Exhibit 10.7

 

INTERCOMPANY SUBORDINATION AGREEMENT

THIS INTERCOMPANY SUBORDINATION AGREEMENT (this “Agreement”), dated as of June
30, 2006, is made among the persons signatory hereto as Creditors (each a
“Creditor” and collectively, the “Creditors”), and LEVINE LEICHTMAN CAPITAL
PARTNERS III, L.P., a California limited partnership (together with its
successors and assigns and any other holders of the Securities, the
“Purchaser”).

WHEREAS, BUTLER INTERNATIONAL, INC., a Maryland corporation, (the “Parent”),
BUTLER SERVICES INTERNATIONAL, INC., a Delaware corporation (“BSI”), BUTLER
PUBLISHING, INC., a Delaware corporation (“Butler Publishing”), BUTLER SERVICE
GROUP, INC., a New Jersey corporation (“BSG”), BUTLER TELECOM, INC., a Delaware
corporation (“Butler Telecom”), BUTLER SERVICES, INC., a Delaware corporation
(“Butler Services”), BUTLER UTILITY SERVICE, INC., a Delaware corporation
(“Butler Utility”), AAC CORP., a Delaware corporation (“AAC”), SYLVAN INSURANCE
CO., LTD., a company organized under the laws of Bermuda (“Sylvan”), and DATA
PERFORMANCE, INC., a New Jersey corporation (“DPI” and together with Parent,
BSI, Butler Publishing, BSG, Butler Telecom, Butler Services, Butler Utility,
AAC, and Sylvan are referred to hereinafter each individually as a “Obligor” and
collectively the “Obligors”) and the Purchaser are parties to that certain
Securities Purchase Agreement, dated as of even date herewith (as amended,
modified, renewed, extended, or replaced from time to time, the “Securities
Purchase Agreement”), pursuant to which the Purchaser has agreed to purchase the
Securities from the Parent, BSI, Butler Publishing, BSG, Butler Telecom, Butler
Services and Butler Utility (collectively, the “Companies” and each a
“Company”);

WHEREAS, AAC, Sylvan and DPI (referred to hereinafter each individually as a
“Guarantor” and collectively the “Guarantors”) have entered into that certain
General and Continuing Guaranty, dated as of even date herewith (as amended,
modified, renewed, extended, or replaced from time to time, the “Guaranty”), in
favor of the Purchaser pursuant to which such Guarantors have guaranteed the
obligations of the Companies under the Securities Purchase Agreement;

WHEREAS, the Creditors are affiliates of the Obligors;

WHEREAS, each Creditor has made or may make certain loans or advances from time
to time to one or more Obligors;

WHEREAS, in order to induce the Purchaser to enter into the Securities Purchase
Agreement, each Creditor has agreed to the subordination of such indebtedness of
the Obligors to such Creditor, upon the terms and subject to the conditions set
forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:

 

 

 

 

 

 

 

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SECTION 1.

Definitions; Interpretation.

(a)          Terms Defined in Securities Purchase Agreement. All capitalized
terms used in this Agreement and not otherwise defined herein shall have the
meanings assigned to them in the Securities Purchase Agreement.

(b)          Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:

“Discharge of Senior Debt” means payment and satisfaction in full in cash of any
and all Senior Debt (as defined below) which may be now or hereafter owing to
the Purchaser or any other holder of the Securities by any Obligor.

“Insolvency Event” has the meaning set forth in Section 3.

“Senior Debt” means the Obligations (as defined in the Securities Purchase
Agreement) and other indebtedness and liabilities of the Obligors to the
Purchaser and/or any other holders of any of the Securities under or in
connection with the Securities Purchase Agreement and the other Investment
Documents, including all unpaid principal, all interest accrued thereon
(including all interest that, but for the provisions of the Bankruptcy Code,
would have accrued), all fees due under the Securities Purchase Agreement and
the other Investment Documents (including all fees that, but for the provisions
of the Bankruptcy Code, would have accrued), and all other amounts payable by
the Obligors to the Purchaser and/or any other holders of any of the Securities
thereunder or in connection therewith, whether now existing or hereafter
arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.

