Exhibit 10.21

 
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT

THIS ACCOUNTS RECEIVABLE PURCHASE AGREEMENT (this “Agreement”) is made on this
11th day of March, 2009, by and between REPUBLIC CAPITAL ACCESS, LLC, a Delaware
limited liability company having its principal place of business at 1818 Library
Street, Reston, Virginia 20190 (“Buyer”), and Lattice Incorporated, Ricciardi
Technologies, Inc. and Systems Management Engineering, Inc. having its principal
place of business at 2411 Dulles Corner Park, Suite 220, Herndon, VA 20171
(collectively “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; and

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 and any guarantor of such Purchased Receivable.

“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.

“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.

 
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“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 December 31, 2009, subject to the term of the Seller’s government contracts,
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 City of New York are authorized
or obligated by Applicable Law to close.

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

“CBH” shall mean Cherry, Bekaert & Holland, L.L.P., or such other Person that
KBC approves in writing in its sole discretion that performs the obligations of
Cherry, Bekaert & Holland, L.L.P. under the Collateral Review Agreement.

“Collateral Review Agreement” shall mean the Letter of Arrangement dated as of
December 31, 2008 between CBH and the Buyer.

“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.

“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.

 
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“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.

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

“Contractor Review Agreement” shall mean that certain Letter Agreement dated as
of January 9, 2009 between the Underwriter and RCA.

“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 contract with an Account Debtor
pursuant to which it is entitled to receive payments from such Account Debtor,
(d) 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 Government 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) has been reviewed and approved pursuant to the Contractor
Review Agreement at least annually, and (j) satisfies all of the representations
and warranties it makes under this Agreement.

 
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“Eligible Receivable” A bona fide receivable arising from an invoice that has
been sent to and approved for payment 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 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 has been purchased by the Buyer from the Seller in accordance
with this Agreement; (c) 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; (d) that satisfies all of the criteria of any due diligence review
conducted by Buyer, RCA, CBH or the Underwriter; (e) 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; (f) that has been validly assigned to Buyer pursuant to the
Assignment of Claims Act, and all payments with respect thereto have been
validly been directed to be made directly to the Segregated Account; (g) with
respect to which, immediately following the transfer of such Eligible Receivable
to Buyer as contemplated by this Agreement, the Borrower shall have good title
to such Eligible Receivable, free and clear of any Liens; (h) 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 do not require any consent that has not been obtained; (i) 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; (j) as to which the right to
receive payments thereunder is an “account” or a “payment intangible”, within
the meaning of the UCC; (k) 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; (l)
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; (m) which, together with the contracts,
documents, instruments and other items related thereto, do not contravene in any
material respect any Applicable Laws; (n) 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 Borrower 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 (o) which at no point in
time has failed to meet each of the criteria to constitute an Eligible
Receivable set forth in subsections (a) through (m) 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) KBC, in its sole
discretion, is satisfied with the verbal confirmation that KBC has received from
an appropriate government official that any such receivable is proper and will
be submitted for payment.
 
 
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“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.).
 
 
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“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.

“Government 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 are 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 Contract shall not constitute a separate Government Contract, for
purposes of this definition, but shall be part of the Government Contract to
which it relates.

“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.

“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.

“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 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.
 
 
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“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.

“KBC” shall mean KBC Bank, N.V., a banking institution organized under the laws
of the Kingdom of Belgium, acting through its New York Branch.

“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.

 
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“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.
 
“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.

“Program Continuance Fee” shall have the meaning set forth in Section 3.4
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 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 Sale and Contribution
Agreement dated as of January 20, 2009, by and between RCA, as purchaser, and
Buyer, as seller.
 
“Segregated  Account” shall mean that segregated bank account, located at KBC,
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 or under any other document, instrument or
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.

 
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“Solvent” means, with respect any Person, that as of any day, both (a) (i) the
sum of such Person’s debts (including contingent and unliquidated liabilities)
does not exceed the present fair saleable value of such Person’s present assets
(both at fair value and fair saleable value); (ii) such Person’s capital is not
unreasonably small in relation to its business as contemplated on such day; and
(iii) such Person has not incurred and does not intend to incur, and believes
that it will not incur, debts including current obligations beyond its ability
to pay such debts as they become due (whether at maturity or otherwise); and (b)
such Person is  “solvent” within the meaning given that term and similar terms
under Applicable Laws relating to fraudulent transfers and conveyances.  For
purposes of this definition, the amount of any contingent liability at any time
shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5)

“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 State of New York, 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 State of New York,
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.
 
