of the following: (i) preparing, negotiating, administering
and enforcing this Agreement or any other agreement executed in connection with
this Agreement, including any amendments, waivers or consents, (ii) any
litigation or dispute (whether instituted by Buyer, Seller or any other Person)
about the Purchased Receivables, this Agreement or any other agreement executed
in connection with this Agreement, (iii) enforcing any rights against Seller,
any guarantor or any Account Debtor, (iv) protecting or enforcing its interest
in the Purchased Receivables, (v) collecting the Purchased Receivables and the
Obligations and (vi) the representation of Buyer or its designee in connection
with any bankruptcy case or insolvency proceeding involving Seller, any
Purchased Receivable, any Account Debtor or any guarantor.

9.3

Indemnification.  

9.3.1

   Seller agrees to pay, indemnify and hold each of Buyer, its designees and
their respective directors, officers, employees and agents and, with respect to
subclause (iv) below, RCA and Lender harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including
reasonable attorney’s fees) arising out of, relating to or resulting from any of
the following (collectively, the “Buyer Indemnified Liabilities”): (i) the
failure of any representation or warranty or statement made or deemed made by
Seller under or in connection with this Agreement or in any certificate or
report delivered pursuant hereto, including, without limitation, any Receivables
Invoice, to be true and correct in any material respect when made or deemed
made; (ii) the failure by Seller to perform its Seller Obligations under this
Agreement, (iii) the failure by Seller to comply with any Applicable Law, rule
or regulation of any governmental authority with respect to the sale, transfer,
delivery and assignment of any Purchased Receivables or (iv) the transfer of (A)
any collections deposited into the Segregated Account relating to Unpurchased
Receivables, (B) any portion of the Initial Purchase Price or Residual Purchase
Price, or (C) any reimbursements or other funds arising under this Agreement to
a Person other than Seller pursuant to instructions provided to Buyer by Seller.

9.3.2

Without limiting or being limited by the foregoing, Seller agrees to pay, on
demand, to each of Buyer, its directors, officers, employees and agents and, as
applicable, RCA and Lender any and all amounts necessary to indemnify Buyer, its
directors, officers, employees and agents and, as applicable, RCA and Lender
from and against any and all Buyer Indemnified Liabilities relating to or
resulting from any Proceeding related to any of the matters referred to in
Section 10.3.1 hereof or any investigation, litigation or proceeding with
respect to any action, or failure to act, by Seller under this Agreement.

9.3.3

  Notwithstanding anything in this Section 10.3 to the contrary, Seller shall
have no obligation to indemnify any of the Buyer, its directors, officers,
employees and agents

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and, as applicable, RCA and Lender under this Section 10.3 in respect of Buyer
Indemnified Liabilities to the extent resulting from (i) the gross negligence or
willful misconduct on the part of Buyer, its directors, officers, employees and
agents and, as applicable, RCA and Lender  as determined by the final judgment
of a court of competent jurisdiction no longer subject to appeal or (ii)
litigation between Buyer and its directors, officers, employees and agents not
involving an actual or alleged act or omission of Seller or any of Seller’s
affiliates.

9.4

Severability, Waiver and Amendment.  In the event that any provision of this
Agreement is deemed invalid by reason of law, this Agreement will be construed
as not containing such provision and the remainder of the Agreement shall remain
in full force and effect. Buyer retains all of its rights, even if it makes
payment of Initial Purchase Price after a default. If Buyer waives a default, it
may enforce a later default. Any consent or waiver under, or amendment of, this
Agreement must be in writing. Nothing contained herein, or any action taken or
not taken by Buyer at any time, shall be construed at any time to be indicative
of any obligation or willingness on the part of Buyer to amend this Agreement or
to grant to Seller any waivers or consents.

9.5

Choice of Law.  This Agreement is governed by and interpreted in accordance with
the laws of the Commonwealth of Virginia, excluding principles of conflict of
laws.  