“Subordinated Debt” means, with respect to each Creditor, all indebtedness,
liabilities, and other obligations of any Obligor owing to such Creditor,
whether now existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or undetermined,
including all fees and all other amounts payable by any Obligor to such Creditor
under or in connection with any documents or instruments related thereto.

“Subordinated Debt Payment” means any payment or distribution by or on behalf of
the Obligors, directly or indirectly, of assets of the Obligors of any kind or
character, whether in cash, property, or securities for or on account of the
Subordinated Debt, including on account of the purchase, redemption, or other
acquisition of Subordinated Debt, as a result of a collection, sale, or other
disposition of collateral, or by setoff, exchange, or in any other manner.

(c)          Interpretation. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term “including” is not limiting, and the
term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. References to agreements and other contractual
instruments shall be deemed to include all subsequent

 

 

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amendments and other modifications thereto. References to statutes or
regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending, or replacing the statute or regulation
referred to. The captions and headings are for convenience of reference only and
shall not affect the construction of this Agreement.

SECTION 2.     Subordination to Payment of Senior Debt. As to each Creditor, all
payments on account of the Subordinated Debt shall be subject, subordinate, and
junior, in right of payment and exercise of remedies, to the extent and in the
manner set forth herein, to the prior Discharge of Senior Debt.

SECTION 3.     Subordination Upon Any Distribution of Assets of the Obligors. As
to each Creditor, in the event of any payment or distribution of assets of any
Obligor of any kind or character, whether in cash, property, or securities, upon
the dissolution, winding up, or total or partial liquidation or reorganization,
readjustment, arrangement, or similar proceeding relating to any Obligor or its
property, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership, arrangement, or similar proceedings or upon an assignment for the
benefit of creditors, or upon any other marshaling or composition of the assets
and liabilities of any Obligor, or otherwise (such events, collectively, the
“Insolvency Events”): (i) the Discharge of Senior Debt must have occurred before
any Subordinated Debt Payment is made; and (ii) to the extent permitted by
applicable law, any Subordinated Debt Payment to which such Creditor would be
entitled except for the provisions hereof, shall be paid or delivered by the
trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other
liquidating agent making such payment or distribution directly to the Purchaser
for application to the payment of the Senior Debt in accordance with clause (i),
after giving effect to any concurrent payment or distribution or provision
therefor to the Purchaser in respect of such Senior Debt.

 

SECTION 4.

Payments on Subordinated Debt.

(a)          Permitted Payments. So long as no Event of Default would occur or
has occurred and is continuing, each Obligor may make, and each Creditor shall
be entitled to accept and receive, payments on account of the Subordinated Debt
in the ordinary course of business.

(b)          No Payment Upon Senior Debt Defaults. Upon the occurrence of any
Event of Default, and until such Event of Default is cured or waived in
accordance with the terms of the Securities Purchase Agreement, each Obligor
shall not make, and each Creditor shall not accept or receive, any Subordinated
Debt Payment; provided, however, notwithstanding the foregoing, (i) any Creditor
that is not a Company may pay to a Company, and such Company may accept and
receive, payments on account of any Subordinated Debt owed to such Company so
long as such payments are remitted to a deposit account of a Company that is
subject to a Deposit Account Control Agreement and (ii) any Creditor that is not
a Company or a Guarantor may pay to a Guarantor, and such Guarantor may accept
and receive, payments on a account of any Subordinated Debt owed to such
Guarantor so long as such payments are remitted to a deposit account of a
Company that is subject to a Deposit Account Control Agreement.

SECTION 5.    Subordination of Remedies. Until the Discharge of Senior Debt,
following the occurrence of any Event of Default and until such Event of Default
is cured or waived, each Creditor shall not, without the prior written consent
of the Purchaser:

 

 

 

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(a)          accelerate, make demand, or otherwise make due and payable prior to
the original due date thereof any Subordinated Debt or bring suit or institute
any other actions or proceedings to enforce its rights or interests in respect
of the obligations of any Obligor owing to such Creditor;

(b)          exercise any rights under or with respect to guaranties of the
Subordinated Debt, if any;

(c)          exercise any rights to set-offs and counterclaims in respect of any
indebtedness, liabilities, or obligations of any Obligor to such Creditor
against any of the Subordinated Debt; or

(d)          commence, or cause to be commenced, or join with any creditor other
than the Purchaser in commencing, any bankruptcy, insolvency, or receivership
proceeding against any Obligor.

SECTION 6.     Payment Over to the Purchaser. In the event that, notwithstanding
the provisions of Section 3, Section 4, and Section 5, any Subordinated Debt
Payments shall be received in contravention of Section 3, Section 4, or Section
5 by any Creditor before the Discharge of Senior Debt has occurred, such
Subordinated Debt Payments shall be held in trust for the benefit of the
Purchaser and shall be paid over or delivered to the Purchaser for application
to the payment, in full, in cash or cash equivalents of all Senior Debt
remaining unpaid to the extent necessary to give effect to Section 3, Section 4,
and Section 5, after giving effect to any concurrent payments or distributions
to the Purchaser in respect of the Senior Debt.

 

SECTION 7.

Insolvency.

(a)          Authorization to the Purchaser. If, while any Subordinated Debt is
outstanding, any Insolvency Event shall occur and be continuing with respect to
any Obligor or its property: (i) the Purchaser hereby is irrevocably authorized
and empowered (in the name of each Creditor or otherwise), but shall have no
obligation, to demand, sue for, collect, and receive every payment or
distribution in respect of the Subordinated Debt and give acquittance therefor
and to file claims and proofs of claim and take such other action (including
voting the Subordinated Debt) as it may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of the Purchaser; and
(ii) each Creditor shall promptly take such action as the Purchaser reasonably
may request (A) to collect the Subordinated Debt for the account of the
Purchaser and to file appropriate claims or proofs of claim in respect of the
Subordinated Debt, (B) to execute and deliver to the Purchaser such powers of
attorney, assignments, and other instruments as it may request to enable it to
enforce any and all claims with respect to the Subordinated Debt, and (C) to
collect and receive any and all Subordinated Debt Payments.

 

(b)

Rights in Insolvency Events.

(i)           Each of the Creditors hereby authorizes and empowers the
Purchaser, in any Insolvency Event to file a proof of claim on behalf of such
Creditor with respect to the Subordinated Debt (A) if such Creditor fails to
file such proof of claim prior to thirty (30) days before the expiration of the
time period during which such claims must be submitted, or (B) if the Purchaser
believes that any statements or assertions in a proof of claim

 

 

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filed by such Creditor are not consistent with the terms and conditions hereof;
provided, however, that any failure of the Purchaser to file such proof of claim
shall not be deemed to be a waiver by the Purchaser of any of the rights and
benefits granted herein by such Creditor. Each Creditor shall provide the
Purchaser with a copy of any proof of claim filed by such Creditor in any
Insolvency Event.

(ii)          Each Creditor hereby irrevocably grants the Purchaser the sole and
exclusive authority and power in any Insolvency Event, unless and until this
Subordination Agreement is terminated in accordance with its terms: (A) to
accept and receive any payment or distribution which may be payable or
deliverable at any time upon or in respect of the Subordinated Debt; and (B) to
take such other action as may be necessary or advisable to effectuate the
foregoing. Each Creditor shall provide to the Purchaser all information and
documents necessary to present claims or seek enforcement as described in the
immediately preceding sentence.

(iii)        Each of the Creditors hereby agrees that, while it shall retain the
right to vote its claims and, except as otherwise provided in this Agreement,
otherwise act in any Insolvency Event relative to any Obligor (including,
without limitation, the right to vote to accept or reject any plan of partial or
complete liquidation, reorganization, arrangement, composition, or extension),
such Creditor shall not: (A) take any action or vote in any way so as to
directly or indirectly challenge or contest (1) the validity or the
enforceability of the Securities Purchase Agreement, the other Investment
Documents, or the liens and security interests granted to the Purchaser with
respect to the Senior Debt, (2) the rights and duties of the Purchaser
established in the Securities Purchase Agreement or any other Investment
Documents, or (3) the validity or enforceability of this Agreement; (B) seek, or
acquiesce in any request, to dismiss any Insolvency Event or to convert an
Insolvency Event under chapter 11 of the Bankruptcy Code to a case under chapter
7 of the Bankruptcy Code; (C) seek, or acquiesce in any request for, the
appointment of a trustee or examiner with expanded powers for any Obligor; (D)
propose, vote in favor of or otherwise approve a plan of reorganization,
arrangement or liquidation, or file any motion or pleading in support of any
plan of reorganization, arrangement or liquidation, unless it provides for the
Discharge of Senior Debt or unless the Purchaser has approved of the treatment
of its claims with respect to the Senior Debt under such plan; (E) object to the
treatment under a plan of reorganization or arrangement of the Purchaser’s
claims with respect to the Senior Debt; (F) seek relief from the automatic stay
of Section 362 of the Bankruptcy Code or any other stay in any Insolvency Event
in respect of any portion of the Collateral; or (G) directly or indirectly
oppose any relief requested or supported by the Purchaser including any sale or
other disposition of property free and clear of the liens and security interests
of any Creditor under Section 363(f) of Title 11 of the United States Code or
any other similar provision of applicable law.

