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 







As of November
7, 2008

Page 2 of 10 


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







As of November
7, 2008

Page 3 of 10 


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







As of November
7, 2008

Page 4 of 10 


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







As of November
7, 2008

Page 5 of 10 


          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







As of November
7, 2008

Page 6 of 10


	
 

	
 

	
 


	
AGENTS AND LENDERS:

	
GENERAL ELECTRIC CAPITAL


	
 

	
CORPORATION, as Agent 
and a Lender


	
 

	
 

	
 


	
 

	
By:

	
/s/James H. Kaufman


	
 

	
 

	



	
 

	
 

	
          Duly
 Authorized Signatory





SECOND AMENDMENT
TO FORBEARANCE AGREEMENT







As of November
7, 2008

Page 7 of 10 


AS BORROWER:


BUTLER SERVICE GROUP, INC.


	
 

	
 


	
By:

	
/s/Edward M. Kopko


	
 

	



	
Name:  EDWARD M. KOPKO


	
Title:   Chief Executive Officer





SECOND AMENDMENT
TO FORBEARANCE AGREEMENT







As of November
7, 2008

Page 8 of 10 


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


	
 

	



	
Name:  EDWARD M. KOPKO


	
Title:   Chief Executive Officer





SECOND AMENDMENT
TO FORBEARANCE AGREEMENT







As of November
7, 2008

Page 9 of 10 


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