9.6

Waiver of Jury Trial.  Each of the parties hereto hereby irrevocably waives all
right to a trial by jury in any Proceeding or counterclaim arising out of or
relating to this Agreement or any agreement or any instrument or document
delivered thereunder.

9.7

Notices.  All notices shall be given to Buyer and Seller at the address set
forth on the first page of this Agreement, or the facsimile number or email
address as the parties may exchange from time to time, and shall be deemed to
have been delivered and received (i) if mailed, three (3) calendar days after
deposited in the U.S. mail, first class, postage pre-paid, (ii) one (1) calendar
day after deposit with an overnight mail or messenger service, or (iii) on the
same date of confirmed transmission if sent by hand delivery, facsimile or
email.

9.8

Arbitration.  At the request at any time of either party, any controversies
concerning this Agreement will be settled by arbitration in accordance with the
U.S. Arbitration Act, and under the Commercial Arbitration Rules and
Administration of the American Arbitration Association.

9.9

Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of Seller and Buyer and their respective successors (whether by merger,
consolidation or otherwise) and assigns. The provisions of this Agreement are
for the benefit of Seller and Buyer and such respective successors and assigns,
and nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Purchased Receivables or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein, except as provided in the last
sentence of this Section 10.9.  Seller may not assign, transfer or dispose of
all or any portion of its rights or obligations hereunder without the prior
written consent of Buyer, and any such assignment without the prior written
consent of Buyer shall be null and void. Seller hereby consents to the grant by
Buyer to RCA of all Buyer’s right, title and interest in and to the Purchased
Receivables, including the collateral assignment of any interest of Buyer in and
to this Agreement.  Seller understands that Buyer or

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RCA may grant a security interest in all its right, title and interest in the
Purchased Receivables (including the right to all revenues and proceeds of the
Purchased Receivables), and its rights under this Agreement, to secure future
debt obligations. Seller hereby consents to the grant of such security interest
and, in connection therewith, (a) agrees that any such future lender shall be a
third party beneficiary of this Agreement, (b) agrees that such lender may have
the right to exercise Buyer’s rights and remedies hereunder, (c) agrees that
such lender may have the right to foreclose on its security interest in Buyer’s
rights under this Agreement and to exercise Buyer’s rights and remedies
hereunder, and (d) acknowledges and agrees that it will upon the reasonable
request of Buyer agree with such lender that neither this Agreement nor any of
the terms hereof may be amended, supplemented, modified or waived without the
written consent of such lender.  Seller and Buyer hereby consent to the grant by
RCA to Lender of all RCA’s right, title and interest in and to the Purchased
Receivables, including the collateral assignment of any interest of RCA in and
to this Agreement.

9.10

Term and Termination.  The term of this Agreement shall be for the Availability
Period, and from year to year thereafter unless terminated in writing by Buyer
or Seller. Seller and Buyer shall each have the right to terminate this
Agreement at any time. Notwithstanding the foregoing, any termination of this
Agreement shall not affect Buyer’s security interest, if any, in and ownership
of the Purchased Receivables, and this Agreement shall continue to be effective,
and Buyer’s rights and remedies hereunder shall survive such termination, until
all transactions entered into and Obligations incurred hereunder or in
connection herewith have been completed and satisfied in full.

9.11

Survival of Agreement.  All covenants, agreements, representations and
warranties made by Seller herein and/or in the exhibits, schedules, certificates
or other instruments prepared or delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by Buyer, shall
survive the sale of any Purchased Receivables to Buyer, regardless of any
investigation made by Buyer or any party providing financing to Buyer or on
their behalf, and shall continue in full force and effect so long as this
Agreement has not been terminated.

9.12

Titles and Section Headings.  The titles and section headings used herein are
for convenience only and shall not be used in interpreting this Agreement.

