Document:

Unassociated Document

    Exhibit
      10.2

     

     

     

    AMENDED
      AND RESTATED FINANCING AND SECURITY AGREEMENT

     

    Dated

     

    August
      6, 2007

     

    By
      and Between

     

    GENERAL
      PHYSICS CORPORATION

     

    as
      Borrower

     

    And

     

    WACHOVIA
      BANK, NATIONAL ASSOCIATION,

     

    as
      Lender

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      
        	ARTICLE
                I DEFINITIONS	
                2

              
	
                Section
                  1.1

              	
                Certain
                  Defined Terms.

              	
                2

              
	
                Section
                  1.2

              	
                Accounting
                  Terms and Other Definitional Provisions.

              	
                19

              
	 	 
	ARTICLE
                II THE CREDIT FACILITIES	
                20

              
	
                Section
                  2.1

              	
                The
                  Revolving Credit Facility.

              	
                
                  20

                

              
	
                2.1.1

              	
                Revolving
                  Credit Facility.

              	
                
                  20

                

              
	
                2.1.2

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

              	
                
                  20

                

              
	
                2.1.3

              	
                Borrowing
                  Base.

              	
                
                  21

                

              
	
                2.1.4

              	
                Borrowing
                  Base Report.

              	
                
                  21

                

              
	
                2.1.5

              	
                Revolving
                  Credit Note.

              	
                
                  22

                

              
	
                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.

              	
                24

              
	
                Section
                  2.2

              	
                The
                  Letter of Credit Facility.

              	
                
                  24

                

              
	
                2.2.1

              	
                Letters
                  of Credit.

              	
                
                  24

                

              
	
                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.

              	
                26

              
	
                2.2.6

              	
                Change
                  in Law; Increased Cost.

              	
                
                  27

                

              
	
                2.2.7

              	
                General
                  Letter of Credit Provisions.

              	
                27

              
	
                Section
                  2.3

              	
                Applicable
                  Interest Rates.

              	
                28

              
	
                Section
                  2.4

              	
                General
                  Financing Provisions.

              	
                29

              
	
                2.4.1

              	
                Borrowers’
                  Representatives.

              	
                
                  29

                

              
	
                2.4.2

              	
                Use
                  of Proceeds of the Revolving Loan.

              	
                31

              
	
                2.4.3

              	
                Origination
                  Fee.

              	
                
                  31

                

              
	
                2.4.4

              	
                Monitoring
                  Fee.

              	
                
                  31

                

              
	
                2.4.5

              	
                Computation
                  of Interest and Fees.

              	
                
                  31

                

              
	
                2.4.6

              	
                Maximum
                  Interest Rate.

              	
                
                  31

                

              
	
                2.4.7

              	
                Payments.

              	
                
                  32

                

              
	
                2.4.8

              	
                Liens;
                  Setoff.

              	
                
                  32

                

              
	
                2.4.9

              	
                Requirements
                  of Law.

              	
                
                  32

                

              
	
                2.4.10

              	
                Guaranty.

              	
                33

              
	
                2.4.11

              	
                ACH
                  Transactions and Swap Contracts.

              	
                36

              
	
                2.4.12

              	
                Termination
                  of Revolving Credit Facility.

              	
                
                  36

                

              
	 	 
	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.

              	
                37

              
	
                Section
                  3.4

              	
                Personal
                  Property.

              	
                
                  37

                

              
	
                Section
                  3.5

              	
                Record
                  Searches.

              	
                
                  38

                

              
	
                Section
                  3.6

              	
                Costs.

              	
                
                  38

                

              
	
                Section
                  3.7

              	
                Release.

              	
                
                  38

                

              
	
                Section
                  3.8

              	
                Inconsistent
                  Provisions.

              	
                39

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	ARTICLE
                IV REPRESENTATIONS AND WARRANTIES	
                39

              
	
                Section
                  4.1

              	
                Representations
                  and Warranties.

              	
                
                  39

                

              
	
                4.1.1

              	
                Subsidiaries.

              	
                
                  39

                

              
	
                4.1.2

              	
                Existence.

              	
                
                  39

                

              
	
                4.1.3

              	
                Power
                  and Authority.

              	
                
                  39

                

              
	
                4.1.4

              	
                Binding
                  Agreements.

              	
                
                  39

                

              
	
                4.1.5

              	
                No
                  Conflicts.

              	
                
                  
                    40

                  

                

              
	
                4.1.6

              	
                No
                  Defaults, Violations.

              	
                40

              
	
                4.1.7

              	
                Compliance
                  with Laws.

              	
                
                  
                    40

                  

                

              
	
                4.1.8

              	
                Margin
                  Stock.

              	
                
                  40

                

              
	
                4.1.9

              	
                Investment
                  Company Act; Margin Stock.

              	
                
                  41

                

              
	
                4.1.10

              	
                Litigation.

              	
                
                  41

                

              
	
                4.1.11

              	
                Financial
                  Condition.

              	
                
                  41

                

              
	
                4.1.12

              	
                Full
                  Disclosure.

              	
                
                  41

                

              
	
                4.1.13

              	
                Indebtedness
                  for Borrowed Money.

              	
                
                  42

                

              
	
                4.1.14

              	
                Subordinated
                  Debt.

              	
                
                  42

                

              
	
                4.1.15

              	
                Taxes.

              	
                
                  42

                

              
	
                4.1.16

              	
                ERISA.

              	
                
                  42

                

              
	
                4.1.17

              	
                Title
                  to Properties.

              	
                
                  43

                

              
	
                4.1.18

              	
                Patents,
                  Trademarks, Etc.

              	
                
                  43

                

              
	
                4.1.19

              	
                Employee
                  Relations.

              	
                
                  43

                

              
	
                4.1.20

              	
                Presence
                  of Hazardous Materials or Hazardous Materials
                  Contamination.

              	
                
                  43

                

              
	
                4.1.21

              	
                Perfection
                  and Priority of Collateral.

              	
                
                  44

                

              
	
                4.1.22

              	
                No
                  Suspension or Debarment.

              	
                
                  44

                

              
	
                4.1.23

              	
                Collateral
                  Disclosure List.

              	
                
                  44

                

              
	
                4.1.24

              	
                Business
                  Names and Addresses.

              	
                
                  44

                

              
	
                4.1.25

              	
                Equipment.

              	
                
                  44

                

              
	
                4.1.26

              	
                Accounts.

              	
                
                  44

                

              
	
                4.1.27

              	
                Compliance
                  with Eligibility Standards.

              	
                
                  45

                

              
	
                Section
                  4.2

              	
                Survival;
                  Updates of Representations and Warranties.

              	
                
                  45

                

              
	 	 
	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.

              	
                
                  46

                

              
	
                5.1.3

              	
                Organizational
                  Documents - Guarantor.

              	
                
                  46

                

              
	
                5.1.4

              	
                Consents,
                  Licenses, Approvals, Etc.

              	
                47

              
	
                5.1.5

              	
                Note.

              	
                
                  47

                

              
	
                5.1.6

              	
                Financing
                  Documents and Collateral.

              	
                
                  47

                

              
	
                5.1.7

              	
                Other
                  Financing Documents.

              	
                
                  47

                

              
	
                5.1.8

              	
                Other
                  Documents, Etc.

              	
                
                  48

                

              
	
                5.1.9

              	
                Payment
                  of Fees.

              	
                
                  48

                

              
	
                5.1.10

              	
                Collateral
                  Disclosure List.

              	
                
                  48

                

              
	
                5.1.11

              	
                Recordings
                  and Filings.

              	
                
                  48

                

              
	
                5.1.12

              	
                Insurance
                  Certificate.

              	
                
                  48

                

              
	
                5.1.13

              	
                Landlord’s
                  Waivers.

              	
                
                  48

                

              
	
                5.1.14

              	
                Field
                  Examination.

              	
                
                  48

                

              
	
                5.1.15

              	
                Subordination
                  Agreement.

              	
                
                  48

                

              
	
                5.1.16

              	
                Subordinated
                  Indebtedness.

              	
                49

              
	
                5.1.17

              	
                Blocked
                  Account Agreements.

              	
                
                  49

                

              
	
                5.1.18

              	
                Borrowing
                  Base Report.

              	
                
                  49

                

              
	
                Section
                  5.2

              	
                Conditions
                  to all Extensions of Credit.

              	
                
                  49

                

              
	
                5.2.1

              	
                Compliance.

              	
                
                  49

                

              
	
                5.2.2

              	
                Borrowing
                  Base.

              	
                
                  49

                

              
	
                5.2.3

              	
                Default.

              	
                
                  49

                

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                5.2.4

              	
                Representations
                  and Warranties.

              	
                49

              
	
                5.2.5

              	
                Adverse
                  Change.

              	
                50

              
	
                5.2.6

              	
                Legal
                  Matters.

              	
                
                  50

                

              
	 	 
	ARTICLE
                VI COVENANTS	
                
                  50

                

              
	
                Section
                  6.1

              	
                Affirmative
                  Covenants.

              	
                
                  50

                

              
	
                6.1.1

              	
                Financial
                  Statements.

              	
                
                  50

                

              
	
                6.1.2

              	
                Recordkeeping,
                  Rights of Inspection, Field Examination, Etc.

              	
                52

              
	
                6.1.3

              	
                Existence.

              	
                53

              
	
                6.1.4

              	
                Compliance
                  with Laws.

              	
                
                  53

                

              
	
                6.1.5

              	
                Preservation
                  of Properties.

              	
                
                  53

                

              
	
                6.1.6

              	
                Line
                  of Business.

              	
                
                  53

                

              
	
                6.1.7

              	
                Insurance.

              	
                
                  53

                

              
	
                6.1.8

              	
                Taxes.

              	
                54

              
	
                6.1.9

              	
                ERISA.

              	
                
                  54

                

              
	
                6.1.10

              	
                Notification
                  of Events of Default and Adverse Developments.

              	
                
                  54

                

              
	
                6.1.11

              	
                Hazardous
                  Materials; Contamination.

              	
                55

              
	
                6.1.12

              	
                Financial
                  Covenants.