“Underwriter” shall mean Credit Risk Management LLC.

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

“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)).

 
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SECTION 2
PURCHASE AND SALE OF RECEIVABLES

2.1    Delivery of Invoices; Validation of Receivables.  During Availability
Period, and simultaneously with the delivery of the same to any Account Debtor,
Seller shall deliver to Buyer and KBC 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”). 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.

2.2    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; 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. Notwithstanding the foregoing,
Buyer shall have no obligation to purchase all or any portion of Eligible
Receivables set forth in any Offer Notice or to give a 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, and (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.

2.3    Purchase Price of Receivables.

2.3.1 Initial Purchase Price.  As set forth in Section 2.2 hereof, Buyer shall
pay to Seller an amount equal to ninety percent (90%) (the “Initial Purchase
Price Rate”) of the Face Amount of each Eligible Receivable set forth in any
Confirmation List (each, an “Initial Purchase Price”). Throughout the term of
this Agreement, Buyer shall have the right to adjust the Initial Purchase Price
Rate in its sole discretion upon consideration of certain factors as set forth
in Exhibit A attached hereto.

2.3.2 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 oral or 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.

 
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2.4    Effectiveness of the Sale to Buyer.  Effective upon Buyer’s payment of
the Initial Purchase Price, and for and in consideration therefore and in
consideration of the covenants of this Agreement, Seller hereby absolutely
sells, transfer 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.

2.5    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 or KBC to remit, all such collections to Seller within
the three (3) Business Days immediately following such collection. Buyer, in its
sole discretion, may charge a fee to cover any and all administrative costs
related to the collection and remittance of any Unpurchased Receivables.

2.6    True Sales.

2.6.1 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.

2.6.2 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.

 
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SECTION 3
FEES; ACCOUNTING

3.1    Enrollment Fee. Immediately upon the execution of this Agreement, Seller
shall pay to Buyer an amount equal to Twelve Thousand and Five Hundred dollars
($12,500.00) (the “Enrollment Fee”) in consideration of Buyer’s commitment to
purchase Receivables hereunder.

3.2    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) (the
“Termination Fee”) in consideration for such early termination of this
Agreement. The Termination Fee shall be paid to Buyer within twenty (20) days of
such early termination, and may be charged to Seller directly or offset from any
Residual Purchase Price or Unpurchased Receivable payments owed to Seller at or
after the time at which such Termination Fee arises.

3.3    Program Access Fees.  On each Residual Payment Date, Buyer shall, or
shall cause KBC to, deduct from any Collections an amount equal to the sum of
.0226% (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 than
once per calendar quarter. Buyer shall provide Seller with thirty (30) days
prior written notice of any such change.

3.4    Program Continuance Fee.  Throughout the term of this Agreement, as set
forth in Section 10.10 hereof, Seller shall pay to Buyer a quarterly fee equal
to Two Thousand Five Hundred dollars ($2,500.00 ) if the Average Account Balance
for each day is less than One Million Five Hundred Thousand dollars
($1,500,000.00), (the “Program Continuance Fee”); provided, however, that Buyer,
may reduce, in whole or in part, the Program Continuance Fee assessed in a given
calendar quarter based on Buyer’s review of the collectability of the Purchased
Receivables and the amount of Receivables Seller elects to sell to Buyer
hereunder.

 
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3.5    Discount Factor. On each Residual Payment Date, Buyer shall, or shall
cause to, deduct from any Collections an amount equal to .35% (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
changes in the Buyer’s cost of funds or based on Buyer’s collection experience
on all invoices purchased from Seller; provided, however, that the Discount
Factor Rate may only be adjusted as of the first day of each calendar month.
Buyer shall provide Seller with thirty (30) days prior written notice of any
such change.

3.6    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

4.1    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.

4.2    Deemed Collections; Repurchase

4.2.1 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.

 
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4.2.2 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 KBC to the same extent as if
Collections pertaining to such Purchased Receivable had actually been received
on such date.

4.2.3 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.

4.2.4 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

5.1    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, (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.

 
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5.2    Servicing of Purchased Receivables. Subject to Buyer’s ownership of the
Purchased Receivables, KBC 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 and/or KBC to
facilitate the full and proper performance of such duties and obligations for
the benefit of Buyer, RCA and/or KBC. To the extent that Buyer, individually or
through KBC, has granted or grants powers of attorney to RCA or to KBC, Seller
hereby grants a corresponding power of attorney on the same terms to RCA or KBC.
Seller hereby acknowledges and agrees that Buyer, in all of its capacities, may
assign to RCA, which in turn may assign to KBC 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 KBC in the
exercise of such rights.

5.3    Rights of Buyer; Enforcement Rights.

5.3.1 Buyer shall have no obligation to account for, to replace, to substitute
or to return any 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.

5.3.2 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.

5.3.3 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

6.1    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 (with copies to KBC), on or
before the date of such purchase, each in form and substance satisfactory to
Buyer and KBC:

 
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6.1.1 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;

6.1.2 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;

6.1.3 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;

6.1.4 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

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

6.2 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:

6.2.1 In the case of each purchase, Seller shall have delivered to KBC 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 or KBC;

6.2.2 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;

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

6.2.4 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 Assignment of Claims Act, and all
applicable regulations issued pursuant thereto, (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, 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;

6.2.5 Since September 30, 2008, 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;

6.2.6 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;

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

6.2.8 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;

6.2.9 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;

6.2.10 Seller shall have been found to have met any and all requirements of the
Underwriter’s annual review set forth in the Contractor Review Agreement.

6.2.11 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).

6.3    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).

 
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6.4    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.

SECTION 7
REPRESENTATIONS AND WARRANTIES

7.1    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:

7.1.1 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.

7.1.2 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.

7.1.3 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.

7.1.4 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.

 
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7.1.5 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.

7.1.6 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 collectibility 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.

7.1.7 Government Contract Regulatory Matters.

7.1.7.1   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.

7.1.7.2   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.

 
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7.1.7.3   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 (i) liability under the False
Claims Act, (ii) a claim for price adjustment under the Truth in Negotiations
Act or (iii) any other request for a material reduction in the price of any
Government Contracts.

7.1.7.4   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 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.

7.1.7.5   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.

7.1.7.6   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.

 
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7.1.7.7   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.

7.1.7.8   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 the Government 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.

7.1.7.9   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.

7.1.7.10  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.

7.1.7.11  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 (i) a claim for
price adjustment under the Truth in Negotiations Act; or (ii) any other request
for a material reduction in the price of any Government Contract, including but
not limited to claims based on actual or alleged defective pricing.  To Seller’s
best knowledge, there exists no basis for a claim of any liability of Seller by
the Government as a result of defective cost and pricing data submitted to the
Government. 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.

 
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7.1.7.12  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.

7.1.7.13 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.

7.1.7.14  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.

7.1.7.15 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.

7.1.7.16 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, 2008).

7.1.8 Assignment of Claims Act.  Prior to each sale of Purchased Receivables
hereunder, all steps shall have been taken necessary or appropriate under the
Assignment of Claims Act 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 (ii) all
payments and Collections with respect to such Purchased Receivables have been
validly directed to be made directly to the Segregated Account.

 
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7.1.9 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.

7.1.10 Quality of Title; Valid Sale; No Other Liens.

7.1.10.1 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.

7.1.10.2 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.

7.1.10.3 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.

7.1.10.4 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.

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

7.1.11 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 KBC 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.

7.1.12 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.

 
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7.1.13 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.

7.1.14 Solvency.  Seller is Solvent; and at the time of (and immediately after)
each sale pursuant to this Agreement it shall be Solvent.

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

7.1.16 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.

7.1.17 Eligible Receivables.  Each Purchased Receivable sold by it to Buyer
hereunder that is designated as an Eligible Receivable on any Invoice Remittal
is in fact an Eligible Receivable.

7.1.18 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.

7.1.19 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 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.

7.1.20 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.

7.1.21 ERISA.  If 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.

7.1.22 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.

 
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7.1.23 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.

7.1.24 True and Complete Disclosure.

7.1.24.1 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).

7.1.24.2 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.

7.1.25 Material Adverse Effect. Since September 30, 2008, 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.

 
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7.1.26 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.

7.1.27 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.

7.1.28 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.

 
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7.1.29 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

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

8.1.1 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 (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.

8.1.2 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.

8.1.3 Audits.  (A) Seller will at any time and from time to time during regular
business hours, permit Buyer or KBC or any of its 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 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 KBC, permit certified public accountants
or other auditors acceptable to KBC to conduct, at Seller’s expense, a review of
its books and records with respect to the Purchased Receivables; provided that
unless this Agreement 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.

8.1.4 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.

 
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8.1.5 Financial Statements; Reports.  Seller shall furnish or cause to be
furnished to Buyer (i) within ninety (90) days after the end of each fiscal year
of Seller commencing with the fiscal year ending 2009, 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)
within forty-five (45) days 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, 2009, 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.

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

8.1.7 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 KBC 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.

 
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8.1.8 Notices.  Seller will give written notice to Buyer and KBC 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.

8.1.9 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
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.

 
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8.1.10 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 KBC, at
such other locations acceptable to Buyer and KBC.

8.1.11 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.

8.1.12 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.

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

8.2.1 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.

8.2.2 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.

8.2.3 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
collectibility of any Purchased Receivable or otherwise adversely affect the
interests or remedies of Buyer under this Agreement or result in a Material
Adverse Effect.

8.2.4 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.

8.2.5 Consolidation; Merger.  Seller will not 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. Seller may consolidate or merge with or into
any other Person if the officers and directors of the Seller do not change.

 
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8.2.6 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.

8.2.7 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.

8.2.8 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.

8.2.9 Waiver of Stay or Execution of Laws.  Seller covenants (to the extent it
may lawfully do so) that is shall not at any time insist upon, or please, 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.

8.2.10 Mergers, Acquisitions, Sales, Etc.  Seller will not (i) be a party to any
merger or consolidation, or purchase or otherwise acquire all or substantially
all of the assets or any stock of any class of, or any partnership or joint
venture interest in, any other Person without the consent of Buyer or (ii) sell,
transfer, convey or lease all or any substantial part of its assets, or sell or
assign with or without recourse any Receivables or any interest therein (other
than pursuant hereto or to this Agreement). Seller may be a party to any merger
or consolidation, or purchase or otherwise acquire all or substantially all of
the assets or any stock of any class of, or any partnership or joint venture
interest in, any Person if the officers and directors of the Seller do not
change.

 
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SECTION 9
DEFAULT

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

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

9.1.2 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;

9.1.3 Seller shall not be Solvent, or Seller is generally not paying its debts
as they become due or is left with unreasonably small capital;

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

9.1.5 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;

9.1.6 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;

9.1.7  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;
or

9.2   Remedies upon Default.  Upon the occurrence of an Event of Default, (i)
without implying any obligation to buy Receivables, Buyer my 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.

 
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SECTION 10
MISCELLANEOUS

10.1   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 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.

10.2   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, negotiation, 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.

10.3   Indemnification.

10.3.1    Seller agrees to pay, indemnify and hold Buyer, its designees and
their respective directors, officers, employees and agents 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 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 or (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.

 
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10.3.2   Without limiting or being limited by the foregoing, Seller agrees to
pay, on demand, to each of Buyer and its directors, officers, employees and
agents any and all amounts necessary to indemnify Buyer and its directors,
officers, employees and agents 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.

10.3.3   Notwithstanding anything in this Section 10.3 to the contrary, Seller
shall have no obligation to indemnify any of the Buyer and its directors,
officers, employees and agents 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 or its directors, officers, employees
and agents as determined by the final judgment of a court of competent
jurisdiction no longer subject to appeal or (ii) litigation between Buyer and
its 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.

10.4   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.

10.5   Choice of Law.  This Agreement is governed by and interpreted in
accordance with the laws of the State of New York, excluding principles of
conflict of laws.

10.6   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.

10.7   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.

 
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10.8   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. The U.S.
Arbitration Act will supplement New York law, as appropriate, even though this
Agreement provides that it is otherwise governed by New York law.

10.9   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 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 KBC 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.

10.10   Term and Termination.  The term of this Agreement shall be from the date
hereof to December 31, 2009, 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.

 
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10.11   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 and 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.

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

10.13   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 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.

10.14   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.

10.15   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 and (iii) to the extent required by applicable law or regulation or
by any court, regulatory body or agency having jurisdiction over such party; 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.

 
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10.16   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:

LATTICE INCORPORATED

By: /s/ Paul Burgess                                           
Name:  Paul Burgess
Title:    President & Chief Executive 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
 
 
 
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EXHIBIT A

Initial Purchase Price Rate Adjustment Factors
 
 
 
 
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