9.13

Other Agreements.  The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of Buyer
under any other document, instrument or agreement. The terms of such other
documents, instruments and agreements shall remain in full force and effect
notwithstanding the execution of this Agreement. In the event of a conflict
between any provision of this Agreement and any provision of any other document,
instrument or agreement between Seller on the one hand, and Buyer or any other
division or affiliate of Buyer on the other hand, Buyer shall determine, in its
sole discretion, which provision shall apply. Seller acknowledges specifically
that any Liens and/or security interests currently securing payment of any
obligations of Seller owing to Buyer or any other division or affiliate of Buyer
also secure Seller’s obligations under this Agreement, and are valid and
subsisting and are not adversely affected by execution of this Agreement. Seller
further acknowledges that (i) any collateral under other outstanding security
agreements or other documents between Seller and Buyer or any other division or
affiliate of Buyer secures the obligations of Seller under this

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Agreement and (ii) a default by Seller under this Agreement constitutes a
default under other outstanding agreements between Seller and Buyer or any other
division or affiliate of Buyer.

9.14

Counterparts.  This Agreement may be executed by the parties hereto individually
or in any combination, in one or more counterparts, each of which shall be an
original and all of which together constitute one and the same agreement.

9.15

Confidentiality.  Seller and Buyer each agrees to maintain the confidentiality
of this Agreement in communications with third parties and otherwise; provided,
that this Agreement may be disclosed (i) to third parties to the extent such
disclosure is made pursuant to a written agreement of confidentiality in form
and substance reasonably satisfactory to Buyer, (ii) to the legal counsel and
auditors of Buyer and Seller if they agree to hold it confidential, (iii) to the
extent required by applicable law or regulation or by any court, regulatory body
or agency having jurisdiction over such party and (iv) to the extent required
under applicable securities laws, including the rules and regulations of the
Securities and Exchange Commission (which may require that the Company disclose
the execution of this Agreement on a Current Report on Form 8-K and that this
Agreement be filed as an exhibit to a public filing of the Seller); and
provided, further, that such party shall have no obligation of confidentiality
in respect of any information which may be generally available to the public or
becomes available to the public through no fault of such party.

9.16

Acknowledgments. Seller hereby acknowledges that (i) it has been advised by
counsel in the negotiation, execution and delivery of this Agreement, (ii) no
joint venture is created hereby or otherwise exists by virtue of the
transactions contemplated hereby between Buyer and Seller and (iii) that nothing
in this Agreement or otherwise will be deemed to create an advisory, fiduciary
or agency relationship or fiduciary or other implied duty between Buyer and
Seller.

{Signatures appear on the following page.}

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized representatives all as of the day and year first above
written, with the specific intention that this Agreement constitute a document
under seal.

SELLER:

IMPLANT SCIENCES CORPORATION

By: /s/ Roger P. Deschenes

Name: Roger P. Deschenes

Title:  Chief Financial Officer

BUYER:

REPUBLIC CAPITAL ACCESS, LLC

By: /s/ Timothy J. Gilmore

Name: Timothy J. Gilmore

Title: CFO

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SCHEDULE 7.1.7.8

Audits, Investigations and Enforcement Actions

NONE

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EXHIBIT A

RATE SCHEDULE

 Federal Gov Prime Contracts

Federal Gov Subcontracts-

Initial Payment Percentage

90%

85%

 

 

 

Program Access Fee

0.017%

0.017 %

 ("PAF Rate")

 

 

 

Discount Factor Rate

0.35 %

0.53 %

 

 

 

Federal Gov Prime Contracts - The Account Debtor is an agency of the United
States government

Federal Gov Subcontracts - The Account Debtor is a prime contractor to an agency
of the United States government and has been approved by Buyer, and contract
payment terms are 45 days.

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EXHIBIT B

COMPLIANCE CERTIFICATE

Pursuant to section 8.1.1 of that Accounts Receivable Purchase Agreement (“the
Agreement”) between _______________________ and Republic Capital Access, LLC
dated ______________, I, _______________, the ____________________ of
________________________, do hereby certify that _____________________ is in
full compliance with the terms and conditions of the Agreement and that no
Events of Default have occurred.

Certified on this _____ day of ______ 20__:

Signed:

 

Title:

Company: