Document:

Exhibit 10.91

 

THIRD AMENDMENT

Dated
as of August 31, 2007

to

FOURTH AMENDED AND RESTATED

RECEIVABLES SALE AGREEMENT

Dated as of September 28, 2006

 

THIS
THIRD AMENDMENT (the “Amendment”), dated
as of August 31, 2007, is entered into among Crompton & Knowles
Receivables Corporation, a Delaware corporation, as Seller (the “Seller”), Chemtura
Corporation (f/k/a Crompton Corporation), a Delaware corporation, as the
initial Collection Agent (the “Initial
Collection Agent”), and, together with any successor
thereto, the “Collection Agent”), ABN
AMRO Bank N.V., as agent for the Purchaser Group to which Amsterdam is a party
and the Purchasers (the “Agent”), Calyon
New York Branch (“Calyon”),
as the Purchaser Agent for the Purchaser Group to which
Atlantic is a party, Wachovia Bank, National Association (“Wachovia”), as Letter of Credit issuer (in
such capacity, the “LC Issuer”)  and
as Purchaser Agent for the Purchaser Group to which VFCC is a party, the other
Purchaser Agents from time to time party hereto, the related bank purchasers
party hereto (the “Related Bank Purchasers”), Amsterdam
Funding Corporation (“Amsterdam”), as a Conduit Purchaser, Atlantic Asset
Securitization LLC (“Atlantic”), as a Conduit Purchaser, Variable Funding Capital
Company, LLC (“VFCC”),
as a Conduit Purchaser and the other Conduit Purchasers from
time to time party hereto.

 

Reference
is hereby made to that certain Fourth Amended and Restated Receivables Sale
Agreement, dated as of September 28, 2006 (as amended, supplemented or
otherwise modified through the date hereof, the “Sale Agreement”), among the Seller, the Initial
Collection Agent, the Purchaser Agents from time to time party thereto, the
Related Bank Purchasers from time to time party thereto, the Conduit Purchasers
from time to time party thereto and the Agent. Terms used herein and not
otherwise defined herein which are defined in the Sale Agreement or the other
Transaction Documents (as defined in the Sale Agreement) shall have the same
meaning herein as defined therein.

 

For
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

Section I. Upon execution by the parties hereto in the space provided for that
purpose below, the Sale Agreement shall be, and it hereby is, amended as
follows:

 

(a)           The defined term “Concentration Limit” appearing in
Schedule I of the Sale Agreement is hereby amended in its entirety and as so
amended shall read as follows

 

“Concentration Limit” means with respect to any Obligor (i) with
senior unsecured long-term indebtedness rated A (or higher) by S&P and A2
(or higher) by Moody’s, an amount not to exceed 5.0% of the Gross Eligible
Receivables Balance, (ii) with senior unsecured long-term indebtedness
rated BBB- but lower

 

 

than A by S&P and at least Baa3 but lower than A2 by Moody’s, an
amount not to exceed 3.33% of the Gross Eligible Receivables Balance and (iii) with
respect to all other Obligors not covered in clauses (i) and (ii) and
not then the subject of a Special Limit, an amount not to exceed 2.0% of the
Gross Eligible Receivables Balance.

 

(b)           The defined term “Dilution
Reserve” appearing in Schedule I of the Sale Agreement is hereby
amended in its entirety and as so amended shall read as follows:

 

“Dilution Reserve” shall
mean the product of (x) the Dilution Stress Factor multiplied by (y) the
highest rolling three-month average Dilution Ratio the most recent 12-calendar
months.

 

(c)           Clauses (i) and (ii) the defined term “Eligible Receivable” appearing in Schedule
I of the Sale Agreement are hereby amended in their entirety and as so amended
shall read as follows:

 

(i)            the Obligor of which (a) is a
resident of, or organized under the laws of, or with its chief executive office
in, the USA: provided, however, that
not more than 20% of Eligible Receivables in the aggregate at any time may
consist of Receivables due from Obligors which are not residents of, or
organized under the laws of, or with chief executive offices in, the USA; (b) is
not an Affiliate of any Originator; (c) if a Governmental Authority is
domiciled in the USA; (d) has not suffered a Bankruptcy Event; (e) is
a customer of the Originator in good standing; (f) is not the Obligor of
Receivables 50% or more of which are Defaulted Receivables; and (g) is not
Honeywell International Inc. or any of its Affiliates;

 

(ii)           which is stated to be due and payable
within 90 days after the invoice therefor; provided,
however, that not more than 15% of the Gross Eligible Receivables
Balance (other than the portion of the Gross Eligible Receivables Balance
represented by Eligible Foreign Receivables) at any time may consist of
Receivables which are stated to be due and payable within 91 to 180 days after
invoice therefor, provided that
any Purchaser Agent may remove or discontinue this allowance for Receivables
due within 91 to 180 days after the invoice thereafter set forth in this
subsection (ii) from the criteria for Eligible Receivables upon not less
than three Business Days prior written notice to the Seller, Collection Agent
and Agent in the sole discretion of such Purchaser Agent;

 

2

 

(d)           The defined term “Eligible
Receivables Balance” appearing in Schedule I of the Sale Agreement
is hereby amended in its entirety and as so amended shall read as follows:

 

“Eligible
Receivables Balance” means, at any time, (a) the
Gross Eligible Receivables Balance less (b) without duplication an amount
equal to the sum of (1) the portion of the aggregate outstanding principal
balance of Eligible Receivables which exceed the Concentration Limit or the
Special Limit plus (2) the dollar amounts of the Tax Liability Amount plus
(3) any interest finance charges or late fees that would otherwise
constitute a portion of each Eligible Receivable, plus (4) a portion of
the Gross Eligible Receivables Balance consisting of Foreign Receivables that
exceeds the Foreign Concentration Limit, plus (5) a portion of the Gross
Eligible Receivables Balance consisting of Governmental Receivables that exceed
the Governmental Receivable Concentration Limit.

 

(e)           The
defined term “Loss Reserve” appearing
in Schedule I of the Sale Agreement is hereby amended be deleting the reference
“12.0%” appearing in clause (A) and
replacing it with “10.0%.”

 

(f)            Clause (d) of the defined term “Termination Date” is hereby amended in
its entirety and as so amended shall read as follows:

 

(d)                                 August 30, 2010.

 

(g)           The following new defined terms are hereby added to
Schedule I of the Sale Agreement in the appropriate alphabetical order as
follows:

 

“Dilution Stress
Factor” shall be determined according to the following
table:

 

	
  Moody’s Long-Term

  	
   

  	
  S&P Long-Term

  	
   

  	
   

  
	
  Unsecured Debt

  	
   

  	
  Unsecured Debt

  	
   

  	
  Dilution Stress

  
	
  Ratings for Parent

  	
   

  	
  Ratings for Parent

  	
   

  	
  Factor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than Baa3

  	
   

  	
  Greater than BBB-

  	
   

  	
  2.5x

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Baa3

  	
   

  	
  BBB-

  	
   

  	
  2.5x

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bal

  	
   

  	
  BB+

  	
   

  	
  3.0x

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ba2

  	
   

  	
  BB

  	
   

  	
  3.0x

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ba3

  	
   

  	
  BB-

  	
   

  	
  4.0x

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Below Ba3 or no rating

  	
   

  	
  Below BB- or no rating

  	
   

  	
  5.0x

  

 

3

 

If the long-term unsecured debt rating of the
Parent from Moody’s is at least Baa3 and from S&P is at least BBB-, then
the Dilution Stress Factor for the higher of the two ratings apply. If the
long-term unsecured debt rating of the Parent is less than Baa3 by Moody’s or
less than BBB- by S&P or has been withdrawn by either such Rating Agency,
then (i) the Dilution Stress Factor for the lower of the two ratings
levels set forth above apply if the rating grade variance is not more than one
gradation and (ii) the Dilution Stress Factor that is one notch above the
lower of the two ratings levels set forth above applies if the rating grade
variance is two notches or more. If the long-term unsecured indebtedness of the
Parent is rated Bal or BB+ or lower by both Moody’s and S&P, then the
Dilution Stress Factor for the lower of the two ratings levels set forth above
applies.

 

“Foreign Receivable”
means any Receivable (i) the Obligor of which is
domiciled in an OECD Country other than the United States of America and (ii) which
otherwise satisfies the requirements of an “Eligible
Receivable”.

 

“Foreign Receivable
Concentration Limit” means (A) with respect to
Foreign Receivables described in clauses (B) and (C) below in the
aggregate, an amount not to exceed the 20% of the Eligible Receivable Balance,
(B)(i) with respect to all Foreign Receivables the Obligors of which are
domiciled in either the United Kingdom and/or Canada, an amount not to exceed
10.0% of the Eligible Receivable Balance, and (ii) with respect to all
Foreign Receivables the Obligors of which are domiciled in an OECD Country with
a long-term foreign currency rating of not less than A by S&P and A2 by
Moody’s that is not the United Kingdom or Canada, an amount not to exceed 10.0%
of the Eligible Receivable Balance, and (C) with respect to all Foreign
Receivables the Obligors of which are domiciled in any OECD Country in clauses (A) and
(B) above, 1.0% (for each such Obligor) of the Eligible Receivable
Balance.

 

“Governmental
Receivable” means any Receivable (i) the Obligor
of which is a Governmental Authority domiciled in the United States and (ii) which
otherwise satisfies the requirements of an “Eligible
Receivable.”

 

4

 

“Governmental
Receivable Concentration Limit” means with respect to all Governmental
Receivables, for any governmental agency, an amount not to exceed 1.0% of the
Eligible Receivable Balance.

 

“Gross
Eligible Receivables Balance” means the aggregate outstanding principal balance of all Eligible
Receivables.

 

“OECD”
means the
Organization for Economic Cooperation and Development.

 

“OECD Country” means a country that is a member of the OECD.

 

(h)           Exhibit F to
the Sale Agreement is hereby amended in its entirety and as  so amended shall read as set forth on Exhibit F
attached hereto.

 

Section 2. The Sale Agreement, as amended and
supplemented hereby or as contemplated herein, and all rights and powers
created thereby and thereunder or under the other Transaction Documents and all
other documents executed in connection therewith, are in all respects ratified
and confirmed. From and after the date hereof, the Sale Agreement shall be
amended and supplemented as herein provided, and, except as so amended and
supplemented, the Sale Agreement, each of the other Transaction Documents and
all other documents executed in connection therewith shall remain in full force
and effect. By executing this Amendment, Chemtura Corporation confirms that it
is the “Guarantor”
under the Limited Guaranty
and that the Limited Guaranty and Chemtura Corporation’s obligations thereunder
remain in full force and effect.

 

Section 3. This Amendment shall become effective only
once the Agent has received executed counterparts of this Amendment.

 

Section 4. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original but both or all of
which, when taken together, shall constitute but one instrument.

 

Section 5. This Amendment shall be governed and
construed in accordance with the internal laws of the State of New York.

 

5

 

IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered by their duly authorized officers as of the date first above
written.

 

	
   

  	
  ABN AMRO BANK N.V., as the Related Bank

  
	
   

  	
  Purchaser for Amsterdam, as the Amsterdam

  
	
   

  	
  Purchaser and as the Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
  Title:

  	
  SVP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adnan Bhanpuri

  
	
   

  	
   

  	
  ADNAN BHANPURI

  
	
   

  	
  Title:

  	
  VICE PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMSTERDAM
  FUNDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as the LC Issuer, the Related Bank
  Purchaser

  
	
   

  	
  for VFCC and as the VFCC Purchaser Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VARIABLE FUNDING CAPITAL COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WACHOVIA CAPITAL MARKETS, LLC,

  
	
   

  	
   

  	
  as Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas R. Wilson, Sr

  
	
   

  	
   

  	
  Douglas R. Wilson, Sr

  
	
   

  	
  Title:

  	
  Director

  
				

 

6

 

	
   

  	
   

  	
  CALYON NEW YORK BRANCH, as the Related

  
	
   

  	
   

  	
  Bank Purchaser for Atlantic and as the

  
	
   

  	
   

  	
  Atlantic Purchaser Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Richard McBride

  	
   

  	
  By:

  	
  /s/ Kostantina Kourmpetis

  
	
  RICHARD McBRIDE

  	
   

  	
   

  	
  Kostantina Kourmpetis

  
	
  DIRECTOR

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATLANTIC ASSET SECURITIZATION LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Richard McBride

  	
   

  	
  By:

  	
  /s/ Kostantina Kourmpetis

  
	
  RICHARD McBRIDE

  	
   

  	
   

  	
  Kostantina Kourmpetis

  
	
  DIRECTOR

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

7

 

	
   

  	
   

  	
  CROMPTON & KNOWLES RECEIVABLES

  
	
   

  	
   

  	
  CORPORATION, as Seller

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CHEMTURA CORPORATION (F/K/A CROMPTON

  
	
   

  	
   

  	
  CORPORATION), as Initial Collection Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Secretary

  
					

 

8

 

EXHIBIT F

 

LOCK BOXES AND
LOCK-BOX BANKS

 

EXHIBIT REDACTEDExhibit 10.1

 

SECOND AMENDED AND RESTATED FINANCING AND SECURITY
AGREEMENT

 

Dated

 

November 5, 2008

 

By and Between

 

GENERAL PHYSICS CORPORATION

 

as Borrower

 

And

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

 

as Lender

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
  1

  
	
  Section 1.1

  	
   

  	
  Certain Defined Terms.

  	
  1

  
	
  Section 1.2

  	
   

  	
  Accounting Terms and Other Definitional Provisions.

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II THE CREDIT FACILITIES

  	
  19

  
	
  Section 2.1

  	
   

  	
  The Revolving Credit Facility.

  	
  19

  
	
  2.1.1

  	
   

  	
  Revolving Credit Facility.

  	
  19

  
	
  2.1.2

  	
   

  	
  Procedure for Making Advances Under the Revolving
  Loan; Lender Protection Loans.

  	
  20

  
	
  2.1.3

  	
   

  	
  Borrowing Base.

  	
  20

  
	
  2.1.4

  	
   

  	
  Borrowing Base Report.

  	
  21

  
	
  2.1.5

  	
   

  	
  Revolving Credit Note.

  	
  21

  
	
  2.1.6

  	
   

  	
  Mandatory Prepayments of Revolving Loan.

  	
  22

  
	
  2.1.7

  	
   

  	
  Optional Prepayments of Revolving Loan.

  	
  22

  
	
  2.1.8

  	
   

  	
  The Collateral Account.

  	
  22

  
	
  2.1.9

  	
   

  	
  Revolving Loan Account.

  	
  23

  
	
  2.1.10

  	
   

  	
  Revolving Credit Unused Line Fee.

  	
  23

  
	
  Section 2.2

  	
   

  	
  The Letter of Credit Facility.

  	
  23

  
	
  2.2.1

  	
   

  	
  Letters of Credit.

  	
  23

  
	
  2.2.2

  	
   

  	
  Letter of Credit Fees.

  	
  24

  
	
  2.2.3

  	
   

  	
  Terms of Letters of Credit.

  	
  24

  
	
  2.2.4

  	
   

  	
  Procedures for Letters of Credit.

  	
  25

  
	
  2.2.5

  	
   

  	
  Payments of Letters of Credit.

  	
  25

  
	
  2.2.6

  	
   

  	
  Change in Law; Increased Cost.

  	
  26

  
	
  2.2.7

  	
   

  	
  General Letter of Credit Provisions.

  	
  27

  
	
  Section 2.3

  	
   

  	
  Applicable Interest Rates.

  	
  28

  
	
  Section 2.4

  	
   

  	
  General Financing Provisions.

  	
  28

  
	
  2.4.1

  	
   

  	
  Borrowers’ Representatives.

  	
  28

  
	
  2.4.2

  	
   

  	
  Use of Proceeds of the Revolving Loan.

  	
  30

  
	
  2.4.3

  	
   

  	
  Origination Fee.

  	
  30

  
	
  2.4.4

  	
   

  	
  Monitoring Fee.

  	
  30

  
	
  2.4.5

  	
   

  	
  Computation of Interest and Fees.

  	
  31

  
	
  2.4.6

  	
   

  	
  Maximum Interest Rate.

  	
  31

  
	
  2.4.7

  	
   

  	
  Payments.

  	
  31

  
	
  2.4.8

  	
   

  	
  Liens; Setoff.

  	
  31

  
	
  2.4.9

  	
   

  	
  Requirements of Law.

  	
  32

  
	
  2.4.10

  	
   

  	
  Guaranty.

  	
  32

  
	
  2.4.11

  	
   

  	
  ACH Transactions and Swap Contracts.

  	
  35

  
	
  2.4.12

  	
   

  	
  Termination of Revolving Credit Facility.

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III THE COLLATERAL

  	
  36

  
	
  Section 3.1

  	
   

  	
  Debt and Obligations Secured.

  	
  36

  
	
  Section 3.2

  	
   

  	
  Grant of Liens.

  	
  36

  
	
  Section 3.3

  	
   

  	
  Collateral Disclosure List.

  	
  36

  
	
  Section 3.4

  	
   

  	
  Personal Property.

  	
  37

  
	
  Section 3.5

  	
   

  	
  Record Searches.

  	
  37

  
	
  Section 3.6

  	
   

  	
  Costs.

  	
  37

  
	
  Section 3.7

  	
   

  	
  Release.

  	
  38

  
	
  Section 3.8

  	
   

  	
  Inconsistent Provisions.

  	
  38

  

 

 

	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES

  	
  38

  
	
  Section 4.1

  	
   

  	
  Representations and Warranties.

  	
  38

  
	
  4.1.1

  	
   

  	
  Subsidiaries.

  	
  38

  
	
  4.1.2

  	
   

  	
  Existence.

  	
  38

  
	
  4.1.3

  	
   

  	
  Power and Authority.

  	
  39

  
	
  4.1.4

  	
   

  	
  Binding Agreements.

  	
  39

  
	
  4.1.5

  	
   

  	
  No Conflicts.

  	
  39

  
	
  4.1.6

  	
   

  	
  No Defaults, Violations.

  	
  39

  
	
  4.1.7

  	
   

  	
  Compliance with Laws.

  	
  40

  
	
  4.1.8

  	
   

  	
  Margin Stock.

  	
  40

  
	
  4.1.9

  	
   

  	
  Investment Company Act; Margin Stock.

  	
  40

  
	
  4.1.10

  	
   

  	
  Litigation.

  	
  40

  
	
  4.1.11

  	
   

  	
  Financial Condition.

  	
  40

  
	
  4.1.12

  	
   

  	
  Full Disclosure.

  	
  41

  
	
  4.1.13

  	
   

  	
  Indebtedness for Borrowed Money.

  	
  41

  
	
  4.1.14

  	
   

  	
  Taxes.

  	
  41

  
	
  4.1.15

  	
   

  	
  ERISA.

  	
  41

  
	
  4.1.16

  	
   

  	
  Title to Properties.

  	
  42

  
	
  4.1.17

  	
   

  	
  Patents, Trademarks, Etc.

  	
  42

  
	
  4.1.18

  	
   

  	
  Employee Relations.

  	
  42

  
	
  4.1.19

  	
   

  	
  Presence of Hazardous Materials or Hazardous
  Materials Contamination.

  	
  43

  
	
  4.1.20

  	
   

  	
  Perfection and Priority of Collateral.

  	
  43

  
	
  4.1.21

  	
   

  	
  No Suspension or Debarment.

  	
  43

  
	
  4.1.22

  	
   

  	
  Collateral Disclosure List.

  	
  43

  
	
  4.1.23

  	
   

  	
  Business Names and Addresses.

  	
  43

  
	
  4.1.24

  	
   

  	
  Equipment.

  	
  44

  
	
  4.1.25

  	
   

  	
  Accounts.

  	
  44

  
	
  4.1.26

  	
   

  	
  Compliance with Eligibility Standards.

  	
  44

  
	
  Section 4.2

  	
   

  	
  Survival; Updates of Representations and Warranties.

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V CONDITIONS PRECEDENT

  	
  45

  
	
  Section 5.1

  	
   

  	
  Conditions to the Initial Advance and Initial Letter
  of Credit.

  	
  45

  
	
  5.1.1

  	
   

  	
  Organizational Documents.

  	
  45

  
	
  5.1.2

  	
   

  	
  Opinion of Borrowers’ Counsel.

  	
  45

  
	
  5.1.3

  	
   

  	
  Organizational Documents - Guarantor.

  	
  46

  
	
  5.1.4

  	
   

  	
  Consents, Licenses, Approvals, Etc.

  	
  46

  
	
  5.1.5

  	
   

  	
  Note.

  	
  46

  
	
  5.1.6

  	
   

  	
  Financing Documents and Collateral.

  	
  47

  
	
  5.1.7

  	
   

  	
  Other Financing Documents.

  	
  47

  
	
  5.1.8

  	
   

  	
  Other Documents, Etc.

  	
  47

  
	
  5.1.9

  	
   

  	
  Payment of Fees.

  	
  47

  
	
  5.1.10

  	
   

  	
  Collateral Disclosure List.

  	
  47

  
	
  5.1.11

  	
   

  	
  Recordings and Filings.

  	
  47

  
	
  5.1.12

  	
   

  	
  Insurance Certificate.

  	
  47

  
	
  5.1.13

  	
   

  	
  Landlord’s Waivers.

  	
  47

  
	
  5.1.14

  	
   

  	
  Blocked Account Agreements.

  	
  48

  
	
  5.1.15

  	
   

  	
  Borrowing Base Report.

  	
  48

  
	
  Section 5.2

  	
   

  	
  Conditions to all Extensions of Credit.

  	
  48

  
	
  5.2.1

  	
   

  	
  Compliance.

  	
  48

  
	
  5.2.2

  	
   

  	
  Borrowing Base.

  	
  48

  
	
  5.2.3

  	
   

  	
  Default.

  	
  48

  
	
  5.2.4

  	
   

  	
  Representations and Warranties.

  	
  48

  
	
  5.2.5

  	
   

  	
  Adverse Change.

  	
  48

  
	
  5.2.6

  	
   

  	
  Legal Matters.

  	
  49

  

 

2

 

	
  ARTICLE VI COVENANTS

  	
  49

  
	
  Section 6.1

  	
   

  	
  Affirmative Covenants.

  	
  49

  
	
  6.1.1

  	
   

  	
  Financial Statements.

  	
  49

  
	
  6.1.2

  	
   

  	
  Recordkeeping, Rights of Inspection, Field
  Examination, Etc.

  	
  50

  
	
  6.1.3

  	
   

  	
  Existence.

  	
  51

  
	
  6.1.4

  	
   

  	
  Compliance with Laws.

  	
  52

  
	
  6.1.5

  	
   

  	
  Preservation of Properties.

  	
  52

  
	
  6.1.6

  	
   

  	
  Line of Business.

  	
  52

  
	
  6.1.7

  	
   

  	
  Insurance.

  	
  52

  
	
  6.1.8

  	
   

  	
  Taxes.

  	
  53

  
	
  6.1.9

  	
   

  	
  ERISA.

  	
  53

  
	
  6.1.10

  	
   

  	
  Notification of Events of Default and Adverse
  Developments.

  	
  53

  
	
  6.1.11

  	
   

  	
  Hazardous Materials; Contamination.

  	
  54

  
	
  6.1.12

  	
   

  	
  Financial Covenants.

  	
  55

  
	
  6.1.13

  	
   

  	
  Collection of Receivables.

  	
  55

  
	
  6.1.14

  	
   

  	
  Assignments of Receivables.

  	
  56

  
	
  6.1.15

  	
   

  	
  Government Accounts.

  	
  56

  
	
  6.1.16

  	
   

  	
  Notice of Returned Goods, etc.

  	
  56

  
	
  6.1.17

  	
   

  	
  Equipment.

  	
  56

  
	
  6.1.18

  	
   

  	
  Defense of Title and Further Assurances.

  	
  56

  
	
  6.1.19

  	
   

  	
  Business Names; Locations.

  	
  57

  
	
  6.1.20

  	
   

  	
  Protection of Collateral.

  	
  57

  
	
  6.1.21

  	
   

  	
  Depository Relationship.

  	
  58

  
	
  Section 6.2

  	
   

  	
  Negative Covenants.

  	
  58

  
	
  6.2.1

  	
   

  	
  Capital Structure, Merger or Sale of Assets.

  	
  58

  
	
  6.2.2

  	
   

  	
  Acquisitions.

  	
  58

  
	
  6.2.3

  	
   

  	
  Subsidiaries.

  	
  58

  
	
  6.2.4

  	
   

  	
  Issuance of Stock.

  	
  58

  
	
  6.2.5

  	
   

  	
  Purchase or Redemption of Securities, Dividend
  Restrictions.

  	
  58

  
	
  6.2.6

  	
   

  	
  Indebtedness.

  	
  59

  
	
  6.2.7

  	
   

  	
  Investments, Loans and Other Transactions.

  	
  59

  
	
  6.2.8

  	
   

  	
  Stock of Subsidiaries.

  	
  60

  
	
  6.2.9

  	
   

  	
  Subordinated Indebtedness.

  	
  60

  
	
  6.2.10

  	
   

  	
  Liens; Confessed Judgment.

  	
  60

  
	
  6.2.11

  	
   

  	
  Other Businesses.

  	
  61

  
	
  6.2.12

  	
   

  	
  ERISA Compliance.

  	
  61

  
	
  6.2.13

  	
   

  	
  Prohibition on Hazardous Materials.

  	
  61

  
	
  6.2.14

  	
   

  	
  Method of Accounting; Fiscal Year.

  	
  61

  
	
  6.2.15

  	
   

  	
  Sale and Leaseback.

  	
  62

  
	
  6.2.16

  	
   

  	
  Disposition of Collateral.

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES

  	
  62

  
	
  Section 7.1

  	
   

  	
  Events of Default.

  	
  62

  
	
  7.1.1

  	
   

  	
  Failure to Pay.

  	
  62

  
	
  7.1.2

  	
   

  	
  Breach of Representations and Warranties.

  	
  62

  
	
  7.1.3

  	
   

  	
  Failure to Comply with Specific Covenants.

  	
  62

  
	
  7.1.4

  	
   

  	
  Failure to Comply with Covenants.

  	
  62

  
	
  7.1.5

  	
   

  	
  Default Under Other Financing Documents or
  Obligations.

  	
  63

  
	
  7.1.6

  	
   

  	
  Receiver; Bankruptcy.

  	
  63

  
	
  7.1.7

  	
   

  	
  Involuntary Bankruptcy, etc.

  	
  63

  
	
  7.1.8

  	
   

  	
  Judgment.

  	
  63

  
	
  7.1.9

  	
   

  	
  Execution; Attachment.

  	
  64

  
	
  7.1.10

  	
   

  	
  Default Under Other Borrowings.

  	
  64

  
	
  7.1.11

  	
   

  	
  Challenge to Agreements.

  	
  64

  
	
  7.1.12

  	
   

  	
  Material Adverse Change.

  	
  64

  

 

3

 

	
  7.1.13

  	
   

  	
  Contract Default, Debarment or Suspension.

  	
  64

  
	
  7.1.14

  	
   

  	
  Liquidation, Termination, Dissolution, etc.

  	
  64

  
	
  Section 7.2

  	
   

  	
  Remedies.

  	
  64

  
	
  7.2.1

  	
   

  	
  Acceleration.

  	
  65

  
	
  7.2.2

  	
   

  	
  Further Advances.

  	
  65

  
	
  7.2.3

  	
   

  	
  Uniform Commercial Code.

  	
  65

  
	
  7.2.4

  	
   

  	
  Specific Rights With Regard to Collateral.

  	
  66

  
	
  7.2.5

  	
   

  	
  Application of Proceeds.

  	
  67

  
	
  7.2.6

  	
   

  	
  Performance by Lender.

  	
  67

  
	
  7.2.7

  	
   

  	
  Other Remedies.

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS

  	
  68

  
	
  Section 8.1

  	
   

  	
  Notices.

  	
  68

  
	
  Section 8.2

  	
   

  	
  Amendments; Waivers.

  	
  69

  
	
  Section 8.3

  	
   

  	
  Cumulative Remedies.

  	
  69

  
	
  Section 8.4

  	
   

  	
  Severability.

  	
  70

  
	
  Section 8.5

  	
   

  	
  Assignments by Lender.

  	
  71

  
	
  Section 8.6

  	
   

  	
  Participations by Lender.

  	
  71

  
	
  Section 8.7

  	
   

  	
  Disclosure of Information by Lender.

  	
  72

  
	
  Section 8.8

  	
   

  	
  Successors and Assigns.

  	
  72

  
	
  Section 8.9

  	
   

  	
  Continuing Agreements.

  	
  72

  
	
  Section 8.10

  	
   

  	
  Enforcement Costs.

  	
  72

  
	
  Section 8.11

  	
   

  	
  Applicable Law; Jurisdiction.

  	
  73

  
	
  8.11.1

  	
   

  	
  Applicable Law.

  	
  73

  
	
  8.11.2

  	
   

  	
  Submission to Jurisdiction.

  	
  73

  
	
  8.11.3

  	
   

  	
  Service of Process.

  	
  73

  
	
  Section 8.12

  	
   

  	
  Duplicate Originals and Counterparts.

  	
  73

  
	
  Section 8.13

  	
   

  	
  Headings.

  	
  73

  
	
  Section 8.14

  	
   

  	
  No Agency.

  	
  74

  
	
  Section 8.15

  	
   

  	
  Date of Payment.

  	
  74

  
	
  Section 8.16

  	
   

  	
  Entire Agreement.

  	
  74

  
	
  Section 8.17

  	
   

  	
  Waiver of Trial by Jury.

  	
  74

  
	
  Section 8.18

  	
   

  	
  LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES.

  	
  74

  
	
  Section 8.19

  	
   

  	
  Liability of Lender.

  	
  75

  
	
  Section 8.20

  	
   

  	
  Indemnification.

  	
  75

  
	
  Section 8.21

  	
   

  	
  Confidentiality.

  	
  76

  
	
  Section 8.22

  	
   

  	
  Patriot Act Notice.

  	
  76

  
	
  Section 8.23

  	
   

  	
  Compliance with Laws.

  	
  76

  
	
  Section 8.24

  	
   

  	
  Electronic Transmission of Data.

  	
  77

  

 

4

 

SECOND AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED FINANCING AND
SECURITY AGREEMENT (this “Agreement”) is made as of November 5, 2008, by
and between GENERAL PHYSICS
CORPORATION, a Delaware corporation (“General Physics” or “Borrower”) and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (“Lender”).

 

RECITALS

 

A.            Borrower and Lender
are parties to an Amended and Restated Financing and Security Agreement dated
as of August 6, 2007 (the “Original Financing Agreement”) pursuant to
which Lender has provided to Borrower a revolving credit facility in the
maximum principal amount of $25,000,000 and a letter of credit facility as a
part of that revolving credit facility, to be used by Borrower for the certain
permitted uses as defined in the Original Financing Agreement.

 

C.            Borrower has applied
to Lender for (i) an extension of the maturity date of the credit
facilities under the Original Financing Agreement, (ii) an increase in the
revolving credit facility to the maximum principal amount of $35,000,000, (iii) an
increase in sublimit for the letter of credit facility to $5,000,000, (iv) a
change in the Permitted Uses (as hereinafter defined) and (v) a change in
the pricing applicable to the revolving credit facility.

 

D.            Lender has agreed to
amend the Original Financing Agreement and, in connection therewith, agreed
with Borrower to restate the Original Financing Agreement in its entirety upon
the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENTS

 

NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1             Certain
Defined Terms.

 

As used in this Agreement, the terms defined in the
Preamble and Recitals hereto shall have the respective meanings specified
therein, and the following terms shall have the following meanings:

 

“Account” individually and “Accounts” collectively
mean all presently existing or hereafter acquired or created accounts, accounts
receivable, health-care insurance receivables, contract rights, notes, drafts,
instruments, acceptances, chattel paper, leases and writings evidencing a
monetary obligation or a security interest in, or a lease of, goods, all rights
to payment of a monetary obligation or other consideration under present or
future contracts

 

 

(including, without
limitation, all rights (whether or not earned by performance) to receive
payments under presently existing or hereafter acquired or created letters of
credit), or by virtue of property that has been sold, leased, licensed,
assigned or otherwise disposed of, services rendered or to be rendered, loans
and advances made or other considerations given, by or set forth in or arising
out of any present or future chattel paper, note, draft, lease, acceptance,
writing, bond, insurance policy, instrument, document or general intangible,
and all extensions and renewals of any thereof, all rights under or arising out
of present or future contracts, agreements or general interest in goods which
gave rise to any or all of the foregoing, including all commercial tort claims,
other claims or causes of action now existing or hereafter arising in
connection with or under any agreement or document or by operation of law or
otherwise, all collateral security of any kind (including, without limitation,
real property mortgages and deeds of trust) Supporting Obligations,
letter-of-credit rights and letters of credit given by any Person with respect
to any of the foregoing, all books and records in whatever media (paper,
electronic or otherwise) recorded or stored, with respect to any or all of the
foregoing and all equipment and general intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all Proceeds of the foregoing.

 

“Account Debtor” means any Person who is obligated on
a Receivable and “Account Debtors” mean all Persons who are obligated on the
Receivables.

 

“ACH Transactions” means any cash management or
related services including the automatic clearing house transfer of funds by
Lender for the account of any Borrower pursuant to agreement or overdrafts.

 

“Additional Borrower” means each Person that has
executed and delivered an Additional Borrower Joinder Supplement that has been
accepted and approved by Lender.

 

“Additional Borrower Joinder Supplement” means an
Additional Borrower Joinder Supplement in substantially the form attached
hereto as EXHIBIT A, with the blanks appropriately completed and
executed and delivered by the Additional Borrower and accepted by General
Physics on behalf of Borrowers.

 

“Adjustment Date” has the meaning described in Section 8.5
(Assignments by Lender).

 

“Affiliate” means, with respect to any designated
Person, any other Person, (a) directly or indirectly controlling, directly
or indirectly controlled by, or under direct or indirect common control with
the Person designated, (b) directly or indirectly owning or holding twenty
percent (20%) or more of any equity interest in such designated Person, or (c) twenty
percent (20%) or more of whose stock or other equity interest is directly or
indirectly owned or held by such designated Person.  For purposes of this definition, the term “control”
(including with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities or other equity
interests or by contract or otherwise.

 

2

 

“Agreement” means this Amended and Restated Financing
and Security Agreement, as amended, restated, supplemented or otherwise
modified in writing in accordance with the provisions of Section 8.2
(Amendments; Waivers).

 

“Applicable Margin” means
the applicable rate per annum added, as set forth in Section 2.3
(Applicable Interest Rates), to the LIBOR Market Index Rate.

 

“Applicable Rate” means the sum of (a) the
Applicable Margin plus (b) the LIBOR Market Index Rate.

 

“Assets” means at any date all assets that, in
accordance with GAAP consistently applied, should be classified as assets on a
consolidated balance sheet of Borrowers and their respective Subsidiaries.

 

“Assignee” means any Person to which Lender assigns
all or any portion of its interests under this Agreement, any Commitment, and
the Revolving Loan, in accordance with the provisions of Section 8.5
(Assignments by Lender), together with any and all successors and assigns of
such Person; “Assignees” means the collective reference to all Assignees.

 

“Bankruptcy Code” means Title 11 of the United States
Code, as amended from time to time, and any successor Laws.

 

“Blocked Account” means collectively the deposit
accounts subject to the Blocked Account Agreements.

 

“Blocked Account Agreements” means collectively the
Blocked Account Agreement dated as of August 13, 2003 by and among General
Physics, Lender and Bank of America, N. A., each as amended, modified,
substituted, extended, and renewed from time to time.

 

“Borrower” means each Person defined as a “Borrower”
in the preamble of this Agreement and each Additional Borrower; “Borrowers”
means the collective reference to all Persons defined as “Borrower” in the
preamble to this Agreement and all Additional Borrowers.

 

“Borrowing Base” has the meaning described in Section 2.1.3
(Borrowing Base).

 

“Borrowing Base Deficiency” has the meaning described
in Section 2.1.3 (Borrowing Base).

 

“Borrowing Base Report” has the meaning described in Section 2.1.4
(Borrowing Base Report).

 

“Business Day” means any day other than a Saturday,
Sunday or other day on which commercial banks in the State are authorized or
required to close.

 

“Capital Adequacy Regulation” means any guideline,
request or directive of any central bank or other Governmental Authority, or
any other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.

 

3

 

“Capital Expenditure” means an expenditure (whether
payable in cash or other property or accrued as a liability) for Fixed or
Capital Assets, including, without limitation, the entering into of a Capital
Lease.

 

“Capital Lease” means with respect to any Person any
lease of real or personal property, for which the related Lease Obligations
have been or should be, in accordance with GAAP consistently applied,
capitalized on the balance sheet of that Person.

 

“Cash Equivalents” means (a) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency thereof, (b) certificates
of deposit with maturities of one (1) year or less from the date of
acquisition of, or money market accounts maintained with, Lender, any Affiliate
of Lender, or any other domestic commercial bank having capital and surplus in
excess of One Hundred Million Dollars ($100,000,000.00) or such other domestic
financial institutions or domestic brokerage houses to the extent disclosed to,
and approved by, Lender and (c) commercial paper of a domestic issuer
rated at least either A-1 by Standard & Poor’s Corporation (or its
successor) or P-1 by Moody’s Investors Service, Inc. (or its successor)
with maturities of six (6) months or less from the date of acquisition.

 

“Chattel Paper” means a record or records (including,
without limitation, electronic chattel paper) that evidence both a monetary
obligation and a security interest in specific goods, a security interest in
specific goods and software used in the goods, or a lease of specific goods;
all Supporting Obligations with respect thereto; any returned, rejected or
repossessed goods and software covered by any such record or records and all
proceeds (in any form including, without limitation, accounts, contract rights,
documents, chattel paper, instruments and general intangibles) of such
returned, rejected or repossessed goods; and all Proceeds of the foregoing.

 

“Closing Date” means the date on the cover of this
Agreement.

 

“Collateral” means all property of each and every
Borrower subject from time to time to the Liens of this Agreement, any of the
Security Documents and/or any of the other Financing Documents, together with
any and all Proceeds thereof.

 

“Collateral Account” has the meaning described in Section 2.1.8
(The Collateral Account).

 

“Collateral Disclosure List” has the meaning described
in Section 3.3 (Collateral Disclosure List).

 

“Commitment” means the Revolving Credit Commitment.

 

“Compliance Certificate” means a periodic Compliance
Certificate described in Section 6.1.1 (Financial Statements).

 

“Commonly Controlled Entity” means an entity, whether
or not incorporated, which together with any Borrower would be deemed to be a “single
employer” within the meaning of Internal Revenue Code § 414(b) or
(c), and for the purpose of ERISA § 302 and/or Internal Revenue Code
§§ 412, 4971, 4977, 4980D, 4980E and/or each “applicable section” under 

 

4

 

Internal Revenue Code
§ 414(t)(2), within the meaning of the Internal Revenue Code
§ 414(b), (c) (m) or (o).

 

“Copyrights” means and includes, in each case whether
now existing or hereafter arising, all of each Borrower’s rights, title and
interest in and to (a) all copyrights, rights and interests in copyrights,
works protectable by copyright, copyright registrations, copyright
applications, and all renewals of any of the foregoing, (b) all income,
royalties, damages and payments now or hereafter due and/or payable under any
of the foregoing, including, without limitation, damages or payments for past,
current or future infringements of any of the foregoing, (c) the right to
sue for past, present and future infringements of any of the foregoing, and (d) all
rights corresponding to any of the foregoing throughout the world.

 

“Credit Facility” means the Revolving Credit Facility
or the Letter of Credit Facility, as the case may be, and “Credit Facilities”
means collectively the Revolving Credit Facility and the Letter of Credit
Facility and any and all other credit facilities now or hereafter extended
under or secured by this Agreement.

 

“Current Letter of Credit Obligations” has the meaning
described in Section 2.2.5 (Payments of Letters of Credit).

 

“Default” means an event which, with the giving of
notice or lapse of time, or both, would reasonably be expected to constitute an
Event of Default under the provisions of this Agreement.

 

“Documents” means all documents of title or receipts,
whether now existing or hereafter acquired or created, and all Proceeds of the
foregoing.

 

“Eligible Receivable” and “Eligible Receivables” mean,
at any time of determination thereof, the unpaid portion of each account (net
of any returns, discounts, claims, credits, charges, accrued rebates or other
allowances, offsets, deductions, counterclaims, disputes or other defenses and
reduced by the aggregate amount of all reserves, limits and deductions provided
for in this definition and elsewhere in this Agreement) receivable in United
States Dollars, provided each account conforms and continues to conform to the
following criteria to the satisfaction of Lender:

 

(a)           the account arose in
the ordinary course of business from a bona fide outright sale of goods or from
services performed;

 

(b)           the account is a valid,
legally enforceable obligation of the Account Debtor and requires no further
act on the part of any Person under any circumstances to make the account
payable by the Account Debtor;

 

(c)           the account is based
upon an enforceable order or contract, written or oral, for Inventory shipped
or services performed, and the same were shipped or performed in accordance
with such order or contract;

 

(d)           if the account arises
from the sale of Inventory, the Inventory the sale of which gave rise to the
account has been shipped or delivered 

 

5

 

to the Account Debtor on an absolute sale basis and
not on a bill and hold sale basis, a consignment sale basis, a guaranteed sale
basis, a sale or return basis, or on the basis of any other similar
understanding;

 

(e)           if the account arises
from the performance of services, such services have been fully rendered and do
not relate to any warranty claim or obligation;

 

(f)            the account is
evidenced by an invoice or other documentation in form acceptable to Lender,
dated no later than is customary in the ordinary course of business and
containing only terms normally offered by the applicable Borrower;

 

(g)           the amount shown on the
books of a Borrower, and on any invoice, certificate, schedule or statement
delivered to Lender is owing to such Borrower, and no partial payment has been
received unless reflected on the books of such Borrower, and deducted from the
amount due;

 

(h)           the account is not
outstanding more than ninety (90) days from the date of the invoice therefor or
past due more than sixty (60) days after its due date, which shall not be later
than sixty (60) days after the invoice date;

 

(i)            the account is not
owing by any Account Debtor for which Lender has deemed fifty percent (50%) or
more of such Account Debtor’s other accounts (or any portion thereof) due to a
Borrower, individually, or all Borrowers collectively, to be non-Eligible
Receivables;

 

(j)            the account is not
owing by an Account Debtor or a group of affiliated Account Debtors to any
Borrower whose then existing accounts owing to that Borrower, individually, exceed
in aggregate face amount fifteen percent (15%) of such Borrower’s total
Eligible Receivables; provided, however, for the purposes of this subsection
(j), each contract with any agency or division of the United States Government,
shall be treated as though entered into with a separate Account Debtor and if a
Borrower has an account or accounts which, when aggregated with other accounts
owing by an Account Debtor or group of affiliated Account Debtors, exceed(s) fifteen
percent (15%) of such Borrower’s total Eligible Receivables, only that portion
of the account in excess of fifteen percent (15%) shall be deemed ineligible;

 

(k)           the Account Debtor has
not returned, rejected or refused to retain, or otherwise notified a Borrower
of any dispute concerning, or claimed nonconformity of, any of the Inventory or
services from the sale or furnishing of which the account arose; provided,
however, the Receivable shall be deemed ineligible only to the extent of the
disputed amount;

 

(l)            the account is not
subject to any present or contingent (and no facts exist which are the basis
for any future) offset, claim, 

 

6

 

deduction or counterclaim, dispute or defense in law
or equity on the part of such Account Debtor, or any claim for credits,
allowances, or adjustments by the Account Debtor because of returned, inferior
or damaged Inventory or unsatisfactory services, or for any other reason
including, without limitation, those arising on account of a breach of any
express or implied representation or warranty; provided, however, the
Receivable shall be deemed ineligible only to the extent of the disputed
amount;

 

(m)          the Account Debtor is
not a Subsidiary or Affiliate of any Borrower, or an employee, officer,
director or shareholder of any Borrower, or Affiliate of any Borrower;

 

(n)           the Account Debtor is
not incorporated or primarily conducting business in any jurisdiction outside
of the United States of America or Canada (excluding Quebec Province), unless
the Account Debtor’s obligations with respect to such account are secured by a
letter of credit, guaranty or banker’s acceptance having terms and from such
issuers and confirmation banks as are acceptable to Lender in its sole and
absolute discretion (which letter of credit, guaranty or banker’s acceptance is
subject to the perfected Lien of Lender);

 

(o)           as to which none of the
following events has occurred with respect to the Account Debtor on such
Account:  death or judicial declaration
of incompetency of an Account Debtor who is an individual; the filing by or
against the Account Debtor of a request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency, or similar laws
of the United States, any state or territory thereof, or any foreign
jurisdiction, now or hereafter in effect; the making of any general assignment
by the Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a “custodian,” as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;

 

(p)           no Borrower, is
indebted in any manner to the Account Debtor (as creditor, lessor, supplier or
otherwise), with the exception of customary credits, adjustments and/or
discounts given to an Account Debtor by a Borrower, in the ordinary course of
its business; provided, however, if in the ordinary course of business any
Borrower incurs obligations to an Account Debtor for goods or services, the
account shall be deemed ineligible only to the 

 

7

 

extent of the amount of such payable due to the
Account Debtor by such Borrower;

 

(q)           the account does not
arise from services under or related to any warranty obligation or out of
service charges, finance charges or other fees for the time value of money;

 

(r)            the account is not
evidenced by chattel paper or an instrument of any kind and, except as may
occur under subsection (n) above, is not secured by any letter of credit;

 

(s)           the title of the
respective Borrower, to the account is absolute and is not subject to any prior
assignment, claim, Lien, or security interest, except Permitted Liens;

 

(t)            no bond or other
undertaking by a guarantor or surety has been or is required to be obtained,
supporting the performance of any Borrower, or any other obligor in respect of
any of such Borrower’s agreements with the Account Debtor or supporting the
account and any of the Account Debtor’s obligations in respect of the account;

 

(u)           each Borrower, has the
full and unqualified right and power to assign and grant a security interest
in, and Lien on, the account to Lender as security and collateral for the
payment of the Obligations;

 

(v)           the account does not
arise out of a contract with, or order from, an Account Debtor that, by its
terms, forbids or makes void or unenforceable the assignment or grant of a
security interest by Borrower, to Lender of the account arising from such
contract or order;

 

(w)          the account is subject
to a Lien in favor of Lender, which Lien is perfected as to the account by the
filing of financing statements and which Lien upon such filing constitutes a
first priority security interest and Lien, subject to Permitted Liens;

 

(x)           the Inventory giving
rise to the account was not, at the time of the sale thereof, subject to any
Lien other than Permitted Liens;

 

(y)           no part of the account
represents an advance or “up-front” billing for which work has not been
performed or a retainage; and

 

(z)           Lender in the good
faith exercise of its sole and absolute discretion has not deemed the account
ineligible because of uncertainty as to the creditworthiness of the Account
Debtor or because Lender otherwise considers the collateral value of such
account to Lender to be impaired or its ability to realize such value to be
insecure.

 

8

 

In the event of any dispute, under the foregoing
criteria, as to whether an account is, or has ceased to be, an Eligible
Receivable, the decision of Lender in the good faith exercise of its sole and
absolute discretion shall control.

 

“Enforcement Costs” means all reasonable expenses,
charges, costs and fees whatsoever of any nature whatsoever paid or incurred by
or on behalf of Lender in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents, (b) the
creation, perfection, collection, maintenance, preservation, defense,
protection, realization upon, disposition, sale or enforcement of all or any
part of the Collateral, this Agreement or any of the other Financing Documents,
including, without limitation, those costs and expenses more specifically
enumerated in Section 3.6 (Costs) and/or Section 8.10 (Enforcement
Costs), and further including, without limitation, amounts paid to lessors,
processors, bailees, warehousemen, sureties, judgment creditors and others in
possession of or with a Lien against or claimed against the Collateral, and (c) the
monitoring, administration, processing and/or servicing of any or all of the
Obligations, the Financing Documents, and/or the Collateral.

 

“Equipment” means all equipment, machinery, computers,
chattels, tools, parts, machine tools, furniture, furnishings, fixtures and
supplies of every nature, presently existing or hereafter acquired or created
and wherever located, whether or not the same shall be deemed to be affixed to
real property, and all of such types of property leased by any Borrower and all
of Borrowers’ rights and interests with respect thereto under such leases
(including, without limitation, options to purchase), together with all
accessions, additions, fittings, accessories, special tools, and improvements
thereto and substitutions therefor and all parts and equipment which may be
attached to or which are necessary or beneficial for the operation, use and/or
disposition of such personal property, all licenses, warranties, franchises and
General Intangibles related thereto or necessary or beneficial for the
operation, use and/or disposition of the same, together with all Accounts,
Chattel Paper, Instruments and other consideration received by any Borrower on
account of the sale, lease or other disposition of all or any part of the
foregoing, and together with all rights under or arising out of present or
future Documents and contracts relating to the foregoing and all Proceeds of
the foregoing.

 

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended from time to time.

 

“Event of Default” has the meaning described in
ARTICLE VII (Default and Rights and Remedies).

 

“Facilities” means the collective reference to the
loan, letter of credit, interest rate protection, foreign exchange risk, cash
management, and other credit facilities now or hereafter provided to any one or
more of Borrowers by Lender.

 

“Fees” means, without duplication, the collective
reference to each fee payable to Lender under the terms of this Agreement or
under the terms of any of the other Financing Documents.

 

“Financing Documents” means at any time collectively
this Agreement, the Notes, the Security Documents, the Letter of Credit
Documents, and any other instrument, agreement or document previously,
simultaneously or hereafter executed and delivered by any Borrower, any 

 

9

 

Guarantor and/or any
other Person, singly or jointly with another Person or Persons, evidencing,
securing, guarantying or in connection with this Agreement, any Note, any of
the Security Documents, any of the Facilities, and/or any of the Obligations.

 

“Fixed or Capital Assets” of a Person at any date
means all assets which would, in accordance with GAAP consistently applied, be
classified on the balance sheet of such Person as property, plant or equipment
at such date.

 

“GAAP” means generally accepted accounting principles
in the United States of America in effect from time to time.

 

“General Intangibles” means all general intangibles of
every nature, whether presently existing or hereafter acquired or created, and
without implying any limitation of the foregoing, further means all books and
records, commercial tort claims, other claims (including without limitation all
claims for income tax and other refunds), payment intangibles, Supporting
Obligations, choses in action, claims, causes of action in tort or equity,
contract rights, judgments, customer lists, software, Patents, Trademarks, licensing
agreements, rights in intellectual property, goodwill (including goodwill of
any Borrower’s business symbolized by and associated with any and all
Trademarks, trademark licenses, Copyrights and/or service marks), royalty
payments, licenses, letter-of-credit rights, letters of credit, contractual
rights, the right to receive refunds of unearned insurance premiums, rights as
lessee under any lease of real or personal property, literary rights,
Copyrights, service names, service marks, logos, trade secrets, amounts
received as an award in or settlement of a suit in damages, deposit accounts,
interests in joint ventures, general or limited partnerships, or limited
liability companies or partnerships, rights in applications for any of the
foregoing, books and records in whatever media (paper, electronic or otherwise)
recorded or stored, with respect to any or all of the foregoing, all Supporting
Obligations with respect to any of the foregoing, and all Equipment and General
Intangibles necessary or beneficial to retain, access and/or process the
information contained in those books and records, and all Proceeds of the
foregoing.

 

“Governmental Authority” means any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government and any department, agency or instrumentality thereof.

 

“Government Contracts” means any contract with the
United States or any department, agency or instrumentality of the United
States.

 

“GPX” means GP Strategies Corporation, a corporation
organized and existing under the laws of the State of Delaware.

 

“Guarantor” means GPX and its successors and assigns.

 

“Guaranty” means that certain guaranty of payment for
the benefit of Lender dated as of the Closing Date from GPX, as the same may
from time to time be extended, amended, restated or otherwise modified.

 

“Hazardous Materials” means (a) any “hazardous
waste” as defined by the Resource Conservation and Recovery Act of 1976, as
amended from time to time, and regulations 

 

10

 

promulgated thereunder; (b) any
“hazardous substance” as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and
regulations promulgated thereunder; and (c) any substance the presence of
which on any property now or hereafter owned, acquired or operated by any
Borrower is prohibited by any Law similar to those set forth in this definition.

 

“Hazardous Materials Contamination” means the
contamination (whether presently existing or occurring after the date of this
Agreement) by Hazardous Materials of any property owned, operated or controlled
by any Borrower or for which any Borrower has responsibility, including,
without limitation, improvements, facilities, soil, ground water, air or other
elements on, or of, any property now or hereafter owned, acquired or operated
by any Borrower, and any other contamination by Hazardous Materials for which
any Borrower is responsible.

 

“Indebtedness” of a Person means at any date the total
liabilities of such Person at such time determined in accordance with GAAP
consistently applied.

 

“Indebtedness for Borrowed Money” of a Person means at
any time the sum at such time of (a) Indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services, (b) any
obligations of such Person in respect of letters of credit, banker’s or other
acceptances or similar obligations issued or created for the account of such
Person, (c) Lease Obligations of such Person with respect to Capital
Leases, (d) all liabilities secured by any Lien on any property owned by
such Person, to the extent attached to such Person’s interest in such property,
even though such Person has not assumed or become personally liable for the
payment thereof, (e) obligations of third parties which are being
guarantied or indemnified against by such Person or which are secured by the
property of such Person; (f) any obligation of such Person under an
employee stock ownership plan or other similar employee benefit plan; (g) any
obligation of such Person or a Commonly Controlled Entity to a Multiemployer
Plan; and (h) any obligations, liabilities or indebtedness, contingent or
otherwise, under or in connection with, any Swap Contract; but excluding trade
and other accounts payable in the ordinary course of business in accordance
with customary trade terms and which are not overdue (as determined in
accordance with customary trade practices) or which are being disputed in good
faith by such Person and for which adequate reserves are being provided on the
books of such Person in accordance with GAAP.

 

“Indemnified Parties” has the meaning set forth in Section 8.20
(Indemnification).

 

“Instrument” means a negotiable instrument or any
other writing which evidences a right to payment of a monetary obligation and
is not itself a security agreement or lease and is of a type that in the
ordinary course of business is transferred by delivery with any necessary
endorsement or assignment, and all Supporting Obligations with respect to any
of the foregoing and all Proceeds with respect to any of the foregoing.

 

“Interest Coverage Ratio” shall be defined as (a) earnings
before deduction of interest and taxes paid divided by (b) the sum of
interest and tax payments.

 

“Internal Revenue Code” means the Internal Revenue
Code of 1986, as amended from time to time, and the Income Tax Regulations
issued and proposed to be issued thereunder.

 

11

 

“Inventory” means all goods whether now owned or
hereafter acquired and other personal property furnished under any contract of
service or intended for sale or lease, including, without limitation, all raw
materials, work-in-process, finished goods and materials and supplies of any
kind, nature or description which are used or consumed in any Borrower’s
business or are or might be used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods and other personal
property and all licenses, warranties, franchises, General Intangibles,
personal property and all documents of title or documents relating to the same,
together with all Accounts, Chattel Paper, Instruments and other consideration
received on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all Proceeds of
the foregoing.

 

“Investment Property” means a security, whether
certificated or uncertificated, security entitlement, securities account,
commodity contract or commodity account and all Proceeds of, and Supporting
Obligations with respect to, the foregoing.

 

“ISP” means, with respect to any Letter of Credit,
the “International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as
may be in effect at the time of issuance).

 

“Item of Payment” means each check, draft, cash,
money, instrument, item, and other remittance in payment or on account of
payment of the Receivables or otherwise with respect to any Collateral,
including, without limitation, cash proceeds of any returned, rejected or
repossessed goods, the sale or lease of which gave rise to a Receivable, and
other proceeds of Collateral; and “Items of Payment” means the collective
reference to all of the foregoing.

 

“Laws” means all ordinances, statutes, rules,
regulations, orders, injunctions, writs, or decrees of any Governmental
Authority.

 

“Lease Obligations” of a Person means for any period
the rental commitments of such Person for such period under leases for real
and/or personal property (net of rent from subleases thereof, but including
taxes, insurance, maintenance and similar expenses which such Person, as the
lessee, is obligated to pay under the terms of said leases, except to the
extent that such taxes, insurance, maintenance and similar expenses are payable
by sublessees), including rental commitments under Capital Leases.

 

“Letter of Credit” and “Letters of Credit” shall have
the meanings described in Section 2.2.1 (Letters of Credit).

 

“Letter of Credit Agreement” means the collective
reference to each letter of credit application and agreement substantially in
the form of Lender’s then standard form of application for letter of credit or
such other form as may be approved by Lender, executed and delivered by any
Borrower or Borrowers in connection with the issuance of a Letter of Credit, as
the same may from time to time be amended, restated, supplemented or modified
and “Letter of Credit Agreements” means all of the foregoing in effect at any
time and from time to time.

 

“Letter of Credit Cash Collateral Account” has the
meaning described in Section 2.2.3 (Terms of Letters of Credit).

 

12

 

“Letter of Credit Documents” means any and all drafts
under or purporting to be under a Letter of Credit, any Letter of Credit Agreement,
and any other instrument, document or agreement executed and/or delivered by
any Borrower or Borrowers or any other Person under, pursuant to or in
connection with a Letter of Credit or any Letter of Credit Agreement.

 

“Letter of Credit Facility” means the facility
established pursuant to Section 2.2 (Letter of Credit Facility).

 

“Letter of Credit Fee” and “Letter of Credit Fees”
have the meanings described in Section 2.2.2 (Letter of Credit Fees).

 

“Letter of Credit Obligations” means all Obligations
of Borrowers with respect to the Letters of Credit and the Letter of Credit
Agreements.

 

“Letter-of-credit right” means a right to payment or
performance under a letter of credit, whether or not the beneficiary has
demanded or is at the time entitled to demand payment or performance.

 

“Liabilities” means at any date all liabilities that
in accordance with GAAP consistently applied should be classified as
liabilities on a consolidated balance sheet of Borrowers and their respective
Subsidiaries.

 

“LIBOR Market Index Rate”, for any day the rate
(rounded to the next higher 1/100 of 1%) for 1 month U.S. dollar deposits as
reported on Telerate page 3750 as of 11:00 a.m., London time, on such
day, provided, if such day is not a London business day, then the immediately
preceding London business day (or if not so reported, then as determined by
Lender from another recognized source or interbank quotation).

 

“Lien” means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
charge, or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, and any financing lease having substantially
the same economic effect as any of the foregoing).

 

“Loan Notice” has the meaning described in Section 2.1.2
(Procedure for Making Advances).

 

“Lockbox” has the meaning described in Section 2.1.8
(The Collateral Account).

 

“Maximum Rate” has the meaning described in Section 2.4.6
(Maximum Interest Rate).

 

“Monitoring Fee” and “Monitoring Fees” have the
meanings described in Section 2.4.4 (Monitoring Fee).

 

“Multiemployer Plan” means a Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

13

 

“Net Worth” means the consolidated shareholders’
equity, defined in accordance with GAAP, of Borrowers and their respective
Subsidiaries.

 

“Notice” means a communication delivered in accordance
with the terms of Section 8.1 (Notices).

 

“Note” means the Revolving Credit Note, and “Notes”
means collectively the Revolving Credit Note and any other promissory note
which may from time to time evidence all or any portion of the Obligations.

 

“Obligations” means, without duplication, all present
and future indebtedness, duties, obligations, and liabilities, whether now
existing or contemplated or hereafter arising, of any one or more of Borrowers
to Lender under, arising pursuant to, in connection with and/or on account of
the provisions of this Agreement, each Note, each Security Document, and/or any
of the other Financing Documents, the Revolving Loan, any Swap Contract and/or
any of the Facilities including, without limitation, the principal of, and
interest on, each Note, late charges, the Fees, Enforcement Costs, and
prepayment fees (if any), letter of credit reimbursement obligations, letter of
credit fees or fees charged with respect to any guaranty of any letter of
credit, regardless of whether such indebtedness, duties, obligations, and
liabilities be direct, indirect, primary, secondary, joint, several, joint and
several, fixed or contingent; and also means any and all renewals, extensions,
substitutions, amendments, restatements and rearrangements of any such
indebtedness, duties, obligations, and liabilities.

 

“OFAC” means the U.S. Department of the Treasury’s
Office of Foreign Assets Control.

 

“Origination Fee” has the meaning described in Section 2.4.3
(Origination Fee).

 

“Outstanding Letter of Credit Obligations” has the
meaning described in Section 2.2.3 (Terms of Letters of Credit).

 

“Patents” means and includes, in each case whether now
existing or hereafter arising, all of each Borrower’s rights, title and
interest in and to (a) any and all patents and patent applications, (b) any
and all inventions and improvements described and claimed in such patents and
patent applications, (c) reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any patents and patent applications, (d) income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect to any patents or patent applications, including,
without limitation, damages and payments for past and future infringements, (e) rights
to sue for past, present and future infringements of patents, and (f) all
rights corresponding to any of the foregoing throughout the world.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Permitted Acquisitions” means acquisitions which may
be made by Borrower, provided there is no Default or Event of Default both
prior to the acquisition and on a pro-forma basis, for which the aggregate cash
purchase price paid at closing plus the projected earnout payments to be paid
by Borrower do not exceed Twenty Million Dollars ($20,000,000).

 

14

 

“Permitted Liens” means:  (a) Liens for Taxes which are not
delinquent or which Lender has determined in the exercise of its sole and
absolute discretion (i) are being diligently contested in good faith and
by appropriate proceedings, and such contest operates to suspend collection of
the contested Taxes and enforcement of a Lien, (ii) the applicable
Borrower, has the financial ability to pay, with all penalties and interest, at
all times without materially and adversely affecting such Borrower, and (iii) are
not, and will not be with appropriate filing, the giving of notice or the
passage of time alone, entitled to priority over any Lien of Lender; (b) deposits to secure the performance of bids,
trade contracts and leases (other than Indebtedness), statutory obligations,
surety bonds (other than bonds related to judgments or litigation), performance
bonds and other obligations of a like nature incurred in the ordinary course of
business; (c) Liens securing the Obligations; (d) judgment
Liens to the extent the entry of such judgment does not constitute an Event of
Default under the terms of this Agreement or result in the sale or levy of, or
execution on, any of the Collateral; (e) Liens existing as of the date
hereof, including Liens securing the Subordinated Debt; (f) Liens securing
Capital Leases that are otherwise permitted hereunder; (g) carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than thirty (30) days or
which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of the applicable Borrower; (h) easements, rights-of-way,
restrictions and other similar encumbrances affecting real property which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Borrower;
and (i) such other Liens, if any, as are set forth on Schedule
4.1.20 attached hereto and made a part hereof.

 

“Permitted Uses” means (a) an amount not to
exceed $10,000,000 to be used to repurchase issued and outstanding stock of GPX
after August 14, 2008, (b) general working capital purposes arising
in the ordinary course of Borrowers’ business which shall include payment of
annual earn-out payments in connection with the acquisitions of Sandy
Corporation, Via Training, LLC and Performance Consulting Services, Inc.,
and (c) to support the issuance of Letters of Credit.

 

“Person” means and includes an individual, a
corporation, a partnership, a joint venture, a limited liability company or
partnership, a trust, an unincorporated association, a Governmental Authority,
or any other organization or entity.

 

“Plan” means any “pension
plan” as defined in ERISA Section 3(2) maintained by any Borrower or
a Commonly Controlled Entity in which any Borrower or a Commonly Controlled
Entity is an “employer” as defined in Section 3(5) of ERISA and which is intended to qualify for
favorable tax treatment pursuant to Internal Revenue Code Section 401(a).

 

“Post-Default Rate” means the Applicable Rate in
effect from time to time, plus three percent (3%) per annum.

 

“Post-Expiration Date Letter of Credit” and “Post-Expiration
Date Letters of Credit” have the meanings described in Section 2.2.3
(Terms of Letters of Credit).

 

15

 

“Prepayment” means a Revolving Loan Mandatory
Prepayment or a Revolving Loan Optional Prepayment, as the case may be, and “Prepayments”
mean collectively all Revolving Loan Mandatory Prepayments and all Revolving
Loan Optional Prepayments.

 

“Pricing Ratio” means the Total Liabilities to
Tangible Net Worth Ratio.

 

“Proceeds” has the meaning described in the Uniform
Commercial Code as in effect from time to time.

 

“Receivable” means a now owned or hereafter owned,
acquired or created Account, Chattel Paper, General Intangible or Instrument
and all Proceeds thereof; and “Receivables” means all now or hereafter owned,
acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments, and all Proceeds thereof.

 

“Registered Organization” means an organization
organized solely under the law of a single state or the United States and as to
which the state or the United States must maintain a public record showing the
organization to have been organized.

 

“Reportable Event” means any of the events set forth
in Section 4043(c) of ERISA or the regulations thereunder.

 

“Responsible Officer” means, with respect to a Person,
the chief executive officer or the president of such Person or, with respect to
financial matters, the chief financial officer of such Person.

 

“Revolving Credit Commitment” means the agreement of
Lender relating to the making of the Revolving Loan and advances thereunder
subject to and in accordance with the provisions of this Agreement.

 

“Revolving Credit Commitment Period” means the period
of time from the Closing Date to the Business Day preceding the Revolving
Credit Termination Date.

 

“Revolving Credit Committed Amount” has the meaning
described in Section 2.1.1 (Revolving Credit Facility).

 

“Revolving Credit Expiration Date” means October 31,
2010, unless otherwise extended for successive periods of one (1) year
beyond the then existing maturity date commencing as of the first anniversary
date of this Agreement, by Lender in the exercise of its sole and absolute
discretion.

 

“Revolving Credit Facility” means the facility
established by Lender pursuant to Section 2.1 (Revolving Credit Facility).

 

“Revolving Credit Note” has the meaning described in Section 2.1.5
(Revolving Credit Note).

 

16

 

“Revolving Credit Termination Date” means the earlier
of (a) the Revolving Credit Expiration Date, or (b) the date on which
the Revolving Credit Commitment is terminated pursuant to Section 7.2
(Remedies) or otherwise.

 

“Revolving Credit Unused Line Fee” and “Revolving
Credit Unused Line Fees” have the meanings described in Section 2.1.10
(Revolving Credit Unused Line Fee).

 

“Revolving Loan” has the meaning described in Section 2.1.1
(Revolving Credit Facility).

 

“Revolving Loan Account” has the meaning described in Section 2.1.9
(Revolving Loan Account).

 

“Revolving Loan Mandatory Prepayment” and “Revolving
Loan Mandatory Prepayments” have the meanings described in Section 2.1.6
(Mandatory Prepayments of Revolving Loan).

 

“Revolving Loan Optional Prepayment” and “Revolving
Loan Optional Prepayments” have the meanings described in Section 2.1.7
(Optional Prepayment of Revolving Loan).

 

“Sanctioned Country” means a country subject to a
sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/sanctions/, or as otherwise published from time to time.

 

“Sanctioned Person” means (i) a person named
on the list of Specially Designated Nationals or Blocked Persons maintained by
OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time, or (ii) (A) an agency
of the government of a Sanctioned Country, (B) an organization controlled
by a Sanctioned Country, or (C) a person resident in a Sanctioned Country
to the extent subject to a sanctions program administered by OFAC.

 

“Security Documents” means collectively any
assignment, pledge agreement, security agreement, mortgage, deed of trust, deed
to secure debt, financing statement and any similar instrument, document or
agreement under or pursuant to which a Lien is now or hereafter granted to, or
for the benefit of, Lender on any real or personal property of any Person to
secure all or any portion of the Obligations, all as the same may from time to
time be amended, restated, supplemented or otherwise modified.

 

“State” means the State of Maryland.

 

“Subordinated Indebtedness” means all Indebtedness
incurred at any time by any Borrower or Borrowers, which is in amounts, subject
to repayment terms, and subordinated to the Obligations, as set forth in one or
more written agreements, all in form and substance satisfactory to Lender in
its sole and absolute discretion.

 

“Subsidiary” means any corporation the majority of the
voting shares of which at the time are owned directly by any Borrower and/or by
one or more Subsidiaries of any Borrower.

 

17

 

“Supporting Obligation” means a letter-of-credit
right, secondary obligation or obligation of a secondary obligor or that
supports the payment or performance of an account, chattel paper, document,
general intangible, instrument or investment property.

 

“Swap Contract” means any document, instrument or
agreement between Borrower and Lender or any Affiliate of Lender, now existing
or entered into in the future, relating to an interest rate swap transaction,
forward rate transaction, interest rate cap, floor or collar transaction, any
similar transaction, any option to enter into any of the foregoing, and any
combination of the foregoing, which agreement may be oral or in writing,
including, without limitation, any master agreement relating to or governing
any or all of the foregoing and any related schedule or confirmation, each as
amended from time to time.

 

“Tangible Net Worth” means as to the Borrowers and
their respective Subsidiaries on a consolidated basis at any date of
determination thereof, the sum at such time of: 
the Net Worth less the total of (a) all Assets which would be
classified as intangible assets under GAAP consistently applied, (b) any
revaluation or other write-up in book value of assets subsequent to the date of
the most recent financial statements delivered to Lender, and (c) the
amount of all loans and advances (exclusive of advances permitted under Section 6.2.7(a))
to, or investments in, any Person, excluding Cash Equivalents and deposit
accounts maintained by Borrower with any financial institution.

 

“Taxes” means all taxes and assessments whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character (including all penalties or interest thereon), which at any
time may be assessed, levied, confirmed or imposed by any Governmental
Authority on any Borrower or any of its or their properties or assets or any
part thereof or in respect of any of its franchises, businesses, income or
profits.

 

“Trademarks” means and includes in each case whether
now existing or hereafter arising, all of Borrower’s rights, title and interest
in and to (a) any and all trademarks (including service marks), trade
names and trade styles, and applications for registration thereof and the
goodwill of the business symbolized by any of the foregoing, (b) any and
all licenses of trademarks, service marks, trade names and/or trade styles,
whether as licensor or licensee, (c) any renewals of any and all
trademarks, service marks, trade names, trade styles and/or licenses of any of
the foregoing, (d) income, royalties, damages and payments now or
hereafter due and/or payable with respect thereto, including, without
limitation, damages, claims, and payments for past, present and future
infringements thereof, (e) rights to sue for past, present and future
infringements of any of the foregoing, including the right to settle suits
involving claims and demands for royalties owing, and (f) all rights
corresponding to any of the foregoing throughout the world.

 

“Unbilled Receivables” means Receivables which
otherwise qualify as Eligible Receivables but which shall be billed within
fifteen (15) days after the last day of the prior month and are included in
General Physics’ General Ledger Account number 11-601 titled “Sales earned not
billed”.

 

18

 

“Uniform Commercial Code” means, unless otherwise
provided in this Agreement, the Uniform Commercial Code as adopted by and in
effect from time to time in the State or in any other jurisdiction, as
applicable.

 

“Wholly Owned Subsidiary” means any corporation, all
the shares of stock of all classes of which (other than directors’ qualifying
shares) at the time are owned directly or indirectly by a Borrower and/or by
one or more Wholly Owned Subsidiaries of Borrower.

 

Section 1.2                                      Accounting
Terms and Other Definitional Provisions.

 

Unless otherwise defined herein, as used in this
Agreement and in any certificate, report or other document made or delivered
pursuant hereto, accounting terms not otherwise defined herein, and accounting
terms only partly defined herein, to the extent not defined, shall have the
respective meanings given to them under GAAP, as consistently applied to the
applicable Person.  All terms used herein
which are defined by the Uniform Commercial Code shall have the same meanings
as assigned to them by the Uniform Commercial Code unless and to the extent
varied by this Agreement.  The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, subsection, schedule and
exhibit references are references to articles, sections or subsections of, or
schedules or exhibits to, as the case may be, this Agreement unless otherwise
specified.  As used herein, the singular
number shall include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender shall include all genders, as the context
may require.  Reference to any one or
more of the Financing Documents shall mean the same as the foregoing may from
time to time be amended, restated, substituted, extended, renewed, supplemented
or otherwise modified.

 

ARTICLE II 

THE CREDIT FACILITIES

 

Section 2.1                                      The
Revolving Credit Facility.

 

2.1.1        Revolving
Credit Facility.

 

Subject to and upon the provisions of this Agreement,
Lender establishes a revolving credit facility in favor of Borrowers.  The aggregate of all advances under the
Revolving Credit Facility is sometimes referred to in this Agreement as the “Revolving
Loan”.

 

The principal amount of Thirty-Five Million Dollars
($35,000,000) is the “Revolving Credit Committed Amount”.

 

During the Revolving Credit Commitment Period, Lender
agrees to make advances under the Revolving Credit Facility in accordance with
the provisions of this Agreement; provided that after giving effect to any
request duly made pursuant to this Agreement, the aggregate outstanding
principal balance of the Revolving Loan and all Letter of Credit Obligations
would not exceed the lesser of (a) the Revolving Credit Committed Amount
or (b) the then most current Borrowing Base.

 

19

 

Unless sooner paid, the unpaid Revolving Loan,
together with interest accrued and unpaid thereon, and all other Obligations
shall be due and payable in full on the Revolving Credit Expiration Date.

 

2.1.2                        Procedure
for Making Advances Under the Revolving Loan; Lender Protection Loans.

 

Borrowers may borrow under the Revolving Credit
Facility on any Business Day.  Advances
under the Revolving Loan shall be deposited to a demand deposit account of
General Physics with Lender (or an Affiliate of Lender) or shall be otherwise
applied as directed by General Physics, which direction Lender may require to
be in writing.  No later than 12:00 p.m.
(Eastern Time) on the date of the requested borrowing, General Physics shall
give Lender oral or written notice (a “Loan Notice”) of the amount and (if
requested by Lender) the purpose of the requested borrowing.  Any oral Loan Notice shall be confirmed in
writing by General Physics within three (3) Business Days after the making
of the requested advance under the Revolving Loan.  Each Loan Notice shall be irrevocable.

 

In addition, each Borrower hereby irrevocably
authorizes Lender at any time and from time to time, without further request
from or notice to such Borrower, to make advances under the Revolving Loan, and
to establish, without duplication, reserves against the Borrowing Base, which
Lender, in its sole and absolute discretion, deems necessary or appropriate to
protect the interests of Lender, including, without limitation, advances and
reserves under the Revolving Loan made to cover debit balances in the Revolving
Loan Account, principal of, and/or interest on, the Revolving Loan, the
Obligations (including, without limitation, any Letter of Credit Obligations),
and/or Enforcement Costs, prior to, on, or after the termination of other
advances under this Agreement, regardless of whether the outstanding principal
amount of the Revolving Loan that Lender may advance or reserve hereunder
exceeds the Revolving Credit Committed Amount or the Borrowing Base.  Lender shall communicate to General Physics
from time to time any action taken under this paragraph either orally or in
writing.

 

2.1.3                        Borrowing
Base.

 

As used in this Agreement, the term “Borrowing Base”
means at any time, an amount equal to the aggregate of (a) eighty percent
(80%) of the amount of Eligible Receivables of Borrowers and (b) eighty percent (80%) of Borrowers’ Unbilled
Receivables.

 

The Borrowing Base shall be computed based on the
Borrowing Base Report most recently delivered to and accepted by Lender in its
sole and absolute discretion.  In the
event Borrowers fail to furnish a Borrowing Base Report required by Section 2.1.4
(Borrowing Base Report), or in the event Lender believes that a Borrowing Base
Report is no longer accurate, Lender may, in its sole and absolute discretion
exercised from time to time and without limiting its other rights and remedies
under this Agreement, suspend the making of or limit advances under the
Revolving Loan.

 

If at any time the total of the aggregate principal
amount of the Revolving Loan and Outstanding Letter of Credit Obligations
exceeds the Borrowing Base, a borrowing base deficiency (“Borrowing Base
Deficiency”) shall exist.  Each time a
Borrowing Base 

 

20

 

Deficiency exists,
Borrowers, at the sole and absolute discretion of Lender exercised from time to
time, shall pay the Borrowing Base Deficiency ON DEMAND to Lender.

 

Without implying any limitation on Lender’s discretion
with respect to the Borrowing Base, the criteria for Eligible Receivables
contained in the respective definitions of Eligible Receivables are in part
based upon the business operations of Borrowers existing on or about the
Closing Date and upon information and records furnished to Lender by
Borrowers.  If at any time or from time
to time hereafter, the business operations of Borrowers change or such
information and records furnished to Lender is incorrect or misleading, Lender
in its discretion, may at any time and from time to time during the duration of
this Agreement change such criteria or add new criteria.  Lender shall communicate such changed or
additional criteria to Borrowers from time to time either orally or in writing.

 

2.1.4                        Borrowing
Base Report.

 

Borrowers will furnish to Lender no less frequently
than monthly and at such other times as may be requested by Lender a report of
the Borrowing Base (each a “Borrowing Base Report”; collectively, the “Borrowing
Base Reports”) in the form required from time to time by Lender, appropriately
completed and duly signed.  The Borrowing
Base Report shall contain the amount and payments on the Receivables, both
billed and unbilled, and the calculations of the Borrowing Base, all in such
detail, and accompanied by such supporting and other information, as Lender may
from time to time request.  Upon Lender’s
request Borrowers will provide Lender with (a) confirmatory assignment
schedules; (b) copies of Account Debtor invoices; (c) evidence of
shipment or delivery; and (d) such further schedules, documents and/or
information regarding the Receivables, both billed and unbilled, as Lender may
reasonably require.  The items to be
provided under this subsection shall be in form satisfactory to Lender, and
certified as true and correct by a Responsible Officer (or by any other
officers or employees of Borrower whom a Responsible Officer from time to time
authorizes in writing to do so), and delivered to Lender from time to time
solely for Lender’s convenience in maintaining records of the Collateral.  Any Borrower’s failure to deliver any of such
items to Lender shall not affect, terminate, modify, or otherwise limit the
Liens of Lender on the Collateral.

 

2.1.5                        Revolving
Credit Note.

 

The obligation of Borrowers to pay the Revolving Loan,
with interest, shall be evidenced by a promissory note (as from time to time
extended, amended, restated, supplemented or otherwise modified, the “Revolving
Credit Note”) substantially in the form of EXHIBIT B attached hereto and
made a part hereof, with appropriate insertions.  The Revolving Credit Note shall be payable to
the order of Lender at the times provided in the Revolving Credit Note, and
shall be in the principal amount of the Revolving Credit Committed Amount.  Borrowers acknowledge and agree that, if the
outstanding principal balance of the Revolving Loan outstanding from time to
time exceeds the face amount of the Revolving Credit Note, the excess shall
bear interest at the Post-Default Rate for the Revolving Loan and shall be
payable, with accrued interest, ON DEMAND. 
The Revolving Credit Note shall not operate as a novation of any of the
Obligations or nullify, discharge, or release any such Obligations or the
continuing contractual relationship of the parties hereto in accordance with
the provisions of this Agreement.

 

21

 

2.1.6                        Mandatory
Prepayments of Revolving Loan.

 

Borrowers shall make the mandatory prepayments (each a
“Revolving Loan Mandatory Prepayment” and collectively, the “Revolving Loan
Mandatory Prepayments”) of the Revolving Loan at any time and from time to time
in such amounts as is required pursuant to Section 2.1.3 (Borrowing Base)
in order to cover any Borrowing Base Deficiency.

 

2.1.7                        Optional
Prepayments of Revolving Loan.

 

Borrowers shall have the option, at any time and from
time to time, to prepay (each a “Revolving Loan Optional Prepayment” and
collectively the “Revolving Loan Optional Prepayments”) the Revolving Loan, in
whole or in part without premium or penalty.

 

2.1.8                        The
Collateral Account.

 

Each Borrower will deposit, or cause to be deposited,
all Items of Payment to a bank account or bank accounts designated by Lender
and from which Lender alone has power of access and withdrawal (collectively,
the “Collateral Account”).  In the case
of any deposit that is made by a Borrower manually (i.e., the payment is
received by a Borrower rather than being delivered to the Lockbox or wired to
the Collateral Account), such deposit shall be made not later than the next
Business Day after the date of receipt of the Items of Payment.  The Items of Payment shall be deposited in
precisely the form received, except for the endorsements of the applicable
Borrower where necessary to permit the collection of any such Items of Payment,
each Borrower hereby agreeing to make such endorsement.  In the event any Borrower shall fail to do
so, Lender is hereby authorized by each Borrower to make the endorsement in the
name of the applicable Borrower.  Prior
to such a deposit, Borrowers will not commingle any Items of Payment with any
of the other funds or property of any Borrower, but will hold them separate and
apart in trust and for the account of Lender.

 

Each Borrower shall direct its Account Debtors that
all Items of Payment are to be either (a) wired to the Collateral Account
or (b) mailed to one or more post-office boxes designated by Lender, or to
such other additional or replacement post-office boxes pursuant to the request
of Lender from time to time (collectively, the “Lockbox”).  Lender shall have unrestricted and exclusive
access to the Lockbox.

 

Each Borrower hereby authorizes Lender to inspect all
Items of Payment, endorse all Items of Payment in the name of such Borrower,
and deposit such Items of Payment in the Collateral Account.  Lender reserves the right, exercised in its
sole and absolute discretion from time to time, to provide to the Collateral
Account credit prior to final collection of an Item of Payment and to disallow
credit for any Item of Payment which is unsatisfactory to Lender.  In the event Items of Payment are returned to
Lender for any reason whatsoever, Lender may, in the exercise of its discretion
from time to time, forward such Items of Payment a second time.  Any returned Items of Payment shall be
charged back to the Collateral Account, the Revolving Loan Account, or other
account, as appropriate.

 

Lender will apply the whole or any part of the
collected funds credited to the Collateral Account (including funds received
from the Blocked Account) against the Revolving Loan (or with respect to Items
of Payment that are not proceeds of Accounts or after the occurrence and during
the continuance of an Event of Default, against any of the Obligations) 

 

22

 

or credit such collected
funds to a depository account of Borrower with Lender (or an Affiliate of
Lender), the order and method of such application to be in the sole discretion
of Lender.

 

2.1.9                        Revolving
Loan Account.

 

Lender will establish and maintain a loan account on
its books (the “Revolving Loan Account”) to which Lender will (a) debit
(i) the principal amount of each advance of the Revolving Loan made by
Lender hereunder as of the date made, (ii) the amount of any interest
accrued on the Revolving Loan as and when due, and (iii) any other amounts
due and payable by Borrowers to Lender from time to time under the provisions
of this Agreement in connection with the Revolving Loan, including, without
limitation, Enforcement Costs, Fees, late charges, and service, collection and
audit fees, as and when due and payable, and (b) credit all
payments made by Borrowers to Lender on account of the Revolving Loan as of the
date made including, without limitation, funds credited to the Revolving Loan
Account from the Collateral Account. 
Lender may debit the Revolving Loan Account for the amount of any Item
of Payment that is returned to Lender unpaid. 
All credit entries to the Revolving Loan Account are conditional and
shall be readjusted as of the date made if final and indefeasible payment is
not received by Lender in cash or solvent credits.  Any and all periodic or other statements or
reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be final, binding and
conclusive upon Borrowers in all respects, absent manifest error, unless Lender
receives specific written objection thereto from Borrowers within thirty (30)
Business Days after such statement or reconciliation shall have been sent by
Lender.

 

2.1.10                  Revolving
Credit Unused Line Fee.

 

Borrowers shall pay to Lender a revolving credit
facility fee (collectively, the “Revolving Credit Unused Line Fees” and
individually, a “Revolving Credit Unused Line Fee”) in an amount equal to
three-eighths percent (3/8%) per annum of the average daily unused and
undisbursed portion of the Revolving Credit Committed Amount in effect from
time to time accruing during each quarter; provided, however, the Revolving
Credit Unused Line Fee shall be calculated at a rate equal to one-quarter of
one percent (1/4%) per annum of the average daily unused and undisbursed
portion of the Revolving Credit Committed Amount in effect from time to time
accruing during such quarter if the unused and undisbursed portion of the
Revolving Credit Committed Amount is less than fifty percent (50%) of the
Revolving Credit Committed Amount.  The
accrued and unpaid portion of the Revolving Credit Unused Line Fee shall be
paid in arrears by Borrowers to Lender on the first day of each September,
December, March and June, commencing on the first such date following the
date hereof, and on the Revolving Credit Termination Date.

 

Section 2.2                                      The
Letter of Credit Facility.

 

2.2.1                        Letters
of Credit.

 

Subject to and upon the provisions of this Agreement,
and as a part of the Revolving Credit Commitment, any of Borrowers, upon the
prior approval of Lender, may obtain standby letters of credit (as the same may
from time to time be amended, supplemented or otherwise modified, each a “Letter
of Credit” and collectively the “Letters of Credit”) from Lender from time to
time from the Closing Date until the Business Day preceding the Revolving 

 

23

 

Credit Termination
Date.  No Borrower will be entitled to obtain a Letter of
Credit hereunder unless (a) after giving effect to the request, the
outstanding principal balance of the Revolving Loan and of the Letter of Credit
Obligations would not exceed the lesser of (i) the Revolving Credit
Committed Amount or (ii) the most current Borrowing Base and (b) the
sum of the aggregate face amount of the then outstanding Letters of Credit
(including the face amount of the requested Letter of Credit) does not exceed
Five Million Dollars ($5,000,000)

 

2.2.2        Letter of Credit Fees.

 

Prior to or simultaneously with the opening of each
Letter of Credit, Borrowers shall pay to Lender, a letter of credit fee (each a
“Letter of Credit Fee” and collectively the “Letter of Credit Fees”) in an
amount equal to the
Applicable Margin multiplied by the face amount of the Letter of Credit, but
not less than the customary fee charged commercial customers for issuing a
Letter of Credit from time to time. 
The Letter of Credit Fees shall be paid upon the opening of each Letter
of Credit and upon each anniversary thereof, if any.  In addition, Borrowers shall also pay to
Lender all other reasonable and customary amendment, negotiation, processing,
transfer or other fees to the extent and as and when required by the provisions
of any Letter of Credit Agreement.  All
Letter of Credit Fees and all such other additional fees are included in and
are a part of the “Fees” payable by Borrowers under the provisions of this
Agreement and are a part of the Obligations.

 

2.2.3                        Terms
of Letters of Credit.

 

Each Letter of Credit shall (a) be opened
pursuant to a Letter of Credit Agreement, and (b) expire on a date not
later than the Business Day preceding the Revolving Credit Expiration Date;
provided, however, if any Letter of Credit does have an expiration date later
than the Business Day preceding the Revolving Credit Termination Date (each a “Post-Expiration
Date Letter of Credit” and collectively, the “Post-Expiration Date Letters of
Credit”), effective as of the Business Day preceding the Revolving Credit
Termination Date and without prior notice to or the consent of Borrowers,
Lender shall make advances under the Revolving Loan for the account of
Borrowers in the aggregate face amount of all such Letters of Credit.  Lender shall deposit the proceeds of such
advances into one or more non-interest bearing accounts with and in the name of
Lender and over which Lender alone shall have exclusive power of access and
withdrawal (collectively, the “Letter of Credit Cash Collateral Account”).  The Letter of Credit Cash Collateral Account
is to be held by Lender as additional collateral and security for any Letter of
Credit Obligations relating to the Post-Expiration Date Letters of Credit.  Each Borrower hereby assigns, pledges, grants
and sets over to Lender a first priority security interest in, and Lien on, all
of the funds on deposit in the Letter of Credit Cash Collateral Account,
together with any and all proceeds and products thereof as additional collateral
and security for the Letter of Credit Obligations relating to the
Post-Expiration Date Letters of Credit. 
Each Borrower acknowledges and agrees that Lender shall be entitled to
fund any draw or draft on any Post-Expiration Date Letter of Credit from the
monies on deposit in the Letter of Credit Cash Collateral Account with notice
to but without the consent of any Borrower. 
Each Borrower further acknowledges and agrees that Lender’s election to
fund any draw or draft on any Post-Expiration Date Letter of Credit from the
Letter of Credit Cash Collateral shall in no way limit, impair, lessen, reduce,
release or otherwise adversely affect Borrowers’ obligation to pay any Letter
of Credit Obligations under or relating to the Post-Expiration Date Letters of
Credit.  At such time as all
Post-Expiration Date Letters of Credit have expired, all Obligations 

 

24

 

have been paid in full,
and the Commitment has been terminated, any remaining funds on deposit in the
Letter of Credit Cash Collateral Account shall be paid to Borrowers.

 

The aggregate face amount of all Letters of Credit at
any one time outstanding and issued by Lender pursuant to the provisions of
this Agreement, including, without limitation, any and all Post-Expiration Date
Letters of Credit, plus the amount of any unpaid Letter of Credit Fees accrued
thereon, and less the aggregate amount of all drafts issued under or purporting
to have been issued under such Letters of Credit that have been paid by Lender
and for which Lender has been reimbursed by Borrower in full in accordance with
Section 2.2.5 (Payments of Letters of Credit) and the Letter of Credit
Agreements, and for which Lender has no further obligation or commitment to
restore all or any portion of the amounts drawn and reimbursed, is herein
called the “Outstanding Letter of Credit Obligations”.

 

2.2.4                        Procedures
for Letters of Credit.

 

A Borrower shall give Lender written notice at least
five (5) Business Days prior to the date on which such Borrower desires
Lender to issue a Letter of Credit.  Such
notice shall be accompanied by a duly executed Letter of Credit Agreement
specifying, among other things:  (a) the
name and address of the intended beneficiary of the Letter of Credit, (b) the
requested face amount of the Letter of Credit, (c) whether the Letter of
Credit is to be revocable or irrevocable, (d) the Business Day on which
the Letter of Credit is to be opened and the date on which the Letter of Credit
is to expire, (e) the terms of payment of any draft or drafts which may be
drawn under the Letter of Credit, and (f) any other terms or provisions
such Borrower desires to be contained in the Letter of Credit.  Such notice shall also be accompanied by such
other information, certificates, confirmations, and other items as Lender may
require to assure that the Letter of Credit is issued in accordance with the
provisions of this Agreement and a Letter of Credit Agreement.  In the event of any conflict between the
provisions of this Agreement and the provisions of a Letter of Credit
Agreement, the provisions of this Agreement shall prevail and control unless
otherwise expressly provided in the Letter of Credit Agreement.  Upon (x) receipt of such notice, (y) payment
of all Letter of Credit Fees and all other Fees payable in connection with the
issuance of such Letter of Credit, and (z) receipt of a duly executed
Letter of Credit Agreement, Lender shall process such notice and Letter of
Credit Agreement in accordance with its customary procedures and open such
Letter of Credit on the Business Day specified in such notice.

 

2.2.5                        Payments
of Letters of Credit.

 

Borrowers hereby promise to pay to Lender, ON DEMAND
and in United States Dollars, the following which are herein collectively
referred to as the “Current Letter of Credit Obligations”:

 

(a)           the amount which Lender has paid or will be
required to pay under each draft or draw on a Letter of Credit, whether such
demand be in advance of Lender’s payment or for reimbursement for such payment;

 

25

 

(b)           any and all reasonable charges and expenses
which Lender may pay or incur relative to the Letter of Credit and/or such
draws or drafts; and

 

(c)           interest on the amounts described in (a) and
(b) not paid by Borrowers as and when due and payable under the provisions
of (a) and (b) above from the day the same are due and payable until
paid in full at the Post-Default Rate.

 

In addition, Borrowers hereby promise to pay any and
all other Letter of Credit Obligations as and when due and payable in
accordance with the provisions of this Agreement and the Letter of Credit
Agreements.  The obligation of Borrowers
to pay Current Letter of Credit Obligations and all other Letter of Credit
Obligations shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which any
Borrower or any other account party may have or have had against the
beneficiary of such Letter of Credit, Lender, or any other Person, including,
without limitation, any defense based on the failure of any draft or draw to
conform to the terms of such Letter of Credit, any draft or other document
proving to be forged, fraudulent or invalid, or the legality, validity,
regularity or enforceability of such Letter of Credit, any draft or other
documents presented with any draft, any Letter of Credit Agreement, this
Agreement, or any of the other Financing Documents, all whether or not Lender
had actual or constructive knowledge of the same, and irrespective of any
Collateral, security or guarantee therefor or right of offset with respect
thereto and irrespective of any other circumstances whatsoever which
constitutes, or might be construed to constitute, an equitable or legal discharge
of Borrowers for any Letter of Credit Obligations, in bankruptcy or otherwise; provided,
however, that Borrowers shall not be obligated to reimburse Lender for
any wrongful payment under such Letter of Credit made as a result of Lender’s
gross negligence or willful misconduct. 
The obligation of Borrowers to pay the Letter of Credit Obligations
shall not be conditioned or contingent upon the pursuit by Lender or any other
Person at any time of any right or remedy against any Person which may be or
become liable in respect of all or any part of such obligation or against any
Collateral, security or guarantee therefor or right of offset with respect
thereto.

 

The Letter of Credit Obligations shall continue to be
effective, or be reinstated, as the case may be, if at any time payment of all
or any portion of the Letter of Credit Obligations is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Person, or upon or as a
result of the appointment of a receiver, intervenor, or conservator of, or
trustee or similar officer for, any Person, or any substantial part of such
Person’s property, all as though such payments had not been made.

 

2.2.6                        Change
in Law; Increased Cost.

 

If any change in any law or regulation or in the
interpretation thereof by any court or other Governmental Authority charged
with the administration thereof occurring after the date of this Agreement
shall either (a) impose, modify or deem applicable any reserve, special
deposit or similar requirement against Letters of Credit issued by Lender, or (b) impose
on Lender any other condition regarding this Agreement or any Letter of Credit,
and the result of any event referred to in clauses (a) or (b) above
shall be to increase the cost to Lender of issuing, 

 

26

 

maintaining or extending
the Letter of Credit or the cost to Lender of funding any obligation under or
in connection with the Letter of Credit (other than a cost relating to net
income, franchise or similar taxes), then, upon demand by Lender, Borrowers
shall immediately pay to Lender from time to time as specified by Lender,
additional amounts which shall be sufficient to compensate Lender for such increased
cost, together with interest on each such amount from the date demanded until
payment in full thereof at a rate per annum equal to the then highest current
rate of interest on the Revolving Loan. 
A certificate as to such increased cost incurred by Lender, submitted by
Lender to Borrowers, shall be conclusive, absent manifest error.

 

2.2.7                        General
Letter of Credit Provisions.

 

Borrowers consent to Lender’s payment of any draft
complying with the terms of any Letter of Credit irrespective of any instructions
of any Borrower to the contrary.  As
between Borrowers and Lender, Borrowers assume all risks of the acts and
omissions of the beneficiary and other users of any Letter of Credit.  Lender and its respective branches,
Affiliates and/or correspondents shall not be responsible for and each Borrower
hereby indemnifies and holds Lender and its respective branches, Affiliates
and/or correspondents harmless from and against all liability, loss and expense
(including reasonable attorney’s fees and costs) incurred by Lender and/or its
branches, Affiliates and/or correspondents relative to and/or as a consequence
of (a) any failure by Borrowers to perform the agreements hereunder and
under any Letter of Credit Agreement, (b) any Letter of Credit Agreement,
this Agreement, any Letter of Credit and any draft, draw and/or acceptance
under or purported to be under any Letter of Credit, (c) any action taken
or omitted by Lender and/or any of its respective branches, Affiliates and/or
correspondents at the request of Borrowers, (d) any failure or inability
to perform in accordance with the terms of any Letter of Credit by reason of
any control or restriction rightfully or wrongfully exercised by any de
facto or de jure Governmental Authority, group or individual asserting
or exercising governmental or paramount powers, and/or (e) any
consequences arising from causes beyond the control of Lender and/or any of its
respective branches, Affiliates and/or correspondents.

 

Except for gross negligence or willful misconduct, Lender
and its respective branches, Affiliates and/or correspondents, shall not be
liable or responsible in any respect for any (a) error, omission,
interruption or delay in transmission, dispatch or delivery of any one or more
messages or advices in connection with any Letter of Credit, whether
transmitted by cable, telegraph, mail or otherwise and despite any cipher or
code which may be employed, and/or (b) action, inaction or omission which
may be taken or suffered by it or them in good faith or through inadvertence in
identifying or failing to identify any beneficiary or otherwise in connection
with any Letter of Credit.

 

Subject to the terms of the Letter of Credit, a Letter
of Credit may be amended, modified or revoked only upon the receipt by Lender
from Borrowers and the beneficiary (including any transferee and/or assignee of
the original beneficiary), of a written consent and request therefor.

 

If any Laws, order of court and/or ruling or
regulation of any Governmental Authority of the United States (or any state
thereof) and/or any country other than the United States permits a beneficiary
under a Letter of Credit to require Lender and/or any of its respective
branches, Affiliates and/or correspondents to pay drafts under or purporting to
be 

 

27

 

under a Letter of Credit
after the expiration date of the Letter of Credit, Borrowers shall reimburse
Lender, as appropriate, for any such payment pursuant to provisions of Section 2.2.6
(Change in Law; Increased Cost).

 

Except as may otherwise be specifically provided in
a Letter of Credit or Letter of Credit Agreement, (a) the rules of
the ISP shall apply to each standby Letter of Credit, and (b) the rules of
the Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce (the “ICC”) at the
time of issuance shall apply to each commercial Letter of Credit.

 

Section 2.3             Applicable Interest Rates.

 

(a)           Each advance of the
Revolving Loan shall bear interest until maturity (whether by acceleration,
declaration, extension or otherwise) at the Applicable Rate as determined in
accordance with the provisions of this Section.

 

(b)           Notwithstanding the
foregoing, following the occurrence and during the continuance of an Event of
Default, at the option of Lender, all advances of the Revolving Loan and all
other Obligations shall bear interest at the Post-Default Rate.

 

(c)           The Applicable Margin
shall be 125 basis points per annum unless and until a change is required by
the operation of Section 2.3(d).

 

(d)           Changes in the
Applicable Margin shall be made not more frequently than quarterly based on the
Pricing Ratio, determined by Lender subsequent to its review of the quarterly
reports required by Section 6.1.1(c) (Quarterly Statements and
Certificates), except that the first such determination shall be made based on
Borrowers’ annual financial statements required by Section 6.1.1(a) (Annual
Statements and Certificates) for Borrowers’ fiscal year ended December 31,
2007 and shall be effective as of the first day of the first month after Lender
receives and reviews such statements. 
The Applicable Margin (expressed as basis points) shall vary depending
upon the Pricing Ratio, as follows:

 

	
  Pricing Ratio 

  	
   

  	
   

  	
   

  
	
  (achieved for two (2) consecutive quarters)

  	
   

  	
  Applicable Margin

  	
   

  
	
  Equal to or less than 3.00 to 1.00

  	
   

  	
  225 basis points

  	
   

  
	
  Equal to or less than 2.50 to 1.00

  	
   

  	
  175 basis points

  	
   

  
	
  Equal to or less than 2.00 to 1.00

  	
   

  	
  125 basis points

  	
   

  
	
  Equal to or less than 1.50 to 1.00

  	
   

  	
  100 basis points

  	
   

  

 

Section 2.4             General
Financing Provisions.

 

2.4.1        Borrowers’ Representatives.

 

Borrowers hereby represent and warrant to Lender that
each of them will derive benefits, directly and indirectly, from each Letter of
Credit and from each Loan, both in their separate capacity and as a member of
the integrated group to which each of Borrowers belong and because the
successful operation of the integrated group is dependent upon the 

 

28

 

continued successful
performance of the functions of the integrated group as a whole, because (a) the
terms of the consolidated financing provided under this Agreement are more
favorable than would otherwise be obtainable by Borrowers individually, and (b) Borrowers’
additional administrative and other costs and reduced flexibility associated
with individual financing arrangements which would otherwise be required if
obtainable would substantially reduce the value to Borrowers of the financing.  Borrowers in the discretion of their
respective managements are to agree among themselves as to the allocation of
the benefits of Letters of Credit and the proceeds of the Loan, provided,
however, that Borrowers shall be deemed to have represented and warranted to
Lender at the time of allocation that each benefit and use of proceeds is a
Permitted Use.

 

For administrative convenience, each Borrower hereby
irrevocably appoints General Physics as Borrower’s attorney-in-fact, with power
of substitution (with the prior written consent of Lender in the exercise of
its sole and absolute discretion), in the name of General Physics or in the
name of Borrower or otherwise to take any and all actions with respect to the
this Agreement, the other Financing Documents, the Obligations and/or the
Collateral (including, without limitation, the Proceeds thereof) as General
Physics may so elect from time to time, including, without limitation, actions
to (i) request advances under the Loan, apply for and direct the benefits
of Letters of Credits, and direct Lender to disburse or credit the proceeds of
any Loan directly to an account of General Physics, any one or more of
Borrowers or otherwise, which direction shall evidence the making of such Loan
and shall constitute the acknowledgment by each of Borrowers of the receipt of
the proceeds of such Loan or the benefit of such Letter of Credit, (ii) enter
into, execute, deliver, amend, modify, restate, substitute, extend and/or renew
this Agreement, any Additional Borrower Joinder Supplement, any other Financing
Documents, security agreements, mortgages, deposit account agreements,
instruments, certificates, waivers, letter of credit applications, releases,
documents and agreements from time to time, and (iii) endorse any check or
other item of payment in the name of Borrower or in the name of General
Physics.  The foregoing appointment is
coupled with an interest, cannot be revoked without the prior written consent
of Lender, and may be exercised from time to time through General Physics’ duly
authorized officer, officers or other Person or Persons designated by General
Physics to act from time to time on behalf of General Physics.

 

Each of Borrowers hereby irrevocably authorizes Lender
to make Loans to any one or more of Borrowers, and hereby irrevocably
authorizes Lender to issue or cause to be issued Letters of Credit for the
account of any or all of Borrowers, pursuant to the provisions of this
Agreement upon the written, oral or telephone request of any one or more of the
Persons who is from time to time a Responsible Officer of a Borrower under the
provisions of the most recent certificate of corporate resolutions and/or
incumbency of Borrowers on file with Lender and also upon the written, oral or
telephone request of any one of the Persons who is from time to time a
Responsible Officer of General Physics under the provisions of the most recent
certificate of corporate resolutions and/or incumbency for General Physics on
file with Lender.

 

Lender assumes no responsibility or liability for any
errors, mistakes, and/or discrepancies in the oral, telephonic, written or
other transmissions of any instructions, orders, requests and confirmations
between Lender and Borrowers in connection with the Credit Facilities, any
Loan, any Letter of Credit or any other transaction in connection with the
provisions of this Agreement. Without implying any limitation on the joint and
several nature of 

 

29

 

the Obligations, Lender
agrees that, notwithstanding any other provision of this Agreement, Borrowers
may create reasonable inter-company indebtedness between or among Borrowers
with respect to the allocation of the benefits and proceeds of the advances and
Credit Facilities under this Agreement. 
Borrowers agree among themselves, and Lender consents to that agreement,
that each Borrower shall have rights of contribution from all of the other
Borrowers to the extent such Borrower incurs Obligations in excess of the
proceeds of the Loans received by, or allocated to purposes for the direct
benefit of, such Borrower.  All such
indebtedness and rights shall be, and are hereby agreed by Borrowers to be,
subordinate in priority and payment to the indefeasible repayment in full in
cash of the Obligations, and, unless Lender agrees in writing otherwise, shall
not be exercised or repaid in whole or in part until all of the Obligations
have been indefeasibly paid in full in cash. 
Borrowers agree that all of such inter-company indebtedness and rights
of contribution are part of the Collateral and secure the Obligations.  Each Borrower hereby waives all rights of
counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. 
Each Borrower shall not evidence the inter-company indebtedness or
rights of contribution by note or other instrument, and shall not secure such
indebtedness or rights of contribution with any Lien or security.  Notwithstanding anything contained in this
Agreement to the contrary, the amount covered by each Borrower under the
Obligations (including, without limitation, Section 2.4.10 (Guaranty))
shall be limited to an aggregate amount (after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf of
any other Borrower in respect of the Obligations) which, together with other
amounts owing by such Borrower to Lender under the Obligations, is equal to the
largest amount that would not be subject to avoidance under the Bankruptcy Code
or any applicable provisions of any applicable, comparable state or other Laws.

 

2.4.2                        Use of
Proceeds of the Revolving Loan.

 

The proceeds of each advance under the Revolving Loan
shall be used by Borrowers for Permitted Uses, and for no other purposes except
as may otherwise be agreed by Lender in writing.

 

2.4.3                        Origination
Fee.

 

Borrowers have paid to Lender on or before the Closing
Date a loan origination fee (the “Origination Fee”) in the amount of One
Hundred Thousand Dollars ($100,000), which fee has been fully earned and is non-refundable.

 

2.4.4        Monitoring Fee.

 

Borrowers shall pay to Lender a monthly monitoring fee
in the amount of $700 (collectively, the “Monitoring Fees” and individually, a “Monitoring
Fee”) commencing on the first such date following the date hereof and continuing
until the Revolving Credit Termination Date. 
Borrowers
authorize Lender to debit demand deposit account number 2079900107595 or any
other account with Lender (routing number 055-003201) designated in writing by
General Physics, beginning as of the date hereof for any Monitoring Fee.  Borrowers further certify that General
Physics hold legitimate ownership of this account and preauthorizes this
periodic debit as part of its right under said ownership.

 

30

 

2.4.5                        Computation
of Interest and Fees.

 

All applicable Fees and interest shall be calculated
on the basis of a year of 360 days for the actual number of days elapsed.

 

2.4.6                        Maximum
Interest Rate.

 

In no event shall any interest rate provided for
hereunder exceed the maximum rate permissible for corporate borrowers under
applicable law for loans of the type provided for hereunder (the “Maximum Rate”).  If, in any month, any interest rate, absent
such limitation, would have exceeded the Maximum Rate, then the interest rate
for that month shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then that interest
rate shall remain at the Maximum Rate until such time as the amount of interest
paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. 
In the event that, upon payment in full of the Obligations, the total
amount of interest paid or accrued under the terms of this Agreement is less
than the total amount of interest which would, but for this Section, have been
paid or accrued if the interest rates otherwise set forth in this Agreement had
at all times been in effect, then Borrowers shall, to the extent permitted by
applicable law, pay Lender, an amount equal to the excess of (a) the
lesser of (i) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect or (ii) the amount of
interest which would have accrued had the interest rates otherwise set forth in
this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement.  In the event that a court determines that
Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, Lender
shall refund to Borrowers such excess.

 

2.4.7                        Payments.

 

All payments of the Obligations, including, without
limitation, principal, interest, Prepayments, and Fees, shall be paid by
Borrowers without setoff, recoupment or counterclaim to Lender in immediately
available funds not later than 2:00 p.m. (Eastern Time) on the due date of
such payment.  All payments received by
Lender after such time shall be deemed to have been received by Lender for
purposes of computing interest and Fees and otherwise as of the next Business
Day.  Payments shall not be considered
received by Lender until such payments are paid to Lender in immediately
available funds to Lender’s principal office in Baltimore, Maryland or at such
other location as Lender may at any time and from time to time notify
Borrowers.  Alternatively, at its sole
discretion, Lender may charge any deposit account of Borrowers at Lender or any
Affiliate of Lender with all or any part of any amount due to Lender under this
Agreement or any of the other Financing Documents to the extent that Borrowers
shall have not otherwise tendered payment to Lender.

 

2.4.8                        Liens;
Setoff.

 

Each Borrower hereby grants to Lender as additional
collateral and security for all of the Obligations, a continuing Lien on any
and all monies, Investment Property, and other property of Borrower and any and
all proceeds thereof, now or hereafter held or received by or in transit to,
Lender, and/or any Affiliate of Lender, from or for the account of,

 

31

 

Borrower, and also upon
any and all deposit accounts (general or special) and credits of Borrower, if
any, with Lender or any Affiliate of Lender, at any time existing, excluding
any deposit accounts held by Borrower in its capacity as trustee for Persons
who are not Affiliates of Borrower. 
Without implying any limitation on any other rights Lender may have
under the Financing Documents or applicable Laws, during the continuance of an
Event of Default, Lender is hereby authorized by each Borrower at any time and
from time to time, without notice to, or consent of, Borrower, to set off,
appropriate, seize, freeze and apply any or all items hereinabove referred to
against all Obligations then outstanding (whether or not then due), all in such
order and manner as shall be determined by Lender in its sole and absolute
discretion.

 

2.4.9                        Requirements
of Law.

 

In the event that Lender shall have determined in good
faith that (a) the adoption of any Capital Adequacy Regulation, or (b) any
change in any Capital Adequacy Regulation or in the interpretation or
application thereof or (c) compliance by Lender or any corporation
controlling Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or Governmental
Authority, does or shall have the effect of reducing the rate of return on the
capital of Lender or any corporation controlling Lender, as a consequence of
the obligations of Lender hereunder to a level below that which Lender or any corporation
controlling Lender would have achieved but for such adoption, change or
compliance (taking into consideration the policies of Lender and the
corporation controlling Lender, with respect to capital adequacy) by an amount
deemed by Lender, in its discretion, to be material, then from time to time,
after submission by Lender to Borrowers of a written request therefor and a
statement of the basis for Lender’s determination, Borrowers shall pay to
Lender ON DEMAND such additional amount or amounts in order to compensate
Lender or its controlling corporation for any such reduction.

 

2.4.10                  Guaranty.

 

(a)                                  Each
Borrower hereby unconditionally and irrevocably, guarantees to Lender:

 

(i)            the due and punctual
payment in full (and not merely the collectibility) by the other Borrowers of
the Obligations, including unpaid and accrued interest thereon, in each case
when due and payable, all according to the terms of this Agreement, the Notes
and the other Financing Documents;

 

(ii)           the due and punctual
payment in full (and not merely the collectibility) by the other Borrowers of
all other sums and charges which may at any time be due and payable in
accordance with this Agreement, the Notes or any of the other Financing
Documents;

 

(iii)          the due and punctual
performance by the other Borrowers of all of the other terms, covenants and
conditions contained in the Financing Documents; and

 

32

 

(iv)                              all
the other Obligations of the other Borrowers.

 

(b)                                 The
obligations and liabilities of each Borrower as a guarantor under this Section 2.4.10
shall be absolute and unconditional and joint and several, irrespective of the
genuineness, validity, priority, regularity or enforceability of this
Agreement, any of the Notes or any of the Financing Documents or any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or guarantor.  Each Borrower in
its capacity as a guarantor expressly agrees that Lender may, in its sole and
absolute discretion, without notice to or further assent of such Borrower and
without in any way releasing, affecting or in any way impairing the joint and
several obligations and liabilities of such Borrower as a guarantor hereunder:

 

(i)                                     waive
compliance with, or any defaults under, or grant any other indulgences under or
with respect to any of the Financing Documents;

 

(ii)                                  modify,
amend, change or terminate any provisions of any of the Financing Documents;

 

(iii)                               grant
extensions or renewals of or with respect to the Credit Facilities, the Notes
or any of the other Financing Documents;

 

(iv)                              effect
any release, subordination, compromise or settlement in connection with this
Agreement, any of the Notes or any of the other Financing Documents;

 

(v)                                 agree
to the substitution, exchange, release or other disposition of the Collateral
or any part thereof, or any other collateral for the Loan or to the
subordination of any lien or security interest therein;

 

(vi)                              make
advances for the purpose of performing any term, provision or covenant
contained in this Agreement, any of the Notes or any of the other Financing
Documents with respect to which Borrowers shall then be in default;

 

(vii)                           make
future advances pursuant to this Agreement or any of the other Financing
Documents;

 

(viii)                        assign,
pledge, hypothecate or otherwise transfer the Commitments, the Obligations, the
Notes, any of the other Financing Documents or any interest therein, all as and
to the extent permitted by the provisions of this Agreement;

 

(ix)                               deal
in all respects with the other Borrowers as if this Section 2.4.10 were
not in effect;

 

33

 

(x)            effect any release,
compromise or settlement with any of the other Borrowers, whether in their
capacity as a Borrower or as a guarantor under this Section 2.4.10, or any
other guarantor; and

 

(xi)           provide
debtor-in-possession financing or allow use of cash collateral in proceedings
under the Bankruptcy Code, it being expressly agreed by all Borrowers that any
such financing and/or use would be part of the Obligations.

 

(c)                                  The
obligations and liabilities of each Borrower, as guarantor under this Section 2.4.10,
shall be primary, direct and immediate, shall not be subject to any
counterclaim, recoupment, set off, reduction or defense based upon any claim
that a Borrower may have against any one or more of the other Borrowers,
Lender, and/or any other guarantor and shall not be conditional or contingent
upon pursuit or enforcement by Lender of any remedies it may have against
Borrowers with respect to this Agreement, the Notes or any of the other
Financing Documents, whether pursuant to the terms thereof or by operation of
law.  Without limiting the generality of
the foregoing, Lender shall not be required to make any demand upon any of
Borrowers, or to sell the Collateral or otherwise pursue, enforce or exhaust
its remedies against Borrowers or the Collateral either before, concurrently
with or after pursuing or enforcing its rights and remedies hereunder.  Any one or more successive or concurrent
actions or proceedings may be brought against each Borrower under this Section 2.4.10,
either in the same action, if any, brought against any one or more of Borrowers
or in separate actions or proceedings, as often as Lender may deem expedient or
advisable.  Without limiting the
foregoing, it is specifically understood that any modification, limitation or
discharge of any of the liabilities or obligations of any one or more of
Borrowers, any other guarantor or any obligor under any of the Financing
Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against any one or more of Borrowers, in their
respective capacities as borrowers and guarantors under this Section 2.4.10,
or under any of the Financing Documents shall not modify, limit, lessen,
reduce, impair, discharge, or otherwise affect the liability of each Borrower
under this Section 2.4.10 in any manner whatsoever, and this Section 2.4.10
shall remain and continue in full force and effect.  It is the intent and purpose of this Section 2.4.10
that each Borrower shall and does hereby waive all rights and benefits which
might accrue to any other guarantor by reason of any such proceeding, and
Borrowers agree that they shall be liable for the full amount of the
obligations and liabilities under this Section 2.4.10, regardless of, and
irrespective to, any modification, limitation or discharge of the liability of
any one or more of Borrowers, any other guarantor or any obligor under any of
the Financing Documents, that may result from any such proceedings.

 

(d)                                 Each
Borrower, as guarantor under this Section 2.4.10, hereby unconditionally,
jointly and severally, irrevocably and expressly waives:

 

(i)            presentment and demand
for payment of the Obligations and protest of non-payment;

 

(ii)           notice of acceptance of
this Section 2.4.10 and of presentment, demand and protest thereof;

 

34

 

(iii)          notice of any default
hereunder or under the Notes or any of the other Financing Documents and notice
of all indulgences;

 

(iv)          notice of any increase
in the amount of any portion of or all of the indebtedness guaranteed by this Section 2.4.10;

 

(v)           demand for observance,
performance or enforcement of any of the terms or provisions of this Section 2.4.10,
the Notes or any of the other Financing Documents;

 

(vi)          all errors and omissions
in connection with Lender’s administration of all indebtedness guaranteed by
this Section 2.4.10, except errors and omissions resulting from acts of
bad faith;

 

(vii)         any right or claim of
right to cause a marshalling of the assets of any one or more of the other
Borrowers;

 

(viii)        any act or omission of
Lender which changes the scope of the risk as guarantor hereunder; and

 

(ix)           all other notices and
demands otherwise required by law which Borrower may lawfully waive.

 

Within ten (10) days following any request of
Lender so to do, each Borrower will furnish Lender and such other persons as
Lender may direct with a written certificate, duly acknowledged stating in
detail whether or not any credits, offsets or defenses exist with respect to
this Section 2.4.10.

 

2.4.11                  ACH
Transactions and Swap Contracts.

 

Borrowers may request and Lender or its Affiliates
may, in their sole and absolute discretion, provide ACH Transactions and Swap
Contracts.  In the event a Borrower
requests Lender or its Affiliates to procure ACH Transactions or Swap Contracts,
then such Borrower agrees to indemnify and hold Lender or its Affiliates
harmless from any and all obligations now or hereafter owing to Lender or its
Affiliates in connection with such ACH Transactions or Swap Contracts other
than obligations arising as a result of Lender’s or its Affiliates’ gross
negligence or willful misconduct. 
Borrowers agree to pay Lender or its Affiliates all amounts owing to
Lender or its Affiliates pursuant to ACH Transactions and Swap Contracts.  In the event Borrowers shall not have paid to
Lender or its Affiliates such amounts, Lender may cover such amounts by an
advance under the Revolving Loan, which advance shall be deemed to have been
requested by Borrowers.  Borrowers
acknowledge and agree that the obtaining of ACH Transactions and Swap Contracts
from Lender or its Affiliates (a) is in the sole and absolute discretion
of Lender or its Affiliates and (b) is subject to all rules and
regulations of Lender or its Affiliates.

 

2.4.12      Termination of Revolving Credit Facility.

 

Borrowers shall have the right to terminate or reduce
the Revolving Credit Commitment, in whole or in part, upon at least thirty (30)
Business Days prior written notice to 

 

35

 

Lender, without any
premium or penalty; provided, however, that all Outstanding Letter of Credit
Obligations shall be secured as provided in Section 2.2.3 (Terms of
Letters of Credit).

 

ARTICLE III 

THE COLLATERAL

 

Section 3.1                                      Debt
and Obligations Secured.

 

All property and Liens assigned, pledged or otherwise
granted under or in connection with this Agreement (including, without
limitation, those under Section 3.2 (Grant of Liens)) or any of the
Financing Documents shall secure (a) the payment of all of the
Obligations, including, without limitation, any and all Outstanding Letter of
Credit Obligations, and (b) the performance, compliance with and
observance by Borrowers of the provisions of this Agreement and all of the
other Financing Documents or otherwise under the Obligations.

 

Section 3.2                                      Grant
of Liens.

 

(a)           Each Borrower hereby
assigns, pledges and grants to Lender, and agrees that Lender shall have a
perfected and continuing security interest in, and Lien on, (a) all of
Borrower’s Accounts, Inventory, Chattel Paper, Documents, Instruments,
Equipment, Investment Property, and General Intangibles (in which Borrower is
permitted under the terms thereof to grant a security interest) and all of
Borrower’s deposit accounts with any financial institution with which Borrower
maintains deposits, whether now owned or existing or hereafter acquired or
arising, (b) all returned, rejected or repossessed goods, the sale or
lease of which shall have given or shall give rise to an Account or Chattel
Paper, (c) all insurance policies relating to the foregoing and the right
to receive refunds of unearned insurance premiums under those policies, (d) all
books and records in whatever media (paper, electronic or otherwise) recorded
or stored, with respect to the foregoing and all Equipment and General
Intangibles necessary or beneficial to retain, access and/or process the
information contained in those books and records; and (e) all Proceeds and
products of the foregoing.  Each Borrower
further agrees that Lender shall have in respect thereof all of the rights and
remedies of a secured party under the Uniform Commercial Code as well as those
provided in this Agreement, under each of the other Financing Documents to
which it is a party and under applicable Laws.

 

(b)           Each Borrower covenants
and agrees that Borrower shall provide Lender with all necessary information
and will execute and deliver such documents as are required to comply with the
Federal Assignment of Claims Act of 1940 (31 U.S.C. §3727 and 41 U.S.C. §15),
to perfect Lender’s security interest in the Accounts arising under Government
Contracts with a contract value equal to or greater than Fifty Thousand Dollars
($50,000) and such other Government Contracts as Lender may determine in its
sole discretion.

 

Section 3.3                                      Collateral
Disclosure List.

 

On or prior to the Closing Date, if requested by
Lender, each Borrower shall each deliver to Lender any updates to the Borrower’s
Collateral Disclosure List (as defined in the Original Financing Agreement)
which shall contain such information with respect to Borrower’s business and personal
property as Lender may require and shall be certified by a Responsible Officer
of Borrower, as applicable.  Promptly
after demand by Lender, Borrower shall furnish to Lender an

 

36

 

update of the information
contained in the Collateral Disclosure List at any time and from time to time
as may be reasonably requested by Lender.

 

Section 3.4                                      Personal
Property.

 

Each Borrower acknowledges and agrees that it is the
intention of the parties to this Agreement that Lender shall have a first
priority, perfected Lien, in form and substance satisfactory to Lender and its
counsel, on all of the Collateral, whether now owned or hereafter acquired,
subject only to the Permitted Liens, if any. 
In furtherance of the foregoing:

 

(a)           On the Closing Date and
without implying any limitation on the scope of Section 3.2 (Grant of
Liens), each Borrower shall deliver to Lender the originals of all of its
letters of credit, Investment Property, Chattel Paper, Documents and Instruments
and, if Lender so requires, shall execute and deliver separate pledge,
assignment and security agreements in form and content acceptable to Lender,
which pledge, assignment and security agreements shall assign, pledge and grant
a Lien to Lender on all letters of credit, Investment Property, Chattel Paper,
Documents, and Instruments. 
Notwithstanding the foregoing, Lender agrees that Borrowers may retain
possession of Investment Property with an aggregate value of less than One
Hundred Thousand Dollars ($100,000) that is received from Account Debtors in
payment of Receivables in lieu of cash.

 

(b)           In the event that any
Borrower shall acquire after the Closing Date any letters of credit, Investment
Property, Chattel Paper, Documents, or Instruments, Borrower shall promptly so
notify Lender and deliver the originals of all of the foregoing to Lender
promptly and in any event within ten (10) days of each acquisition.

 

(c)           All letters of credit,
Investment Property, Chattel Paper, Documents and Instruments shall be
delivered to Lender endorsed and/or assigned as required by any pledge,
assignment and security agreement and/or as Lender may require and, if
applicable, shall be accompanied by blank irrevocable and unconditional stock
or bond powers and/or notices as Lender may require.

 

Section 3.5                                      Record
Searches.

 

As of the Closing Date
and thereafter at the time any Financing Document is executed and delivered by
Borrowers pursuant to this Section, Lender shall have received, in form and
substance satisfactory to Lender, such Lien or record searches with respect to
Borrowers and/or any other Person, as appropriate, and the property covered by
such Financing Document showing that the Lien of such Financing Document will
be a perfected first priority Lien on the property covered by such Financing
Document subject only to Permitted Liens or to such other matters as Lender may
approve.

 

Section 3.6                                      Costs.

 

Borrowers agree to pay, as part of the Enforcement
Costs and to the fullest extent permitted by applicable Laws, on demand all
costs, fees and expenses incurred by Lender in connection with the taking,
perfection, preservation, protection and/or release of a Lien on the
Collateral, including, without limitation:

 

37

 

(a)           customary fees and
expenses incurred in preparing Financing Documents from time to time
(including, without limitation, reasonable attorneys’ fees incurred in
connection with preparing the Financing Documents, including, any amendments
and supplements thereto);

 

(b)           all filing and/or
recording taxes or fees;

 

(c)           all costs of Lien and
record searches;

 

(d)           reasonable attorneys’
fees in connection with all legal opinions required; and

 

(e)           all related costs, fees
and expenses.

 

Section 3.7             Release.

 

Upon the indefeasible repayment in full in cash of the
Obligations and performance of all Obligations under this Agreement and all
other Financing Documents, and the termination and/or expiration of the
Commitment, all Letters of Credit and all Outstanding Letter of Credit
Obligations, or, in the case of Outstanding Letter of Credit Obligations, the
cash collateralization thereof pursuant to Section 2.2.3 (Terms of Letters
of Credit), upon Borrowers’ request and at Borrowers’ sole cost and expense,
Lender shall release and/or terminate any Financing Document.

 

Section 3.8             Inconsistent
Provisions.

 

In the event that the provisions of any Financing
Document directly conflict with any provision of this Agreement, the provisions
of this Agreement govern.

 

ARTICLE IV 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1             Representations
and Warranties.

 

Borrowers, for themselves and for each other,
represent and warrant to Lender, as follows:

 

4.1.1                        Subsidiaries.

 

Borrowers have the Subsidiaries listed on the
Collateral Disclosure List and no others. 
Each of the Subsidiaries is a Wholly Owned Subsidiary except as shown on
the Collateral Disclosure List, which correctly indicates the nature and amount
of each Borrower’s ownership interests therein.

 

4.1.2                        Existence.

 

Each Borrower (a) is a Registered Organization
under the laws of the jurisdiction stated in the Preamble of this Agreement, (b) is
in good standing under the laws of the jurisdiction in which it is organized, (c) has
the power to own its property and to carry on its business as now being
conducted, and (d) is duly qualified to do business and is in good
standing

 

38

 

in each jurisdiction in
which the character of the properties owned by it therein or in which the transaction
of its business makes such qualification necessary.  Each Borrower is organized under the laws of
only one (1) jurisdiction.

 

4.1.3                        Power
and Authority.

 

Each Borrower has full power and authority to execute
and deliver this Agreement and the other Financing Documents to which it is a
party, to make the borrowings and request Letters of Credit under this
Agreement and to incur and perform the Obligations whether under this
Agreement, the other Financing Documents or otherwise, all of which have been
duly authorized by all proper and necessary action.  No consent or approval of owners or any
creditors of any Borrower, and no consent, approval, filing or registration
with or notice to any Governmental Authority on the part of any Borrower, is
required as a condition to the execution, delivery, validity or enforceability
of this Agreement, or any of the other Financing Documents, or the performance
by any Borrower of the Obligations.

 

4.1.4                        Binding
Agreements.

 

This Agreement and the other Financing Documents
executed and delivered by Borrowers have been properly executed and delivered
and constitute the valid and legally binding obligations of Borrowers and are
fully enforceable against Borrowers in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and secured
parties, and general principles of equity regardless of whether applied in a
proceeding in equity or at law.

 

4.1.5                        No
Conflicts.

 

Neither the execution, delivery and performance of the
terms of this Agreement or of any of the other Financing Documents executed and
delivered by Borrowers nor the consummation of the transactions contemplated by
this Agreement will conflict with, violate or be prevented by (a) any
Borrower’s organizational or governing documents, (b) any existing
mortgage, indenture, contract or agreement binding on any Borrower or affecting
its property, except for any conflict which could not have a materially adverse
effect on any Borrower, or (c) any applicable Laws.

 

4.1.6                        No
Defaults, Violations.

 

(a)           No Default or Event of
Default has occurred and is continuing.

 

(b)           No Borrower nor any of
their Subsidiaries is in default under or with respect to any obligation under
any existing mortgage, indenture, contract or agreement binding on it or
affecting its property in any respect which could be materially adverse to the
business, operations, property or financial condition of any Borrower, or which
could materially adversely affect the ability of any Borrower to perform its
obligations under this Agreement or the other Financing Documents to which such
Borrower is a party.

 

39

 

4.1.7        Compliance with Laws.

 

No Borrower nor any of their Subsidiaries is in
violation of any applicable Laws (including, without limitation, any Laws
relating to employment practices, to environmental, occupational and health
standards and controls) or order, writ, injunction, decree or demand of any
court, arbitrator, or any Governmental Authority affecting it or any of its
properties, the violation of which could materially adversely affect the
business, operations or properties of any Borrowers and their Subsidiaries
taken as a whole.

 

4.1.8        Margin Stock.

 

None of the proceeds of the Revolving Loan will be
used, directly or indirectly, by Borrowers or any Subsidiary for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry, any “margin
stock” within the meaning of Regulation U (12 CFR Part 221), of the Board
of Governors of the Federal Reserve System or for any other purpose which might
make the transactions contemplated in this Agreement a “purpose credit” within
the meaning of Regulation U, or cause this Agreement to violate any other
regulation of the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934 or the Small Business Investment Act of 1958,
as amended, or any rules or regulations promulgated under any of such
statutes.

 

4.1.9        Investment Company Act; Margin Stock.

 

No Borrower nor any of their Subsidiaries is an
investment company within the meaning of the Investment Company Act of 1940, as
amended, nor is it, directly or indirectly, controlled by or acting on behalf
of any Person which is an investment company within the meaning of said
Act.  No Borrower nor any of their
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying “margin
stock” within the meaning of Regulation U (12 CFR Part 221), of the Board
of Governors of the Federal Reserve System.

 

4.1.10      Litigation.

 

Except as otherwise disclosed on Schedule 4.1.10
attached hereto and made a part hereof, there are no proceedings, actions or,
to the knowledge of Borrowers, investigations pending or, so far as any
Borrower knows, threatened before or by any court, arbitrator or any
Governmental Authority which, in any one case or in the aggregate, if
determined adversely to the interests of Borrowers or any Subsidiary, would
have a material adverse effect on the business, properties, condition
(financial or otherwise) or operations of any Borrower.

 

4.1.11      Financial Condition.

 

The consolidated financial statements of Borrowers
dated December 31, 2007 are complete and correct and fairly present the
financial position of Borrowers and their Subsidiaries and the results of their
operations and transactions in their surplus accounts as of the date and for
the period referred to and have been prepared in accordance with GAAP applied
on a consistent basis throughout the period involved.  There are no material liabilities, direct or
indirect, fixed or contingent, of Borrowers or their Subsidiaries as of the
date of such financial 

 

40

 

statements that are not
reflected therein or in the notes thereto. 
There has been no adverse change in the financial condition or
operations of Borrowers or their Subsidiaries since the date of such financial
statements and to Borrowers’ knowledge no such adverse change is pending or
threatened.  Prior to the date hereof, no
Borrower nor any Subsidiary has guaranteed the obligations of, or made any
investment in or advances to, any Person, except as disclosed in such financial
statements or the schedules hereto.

 

4.1.12      Full Disclosure.

 

The financial statements referred to in Section 4.1.11
(Financial Condition), the Financing Documents (including, without limitation,
this Agreement), and the statements, reports or certificates furnished by
Borrowers in connection with the Financing Documents (a) do not contain
any untrue statement of a material fact and (b) when taken in their
entirety, do not omit any material fact necessary to make the statements
contained therein not misleading.  There
is no fact known to Borrowers which Borrowers have not disclosed to Lender in
writing prior to the date of this Agreement with respect to the transactions
contemplated by the Financing Documents that materially and adversely affects
or in the future could, in the reasonable opinion of Borrowers, materially
adversely affect the condition, financial or otherwise, results of operations,
business, or assets of Borrowers and their Subsidiaries taken as a whole.

 

4.1.13                  Indebtedness for Borrowed Money.

 

Except for the Obligations and except as set forth in Schedule
4.1.13 attached hereto and made a part hereof, Borrowers have no
Indebtedness for Borrowed Money.  Lender
has received photocopies of all promissory notes evidencing any Indebtedness
for Borrowed Money set forth in Schedule 4.1.13, together with any and
all subordination agreements, other agreements, documents, or instruments
securing, evidencing, guarantying or otherwise executed and delivered in
connection therewith.

 

4.1.14                  Taxes.

 

Each Borrower and its Subsidiaries has filed all
returns, reports and forms for Taxes that, to the knowledge of Borrower, are
required to be filed, and has paid all Taxes as shown on such returns or on any
assessment received by it, to the extent that such Taxes have become due,
unless and to the extent only that such Taxes, assessments and governmental
charges are currently contested in good faith and by appropriate proceedings by
such Borrower, such Taxes are not the subject of any Liens other than Permitted
Liens, and adequate reserves therefor have been established as required under
GAAP.  All tax liabilities of Borrowers
were as of the date of audited financial statements referred to in Section 4.1.11
(Financial Condition), and are now, adequately provided for on the books of
Borrowers or their Subsidiaries, as appropriate.  No tax liability has been asserted by the
Internal Revenue Service or any state or local authority against Borrowers for
Taxes in excess of those already paid.

 

4.1.15                  ERISA.

 

With respect to any Plan, and except to the extent
that the failure of any of the following statements to be accurate would not
result in a material liability to Borrowers: (a) no “accumulated funding
deficiency” as defined in Code §412 or ERISA §302 has occurred, 

 

41

 

whether or not that
accumulated funding deficiency has been waived; (b) no Reportable Event
has occurred other than events for which reporting has been waived under
applicable PBGC regulations; (c) no termination of any plan subject to
Title IV of ERISA has occurred; (d) no Borrower nor any Commonly
Controlled Entity has incurred a “complete withdrawal” within the meaning of
ERISA §4203 from any Multiemployer Plan; (e) no Borrower nor any Commonly
Controlled Entity has incurred a “partial withdrawal” within the meaning of
ERISA §4205 with respect to any Multiemployer Plan; (f) no Multiemployer
Plan to which a Borrower or any Commonly Controlled Entity has an obligation to
contribute is in “reorganization” within the meaning of ERISA §4241 nor has
notice been received by Borrower or any Commonly Controlled Entity that such a
Multiemployer Plan will be placed in “reorganization”.

 

4.1.16                  Title to Properties.

 

Borrowers have good and marketable title to the
Collateral and the properties and assets reflected in the balance sheets
described in Section 4.1.11 (Financial Condition) to the extent such
property and assets have not been disposed of in the ordinary course of
business since the date of such balance sheets and excluding any real property.

 

4.1.17                  Patents, Trademarks, Etc.

 

Each Borrower and their Subsidiaries owns, possesses,
or has the right to use all necessary Patents, licenses, Trademarks,
Copyrights, permits and franchises to own its properties and to conduct its
business as now conducted, without known conflict with the rights of any other
Person.  Any and all obligations to pay
royalties or other charges with respect to such properties and assets are
properly reflected on the financial statements described in Section 4.1.11
(Financial Condition).

 

4.1.18                  Employee Relations.

 

Except as disclosed on Schedule 4.1.18 attached
hereto and made a part hereof, (a) no Borrower nor any Subsidiary thereof
nor any of such Borrower’s or Subsidiary’s employees is subject to any
collective bargaining agreement, (b) no petition for certification or
union election is pending with respect to the employees of any Borrower or any
Subsidiary and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any Borrower, and
(c) there are no strikes, slowdowns, work stoppages or controversies
pending or, to the best knowledge of Borrowers after due inquiry, threatened
between any Borrower and its employees. 
Hours worked and payments made to the employees of Borrowers have not
been in violation of the Fair Labor Standards Act or any other applicable law
dealing with such matters.  All payments
due from Borrowers or for which any claim may be made against Borrowers, on
account of wages and employee and retiree health and welfare insurance and
other benefits have been paid or accrued as a liability on its books.  The consummation of the transactions
contemplated by the Financing Agreement or any of the other Financing
Documents, will not give rise to a right of termination or right of
re-negotiation on the part of any union under any collective bargaining
agreement to which any Borrower is a party or by which it is bound.

 

42

 

4.1.19                  Presence of Hazardous Materials or Hazardous Materials
Contamination.

 

To the best of Borrowers’ knowledge, (a) no
Hazardous Materials are located on any real property owned, controlled or
operated by any Borrower or for which any Borrower is, or is claimed to be,
responsible, except for reasonable quantities of necessary supplies for use by
any Borrower in the ordinary course of its current line of business and stored,
used and disposed in accordance with applicable Laws, except for any
non-compliance which individually or in the aggregate could not have a material
adverse affect on any Borrower or any of its Subsidiaries taken as a whole; and
(b) no property owned, controlled or operated by any Borrower or for which
any Borrower has, or is claimed to have, responsibility has ever been used as a
manufacturing, storage, or dump site for Hazardous Materials except in
compliance with applicable Laws, except for any non-compliance which
individually or in the aggregate could not have a material adverse affect on
any Borrower or any of its Subsidiaries taken as a whole nor is affected by
Hazardous Materials Contamination at any other property except for any such
Hazardous Materials that individually or in the aggregate could not have a
material adverse affect on any Borrower or any of its Subsidiaries taken as a
whole.

 

4.1.20                  Perfection and Priority of Collateral.

 

Lender has, or upon execution and recording of this
Agreement and the Security Documents will have, and will continue to have as
security for the Obligations, a valid and perfected Lien on and security
interest in all Collateral, free of all other Liens, claims and rights of third
parties whatsoever except Permitted Liens, including, without limitation, those
described on Schedule 4.1.20 attached hereto and made a part hereof.

 

4.1.21                  No Suspension or Debarment.

 

No Borrower nor, to the knowledge of any Borrower, any
Affiliate nor any of their respective directors, officers or employees has
received any notice of, or information concerning, any proposed, contemplated
or initiated suspension or debarment, be it temporary or permanent, due to an
administrative or a statutory basis, of any Borrower or any Affiliate by any
Governmental Authority.  Borrowers
further warrant and represent that no Borrower nor, to the knowledge of
Borrowers, any Affiliate has defaulted under any Government Contract which
default would be a basis of terminating such Government Contract.

 

4.1.22                  Collateral Disclosure List.

 

The information contained in the Collateral Disclosure
List delivered by each Borrower is complete and correct in all material
respects.  Such Collateral Disclosure
List completely and accurately identifies (a) the type of entity, the
state of organization and the chief executive office of each Borrower, (b) each
other place of business of each Borrower, (c) the location of all books
and records pertaining to the Collateral, and (d) each location, other
than the foregoing, where any of the Collateral is located.

 

4.1.23                  Business Names and Addresses.

 

In the five (5) years preceding the date hereof,
no Borrower has changed its name, identity or corporate structure, conducted
business under any name other than its 

 

43

 

current name, nor has it
conducted its business in any jurisdiction other than those disclosed on the
Collateral Disclosure List.

 

4.1.24                  Equipment.

 

All Equipment is personalty and is not and will not be
affixed to real estate in such manner as to become a fixture or part of such
real estate.  No equipment is held by any
Borrower on a sale on approval basis.

 

4.1.25                  Accounts.

 

With respect to all Accounts of Borrowers and to the
best of Borrowers’ knowledge (a) they are genuine, and in all respects
what they purport to be, and are not evidenced by a judgment, an Instrument, or
Chattel Paper (unless such judgment has been assigned and such Instrument or
Chattel Paper has been endorsed and delivered to Lender); (b) they
represent bona fide transactions completed in accordance with the terms and
provisions contained in the invoices, purchase orders and other contracts
relating thereto, and the underlying transaction therefor is in all material
respects in accordance with all applicable Laws; (c) the amounts shown on
Borrowers’ books and records, with respect thereto are actually and absolutely
owing to a Borrower and are not contingent or subject to reduction for any
reason other than regular discounts, credits or adjustments allowed by a
Borrower in the ordinary course of its business; (d) no payments have been
or shall be made thereon except payments turned over to Lender by Borrowers; (e) all
Account Debtors thereon have the capacity to contract; and (f) the goods
sold, leased or transferred or the services furnished giving rise thereto are
not subject to any Liens except Permitted Liens.

 

4.1.26                  Compliance with Eligibility Standards.

 

Each Account of Borrowers included in the calculation
of the Borrowing Base does and will at all times that it is included in the
Borrowing Base meet and comply with all of the standards for Eligible
Receivables.  With respect to those
Accounts of Borrowers which Lender has deemed Eligible Receivables (a) to
the knowledge of Borrowers, there are no facts, events or occurrences which
could materially impair the validity, collectibility or enforceability thereof
or tend to reduce the amount payable thereunder; and (b) there are no
proceedings or actions known to Borrowers that are threatened or pending
against any Account Debtor which might result in any material adverse change in
the Borrowing Base.

 

Section 4.2                                      Survival; Updates of Representations and
Warranties.

 

All representations and warranties contained in or
made under or in connection with this Agreement and the other Financing
Documents shall survive the Closing Date, the making of any advance under the
Revolving Loan and extension of credit made hereunder, and the incurring of any
other Obligations and shall be deemed to have been made at the time of each
request for, and again at the time of the making of, each advance under the
Revolving Loan or the issuance of each Letter of Credit, except that the
representations and warranties which relate to the financial statements which
are referred to in Section 4.1.11 (Financial Condition), shall also be
deemed to cover financial statements furnished from time to time to Lender
pursuant to Section 6.1.1 (Financial Statements).

 

44

 

ARTICLE V 

CONDITIONS PRECEDENT

 

Section 5.1                                      Conditions to the Initial Advance and
Initial Letter of Credit.

 

The making of the initial advance under the Revolving
Loan and the issuance of the initial Letter of Credit is subject to the
fulfillment on or before the Closing Date of the following conditions precedent
in a manner satisfactory in form and substance to Lender and its counsel:

 

5.1.1                        Organizational Documents.

 

Lender shall have received for each Borrower:

 

(a)           a certificate of good standing certified
by the Secretary of State, or other appropriate Governmental Authority, of the
state of formation of each Borrower;

 

(b)           a certified copy from the appropriate
Governmental Authority under which each Borrower is organized, of such Borrower’s
organizational documents and all recorded amendments thereto;

 

(c)           a certificate of qualification to do
business certified by the Secretary of State or other Governmental Authority of
each jurisdiction required by Section 4.1.2(d) (Existence); and

 

(d)           a certificate dated as of the Closing
Date by the Secretary or an Assistant Secretary of each Borrower covering:

 

(i)            true and complete copies of such
Borrower’s organizational and governing documents and all amendments thereto;

 

(ii)           true and complete copies of the
resolutions of its Board of Directors authorizing (A) the execution,
delivery and performance of the Financing Documents to which it is a party, (B) the
borrowings hereunder, and (C) the granting of the Liens contemplated by
this Agreement and the Financing Documents to which such Borrower is a party;

 

(iii)          the incumbency, authority and
signatures of the officers of such Borrower authorized to sign this Agreement
and the other Financing Documents to which Borrower is a party; and

 

(iv)          the identity of such Borrower’s
current directors.

 

5.1.2        Opinion of Borrowers’ Counsel.

 

Lender shall have received the favorable opinion of
counsel for Borrowers addressed to Lender.

 

45

 

5.1.3                        Organizational Documents - Guarantor.

 

Lender shall have received for Guarantor:

 

(a)           a certificate of good standing certified
by the Secretary of State, or other appropriate Governmental Authority, of the
state of formation of the Guarantor;

 

(b)           a certificate of qualification to do
business certified by the Secretary of State or other Governmental Authority of
each jurisdiction required by Section 4.1.2(d) (Existence);

 

(c)           a certificate dated as of the Closing
Date by the Secretary or an Assistant Secretary of the Guarantor covering:

 

(i)            true and complete copies of the
Guarantor’s organizational and governing documents and all amendments thereto;

 

(ii)           true and complete copies of the
resolutions of the Board of Directors of the Guarantor authorizing the execution,
delivery and performance of the Financing Documents to which the Guarantor is a
party and the granting of the Liens (if applicable) contemplated by any of the
Financing Documents to which the Guarantor is a party;

 

(iii)          the incumbency, authority and signatures
of the officers of the Guarantor authorized to sign the Guaranty and all other
Financing Documents to which the Guarantor is a party;

 

(iv)          the identity of the Guarantor’s
current directors; and

 

(d)           the favorable opinion of counsel for the
Guarantor addressed to Lender.

 

5.1.4                        Consents, Licenses, Approvals, Etc.

 

Lender shall have received copies of all consents,
licenses and approvals, required in connection with the execution, delivery,
performance, validity and enforceability of the Financing Documents, and such
consents, licenses and approvals shall be in full force and effect.

 

5.1.5                        Note.

 

Lender shall have received the Revolving Credit Note,
conforming to the requirements hereof and executed by a Responsible Officer of
each Borrower and attested by a duly authorized representative of each
Borrower.

 

46

 

5.1.6                        Financing Documents and Collateral.

 

Each Borrower shall have executed and delivered the
Financing Documents to be executed by it, and shall have delivered original
Chattel Paper, Instruments, Investment Property, and related Collateral and all
opinions and other documents contemplated by ARTICLE III (The Collateral).

 

5.1.7                        Other Financing Documents.

 

In addition to the Financing Documents to be delivered
by Borrowers, Lender shall have received the Guaranty and all other Financing
Documents duly executed and delivered by Persons other than Borrowers.

 

5.1.8                        Other Documents, Etc.

 

Lender shall have received such other certificates,
opinions, documents and instruments confirmatory of or otherwise relating to
the transactions contemplated hereby as may have been reasonably requested by
Lender.

 

5.1.9                        Payment of Fees.

 

Lender shall have received payment of any Fees due on
or before the Closing Date.

 

5.1.10                  Collateral Disclosure List.

 

Each Borrower shall have delivered a Collateral
Disclosure List required under the provisions of Section 3.3 (Collateral
Disclosure List) duly executed by a Responsible Officer of such Borrower.

 

5.1.11                  Recordings and Filings.

 

Each Borrower shall have: (a) authorized,
executed and/or delivered all Financing Documents required to be filed,
registered or recorded in order to create, in favor of Lender, a perfected Lien
in the Collateral (subject only to the Permitted Liens) in form and in
sufficient number for filing, registration, and recording in each office in
each jurisdiction in which such filings, registrations and recordations are
required, and (b) delivered such evidence as Lender deems satisfactory
that all necessary filing fees and all recording and other similar fees, and
all Taxes and other expenses related to such filings, registrations and
recordings will be or have been paid in full.

 

5.1.12                  Insurance Certificate.

 

Lender shall have received insurance certificates in
accordance with the provisions of Section 6.1.7 (Insurance).

 

5.1.13                  Landlord’s Waivers.

 

Lender shall have received a waiver from the landlord
of the Elkridge, Maryland location leased by General Physics in form reasonably
acceptable to Lender and its counsel in their sole and absolute discretion.

 

47

 

5.1.14      Blocked Account Agreements.

 

Lender shall have received the fully executed Blocked
Account Agreements in form and content acceptable to Lender.

 

5.1.15      Borrowing Base Report.

 

Lender shall have received a current Borrowing Base
Report.

 

Section 5.2                                      Conditions to all Extensions of Credit.

 

The making of all advances under the Revolving Loan
and the issuance of all Letters of Credit is subject to the fulfillment of the
following conditions precedent in a manner satisfactory in form and substance
to Lender and its counsel:

 

5.2.1                        Compliance.

 

Each Borrower shall have complied and shall then be in
compliance with all terms, covenants, conditions and provisions of this
Agreement and the other Financing Documents that are binding upon it.

 

5.2.2                        Borrowing Base.

 

Borrowers shall have furnished all Borrowing Base
Reports required by Section 2.1.4 (Borrowing Base Report), there shall
exist no Borrowing Base Deficiency, and as evidence thereof, Borrowers shall
have furnished to Lender such reports, schedules, certificates, records and
other papers as may be requested by Lender, and Borrowers shall be in
compliance with the provisions of this Agreement both immediately before and
immediately after the making of the advance requested.

 

5.2.3                        Default.

 

There shall exist no Event of Default or Default
hereunder.

 

5.2.4                        Representations and Warranties.

 

The representations and warranties of Borrowers
contained among the provisions of this Agreement shall be true and with the
same effect as though such representations and warranties had been made at the
time of the making of, and of the request for, each advance under the Revolving
Loan or the issuance of each Letter of Credit, except that the representations
and warranties which relate to financial statements which are referred to in Section 4.1.11
(Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to Lender pursuant to Section 6.1.1 (Financial
Statements).

 

5.2.5                        Adverse Change.

 

No adverse change shall have occurred in the condition
(financial or otherwise), operations or business of any Borrower that would, in
the good faith judgment of Lender, materially impair the ability of Borrowers
to pay or perform any of the Obligations.

 

48

 

5.2.6                        Legal Matters.

 

All legal documents incident to each advance under the
Revolving Loan and each of the Letters of Credit shall be reasonably
satisfactory to counsel for Lender.

 

ARTICLE VI 

COVENANTS

 

Section 6.1                                      Affirmative Covenants.

 

So long as any of the Obligations (or the Commitment)
shall be outstanding hereunder, Borrowers agree, jointly and severally, with
Lender as follows:

 

6.1.1                        Financial Statements.

 

Borrowers shall furnish to Lender:

 

(a)           Annual Statements and Certificates.  Borrowers shall furnish to Lender as soon as
available, but in no event more than one hundred twenty (120) days after the
close of each fiscal year of Borrowers, (i) a copy of the annual audited
financial statement in reasonable detail satisfactory to Lender relating to
Borrowers and their Subsidiaries, prepared in accordance with GAAP and examined
and certified by KPMG LLP or such other independent certified public
accountants satisfactory to Lender, which financial statement shall include a
consolidated balance sheet of Borrowers and their Subsidiaries as of the end of
such fiscal year and consolidated and consolidating statements of income, cash
flows and changes in shareholders equity of Borrowers and their Subsidiaries
for such fiscal year, (ii) a copy of the annual financial statement in
reasonable detail satisfactory to Lender relating to Borrowers and their
Subsidiaries, prepared in accordance with GAAP, which financial statement shall
include a consolidated and consolidating balance sheet of Borrowers and their
Subsidiaries as of the end of such fiscal year, (iii) a Compliance
Certificate, in substantially the form attached to this Agreement as EXHIBIT
C, as may be amended from time to time, containing a detailed computation
of each financial covenant in this Agreement which is applicable for the period
reported, a certification that no change has occurred to the information
contained in the Collateral Disclosure List (except as set forth in a schedule
attached to the certification), and a cash flow projection report, each
prepared by a Responsible Officer of Borrowers in a format acceptable to Lender
and (iii) a management letter in the form prepared by Borrowers’
independent certified public accountants.

 

(b)           Independent Auditors Report.  Borrowers shall furnish to Lender as soon as
available, but in no event more than one hundred twenty (120) days after the
close of Borrowers’ fiscal years, a letter or opinion of the accountant who
examined and certified the annual financial statement relating to Borrowers and
their Subsidiaries (i) stating whether anything in such accountant’s
examination has revealed the occurrence of a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto and (ii) acknowledging
that Lender will rely on the statement and that Borrowers know of the intended
reliance by Lender.

 

(c)           Quarterly Statements and Certificates.  Borrowers shall furnish to Lender as soon as
available, but in no event more than forty-five (45) days after the close of
Borrowers’ fiscal quarters, consolidated and consolidating balance sheets and
income 

 

49

 

statements of Borrowers
and their Subsidiaries as of the close of such period, consolidated cash flows
and changes in shareholders equity statements for such period, projected cash
flow on a quarterly basis and projected income statements, and a Compliance
Certificate, in substantially the form attached to this Agreement as EXHIBIT
C, containing a detailed computation of each financial covenant in this
Agreement which is applicable for the period reported, a certification that no
change has occurred to the information contained in the Collateral Disclosure
List (except as set forth on a schedule attached to the certification), and a
cash flow projection report, each prepared by a Responsible Officer of General
Physics in a format acceptable to Lender, all as prepared and certified by a
Responsible Officer of General Physics and accompanied by a certificate of that
officer stating whether, to the best of his or her knowledge, any event has
occurred which constitutes a Default or an Event of Default hereunder, and, if
so, stating the facts with respect thereto.

 

(d)           Monthly reports. 
Borrowers shall furnish to Lender within twenty (20) days after the end
of each fiscal month, a Borrowing Base Report with respect to Borrowers and a
report containing the following information:

 

(i)            a detailed aging schedule of all
Receivables by Account Debtor as of the end of the previous month and the
fifteenth (15th) day of the current month, in such detail, and
accompanied by such supporting information, as Lender may from time to time
reasonably request;

 

(ii)           a detailed aging of all accounts
payable by supplier, in such detail, and accompanied by such supporting
information, as Lender may from time to time reasonably request;

 

(iii)          a listing of all Unbilled Receivables
as of the end of the previous month and as of the fifteenth (15th)
day of the current month, showing the billing status of such Unbilled
Receivables; and

 

(iv)          such other information as Lender may
reasonably request.

 

(e)           Annual Budget and Projections.  Borrowers shall furnish to Lender as soon as
available, but in no event later than forty-five (45) days before the end of
each fiscal year a consolidated budget on a quarterly basis for the following
fiscal year.

 

(f)            Additional Reports and Information.  Borrowers shall furnish to Lender promptly,
such additional information, reports or statements as Lender may from time to
time reasonably request.

 

6.1.2                        Recordkeeping, Rights of Inspection,
Field Examination, Etc.

 

(a)           Borrowers shall, and shall cause each of their
Subsidiaries to, maintain (i) a standard system of accounting in
accordance with GAAP, and (ii) proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its properties, business and activities.

 

50

 

(b)           Prior to an Event of Default, Borrowers shall, and
shall cause each of their Subsidiaries to, permit authorized representatives of
Lender to visit and inspect the properties of Borrowers and their Subsidiaries,
one (1)) time per year during normal business hours, to review, audit, check
and inspect the Collateral, to review, audit, check and inspect Borrowers’
other books of record and to make abstracts and photocopies thereof, and to
discuss the affairs, finances and accounts of Borrowers and/or any
Subsidiaries, with the officers, directors, employees and other representatives
of Borrowers and/or any Subsidiaries and their respective accountants.  The annualized cost of such an audit is not
anticipated to exceed $15,000 per year.

 

(c)           Subsequent to the occurrence of an Event of Default
and during the continuance thereof, Borrowers shall, and shall cause each of
their Subsidiaries to, permit authorized representatives of Lender to visit and
inspect the properties of Borrowers and their Subsidiaries, to review, audit,
check and inspect the Collateral at any time with or without notice, to review,
audit, check and inspect Borrowers’ other books of record at any time with or
without notice and to make abstracts and photocopies thereof, and to discuss
the affairs, finances and accounts of Borrowers and/or any Subsidiaries, with
the officers, directors, employees and other representatives of Borrowers
and/or any Subsidiaries and their respective accountants, all at such times and
as often as Lender may request.

 

(d)           Each Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower and/or any
Subsidiaries at any time prior to the repayment in full of the Obligations to exhibit
and deliver to Lender copies of any and all of the financial statements, trial
balances, management letters, or other accounting records of any nature of
Borrowers and/or any Subsidiaries in the accountant’s or auditor’s possession,
and to disclose to Lender any information they may have concerning the
financial status and business operations of Borrowers and their
Subsidiaries.  Further, each Borrower
hereby authorizes all Governmental Authorities to furnish to Lender copies of
reports or examinations relating to Borrowers and/or any Subsidiaries, whether
made by a Borrower or otherwise.

 

(e)           Any and all costs and expenses incurred by, or on
behalf of, Lender in connection with the conduct of the foregoing, including,
without limitation, travel, lodging, meals, and other expenses for each auditor
employed by Lender for inspections of the Collateral and Borrowers’ operations,
shall be part of the Enforcement Costs and shall be payable to Lender upon
demand.  Each Borrower acknowledges and
agrees that such expenses may include, but shall not be limited to, any and all
out-of-pocket costs and expenses of Lender’s employees and agents in, and when,
traveling to Borrowers’ facilities.

 

6.1.3                        Existence.

 

Except as otherwise permitted under Section 6.2.1
(Capital Structure, etc.), Borrowers shall (a) maintain, and cause each of
their Subsidiaries to maintain, its existence in good standing in the
jurisdiction in which it is organized and in each other jurisdiction where it
is required to register or qualify to do business if the failure to do so in
such other jurisdiction might have a material adverse effect on the ability of
Borrowers to perform the Obligations, on the conduct of Borrowers’ operations,
on Borrowers’ financial condition, or on the value of, or the ability of Lender
to realize upon, the Collateral and (b) remain a Registered Organization under the laws of the jurisdiction
stated in the Preamble of this Agreement.

 

51

 

6.1.4                        Compliance with Laws.

 

Borrowers shall comply, and cause each of their
Subsidiaries to comply, with all applicable Laws and observe the valid
requirements of Governmental Authorities, the non-compliance with or the
non-observance of which might have a material adverse effect on the ability of
Borrowers to perform the Obligations, on the conduct of Borrowers’ operations,
on Borrowers’ financial condition, or on the value of, or the ability of Lender
to realize upon, the Collateral.

 

6.1.5                        Preservation of Properties.

 

Subject to the terms of any applicable leases and
limited to the extent of the tenant’s obligations thereunder, Borrowers will,
and will cause each of their Subsidiaries to, at all times (a) maintain,
preserve, protect and keep its properties, including, but not limited to the
Collateral, whether owned or leased, in good operating condition, working order
and repair (ordinary wear and tear excepted), and from time to time will make
all repairs, maintenance, replacements, additions and improvements thereto
necessary to maintain such properties in good operating condition, working
order and repair, and (b) do or cause to be done all things necessary to
preserve and to keep in full force and effect its material franchises, leases
of real and personal property, trade names, Patents, Trademarks, Copyrights and
permits which are necessary for the orderly continuance of its business.

 

6.1.6                        Line of Business.

 

Borrowers will continue to engage substantially only
in the business of providing training, training administration/outsourcing,
e-learning, management consulting, engineering and technical products and
services.

 

6.1.7                        Insurance.

 

(a)           General Provisions.  Borrowers
shall, and shall cause each of their Subsidiaries to, maintain insurance
satisfactory to Lender as to amount, nature and carrier covering property
damage (including loss of use and occupancy) to any of Borrowers’ properties,
business interruption insurance, public liability insurance including coverage
for contractual liability, product liability and workers’ compensation, and any
other insurance which is usual for Borrowers’ business.  Each policy shall provide for at least thirty
(30) days prior notice to Lender of any cancellation thereof and name Lender as
loss payee or additional insured, as appropriate.

 

(b)           Insurance Covering Collateral. 
In addition to the insurance requirements stated above, Borrowers shall
also maintain all risk property damage insurance policies covering the tangible
property comprising the Collateral.  The
insurance must be issued by an insurance company acceptable to Lender, must
include a lender’s loss payable endorsement in favor of Lender in a form
acceptable to Lender and shall provide for at least thirty (30) days prior
notice to Lender of any cancellation thereof.

 

(c)           Evidence of Insurance.  Upon the
request of Lender, Borrower shall deliver to Lender a copy of each insurance
policy, or, if permitted by Lender, a certificate of insurance listing all
insurance in force.

 

52

 

6.1.8                        Taxes.

 

Except to the extent that the validity or amount
thereof is being contested in good faith and by appropriate proceedings,
Borrowers will, and will cause each of their Subsidiaries to, pay and discharge
all Taxes prior to the date when any interest or penalty would accrue for the
nonpayment thereof which, if unpaid, could have a material adverse effect on
Borrowers’ business or operation.

 

6.1.9                        ERISA.

 

Borrowers will, and will cause each of its Commonly
Controlled Entities to, comply with the funding requirements of ERISA
§ 302with respect to Plans for its respective employees.  Borrowers will not permit with respect to any
Plan (a) any prohibited transaction or transactions under ERISA or the
Internal Revenue Code, which results, or may result, in any material liability
of Borrowers and/or any Subsidiary and/or Affiliate, or (b) any Reportable
Event if, upon termination of the Plan or Plans with respect to which one or
more such Reportable Events shall have occurred, there is or would be any material
liability of Borrowers and/or any Subsidiary and/or Affiliate to the PBGC.  Upon Lender’s request, Borrowers will deliver
to Lender a copy of the most recent actuarial report, financial statements and
annual report completed with respect to any Plan.

 

6.1.10                  Notification of Events of Default and Adverse
Developments.

 

Borrowers shall promptly notify Lender upon obtaining
knowledge of the occurrence of:

 

(a)           any Event of Default;

 

(b)           any Default;

 

(c)           any litigation instituted or threatened
against Borrowers or any Subsidiaries and of the entry of any judgment or Lien
(other than any Permitted Liens) against any of the assets or properties of
Borrowers or any Subsidiary where the claims against Borrowers or any
Subsidiaries exceed Five Hundred Thousand Dollars ($500,000) and are not
covered by insurance;

 

(d)           any event, development or circumstance
whereby the financial statements furnished hereunder fail in any material
respect to present fairly, in accordance with GAAP, the financial condition and
operational results of Borrowers or any Subsidiaries;

 

(e)           any judicial, administrative or arbitral
proceeding pending against Borrowers or any of their Subsidiaries and any
judicial or administrative proceeding known by Borrowers to be threatened
against it or any of its Subsidiaries that, if adversely decided, could
materially adversely affect its financial condition or operations (present or
prospective);

 

(f)            the receipt by Borrowers or any of their
Subsidiaries of any notice, claim or demand from any Governmental Authority
which alleges 

 

53

 

that Borrowers or any
Subsidiary is in violation of any of the terms of, or has failed to comply with
any applicable Laws regulating its operation and business, including, but not
limited to, the Occupational Safety and Health Act and the Environmental
Protection Act;

 

(g)           any default under any Government Contract
to which any Borrower is a party, any event which if not corrected could give
rise to a default under any Government Contract to which any Borrower is a
party, or any event under any Government Contract with a contract value of One
Million Dollars ($1,000,000) or greater, which if not corrected could give rise
to a termination for convenience; and

 

(h)           any other development in the business or
affairs of Borrowers and any of their Subsidiaries that may be materially
adverse to such Persons taken as a whole;

 

in each case describing
in detail satisfactory to Lender the nature thereof and the action Borrowers propose
to take with respect thereto.

 

6.1.11                  Hazardous Materials; Contamination.

 

Borrowers agree to undertake the following with
respect to any matter that could materially adversely affect Borrowers or any
Subsidiaries taken as a whole:

 

(a)           give notice to Lender immediately upon
any Borrower’s acquiring knowledge of the presence of any Hazardous Materials
or any Hazardous Materials Contamination on any property owned, operated or
controlled by any Borrower or for which any Borrower is, or is claimed to be,
responsible except to the extent such claims arise out of or relate to any
gross negligence or willful misconduct of Lender (provided that such notice
shall not be required for Hazardous Materials placed or stored on such property
in accordance with applicable Laws in the ordinary course (including, without
limitation, quantity) of any Borrower’s line of business expressly described in
this Agreement), with a full description thereof;

 

(b)           promptly comply with any Laws requiring
the removal, treatment or disposal of Hazardous Materials or Hazardous
Materials Contamination and provide Lender with satisfactory evidence of such
compliance;

 

(c)           provide Lender, within thirty (30) days
after a demand by Lender, with a bond, letter of credit or similar financial
assurance evidencing to Lender’s satisfaction that the necessary funds are
available to pay the cost of removing, treating, and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging any
Lien which may be established as a result thereof on any property owned,
operated or controlled by any Borrower or for which any Borrower is, or is
claimed to be, responsible; and

 

54

 

(d)           as part of the Obligations, defend,
indemnify and hold harmless the Indemnified Parties from any and all claims
which may now or in the future (whether before or after the termination of this
Agreement) be asserted against the Indemnified Parties as a result of the
presence of any Hazardous Materials or any Hazardous Materials Contamination on
any property owned, operated or controlled by any Borrower or for which any
Borrower is, or is claimed to be, responsible except to the extent such claims
arise out of or relate to any gross negligence or willful misconduct of
Lender.  Each Borrower acknowledges and
agrees that this indemnification shall survive the termination of this
Agreement and the Commitment and the payment and performance of all of the
other Obligations.

 

6.1.12                  Financial Covenants.

 

(a)           Tangible Net Worth. 
Borrowers will maintain at all times a Tangible Net Worth equal to but
not less than $18,500,000.

 

(b)           Total Liabilities to Tangible Net Worth.  Borrowers shall maintain, at all times, a
ratio of Total Liabilities to Tangible Net Worth so that it is not more than
3.0 to 1.0 commencing December 31, 2008 and thereafter.

 

(c)           Interest Coverage Ratio.  Borrowers shall maintain, at all times, an Interest Coverage Ratio equal to not
less than 2.0 to 1.0.

 

(d)           Capital Expenditures. 
Borrowers will not directly or indirectly (by way of the acquisition of
the securities of a Person or otherwise), make any Capital Expenditures in the
aggregate exceeding $3,000,000 in any fiscal year.

 

6.1.13                  Collection of Receivables.

 

Until such time that Lender shall notify Borrowers of
the revocation of such privilege in accordance with the next sentence,
Borrowers shall at their own expense have the privilege for the account of, and
in trust for, Lender of collecting its Receivables and shall completely service
all of the Receivables including (a) the billing, posting and maintaining
of complete records applicable thereto, (b) the taking of such action with
respect to the Receivables as Lender may request or in the absence of such
request, as Borrowers may deem advisable; and (c) the granting, in the
ordinary course of business, to any Account Debtor, any rebate, refund or
adjustment to which the Account Debtor may be lawfully entitled, and may
accept, in connection therewith, the return of goods, the sale or lease of which
shall have given rise to a Receivable and may take such other actions relating
to the settling of any Account Debtor’s claim as may be commercially
reasonable.  Lender may, at its option,
at any time or from time to time after and during the continuance of an Event
of Default hereunder, revoke the collection privilege given in this Agreement
to Borrowers by either giving notice of its assignment of, and lien on the
Collateral to the Account Debtors or giving notice of such revocation to
Borrowers.  Lender shall not have any
duty to, and each Borrower hereby releases Lender from all claims of loss or
damage caused by the delay or failure to collect or enforce any of the
Receivables or to preserve any rights against any other party with an interest
in the Collateral.  Lender shall be
entitled at any time and from time to time to confirm and verify Receivables.

 

55

 

6.1.14                  Assignments of Receivables.

 

Borrowers will promptly, upon request, execute and
deliver to Lender written assignments, in form and content acceptable to
Lender, of specific Receivables or groups of Receivables; provided, however,
the Lien and/or security interest granted to Lender under this Agreement shall
not be limited in any way to or by the inclusion or exclusion of Receivables
within such assignments.  Receivables so
assigned shall secure payment of the Obligations and are not sold to Lender
whether or not any assignment thereof, which is separate from this Agreement,
is in form absolute.  Each Borrower
agrees that neither any assignment to Lender nor any other provision contained
in this Agreement or any of the other Financing Documents shall impose on
Lender any obligation or liability of Borrowers with respect to that which is
assigned and each Borrower hereby agrees to indemnify Lender and hold Lender
harmless from any and all claims, actions, suits, losses, damages, costs,
expenses, fees, obligations and liabilities which may be incurred by or imposed
upon Lender by virtue of the assignment of and Lien on Borrowers’ rights, title
and interest in, to, and under the Collateral.

 

6.1.15                  Government Accounts.

 

Borrowers will immediately notify Lender if any of the
Receivables arise out of Government Contracts for which, pursuant to the provisions
of Section 3.2 (Grant of Liens), any Borrower is obligated to execute
documents and take steps required by Lender in order that all moneys due and to
become due under such contracts shall be assigned to Lender and notice thereof
given to the Governmental Authority under the Federal Assignment of Claims Act.

 

6.1.16                  Notice of Returned Goods, etc.

 

Borrowers will promptly notify Lender of the return,
rejection or repossession of any goods sold or delivered in respect of any
Receivables, and of any claims made in regard thereto to the extent that the
aggregate purchase price of any such goods in any given calendar month exceeds
in the aggregate One Hundred Thousand Dollars ($100,000.00) in any given
calendar month.

 

6.1.17                  Equipment.

 

Borrowers shall (a) maintain all Equipment as
personalty, (b) not affix any Equipment to any real estate in such manner
as to become a fixture or part of such real estate, and (c) shall hold no
Equipment on a sale on approval basis. 
Each Borrower hereby declares its intent that, notwithstanding the means
of attachment, no goods of Borrower hereafter attached to any realty shall be
deemed a fixture, which declaration shall be irrevocable, without Lender’s
consent, until all of the Obligations have been paid in full and the Commitment
and all Letters of Credit have been terminated or have expired.

 

6.1.18                  Defense of Title and Further Assurances.

 

Subject to the terms of any applicable leases, at its
expense, Borrowers will defend the title to the Collateral (and any part thereof),
and will immediately execute, acknowledge and deliver any renewal, affidavit,
deed, assignment, security agreement, certificate or other document which
Lender may require in order to perfect, preserve, maintain, continue, protect
and/or extend the Lien granted to Lender under this Agreement or under any of
the other 

 

56

 

Financing Documents and
the first priority of that Lien, subject only to the Permitted Liens.  Each Borrower hereby authorizes the filing of
any financing statement or continuation statement required under the Uniform
Commercial Code.  Borrowers will from
time to time do whatever Lender may reasonably require by way of obtaining,
executing, delivering, and/or filing landlords’ waivers, notices of assignment
and other notices and amendments and renewals thereof and Borrowers will take
any and all steps and observe such formalities as Lender may require, in order
to create and maintain a valid Lien upon, pledge of, or paramount security interest
in, the Collateral, subject to the Permitted Liens.  Borrowers shall pay to Lender on demand all
taxes, costs and expenses incurred by Lender in connection with the
preparation, execution, recording and filing of any such document or
instrument.  To the extent that the
proceeds of any of the Accounts or Receivables of Borrowers are expected to
become subject to the control of, or in the possession of, a party other than
Borrowers or Lender, Borrowers shall cause all such parties to execute and
deliver on the Closing Date security documents or other documents as requested
by Lender and as may be necessary to evidence and/or perfect the security
interest of Lender in those proceeds. 
Each Borrower hereby irrevocably appoints Lender as Borrower’s
attorney-in-fact, with power of substitution, in the name of Lender or in the
name of Borrower or otherwise, for the use and benefit of Lender, but at the
cost and expense of Borrower and without notice to Borrower, to execute and
deliver any and all of the instruments and other documents and take any action
which Lender may require pursuant the foregoing provisions of this Section 6.1.18.

 

6.1.19                  Business Names; Locations.

 

Borrowers will notify and cause each of their
Subsidiaries to notify Lender not less than fifteen (15) days prior to (a) any
change in the name under which Borrowers or the applicable Subsidiary conducts
its business, (b) any change of the location of the chief executive office
of Borrowers or the applicable Subsidiary, (c) the opening of any new place
of business or the closing of any existing place of business, and (d) any
change in the location of the places where the books and records, or any part
thereof, are kept.

 

6.1.20                  Protection of Collateral.

 

Subject to the terms of any applicable leases, each
Borrower agrees that Lender may at any time following the occurrence and during
the continuance of an Event of Default take such steps as Lender deems
reasonably necessary to protect the interest of Lender in, and to preserve the
Collateral, including, the hiring of such security guards or the placing of
other security protection measures as Lender deems appropriate, may employ and
maintain at any of Borrower’s premises a custodian who shall have full
authority to do all acts necessary to protect the interests of Lender in the
Collateral and may lease warehouse facilities to which Lender may move all or
any part of the Collateral to the extent commercially reasonable.  Each Borrower agrees to cooperate fully with
Lender’s efforts to preserve the Collateral and, subject to the terms of any
applicable leases, will take such actions to preserve the Collateral as Lender
may reasonably direct.  All of Lender’s
expenses of preserving the Collateral, including any reasonable expenses
relating to the compensation and bonding of a custodian, shall be part of the
Enforcement Costs.

 

57

 

6.1.21      Depository Relationship.

 

Borrowers shall maintain their primary depository and
cash management relationship with Lender at all times during the term of the
Revolving Loan.

 

Section 6.2                                      Negative Covenants.

 

So long as any of the Obligations or the Commitment
shall be outstanding hereunder, each Borrower agrees with Lender as follows:

 

6.2.1                        Capital Structure, Merger or Sale of
Assets.

 

Except for the dissolution of Subsidiaries in Canada
and Brazil, no Borrower will alter or amend its capital structure, authorize
any additional class of equity, issue any stock or equity of any class, enter
into any merger or consolidation or amalgamation, windup or dissolve itself (or
suffer any liquidation or dissolution) or sell, lease or otherwise dispose of
any of its assets (except as provided in Section 6.2.16 (Disposition of
Collateral)).  Any consent of Lender to
the disposition of any assets may be conditioned on a specified use of the
proceeds of disposition.

 

6.2.2                        Acquisitions.

 

Except for Permitted Acquisitions, no Borrower will
acquire all or substantially all the assets of any Person.

 

6.2.3                        Subsidiaries.

 

No Borrower will create or acquire any Subsidiaries
other than the Subsidiaries identified on the Collateral Disclosure List,
unless such Subsidiaries execute an Additional Borrower Joinder Supplement or
such Borrower pledges all of the issued and outstanding stock owned in the Subsidiaries
that are domestic Subsidiaries and sixty six percent (66%) of all of the issued
and outstanding stock owned in the Subsidiaries that are foreign Subsidiaries,
as required by Lender in its sole discretion.

 

6.2.4                        Issuance of Stock.

 

No Borrower will issue any capital stock or, other
than in the ordinary course of business in connection with compensation of
employees and directors, grant any option or right to purchase any of its
capital stock.

 

6.2.5                        Purchase or Redemption of Securities,
Dividend Restrictions.

 

No Borrower will purchase, redeem or otherwise acquire
any shares of its capital stock or warrants now or hereafter outstanding,
declare or pay any dividends thereon (other than stock dividends), apply any of
its property or assets to the purchase, redemption or other retirement of, set
apart any sum for the payment of any dividends on, or for the purchase,
redemption, or other retirement of, make any distribution by reduction of
capital or otherwise in respect of, any shares of any class of capital stock of
Borrower, or any warrants, permit any Subsidiary to purchase or acquire any
shares of any class of capital stock of, or warrants issued by, Borrower, make
any distribution to stockholders or set aside any funds for any such purpose,
and not prepay, purchase or redeem any Indebtedness for Borrowed Money other
than the 

 

58

 

Obligations; provided,
however, if no Default exists or would result from the payment thereof,
Borrowers may make payments to GPX (a) for taxes due in connection with
the operations of Borrower and (b) for payments permitted under Section
6.2.7(g).

 

6.2.6                        Indebtedness.

 

No Borrower will, and no Borrower will permit any
Subsidiary to, create, incur, assume or suffer to exist any Indebtedness for
Borrowed Money, or permit any Subsidiary to do so, except:

 

(a)           the Obligations;

 

(b)           accounts payable arising in the ordinary
course;

 

(c)           Indebtedness secured by Permitted Liens;

 

(d)           Subordinated Indebtedness;

 

(e)           Indebtedness of Subsidiaries permitted
under Section 6.2.7 (Investments, Loans, etc.); and

 

(f)            Indebtedness of Borrower existing on the
date hereof and reflected on Schedule 6.2.6 attached hereto and made a
part hereof.

 

6.2.7                        Investments, Loans and Other
Transactions.

 

Except as otherwise provided in this Agreement, no
Borrower will, and no Borrower will permit any of its Subsidiaries to, (a) make,
assume or acquire any investment in any real property (unless used in
connection with its business and treated as a Fixed or Capital Asset of
Borrower or the Subsidiary) or any Person, whether by stock purchase, capital
contribution, acquisition of indebtedness of such Person or otherwise
(including, without limitation, investments in any joint venture or
partnership), (b) guaranty or otherwise become contingently liable for the
Indebtedness or obligations of any Person, (c) make any loans or advances,
or otherwise extend credit to any Person, or (d) enter into or participate
in any transaction with any Affiliate, Guarantor or Affiliate of Guarantor or,
except in the ordinary course of business, with the officers, directors,
employees and other representatives of Borrower and/or any Subsidiary, except:

 

(a)           any advance to an officer or employee of
Borrower or any Subsidiary for travel or other business expenses in the
ordinary course of business, provided that the aggregate amount of all such
advances by Borrowers and their Subsidiaries (taken as a whole) outstanding at
any time shall not exceed One Hundred Thousand Dollars ($100,000);

 

(b)           the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business;

 

(c)           any investment in Cash Equivalents, which
are pledged to Lender as collateral and security for the Obligations;

 

59

 

(d)           trade credit extended to customers in the
ordinary course of business;

 

(e)           management fees paid to GPX in an amount
not to exceed $1,000,000 in any fiscal year, provided no Event of Default
exists or would result from such payment;

 

(f)            loans made to Subsidiaries from and after
the Closing Date in an amount not to exceed $1,500,000 in the aggregate at any
time outstanding; and

 

(g)           guarantees, loans, investments (including
investments in joint ventures) or advances existing on the date hereof and
reflected on Schedule 6.2.7 attached hereto and made a part hereof.

 

6.2.8                        Stock of Subsidiaries.

 

Except for the dissolution of Subsidiaries in Canada
and Brazil, no Borrower will sell or otherwise dispose of any shares of capital
stock of any Subsidiary (except in connection with a merger or consolidation of
a Wholly Owned Subsidiary into Borrower or another Wholly Owned Subsidiary or
with the dissolution of any Subsidiary) or permit any Subsidiary to issue any
additional shares of its capital stock except pro  rata to its
stockholders.

 

6.2.9                        Subordinated Indebtedness.

 

No Borrower will, and no Borrower will permit any
Subsidiary to make:

 

(a)           any payment of principal of, or interest
on, any of the Subordinated Indebtedness, if a Default or an Event of Default
then exists hereunder or would result from such payment;

 

(b)           any payment of the principal or interest
due on the Subordinated Indebtedness as a result of acceleration thereunder or
a mandatory prepayment thereunder;

 

(c)           any amendment or modification of or
supplement to the documents evidencing or securing the Subordinated
Indebtedness; or

 

(d)           payment of principal or interest on the
Subordinated Indebtedness other than when due (without giving effect to any
acceleration of maturity or mandatory prepayment).

 

6.2.10                  Liens; Confessed Judgment.

 

Each Borrower agrees that it (a) will not create,
incur, assume or suffer to exist any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, or permit any Subsidiary so to do,
except for Liens securing the Obligations and Permitted Liens, (b) will
not agree to, assume or suffer to exist any provision in any instrument or
other document for confession of judgment, cognovit or other similar right or
remedy, (c) will not allow or suffer 

 

60

 

to exist any Permitted
Liens to be superior to Liens securing the Obligations, (d) will not enter
into any contracts for the consignment of goods, will not execute or suffer the
filing of any financing statements or the posting of any signs giving notice of
consignments, and will not, as a material part of its business, engage in the
sale of goods belonging to others, and (e) will not allow or suffer to
exist the failure of any Lien described in the Security Documents to attach to,
and/or remain at all times perfected on, any of the property described in the
Security Documents.

 

6.2.11                  Other Businesses.

 

No Borrower and no Subsidiary of a Borrower will
engage directly or indirectly in any business other than its current line of
business described in Section 6.1.6 (Line of Business).

 

6.2.12                  ERISA Compliance.

 

Except to the extent that the occurrence of any of the
following could not result in a material liability to Borrowers, no Borrower
nor any Commonly Controlled Entity shall: 
(a) engage in or permit any “prohibited transaction” (as defined in
ERISA); (b) cause any “accumulated funding deficiency” as defined in ERISA
and/or the Internal Revenue Code; (c) terminate any Plan in a manner which
could result in the imposition of a lien on the property of Borrower pursuant
to ERISA; (d) terminate or consent to the termination of any Multiemployer
Plan; or (e) incur a complete or partial withdrawal with respect to any
Multiemployer Plan.

 

6.2.13                  Prohibition on Hazardous Materials.

 

Borrowers shall not place, manufacture or store or
permit to be placed, manufactured or stored any Hazardous Materials on any
property owned, operated or controlled by any Borrower or for which any
Borrower is responsible other than Hazardous Materials placed or stored on such
property in accordance with applicable Laws in the ordinary course of Borrowers’
business except for any non-compliance which would not result in a material
adverse effect on Borrowers.

 

6.2.14                  Method of Accounting; Fiscal Year.

 

Borrowers will not:

 

(a)           change the method of accounting employed
in the preparation of any financial statements furnished to Lender under the
provisions of Section 6.1.1 (Financial Statements), unless required to
conform to GAAP and on the condition that Borrowers’ accountants shall furnish
such information as Lender may request to reconcile the changes with Borrowers’
prior financial statements.

 

(b)           change their fiscal year from a year
ending on December 31.

 

61

 

6.2.15                  Sale and
Leaseback.

 

No Borrower or any Subsidiaries will directly or
indirectly enter into any arrangement to sell or transfer all or any
substantial part of its fixed assets and thereupon or within one (1) year
thereafter rent or lease the assets so sold or transferred.

 

6.2.16                  Disposition
of Collateral.

 

No Borrower will sell,
discount, allow credits or allowances, transfer, assign, extend the time for
payment on, convey, lease, assign, transfer or otherwise dispose of the
Collateral, except, prior to an Event of Default, dispositions expressly
permitted elsewhere in this Agreement, the sale of Inventory and licensing of
intellectual property in the ordinary course of business, and the sale of
unnecessary or obsolete Equipment, but only if the proceeds of the sale of such
Equipment are (a) used to purchase similar Equipment to replace the
unnecessary or obsolete Equipment or (b) immediately turned over to Lender
for application to the Obligations in accordance with the provisions of this
Agreement.

 

ARTICLE VII 

DEFAULT AND RIGHTS AND
REMEDIES

 

Section 7.1                                      Events
of Default.

 

The occurrence of any one
or more of the following events shall constitute an “Event of Default” under
the provisions of this Agreement:

 

7.1.1                        Failure
to Pay.

 

The failure of Borrowers to pay any of the Obligations
as and when due and payable in accordance with the provisions of this
Agreement, the Notes and/or any of the other Financing Documents.

 

7.1.2                        Breach
of Representations and Warranties.

 

Any representation or warranty made in this Agreement
or in any report, statement, schedule, certificate, opinion (including any
opinion of counsel for Borrowers), financial statement or other document
furnished in connection with this Agreement, any of the other Financing
Documents, or the Obligations, shall prove to have been false or misleading
when made (or, if applicable, when reaffirmed) in any material respect.

 

7.1.3                        Failure
to Comply with Specific Covenants.

 

The failure of Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in Section 6.1.3
(Existence) or Section 6.1.7 (Insurance), which failure continues uncured for a period of
thirty (30) days after Notice from Lender to Borrowers.

 

7.1.4                        Failure
to Comply with Covenants.

 

The failure of Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in this Agreement not
otherwise referred to in this Section 7.1.

 

62

 

7.1.5                        Default
Under Other Financing Documents or Obligations.

 

A default shall occur under any of the other Financing
Documents or under any other Obligations, and such default is not cured within
any applicable grace period provided therein.

 

7.1.6                        Receiver;
Bankruptcy.

 

Any Borrower or any Subsidiary shall (a) apply
for or consent to the appointment of a receiver, trustee or liquidator of
itself or any of its property, (b) admit in writing its inability to pay
its debts as they mature, (c) make a general assignment for the benefit of
creditors, (d) be adjudicated a bankrupt or insolvent, (e) file a
voluntary petition in bankruptcy or a petition or an answer seeking or
consenting to reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such
law, or take corporate action for the purposes of effecting any of the foregoing,
or (f) by any act indicate its consent to, approval of or acquiescence in
any such proceeding or the appointment of any receiver of or trustee for any of
its property, or suffer any such receivership, trusteeship or proceeding to
continue undischarged for a period of sixty (60) days, or (g) by any act
indicate its consent to, approval of or acquiescence in any order, judgment or
decree by any court of competent jurisdiction or any Governmental Authority
enjoining or otherwise prohibiting the operation of a material portion of
Borrower’s or any Subsidiary’s business or the use or disposition of a material
portion of Borrower’s or any Subsidiary’s assets.

 

7.1.7                        Involuntary
Bankruptcy, etc.

 

An order for relief shall
be entered in any involuntary case brought against any Borrower or any
Subsidiary under the Bankruptcy Code, or (b) any such case shall be
commenced against any Borrower or any Subsidiary and shall not be dismissed
within sixty (60) days after the filing of the petition, or (c) an order,
judgment or decree under any other Law is entered by any court of competent
jurisdiction or by any other Governmental Authority on the application of a
Governmental Authority or of a Person other than Borrowers or any Subsidiary (i) adjudicating
any Borrower, or any Subsidiary bankrupt or insolvent, or (ii) appointing
a receiver, trustee or liquidator of Borrower or of any Subsidiary, or of a
material portion of Borrower’s or any Subsidiary’s assets, or (iii) enjoining,
prohibiting or otherwise limiting the operation of a material portion of any
Borrower’s or any Subsidiary’s business or the use or disposition of a material
portion of any Borrower’s or any Subsidiary’s assets, and such order, judgment
or decree continues unstayed and in effect for a period of thirty (30) days
from the date entered.

 

7.1.8                        Judgment.

 

Unless adequately insured
in the opinion of Lender, the entry of a final judgment for the payment of
money involving more than $1,000,000 against any Borrower or any Subsidiary,
and the failure by such Borrower or such Subsidiary to discharge the same, or
cause it to be discharged, within thirty (30) days from the date of the order,
decree or process under which or pursuant to which such judgment was entered,
or to secure a stay of execution pending appeal of such judgment.

 

63

 

7.1.9                        Execution;
Attachment.

 

Any execution or
attachment shall be levied against the Collateral, or any part thereof, and
such execution or attachment shall not be set aside, discharged or stayed
within thirty (30) days after the same shall have been levied.

 

7.1.10                  Default Under
Other Borrowings.

 

Default shall be made
with respect to any Indebtedness for Borrowed Money (other than the Revolving
Loan) with an outstanding principal amount of greater than $500,000 if the
default is a failure to pay at maturity or if the effect of such default is to
accelerate the maturity of such Indebtedness for Borrowed Money or to permit
the holder or obligee thereof or other party thereto to cause such Indebtedness
for Borrowed Money to become due prior to its stated maturity.

 

7.1.11                  Challenge to
Agreements.

 

Any Borrower or Guarantor
shall challenge the validity and binding effect of any provision of any of the
Financing Documents or shall state its intention to make such a challenge of
any of the Financing Documents or any of the Financing Documents shall for any
reason (except to the extent permitted by its express terms) cease to be
effective or to create a valid and perfected first priority Lien (except for
Permitted Liens) on, or security interest in, any of the Collateral purported
to be covered thereby.

 

7.1.12                  Material
Adverse Change.

 

Lender in its sole
discretion determines in good faith that a material adverse change has occurred
in the financial condition of Borrowers or the value of the Collateral taken as
a whole.

 

7.1.13      Contract
Default, Debarment or Suspension.

 

Default shall be made
under any Government Contract with, or any Government Contract is terminated
for default by, the United States or any individual department, agency or
instrumentality of the United States with which any Borrower has contracts in
the aggregate at that point in time with a value in excess of $10,000,000, or
if any Borrower is debarred or suspended, whether temporarily or permanently,
by the United States or any department, agency or instrumentality of the United
States.

 

7.1.14                    Liquidation,
Termination, Dissolution, etc.

 

Any Borrower shall
liquidate, dissolve or terminate its existence or shall suspend or terminate a
substantial portion of its business operations or any change occurs in the
control of any Borrower without the prior written consent of Lender.

 

Section 7.2                                      Remedies.

 

Upon the occurrence and
during the continuance of any Event of Default, Lender may, in the exercise of
its sole and absolute discretion from time to time, exercise any one or more of
the following rights, powers or remedies:

 

64

 

7.2.1                        Acceleration.

 

Lender may declare any or
all of the Obligations to be immediately due and payable, notwithstanding
anything contained in this Agreement or in any of the other Financing Documents
to the contrary, without presentment, demand, protest, notice of protest or of
dishonor, or other notice of any kind, all of which Borrowers hereby waive.

 

7.2.2                        Further
Advances.

 

Lender may from time to
time without notice to Borrowers suspend, terminate or limit any further
advances, loans or other extensions of credit under the Commitment, under this
Agreement and/or under any of the other Financing Documents.  Further, upon the occurrence of an Event of
Default or Default specified in Section 7.1.6 (Receiver; Bankruptcy) or Section 7.1.7
(Involuntary Bankruptcy, etc.), the Revolving Credit Commitment and any agreement
in any of the Financing Documents to provide additional credit and/or to issue
Letters of Credit shall immediately and automatically terminate and the unpaid
principal amount of the Notes (with accrued interest thereon) and all other
Obligations then outstanding, shall immediately become due and payable without
further action of any kind and without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by Borrowers.

 

7.2.3                        Uniform
Commercial Code.

 

Lender shall have all of
the rights and remedies of a secured party under the applicable Uniform
Commercial Code and other applicable Laws. 
Upon demand by Lender, Borrowers shall assemble the Collateral and make
it available to Lender, at a place designated by Lender.  Subject to the terms of any applicable
leases, Lender or its agents may without notice from time to time enter upon
any Borrower’s premises to take possession of the Collateral, to remove it, to
render it unusable, to process it or otherwise prepare it for sale, or to sell
or otherwise dispose of it.

 

Any written notice of the
sale, disposition or other intended action by Lender with respect to the
Collateral which is sent by regular mail, postage prepaid, to Borrowers at the
address set forth in Section 8.1 (Notices), or such other address of
Borrowers which may from time to time be shown on Lender’s records, at least
ten (10) days prior to such sale, disposition or other action, shall
constitute commercially reasonable notice to Borrowers.  Lender may alternatively or additionally give
such notice in any other commercially reasonable manner.  Nothing in this Agreement shall require
Lender to give any notice not required by applicable Laws.

 

If any consent, approval,
or authorization of any state, municipal or other Governmental Authority or of
any other Person or of any Person having any interest therein, should be
necessary to effectuate any sale or other disposition of the Collateral, each
Borrower agrees to execute all such applications and other instruments, and to
take all other action, as may be required in connection with securing any such
consent, approval or authorization.

 

Borrowers recognize that
Lender may be unable to effect a public sale of all or a part of the Collateral
consisting of Investment Property by reason of certain prohibitions contained
in the Securities Act of 1933, as amended, and other applicable Federal and
state 

 

65

 

Laws.  Lender
may, therefore, in its discretion, take such steps as it may deem appropriate
to comply with such Laws and may, for example, at any sale of the Collateral
consisting of securities restrict the prospective bidders or purchasers as to
their number, nature of business and investment intention, including, without
limitation, a requirement that the Persons making such purchases represent and
agree to the satisfaction of Lender that they are purchasing such securities
for their account, for investment, and not with a view to the distribution or
resale of any thereof.  Borrowers
covenant and agree to do or cause to be done promptly all such acts and things
as Lender may request from time to time and as may be necessary to offer and/or
sell the securities or any part thereof in a manner which is valid and binding
and in conformance with all applicable Laws.  
Upon any such sale or disposition, Lender shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral consisting
of securities so sold.

 

7.2.4                        Specific
Rights With Regard to Collateral.

 

In addition to all other
rights and remedies provided hereunder or as shall exist at law or in equity
from time to time, Lender may (but shall be under no obligation to), without
notice to any Borrower, and each Borrower hereby irrevocably appoints Lender as
its attorney-in-fact, with power of substitution, in the name of Lender and/or
in the name of Borrower for the use and benefit of Lender, but at the cost and
expense of Borrowers and without notice to Borrowers:

 

(a)           request any Account Debtor
obligated on any of the Accounts to make payments thereon directly to Lender,
with Lender taking control of the Proceeds thereof;

 

(b)           compromise, extend or renew
any of the Collateral or deal with the same as it may deem advisable;

 

(c)           make exchanges, substitutions
or surrenders of all or any part of the Collateral;

 

(d)           copy, transcribe, or remove
from any place of business of any Borrower or any Subsidiary all books,
records, ledger sheets, correspondence, invoices and documents, relating to or
evidencing any of the Collateral or without cost or expense to Lender, subject
to the terms of any applicable leases, make such use of any Borrower’s or any
Subsidiary’s place(s) of business as may be reasonably necessary to
administer, control and collect the Collateral;

 

(e)           repair, alter or supply goods
if necessary to fulfill in whole or in part the purchase order of any Account
Debtor;

 

(f)            demand, collect, receipt for
and give renewals, extensions, discharges and releases of any of the
Collateral;

 

(g)           institute and prosecute legal
and equitable proceedings to enforce collection of, or realize upon, any of the
Collateral;

 

66

 

(h)           settle, renew, extend,
compromise, compound, exchange or adjust claims in respect of any of the
Collateral or any legal proceedings brought in respect thereof;

 

(i)            endorse or sign the name of
any Borrower upon any Items of Payment, certificates of title, Instruments,
Investment Property, stock powers, documents, documents of title, financing
statements, assignments, notices, or other writing relating to or part of the
Collateral and on any proof of claim in bankruptcy against an Account Debtor;

 

(j)            clear Inventory through
customs in Lender’s or, as applicable, any Borrower’s name and to sign and
deliver to customs officials powers of attorney in any Borrower’s name for such
purpose;

 

(k)           notify the Post Office
authorities to change the address for the delivery of mail to any Borrower to
such address or Post Office Box as Lender may designate and receive and open
all mail addressed to such Borrower; and

 

(l)            take any other action
necessary or beneficial to realize upon or dispose of the Collateral or to
carry out the terms of this Agreement.

 

7.2.5                        Application
of Proceeds.

 

Any proceeds of sale or
other disposition of the Collateral will be applied by Lender to the payment
first of any and all Enforcement Costs, and any balance of such proceeds will
be applied to the Obligations in such order and manner as Lender shall
determine.  If the sale or other
disposition of the Collateral fails to fully satisfy the Obligations, Borrowers
shall remain liable to Lender for any deficiency.

 

7.2.6                        Performance
by Lender.

 

Lender without notice to
or demand upon Borrowers and without waiving or releasing any of the
Obligations or any Default or Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account and at the expense of Borrowers, and may enter upon the premises of
Borrowers for that purpose and take all such action thereon as Lender may
consider necessary or appropriate for such purpose, subject to the terms of any
applicable leases, and each Borrower hereby irrevocably appoints Lender as its
attorney-in-fact to do so, with power of substitution, in the name of Lender,
in the name of Borrowers or otherwise, for the use and benefit of Lender, but
at the cost and expense of Borrowers and without notice to Borrowers.  All sums so paid or advanced by Lender
together with interest thereon from the date of payment, advance or incurring
until paid in full at the Post-Default Rate and all costs and expenses, shall
be deemed part of the Enforcement Costs, shall be paid by Borrowers to Lender
on demand, and shall constitute and become a part of the Obligations.

 

67

 

7.2.7                        Other
Remedies.

 

Lender may from time to
time proceed to protect or enforce its rights by an action or actions at law or
in equity or by any other appropriate proceeding, whether for the specific
performance of any of the covenants contained in this Agreement or in any of
the other Financing Documents, or for an injunction against the violation of
any of the terms of this Agreement or any of the other Financing Documents, or
in aid of the exercise or execution of any right, remedy or power granted in
this Agreement, the Financing Documents, and/or applicable Laws.  Lender is authorized to offset and apply to
all or any part of the Obligations all moneys, credits and other property of
any nature whatsoever of Borrowers now or at any time hereafter in the
possession of, in transit to or from, under the control or custody of, or on
deposit with, Lender or any Affiliate of Lender.

 

ARTICLE VIII 

MISCELLANEOUS

 

Section 8.1                                      Notices.

 

All notices, requests and
demands to or upon the parties to this Agreement shall be in writing and shall
be deemed to have been given or made when delivered by hand on a Business Day,
or five (5) days after the date when deposited in the mail, postage
prepaid by registered or certified mail, return receipt requested, or when sent
by overnight courier, on the Business Day next following the day on which the
notice is delivered to such overnight courier, addressed as follows:

 

	
  Borrowers:

  	
   

  	
  General Physics
  Corporation

  
	
   

  	
   

  	
  6095 Marshalee
  Drive

  
	
   

  	
   

  	
  Suite 300

  
	
   

  	
   

  	
  Elkridge,
  Maryland 21075

  
	
   

  	
   

  	
  Attention:        Sharon
  Esposito-Mayer

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  General Physics
  Corporation

  
	
   

  	
   

  	
  6095 Marshalee
  Drive

  
	
   

  	
   

  	
  Suite 300

  
	
   

  	
   

  	
  Elkridge,
  Maryland 21075

  
	
   

  	
   

  	
  Attention:        Kenneth
  L. Crawford

  
	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  Wachovia Bank,
  National Association

  
	
   

  	
   

  	
  MD4305

  
	
   

  	
   

  	
  7 Saint Paul
  Street, 2nd Floor

  
	
   

  	
   

  	
  Baltimore,
  Maryland 21202

  
	
   

  	
   

  	
  Attention:        Lucy
  C. Campbell

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Kathleen M.
  Donahue, Esquire

  
	
   

  	
   

  	
  Troutman Sanders
  LLP

  
	
   

  	
   

  	
  1660
  International Drive, Suite 600

  
	
   

  	
   

  	
  McLean, Virginia
  22102

  

 

68

 

By written notice, each
party to this Agreement may change the address to which notice is given to that
party, provided that such changed notice shall include a street address to
which notices may be delivered by overnight courier in the ordinary course on
any Business Day.

 

Section 8.2                                      Amendments;
Waivers.

 

This Agreement and the
other Financing Documents may not be amended, modified, or changed in any
respect except by an agreement in writing signed by Lender and Borrowers.  No waiver of any provision of this Agreement
or of any of the other Financing Documents or consent to any departure by Borrowers
therefrom, shall in any event be effective unless the same shall be in writing
signed by Lender.  No course of dealing
between Borrowers and Lender and no act or failure to act from time to time on
the part of Lender shall constitute a waiver, amendment or modification of any
provision of this Agreement or any of the other Financing Documents or any
right or remedy under this Agreement, under any of the other Financing
Documents or under applicable Laws.

 

Without implying any
limitation on the foregoing:

 

(a)           Any waiver or consent shall be
effective only in the specific instance, for the terms and purpose for which
given, subject to such conditions as Lender may specify in any such instrument.

 

(b)           No waiver of any Default or
Event of Default shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereto.

 

(c)           No notice to or demand on
Borrowers in any case shall entitle Borrowers to any other or further notice or
demand in the same, similar or other circumstance.

 

(d)           No failure or delay by Lender to
insist upon the strict performance of any term, condition, covenant or
agreement of this Agreement or of any of the other Financing Documents, or to
exercise any right, power or remedy consequent upon a breach thereof, shall
constitute a waiver, amendment or modification of any such term, condition,
covenant or agreement or of any such breach or preclude Lender from exercising
any such right, power or remedy at any time or times.

 

(e)           By accepting payment after the
due date of any amount payable under this Agreement or under any of the other
Financing Documents, Lender shall not be deemed to waive the right either to
require prompt payment when due of all other amounts payable under this
Agreement or under any of the other Financing Documents, or to declare a
default for failure to effect such prompt payment of any such other amount.

 

Section 8.3                                      Cumulative
Remedies.

 

The rights, powers and
remedies provided in this Agreement and in the other Financing Documents are
cumulative, may be exercised concurrently or separately, may be exercised from 

 

69

 

time to time and in such order as Lender shall
determine, subject to the provisions of this Agreement, and are in addition to,
and not exclusive of, rights, powers and remedies provided by existing or
future applicable Laws.  In order to
entitle Lender to exercise any remedy reserved to it in this Agreement, it
shall not be necessary to give any notice, other than such notice as may be
expressly required in this Agreement. 
Without limiting the generality of the foregoing and subject to the
terms of this Agreement, Lender may:

 

(a)           proceed against any Borrower
with or without proceeding against any other Person (including, without
limitation, Guarantor) who may be liable (by endorsement, guaranty, indemnity
or otherwise) for all or any part of the Obligations;

 

(b)           proceed against any Borrower
with or without proceeding under any of the other Financing Documents or
against any Collateral or other collateral and security for all or any part of
the Obligations;

 

(c)           without reducing or impairing
the obligation of any Borrower and without notice, release or compromise with
any guarantor or other Person liable for all or any part of the Obligations
under the Financing Documents or otherwise;

 

(d)           without reducing or impairing
the obligations of any Borrower and without notice thereof:

 

(i)            fail to perfect the Lien in any or
all Collateral or to release any or all the Collateral or to accept substitute
Collateral;

 

(ii)           approve the making of advances under
the Revolving Loan under this Agreement;

 

(iii)          waive any provision of this Agreement
or the other Financing Documents;

 

(iv)          exercise or fail to exercise rights of
set-off or other rights; or

 

(e)           accept partial payments or
extend from time to time the maturity of all or any part of the Obligations.

 

Section 8.4                                      Severability.

 

In case one or more
provisions, or part thereof, contained in this Agreement or in the other
Financing Documents shall be invalid, illegal or unenforceable in any respect
under any Law, then without need for any further agreement, notice or action:

 

70

 

(a)           the validity, legality and
enforceability of the remaining provisions shall remain effective and binding
on the parties thereto and shall not be affected or impaired thereby;

 

(b)           the obligation to be fulfilled
shall be reduced to the limit of such validity;

 

(c)           if such provision or part
thereof pertains to repayment of the Obligations, then, at the sole and
absolute discretion of Lender, all of the Obligations of Borrowers to Lender
shall become immediately due and payable; and

 

(d)           if the affected provision or
part thereof does not pertain to repayment of the Obligations, but operates or
would prospectively operate to invalidate this Agreement in whole or in
material part, then such provision or part thereof only shall be void, and the
remainder of this Agreement shall remain operative and in full force and
effect.

 

Section 8.5                                      Assignments
by Lender.

 

Lender may, without
notice to or consent of Borrowers, assign to any Person (each an “Assignee” and
collectively, the “Assignees”) all or a portion of the Commitment; provided, however, prior to any sale of the
Loan, or any portion thereof, to an institution organized under the laws of a
foreign jurisdiction, so long as no Event of Default exists and is continuing,
Lender will provide notice to Borrowers and Borrowers will have the right to
approve or disapprove the sale which approval shall not be unreasonably
withheld, conditioned, or delayed, and provided further, however, that the
notice and consent right provided to Borrowers in the foregoing clause will
only apply to the sale of an interest in the Loan as part of a portfolio
management sale by Lender, and not any sale of Lender itself.  Lender and its Assignee shall notify
Borrowers in writing of the date on which the assignment is to be effective
(the “Adjustment Date”).  On or before
the Adjustment Date, Lender, Borrowers and the Assignee shall execute and
deliver a written assignment agreement in a form acceptable to Lender, which
shall constitute an amendment to this Agreement to the extent necessary to
reflect such assignment.  Upon the
request of Lender following an assignment made in accordance with this Section 8.5,
Borrowers shall issue new Notes to Lender and its Assignee reflecting such
assignment, in exchange for the existing Notes held by Lender.

 

In addition,
notwithstanding the foregoing, Lender may at any time pledge all or any portion
of Lender’s rights under this Agreement, the Commitment or the Obligations to a
Federal Reserve Bank.

 

Section 8.6                                      Participations
by Lender.

 

Lender may at any time
sell to one or more financial institutions participating interests in any of
Lender’s Obligations or Commitment; provided, however, that (a) no such
participation shall relieve Lender from its obligations under this Agreement or
under any of the other Financing Documents to which it is a party, (b) Lender
shall remain solely responsible for the performance of its obligations under
this Agreement and under all of the other Financing 

 

71

 

Documents to which it is a party, and (c) Borrowers
shall continue to deal solely and directly with Lender in connection with
Lender’s rights and obligations under this Agreement and the other Financing
Documents.  A participant shall have no
rights vis-à-vis Borrowers under this Agreement.

 

Section 8.7                                      Disclosure
of Information by Lender.

 

Subject to the provisions
of Section 8.21 (Confidentiality), in connection with any sale, transfer,
assignment or participation by Lender in accordance with Section 8.5
(Assignments by Lender) or Section 8.6 (Participations by Lender), Lender
shall have the right to disclose to any actual or potential purchaser,
assignee, transferee or participant all financial records, information,
reports, financial statements and documents obtained in connection with this
Agreement and/or any of the other Financing Documents or otherwise.

 

Section 8.8                                      Successors
and Assigns.

 

This Agreement and all
other Financing Documents shall be binding upon and inure to the benefit of
Borrowers and Lender and their respective successors and assigns, except that
Borrowers shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of Lender.

 

Section 8.9                                      Continuing
Agreements.

 

All covenants,
agreements, representations and warranties made by Borrowers in this Agreement,
in any of the other Financing Documents, and in any certificate delivered
pursuant hereto or thereto shall survive the making by Lender of the Revolving
Loan, the issuance of Letters of Credit and the execution and delivery of the
Notes, shall be binding upon Borrowers regardless of how long before or after
the date hereof any of the Obligations were or are incurred, and shall continue
in full force and effect so long as any of the Obligations are outstanding and
unpaid.  From time to time upon Lender’s
request, and as a condition of the release of any one or more of the Security
Documents, Borrowers and other Persons obligated with respect to the
Obligations shall provide Lender with such acknowledgments and agreements as
Lender may require to the effect that there exists no defenses, rights of setoff
or recoupment, claims, counterclaims, actions or causes of action of any kind
or nature whatsoever in connection with the Obligations against Lender and/or
any of its agents and others, or to the extent there are, the same are waived
and released.

 

Section 8.10                                Enforcement
Costs.

 

Borrowers shall pay to
Lender on demand all Enforcement Costs, together with interest thereon from the
earlier of the date incurred or advanced until paid in full at a per annum rate
of interest equal at all times to the Post-Default Rate.  Enforcement Costs shall be payable on
demand.  Without implying any limitation
on the foregoing, Borrowers shall pay, as part of the Enforcement Costs, upon
demand any and all stamp and other Taxes and fees payable or determined to be
payable in connection with the execution and delivery of this Agreement and the
other Financing Documents and to save Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay any Taxes or fees referred to in this Section.  The provisions of this Section shall
survive the execution and 

 

72

 

delivery of this Agreement, the repayment of the other
Obligations and shall survive the termination of this Agreement.

 

Section 8.11                                Applicable
Law; Jurisdiction.

 

8.11.1                  Applicable
Law.

 

Borrowers and Lender
acknowledge and agree that this Agreement shall be governed by the Laws of the
State.

 

8.11.2                  Submission to
Jurisdiction.

 

Each Borrower irrevocably
submits to the jurisdiction of any state or federal court sitting in the State
over any suit, action or proceeding arising out of or relating to this
Agreement or any of the other Financing Documents.  Each Borrower irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.  Final judgment in any such suit, action or
proceeding brought in any such court shall be conclusive and binding upon
Borrower and may be enforced in any court in which Borrower is subject to
jurisdiction, by a suit upon such judgment, provided that service of process is
effected upon Borrower in one of the manners specified in this Section or
as otherwise permitted by applicable Laws.

 

8.11.3                  Service of
Process.

 

Each Borrower hereby
consents to process being served in any suit, action or proceeding of the
nature referred to in this Section by the mailing of a copy thereof by
registered or certified mail, postage prepaid, return receipt requested, to
Borrower at Borrower’s address designated in or pursuant to Section 8.1
(Notices).  Each Borrower irrevocably
agrees that such service (y) shall be deemed in every respect effective
service of process upon Borrower in any such suit, action or proceeding, and (z) shall,
to the fullest extent permitted by law, be taken and held to be valid personal
service upon Borrower.  Nothing in this Section shall
affect the right of Lender to serve process in any manner otherwise permitted
by law or limit the right of Lender otherwise to bring proceedings against
Borrower in the courts of any jurisdiction or jurisdictions.

 

Section 8.12                                Duplicate
Originals and Counterparts.

 

This Agreement may be
executed in any number of duplicate originals or counterparts, each of such
duplicate originals or counterparts shall be deemed to be an original and all
taken together shall constitute but one and the same instrument.

 

Section 8.13                                Headings.

 

The headings in this
Agreement are included herein for convenience only, shall not constitute a part
of this Agreement for any other purpose, and shall not be deemed to affect the
meaning or construction of any of the provisions hereof.

 

73

 

Section 8.14                                No
Agency.

 

Nothing herein contained shall be construed to
constitute any Borrower as Lender’s agent for any purpose whatsoever or to
permit any Borrower to pledge any of the credit of Lender.  Lender shall not be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause
thereof, unless as a result of Lender’s gross negligence or willful
misconduct.  Lender shall not, by
anything herein or in any of the Financing Documents or otherwise, assume any
of Borrowers’ obligations under any contract or agreement assigned to Lender,
and Lender shall not be responsible in any way for the performance by Borrowers
of any of the terms and conditions thereof.

 

Section 8.15                                Date
of Payment.

 

Should the principal of or interest on the Notes
become due and payable on other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and in the case of principal,
interest shall be payable thereon at the rate per annum specified in the  Notes during such extension.

 

Section 8.16                                Entire
Agreement.

 

This Agreement is intended by Lender and Borrowers to
be a complete, exclusive and final expression of the agreements contained
herein.  Neither Lender nor Borrowers
shall hereafter have any rights under any prior agreements pertaining to the
matters addressed by this Agreement but shall look solely to this Agreement for
definition and determination of all of their respective rights, liabilities and
responsibilities under this Agreement.

 

Section 8.17                                Waiver
of Trial by Jury.

 

BORROWERS AND LENDER HEREBY
JOINTLY AND SEVERALLY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH
BORROWERS AND LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY
PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING DOCUMENTS,
OR (C) THE COLLATERAL.  THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS AGREEMENT.

 

This waiver is knowingly, willingly and voluntarily
made by Borrowers and Lender, and Borrowers and Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its
effect.  Borrowers and Lender further
represent that they have been represented in the signing of this Agreement and
in the making of this waiver by independent legal counsel, selected of their
own free will, and that they have had the opportunity to discuss this waiver
with counsel.

 

Section 8.18           LIMITATION
ON LIABILITY; WAIVER OF PUNITIVE DAMAGES.

 

EACH OF THE PARTIES HERETO, INCLUDING THE LENDER BY ACCEPTANCE HEREOF,
AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM
OR CONTROVERSY BETWEEN OR AMONG THEM 

 

74

 

THAT MAY ARISE OUT OF OR BE IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS OR ANY OTHER
AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY
OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE
TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE
OR EXEMPLARY DAMAGES.  EACH OF THE
PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION
WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.

 

Section 8.19                                 Liability
of Lender.

 

Borrowers hereby agree that Lender shall not be
chargeable for any negligence, mistake, act or omission of any accountant,
examiner, agency or attorney employed by Lender in making examinations,
investigations or collections, or otherwise in perfecting, maintaining,
protecting or realizing upon any lien or security interest or any other
interest in the Collateral or other security for the Obligations.

 

By inspecting the Collateral or any other properties
of Borrowers or by accepting or approving anything required to be observed,
performed or fulfilled by Borrowers or to be given to Lender pursuant to this
Agreement or any of the other Financing Documents, Lender shall not be deemed
to have warranted or represented the condition, sufficiency, legality,
effectiveness or legal effect of the same, and such acceptance or approval
shall not constitute any warranty or representation with respect thereto by
Lender.

 

Section 8.20                                Indemnification.

 

Each Borrower agrees to indemnify and hold harmless,
Lender, Lender’s parent and Affiliates and Lender’s parent’s and Affiliates’
officers, directors, shareholders, employees and agents (each an “Indemnified
Party,” and collectively, the “Indemnified Parties”), from and against any and
all claims, liabilities, losses, damages, costs and expenses (whether or not
such Indemnified Party is a party to any litigation), including without
limitation, reasonable attorney’s fees and costs and costs of investigation,
document production, attendance at depositions or other discovery, incurred by
any Indemnified Party with respect to, arising out of or as a consequence of (a) this
Agreement or any of the other Financing Documents, including without limitation,
any failure of Borrowers to pay when due (at maturity, by acceleration or
otherwise) any principal, interest, fee or any other amount due under this
Agreement or the other Financing Documents, or any other Event of Default (b) the
use by Borrowers of any proceeds advanced hereunder; (c) the transactions
contemplated hereunder; or (d) any claim, demand, action or cause of
action being asserted against (i) any Borrower or any Affiliates by any
other Person, or (ii) any Indemnified Party by any Borrower in connection
with the transactions contemplated hereunder. 
Notwithstanding anything herein or elsewhere to the contrary, no
Borrower shall be obligated to indemnify or hold harmless any Indemnified Party
from any liability, loss or damage resulting from the gross negligence, willful
misconduct or unlawful actions of such Indemnified Party.  Any amount payable to Lender under this Section will
bear interest at the Post-Default Rate from the due date until paid.

 

75

 

Section 8.21           Confidentiality.

 

Lender understands that some of the information
furnished to it pursuant to this Agreement and the other Financing Documents
may be received by it prior to the time that such information shall have been
made public, and Lender hereby agrees that it will keep, and will direct its
officers and employees to keep, all the information provided to it pursuant to
this Agreement and the other Financing Documents confidential prior to its
becoming public subject, however, to (a) disclosure to officers,
directors, employees, representatives, agents, auditors, consultants, advisors,
lawyers and Affiliates of Lender, in the ordinary course of business, (b) disclosure
to such officers, directors, employees, agents and representatives of a
prospective assignee or participant as need to know such information in
connection with the evaluation of a possible participation in the Commitment
(who will be informed of the confidential nature of the material), or (c) the
obligations of Lender or a participant under applicable Law, or pursuant to
subpoenas or other legal process, to make information available to governmental
agencies and examiners or to others and the right of Lender to use such
information in proceedings to enforce their rights and remedies hereunder or
under any other Financing Documents or in any proceeding against Lender in
connection with this Agreement or under any other Financing Document or the
transactions contemplated hereunder or thereunder.

 

Notwithstanding the foregoing, each of Lender,
Borrowers and any assignee or participant hereunder (and each employee,
representative or other agent of such parties) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and any facts that
may be relevant to the tax structure of the transaction; provided, however,
that no such Person shall disclose any information that is not relevant to
understanding the tax treatment and structure of the transaction (including the
identity of any party and any information that could lead another to determine
the identity of any party), or any information to the extent that such
disclosure could result in a violation of any federal or state securities law
or any stock exchange regulation.

 

Section 8.22           Patriot
Act Notice.

 

To help fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an
account.  For purposes of this section,
account shall be understood to include loan accounts.

 

Section 8.23           Compliance
with Laws.

 

No Borrower is a Sanctioned Person and no Borrower
has any of its assets in a Sanctioned Country or does business in or with, or
derives any of its operating income from investments in or transactions with,
Sanctioned Persons or Sanctioned Countries in violation of economic sanctions
administered by OFAC.  The proceeds from
the Credit Facilities will not be used to fund any operations in, finance any
investments or activities in, or make any payments to, a Sanctioned Person or a
Sanctioned Country.

 

76

 

Section 8.24           Electronic
Transmission of Data.

 

Lender and Borrowers agree that certain data
related to the Credit Facilities (including confidential information,
documents, applications and reports) may be transmitted electronically,
including transmission over the Internet. 
This data may be transmitted to, received from or circulated among agents
and representatives of Borrowers and/or Lender and their Affiliates and other
Persons involved with the subject matter of this Agreement.  Borrowers acknowledge and agree that (a) there
are risks associated with the use of electronic transmission and that Lender
does not control the method of transmittal or service providers, (b) Lender
has no obligation or responsibility whatsoever and assumes no duty or
obligation for the security, receipt or third party interception of any such
transmission, and (c) Borrowers will release, hold harmless and indemnify
Lender from any claim, damage or loss, including that arising in whole or part
from Lender’s strict liability or sole, comparative or contributory negligence,
which is related to the electronic transmission of data.

 

IN WITNESS WHEREOF, each of the parties hereto have
executed and delivered this Agreement under their respective seals as of the
day and year first written above.

 

	
  WITNESS OR ATTEST:

  	
   

  	
  GENERAL PHYSICS
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Sharon
  Esposito-Mayer

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Sharon Esposito-Mayer

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  WACHOVIA BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lucy C. Campbell

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Lucy C. Campbell

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  

 

77

 

LIST OF EXHIBITS

 

A.            Additional Borrower Joinder
Supplement

 

B.            Revolving Credit Note

 

C.            Form of Compliance Certificate

 

78

 

LIST OF SCHEDULES

 

	
  Schedule 4.1.10

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  Schedule 4.1.13

  	
   

  	
  Other Indebtedness

  
	
   

  	
   

  	
   

  
	
  Schedule 4.1.18

  	
   

  	
  Employee Relations

  
	
   

  	
   

  	
   

  
	
  Schedule 4.1.20

  	
   

  	
  Permitted Liens

  
	
   

  	
   

  	
   

  
	
  Schedule 6.2.6

  	
   

  	
  Indebtedness

  
	
   

  	
   

  	
   

  
	
  Schedule 6.2.7

  	
   

  	
  Investments, Loans and
  Other Transactions

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