SECOND AMENDMENT TO FORBEARANCE AGREEMENT

Dated as of November 7, 2008

Butler Service Group, Inc.
110 Summit Avenue
Montvale, NJ 07645

Attn: Ed Kopko

 

 

Re:

Third Amended and Restated Credit Agreement, dated as of August 29, 2007
(including, all annexes, exhibits and schedules thereto, and as amended,
supplemented or otherwise modified from time to time prior to the date hereof,
the “Credit Agreement”), by and among Butler Service Group, Inc. (the
“Borrower”), the other Credit Parties signatory thereto, General Electric
Capital Corporation, as a Lender and Agent for Lenders (the “Agent”), and the
other Lenders signatory thereto from time to time.

Ladies and Gentlemen:

         Capitalized terms used in this letter (hereafter referred to as this
“Amendment”) and not otherwise defined or limited herein shall have the meanings
attributed to such terms in the Forbearance Agreement, dated as of September 29,
2008, among Butler Service Group, Inc., the other Credit Parties signatory
thereto and General Electric Capital Corporation, as a Lender and Agent for
Lenders, as amended by that certain First Amendment to the Forbearance
Agreement, dated as of October 17, 2008 (as amended, the “Forbearance
Agreement”).

 

 

A.

Amendment to the Forbearance Agreement.

         Section A.1 of the Forbearance Agreement is hereby amended as of the
Effective Date (as defined below) by deleting the date “November 7, 2008” set
forth in clause (a) thereof and substituting in lieu thereof the date “November
14, 2008”.

 

 

B.

Forbearance Fee.

         Borrower and the other Credit Parties hereby, jointly and severally
agree to pay to Agent, for the ratable benefit of the Lenders, a forbearance fee
in the aggregate amount equal to $5,000, which shall be fully earned, due and
payable in immediately available funds on the Effective Date (the “Forbearance
Fee”).

 

 

C.

Effectiveness.

         This Amendment shall become effective as of the date first set forth
above (the “Effective Date”) upon Agent’s receipt of (a) four (4) fully-executed
copies of this Amendment, duly

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executed and delivered by the Agent, Requisite Lenders, Borrower and Guarantors
and (b) the Forbearance Fee.

 

 

D.

Representations and Warranties.

         In consideration of the limited agreement of the Agent and the Lenders
to forbear from the exercise of their rights and remedies as set forth above,
each Credit Party hereby represents and warrants to the Agent and the Lenders,
as of the date hereof, as follows:

         1.          The execution, delivery and performance of this Amendment
by such Credit Party: (a) is within its organizational power; (b) has been duly
authorized by all necessary or proper corporate and shareholder action; (c) does
not contravene any provision of such Credit Party’s charter or bylaws or
equivalent organizational documents; (d) does not violate any law or regulation,
or any order or decree of any court or Governmental Authority; (e) does not
conflict with or result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance required by,
any indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Credit Party is a party or by which such Credit Party or any of its
property is bound; (f) does not result in the creation or imposition of any Lien
upon any of the property of such Credit Party other than those in favor of Agent
pursuant to the Loan Documents; and (g) does not require the consent or approval
of any Governmental Authority or any other Credit Party.

         2.          All Loan Documents, including without limitation, this
Amendment, the Forbearance Agreement, the Credit Agreement and the Guaranties,
constitute legal, valid and binding obligations of each Credit Party party
thereto enforceable against each such Credit Party in accordance with the terms
thereof. Each Credit Party hereby ratifies and confirms each of the Loan
Documents to which such Credit Party is party to and the rights granted
thereunder in favor of the Agent and the Lenders, including its liability for
the Obligations as defined therein.

         3.          This Amendment has been duly executed and delivered by or
on behalf of each of Borrower and the other Credit Parties.

         4.          No Default or Event of Default (other than the Specified
Events of Default) has occurred and is continuing after giving effect to the
Forbearance Agreement and this Amendment.

         5.          The representations and warranties of Borrower and the
other Credit Parties contained in the Credit Agreement and each other Loan
Document shall be true and correct on and as of the date hereof with the same
effect as if such representations and warranties had been made on and as of such
date, except that any such representation or warranty which is expressly made
only as of a specified date need be true only as of such date.

         6.          As of November 7, 2008, the aggregate amount of liabilities
of the Borrower and the other Credit Parties for unpaid payroll taxes equals
$2,666,117.16, consisting of (i) $2,657,157.80 in liabilities for unpaid payroll
taxes arising out of payroll paid prior to October

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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31, 2008, and (ii) $8,959.36 in liabilities for unpaid payroll taxes arising out
of payroll paid on October 31, 2008.

 

 

E.

Other Representations, Warranties and Covenants.

         1.          The Credit Parties and the Lenders hereby confirm that the
decision by the Agent and the Lenders to grant the forbearance as outlined in
the Forbearance Agreement as amended by this Amendment (the “Amended Forbearance
Agreement”) is not and shall not be deemed to constitute an undertaking by the
Agent and the Lenders to forbear or refrain from exercising any and all rights
and remedies available to them under the Credit Agreement and the other Loan
Documents and under applicable law upon the occurrence of any Forbearance
Default. Additionally, notwithstanding the agreement of the Agent and the
Lenders to enter into the Amended Forbearance Agreement, the Agent and the
Lenders hereby advise the Credit Parties that, except to the extent of the Agent
and the Lenders’ forbearance expressly referenced through the Forbearance Period
specified in the Amended Forbearance Agreement, the Agent and Lenders require
strict compliance with all of the terms and conditions of the Credit Agreement
and the other Loan Documents; provided, however, that the Agent or the Lenders
shall not be required to issue any notices otherwise required by the Credit
Agreement with respect to the Specified Events of Default during the term of the
Amended Forbearance Agreement.

         2.          Each Credit Party further acknowledges and agrees that: (a)
the Specified Events of Default have occurred or will occur and continue, and
shall not be deemed to have been waived, cured or eliminated, in whole or in
part, by the Amended Forbearance Agreement, and the Agent and the Lenders
expressly reserve rights with respect to the Specified Events of Default,
subject only to the terms in the Credit Agreement, the other Loan Documents and
the Amended Forbearance Agreement; (b) the parties have not entered into a
mutual disregard of the terms and provisions of the Credit Agreement and the
other Loan Documents, or engaged in any course of dealing in variance with the
terms and provisions of the Credit Agreement and the Loan Documents, within the
meaning of any applicable law of the State of New York, or otherwise; and (c) as
of the date hereof, principal in the amount set forth on Schedule A attached
hereto, plus accrued interest was due and owing, by the Borrower under the
Credit Agreement and guaranteed by the Guarantors under the Guaranties.

         3.          Each Credit Party expressly acknowledges and agrees that
the Credit Agreement and other Loan Documents are valid and enforceable by the
Agent and the Lenders and expressly reaffirms its obligations under the Credit
Agreement and other Loan Documents (including the Guaranties). Each Credit Party
agrees that it shall not dispute the validity or enforceability of the Credit
Agreement and other Loan Documents (including the Guaranties) or any of its
obligations thereunder, or the validity, priority, enforceability or extent of
the Agent on behalf of the Lenders’ security interest in or lien against any
item of Collateral under the Credit Agreement and other Loan Documents.

         4.          As further consideration to induce the Agent and the
Lenders to execute, deliver and perform the Amended Forbearance Agreement, each
Credit Party represents and warrants that there are no claims, causes of action,
suits, debts, obligations, liabilities, defenses,

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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counterclaims, demands of any kind, character or nature whatsoever, fixed or
contingent, which such Credit Party may have, or claim to have, against the
Lenders or the Agent in connection with the Credit Agreement and Loan Documents,
and such Credit Party hereby releases, acquits and forever discharges the Agent
and each Lender and its respective agents, employees, officers, directors,
servants, representatives, attorneys, affiliates, successors and assigns
(collectively, the “Released Parties”) from any and all liabilities, claims,
suits, debts, causes of action and the like of any kind, character or nature
whatsoever, known or unknown, fixed or contingent, in connection with the Credit
Agreement and Loan Documents, that the Credit Party may have, or claim to have,
against each of the such Released Parties from the beginning of time until and
through the dates of execution and delivery of this Amendment.

         5.          Each Credit Party covenants and agrees that it will
continue to pay all Charges in accordance with Section 5.2 of the Credit
Agreement from and after the Commencement Date, and that such Credit Party will
not permit the aggregate amount of liabilities of the Borrower and the other
Credit Parties for unpaid payroll taxes arising out of payroll paid prior to the
date set forth as the “last payroll payment date” in any Borrower certification
to the Agent or any Lender as to the amount of outstanding payroll taxes to
exceed $2,666,117.16.

 

 

F.

Miscellaneous.

         1.          Except as expressly amended herein, the Credit Agreement
and the other Loan Documents shall be unmodified and shall continue to be in
full force and effect in accordance with their terms. In addition, the Amended
Forbearance Agreement shall not be deemed a waiver of any term or condition of
any Loan Document and shall not be deemed to prejudice any right or rights which
Agent, for itself and Lenders, may now have or may have in the future under or
in connection with any Loan Document or any of the instruments or agreements
referred to therein, as the same may be amended from time to time.

         2.          The Amended Forbearance Agreement, taken together with the
Credit Agreement and all of the other Loan Documents, embodies the entire
agreement and understanding among the parties hereto, and the Amended
Forbearance Agreement may not be amended or modified and the Forbearance Period
extended unless agreed to in writing executed by all parties signatory to the
Amended Forbearance Agreement or as may otherwise be provided for under the
terms of the Credit Agreement and the other Loan Documents. This Amendment shall
constitute a Loan Document for all purposes under the Credit Agreement.

         3.          This Amendment, and any amendments, waivers, consents or
supplements hereto may be executed in multiple counterparts, each of which when
so executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Delivery of an
executed counterpart of this Amendment by facsimile shall be equally as
effective as delivery of an original executed counterpart of the Agreement.

         4.          THIS AMENDMENT AND THE TRANSACTIONS EVIDENCED HEREBY SHALL
BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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          5.          Time is of the essence for performing all matters set
forth in this Amendment.

[Remainder of Page Intentionally Blank]

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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AGENTS AND LENDERS:

GENERAL ELECTRIC CAPITAL

 

CORPORATION, as Agent
and a Lender

 

 

 

 

By:

/s/James H. Kaufman

 

 

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          Duly Authorized Signatory

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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As of November 7, 2008
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AS BORROWER:

BUTLER SERVICE GROUP, INC.

 

 

By:

/s/Edward M. Kopko

 

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Name:  EDWARD M. KOPKO

Title:   Chief Executive Officer

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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AS GUARANTORS:

BUTLER INTERNATIONAL, INC.
BUTLER SERVICES INTERNATIONAL, INC.
BUTLER TELECOM, INC.
BUTLER PUBLISHING, INC.
BUTLER OF NEW JERSEY REALTY CORP.
BUTLER SERVICES, INC.
BUTLER UTILITY SERVICE, INC.

 

 

By:

/s/Edward M. Kopko

 

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Name:  EDWARD M. KOPKO

Title:   Chief Executive Officer

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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SCHEDULE A

As of November 7, 2008, the principal balance due and owing of the Revolving
Loan was $28,515,274 and the aggregate outstanding Letter of Credit Obligations
was $2,689,516.

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

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