 

SECTION 8.

Certain Agreements of Each Creditor.

(a)          No Benefits. Each Creditor understands that there may be various
agreements between the Purchaser and the Obligors evidencing and governing the
Senior Debt, and each Creditor acknowledges and agrees that such agreements are
not intended to confer any benefits on such Creditor and that the Purchaser
shall have no obligation to such Creditor or any other Person to exercise any
rights, enforce any remedies, or take any actions which may be available to them
under such agreements.

 

 

 

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(b)          No Interference. Each Creditor acknowledges that each Obligor has
granted to the Purchaser security interests in all of such Obligor’s assets, and
agrees not to interfere with or in any manner oppose a disposition of any
Collateral by the Purchaser in accordance with applicable law.

(c)          Reliance by the Purchaser. Each Creditor acknowledges and agrees
that the Purchaser has and will have relied upon and will continue to rely upon
the subordination provisions provided for herein and the other provisions hereof
in entering into the Investment Documents and purchasing the Securities as
contemplated thereunder.

(d)          Waivers. Except as provided under the Securities Purchase
Agreement, each Creditor hereby waives any and all notice of the incurrence of
the Senior Debt or any part thereof and any right to require marshaling of
assets.

(e)          Rights of the Purchaser Not Affected. Each Creditor hereby agrees
that at any time and from time to time, without notice to or the consent of such
Creditor, without incurring responsibility to such Creditor, and without
impairing or releasing the subordination provided for herein or otherwise
impairing the rights of the Purchaser hereunder, (i) the time for any Obligor’s
performance of or compliance with any of its agreements contained in the
Investment Documents may be extended or such performance or compliance may be
waived by the Purchaser (in accordance with the Investment Documents); (ii) the
agreements of any Obligor with respect to the Investment Documents may from time
to time be modified by such Obligor and the Purchaser (in accordance with the
Investment Documents) for the purpose of adding any requirements thereto or
changing in any manner the rights and obligations of such Obligor or the
Purchaser thereunder; (iii) the manner, place, or terms for payment of Senior
Debt or any portion thereof may be altered or the terms for payment extended, or
the Senior Debt may be renewed in whole or in part; (iv) the maturity of the
Senior Debt may be accelerated in accordance with the terms of any present or
future agreement by any Obligor and the Purchaser (in accordance with the
Investment Documents); (v) any Collateral may be sold, exchanged, released, or
substituted and any Lien in favor of the Purchaser may be terminated,
subordinated, or fail to be perfected or become unperfected; (vi) any Person
liable in any manner for Senior Debt may be discharged, released, or
substituted; and (vii) all other rights against the Obligors, any other Person,
or with respect to any Collateral may be exercised (or the Purchaser may waive
or refrain from exercising such rights in accordance with the Investment
Documents).

(f)           Rights of the Purchaser Not to Be Impaired. No right of the
Purchaser to enforce the subordination provided for herein or to exercise its
other rights hereunder shall at any time in any way be prejudiced or impaired by
any act or failure to act by any Creditor, Obligor, or the Purchaser hereunder
or under or in connection with the other Investment Documents or by any
noncompliance by any Creditor or Obligor with the terms and provisions and
covenants herein or in any other Investment Document, regardless of any
knowledge thereof the Purchaser may have or otherwise be charged with.

(g)          Financial Condition of the Obligors. Except as provided under the
Securities Purchase Agreement, no Creditor shall have any right to require the
Purchaser to obtain or disclose any information with respect to: (i) the
financial condition or character of any Obligor or the ability of the Obligors
to pay and perform Senior Debt; (ii) the Senior Debt;

 

 

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(iii) the Collateral or other security for any or all of the Senior Debt;
(iv) the existence or nonexistence of any guarantees of, or any other
subordination agreements with respect to, all or any part of the Senior Debt;
(v) any action or inaction on the part of the Purchaser or any other Person; or
(vi) any other matter, fact, or occurrence whatsoever.

(h)          Acquisition of Liens or Guaranties. No Creditor shall, without the
prior written consent of the Purchaser, acquire any right or interest in or to
any Collateral not owned by such Creditor or accept any guaranties for the
Subordinated Debt.

(i)           Release of Liens. In the event of any private or public sale or
other disposition of all or any portion of the Collateral by or with the consent
of the Purchaser, or as otherwise permitted by the Securities Purchase
Agreement, at any time prior to the date upon which the Discharge of Senior Debt
shall have occurred, each Creditor agrees that such sale or disposition will be
free and clear of the liens and security interests securing the Subordinated
Debt (if any) of such Creditor and, if the sale or other disposition includes
Capital Stock in any Obligor, such Creditor agrees to release the entities whose
Capital Stock is sold from all Subordinated Debt so long as the Purchaser also
releases the entities whose Capital Stock is sold or disposed of from all Senior
Debt. In furtherance thereof, each Creditor agrees that (i) the Purchaser is
authorized to file any and all UCC lien releases and/or terminations of the
liens and security interests held by such Creditor in connection with such a
sale or other disposition, and (ii) it will execute any and all lien and
security interest releases or other documents reasonably requested by the
Purchaser in connection therewith.

(j)           Modifications of Subordinated Debt Documents. Except as otherwise
expressly permitted under the Securities Purchase Agreement or any other
applicable Investment Document, none of the documents, agreements or instruments
governing or related to the Subordinated Debt shall be amended or otherwise
modified without obtaining the prior written consent of the Purchaser, (unless
otherwise permitted under the Securities Purchase Agreement), so as to provide
for (i) any increase in the rate of interest charged thereunder as in effect on
the date hereof, (ii) any increase in the principal amount or any installment
due thereunder, (iii) any reduction of the maturity date of any payment of
principal or interest, (iv) the granting or obtaining of any collateral security
or obtaining any lien on any collateral or (v) any other amendment or
modification which would have a material adverse effect on the operations of any
Obligor which is obligated thereunder, the Purchaser’s security interests in the
Collateral or the claims of the Purchaser.

 

SECTION 9.

Subrogation, etc.

(a)          Subrogation. Each Creditor hereby waives any and all rights that it
may acquire by way of subrogation under this Agreement, by any payment or
distribution to the Purchaser hereunder or otherwise.

(b)          Payments Over to the Creditors. If any payment or distribution to
which any Creditor would otherwise have been entitled but for the provisions of
Section 3, Section 4, or Section 5 shall have been applied pursuant to the
provisions of Section 3, Section 4, or Section 5 to the payment of all amounts
payable under the Senior Debt, such Creditor shall be entitled to receive from
the Purchaser any payments or distributions received by the Purchaser in excess
of

 

 

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the amount sufficient to cause the Discharge of Senior Debt. If any such excess
payment is made to the Purchaser, the Purchaser shall promptly remit such excess
to such Creditor and until so remitted shall hold such excess payment for the
benefit of such Creditor.

 

SECTION 10.

Continuing Agreement; Reinstatement.

(a)          Continuing Agreement. This Agreement is a continuing agreement of
subordination and shall continue in effect and be binding upon each Creditor
until the Discharge of Senior Debt has occurred. The subordinations, agreements,
and priorities set forth herein shall remain in full force and effect regardless
of whether any party hereto in the future seeks to rescind, amend, terminate, or
reform, by litigation or otherwise, its respective agreements with any Obligor.

(b)          Reinstatement. This Agreement shall continue to be effective or
shall be reinstated, as the case may be, if, for any reason, any payment of the
Senior Debt by or on behalf of any Obligor shall be rescinded or must otherwise
be restored by the Purchaser, whether as a result of an Insolvency Event or
otherwise.

SECTION 11.  Transfer of Subordinated Debt. No Creditor may assign or transfer
its rights and obligations in respect of the Subordinated Debt without the prior
written consent of the Purchaser, and any such transferee or assignee, as a
condition to acquiring an interest in the Subordinated Debt shall agree to be
bound hereby, in form satisfactory to the Purchaser.

SECTION 12.  Obligations of the Obligors Not Affected. The provisions of this
Agreement are intended solely for the purpose of defining the relative rights of
each Creditor against the Obligors, on the one hand, and of the Purchaser
against the Obligors, on the other hand. Nothing contained in this Agreement
shall (i) impair, as between any Creditor and any Obligor, the obligation of any
Obligor to pay its obligations with respect to the Subordinated Debt as and when
the same shall become due and payable, or (ii) otherwise affect the relative
rights of any of the creditors (other than the Purchaser) of the Obligors
against any Creditor.

SECTION 13.  Endorsement of Creditor Documents; Further Assurances and
Additional Acts.

(a)          Endorsement of Creditor Documents. At the request of the Purchaser,
all documents and instruments evidencing any of the Subordinated Debt, if any,
shall be endorsed with a legend noting that such documents and instruments are
subject to this Agreement, and each Creditor shall promptly deliver to the
Purchaser evidence of the same.

(b)          Further Assurances and Additional Acts. Each Creditor shall
execute, acknowledge, deliver, file, notarize, and register at its own expense
all such further agreements, instruments, certificates, financing statements,
documents, and assurances, and perform such acts as the Purchaser reasonably
shall deem necessary or appropriate to effectuate the purposes of this
Agreement, and promptly provide the Purchaser with evidence of the foregoing
reasonably satisfactory in form and substance to the Purchaser.

SECTION 14.  Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
facsimile or other

 

 

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similar means of electronic transmission) and shall be mailed, sent, or
delivered in accordance with the notice provisions contained in the Securities
Purchase Agreement.

SECTION 15.  No Waiver; Cumulative Remedies. No failure on the part of the
Purchaser to exercise, and no delay in exercising, any right, remedy, power, or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power, or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power, or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers, and privileges that may
otherwise be available to the Purchaser.

SECTION 16.  Costs and Expenses. Each of the Creditors, jointly and severally,
agrees to pay to the Purchaser on demand the reasonable out-of-pocket costs and
expenses of such Person, and the reasonable fees and disbursements of counsel to
such Person, in connection with the negotiation, preparation, execution,
delivery, and administration of this Agreement, and any amendments,
modifications, or waivers of the terms thereof. Each of the Creditors, jointly
and severally, agrees to pay to the Purchaser, on demand, all costs and expenses
of such Person, and the fees and disbursements of counsel to such Person, in
connection with the enforcement or attempted enforcement of, and preservation of
rights or interests under, this Agreement, including any losses, costs and
expenses sustained by such Person as a result of any failure by any Creditor to
perform or observe its obligations contained in this Agreement.

SECTION 17.  Survival. All covenants, agreements, representations and warranties
made in this Agreement shall, except to the extent otherwise provided herein,
survive the execution and delivery of this Agreement, and shall continue in full
force and effect until the Discharge of Senior Debt has occurred. Without
limiting the generality of the foregoing, the obligations of each Creditor under
Section 16 shall survive the Discharge of Senior Debt.

SECTION 18.  Benefits of Agreement. This Agreement is entered into for the sole
protection and benefit of the parties hereto and their successors and assigns,
and no other Person shall be a direct or indirect beneficiary of, or shall have
any direct or indirect cause of action or -claim in connection with, this
Agreement.

SECTION 19.  Binding Effect. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by each Creditor, the Purchaser and their
respective successors and permitted assigns.

SECTION 20.  GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

SECTION 21.  Consent to Jurisdiction and Venue. THE PARTIES EACH HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENT AND AGREE THAT

 

 

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ALL ACTIONS, SUITS OR OTHER PROCEEDINGS ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS LOCATED IN THE
CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, WHICH COURTS
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY AND ALL CLAIMS,
CONTROVERSIES AND DISPUTES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OTHER INVESTMENT DOCUMENT. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN
THIS SECTION 21 SHALL PRECLUDE THE PURCHASER FROM BRINGING ANY ACTION, SUIT OR
OTHER PROCEEDING IN THE COURTS OF ANY OTHER LOCATION WHERE THE OBLIGORS OR ANY
ONE OF THEM OR ANY OF ITS OR THEIR ASSETS OR THE COLLATERAL MAY BE FOUND OR
LOCATED OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
PURCHASER.

EACH CREDITOR, FOR ITSELF AND ITS PROPERTY, (A) IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION, SUIT OR OTHER PROCEEDING COMMENCED IN ANY SUCH COURT, (B) WAIVES ANY
RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR ANY
OBJECTION THAT SUCH PERSON MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION OR
IMPROPER VENUE AND (C) CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. THE PARTIES EACH HEREBY WAIVE
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT OR OTHER PROCESS ISSUED IN ANY SUCH
ACTION, SUIT OR OTHER PROCEEDING AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH PARTY IN ACCORDANCE WITH SECTION 14 HEREOF AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PERSON’S ACTUAL RECEIPT
THEREOF OR FIVE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE
PREPAID.

TO THE EXTENT PERMITTED UNDER THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
CREDITOR HEREBY WAIVES, IN RESPECT OF ANY SUCH ACTION, SUIT OR OTHER PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS THAT NOW OR HEREAFTER, BY REASON
OF SUCH PERSON’S PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO
IT.

 

SECTION 22.

Entire Agreement; Amendments and Waivers.

(a)          Entire Agreement. This Agreement constitutes the entire agreement
of each of the Creditors and the Purchaser with respect to the matters set forth
herein and supersedes any prior agreements, commitments, draft, communications,
discussions and understandings, oral or written, with respect thereto.

(b)          Amendments and Waivers. No amendment to any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by each of the Creditors and the Purchaser; and no waiver of any
provision of this Agreement, or consent to any departure by any Creditor
therefrom, shall in any event be effective unless the same shall

 

 

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be in writing and signed by the Purchaser. Any such amendment, waiver, or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

SECTION 23.  Conflicts. In case of any conflict or inconsistency between any
terms of this Agreement, on the one hand, and any documents or instruments in
respect of the Subordinated Debt, on the other hand, then the terms of this
Agreement shall control.

SECTION 24.  Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Agreement
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement or the validity or effectiveness of such provision
in any other jurisdiction.

SECTION 25.  Interpretation. This Agreement is the result of negotiations
between, and have been reviewed by the respective counsel to, the Creditors and
the Purchaser and is the product of all parties hereto. Accordingly, this
Agreement shall not be construed against the Purchaser merely because of their
involvement in the preparation hereof. This Agreement is an Investment Document
and is subject to all terms and provisions of the Securities Purchase Agreement
generally applicable to Investment Documents.

SECTION 26.  Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of this Agreement by facsimile or
other similar means of electronic transmission shall be equally effective as
delivery of an original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by facsimile or other
similar means of electronic transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.

SECTION 27.  Termination of Agreement. Upon the Discharge of Senior Debt, this
Agreement shall terminate and the Purchaser shall promptly execute and deliver
to each Creditor such documents and instruments as shall be reasonably necessary
to evidence such termination; provided, however, that the obligations of each
Creditor under Section 16 shall survive such termination.

SECTION 28.  Waiver of Trial by Jury. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM

 

 

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AND OF ARBITRATION, AND UNDERSTANDING THEY ARE WAIVING A CONSTITUTIONAL RIGHT,
EACH OF THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND
UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING BASED UPON,
ARISING OUT OF OR IN ANY WAY RELATING TO (a) THIS AGREEMENT, INCLUDING ANY
PRESENT OR FUTURE AMENDMENT THEREOF, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
OR RELATED TO THIS AGREEMENT, OR (b) ANY CONDUCT, ACT OR OMISSION OF THE PARTIES
OR THEIR AFFILIATES (OR ANY OF THEM) WITH RESPECT TO THIS AGREEMENT, INCLUDING
ANY PRESENT OR FUTURE AMENDMENT THEREOF, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION, SUIT OR OTHER
PROCEEDING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH ACTION, SUIT
OR OTHER PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT
ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF ANY
RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.

SECTION 29.  Judicial Referee. IN THE EVENT THE WAIVER PROVIDED IN SECTION 28 IS
DEEMED INEFFECTIVE, TO GIVE EFFECT TO THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE OR RETIRED JUDGE APPLY THE APPLICABLE LAW, THE PARTIES AGREE
TO REFER, FOR A COMPLETE AND FINAL ADJUDICATION, ANY AND ALL ISSUES OF FACT OR
LAW INVOLVED IN ANY LITIGATION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, ALL
DISCOVERY AND LAW AND MOTION MATTERS, PRETRIAL MOTIONS, TRIAL MATTERS AND
POST-TRIAL MOTIONS (E.G. MOTIONS FOR RECONSIDERATION, NEW TRIAL AND TO TAX
COSTS, ATTORNEY FEES AND PREJUDGMENT INTEREST)) UP TO AND INCLUDING FINAL
JUDGMENT, BROUGHT TO RESOLVE ANY DISPUTE (WHETHER SOUNDING IN CONTRACT, TORT,
UNDER ANY STATUTE OR OTHERWISE) BETWEEN AND AMONG ANY OF THE PARTIES HERETO, TO
A JUDICIAL REFEREE WHO SHALL BE APPOINTED UNDER A GENERAL REFERENCE PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. THE REFEREE’S DECISION WOULD
STAND AS THE DECISION OF THE COURT, WITH JUDGMENT TO BE ENTERED ON HIS/HER
STATEMENT OF DECISION IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE
COURT. THE PARTIES HERETO SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A
RETIRED STATE OR FEDERAL JUDGE WITH AT LEAST FIVE YEARS OF JUDICIAL EXPERIENCE
IN CIVIL MATTERS. IN THE EVENT THAT THE PARTIES HERETO CANNOT AGREE UPON A
REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. WITHOUT LIMITING OR
AFFECTING ANY INDEMNITIES AVAILABLE TO THE PURCHASER, THE PURCHASER, ON THE ONE
HAND, AND THE CREDITORS, ON THE OTHER HAND, SHALL EQUALLY BEAR THE FEES AND
EXPENSES OF THE REFEREE (50% BY THE PURCHASER AND 50% BY THE CREDITORS) UNLESS
THE REFEREE OTHERWISE PROVIDES IN THE STATEMENT OF DECISION.

 

 

 

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[Signature page follows.]

 

 

 

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IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
as of the date first written above.

 

CREDITORS:

BUTLER INTERNATIONAL, INC.,
a Maryland corporation

By:    /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER SERVICES INTERNATIONAL, INC.,
a Delaware corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER PUBLISHING, INC.,
a Delaware corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER SERVICE GROUP, INC.,
a New Jersey corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

 

 

 

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BUTLER OF NEW JERSEY REALTY CORP.,
a New Jersey corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER TELECOM, INC.,
a Delaware corporation

By:    /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER SERVICES, INC.,
a Delaware corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER UTILITY SERVICE, INC.,
a Delaware corporation

By:    /s/ Edward M. Kopko                               

Name:

Title:

 

 

 

 

 

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AAC CORP.,
a Delaware corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

SYLVAN INSURANCE CO., LTD.,
a company organized under the laws of Bermuda

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

BUTLER INTERNATIONAL CHARITABLE FOUNDATION CORP.,
a New Jersey corporation

By:     /s/ Edward M. Kopko                               

Name:

Title:

 

 

DATA PERFORMANCE, INC.,
a New Jersey corporation

By:    /s/ Edward M. Kopko                               

Name:

Title:

 

 

 

 

 

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BUTLER TECHNICAL SERVICES INDIA PRIVATE LIMITED,
a company organized under the laws of India

 

PURCHASER:

LEVINE LEICHTMAN CAPITAL PARTNERS, INC.,
a California corporation

On behalf of LEVINE LEICHTMAN CAPITAL PARTNERS III, L.P.,
a California limited partnership

By:    /s/ Steven Hartman                                      

                Name: Steven Hartman

          Title: Vice President

 

 

 

 

 

 

 

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