              	
                56

              
	
                6.1.13

              	
                Collection
                  of Receivables.

              	
                56

              
	
                6.1.14

              	
                Assignments
                  of Receivables.

              	
                57

              
	
                6.1.15

              	
                Government
                  Accounts.

              	
                
                  57

                

              
	
                6.1.16

              	
                Notice
                  of Returned Goods, etc.

              	
                
                  57

                

              
	
                6.1.17

              	
                Equipment.

              	
                
                  57

                

              
	
                6.1.18

              	
                Defense
                  of Title and Further Assurances.

              	
                58

              
	
                6.1.19

              	
                Business
                  Names; Locations.

              	
                
                  58

                

              
	
                6.1.20

              	
                Protection
                  of Collateral.

              	
                
                  58

                

              
	
                6.1.21

              	
                Depository
                  Relationship.

              	
                59

              
	
                Section
                  6.2

              	
                Negative
                  Covenants.

              	
                
                  59

                

              
	
                6.2.1

              	
                Capital
                  Structure, Merger or Sale of Assets.

              	
                
                  59

                

              
	
                6.2.2

              	
                Acquisitions.

              	
                
                  59

                

              
	
                6.2.3

              	
                Subsidiaries.

              	
                
                  59

                

              
	
                6.2.4

              	
                Issuance
                  of Stock.

              	
                
                  59

                

              
	
                6.2.5

              	
                Purchase
                  or Redemption of Securities, Dividend Restrictions.

              	
                
                  59

                

              
	
                6.2.6

              	
                Indebtedness.

              	
                60

              
	
                6.2.7

              	
                Investments,
                  Loans and Other Transactions.

              	
                60

              
	
                6.2.8

              	
                Stock
                  of Subsidiaries.

              	
                61

              
	
                6.2.9

              	
                Subordinated
                  Indebtedness.

              	
                61

              
	
                6.2.10

              	
                Liens;
                  Confessed Judgment.

              	
                62

              
	
                6.2.11

              	
                Other
                  Businesses.

              	
                
                  62

                

              
	
                6.2.12

              	
                ERISA
                  Compliance.

              	
                
                  62

                

              
	
                6.2.13

              	
                Prohibition
                  on Hazardous Materials.

              	
                
                  62

                

              
	
                6.2.14

              	
                Method
                  of Accounting; Fiscal Year.

              	
                
                  62

                

              
	
                6.2.15

              	
                Sale
                  and Leaseback.

              	
                63

              
	
                6.2.16

              	
                Disposition
                  of Collateral.

              	
                63

              
	 	 
	ARTICLE
                VII DEFAULT AND RIGHTS AND REMEDIES	
                
                  63

                

              
	
                Section
                  7.1

              	
                Events
                  of Default.

              	
                
                  63

                

              
	
                7.1.1

              	
                Failure
                  to Pay.

              	
                
                  63

                

              
	
                7.1.2

              	
                Breach
                  of Representations and Warranties.

              	
                
                  63

                

              
	
                7.1.3

              	
                Failure
                  to Comply with Specific Covenants.

              	
                64

              
	
                7.1.4

              	
                Failure
                  to Comply with Covenants.

              	
                
                  64

                

              
	
                7.1.5

              	
                Default
                  Under Other Financing Documents or Obligations.

              	
                
                  64

                

              
	
                7.1.6

              	
                Receiver;
                  Bankruptcy.

              	
                
                  64

                

              
	
                7.1.7

              	
                Involuntary
                  Bankruptcy, etc.

              	
                
                  64

                

              
	
                7.1.8

              	
                Judgment.

              	
                65

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                7.1.9

              	
                Execution;
                  Attachment.

              	
                65

              
	
                7.1.10

              	
                Default
                  Under Other Borrowings.

              	
                
                  65

                

              
	
                7.1.11

              	
                Challenge
                  to Agreements.

              	
                
                  65

                

              
	
                7.1.12

              	
                Material
                  Adverse Change.

              	
                
                  65

                

              
	
                7.1.13

              	
                Contract
                  Default, Debarment or Suspension.

              	
                
                  65

                

              
	
                7.1.14

              	
                Liquidation,
                  Termination, Dissolution, etc.

              	
                66

              
	
                Section
                  7.2

              	
                Remedies.

              	
                
                  66

                

              
	
                7.2.1

              	
                Acceleration.

              	
                
                  66

                

              
	
                7.2.2

              	
                Further
                  Advances.

              	
                
                  66

                

              
	
                7.2.3

              	
                Uniform
                  Commercial Code.

              	
                
                  66

                

              
	
                7.2.4

              	
                Specific
                  Rights With Regard to Collateral.

              	
                67

              
	
                7.2.5

              	
                Application
                  of Proceeds.

              	
                68

              
	
                7.2.6

              	
                Performance
                  by Lender.

              	
                68

              
	
                7.2.7

              	
                Other
                  Remedies.

              	
                69

              
	 	 
	ARTICLE
                VIII MISCELLANEOUS	
                69

              
	
                Section
                  8.1

              	
                Notices.

              	
                
                  69

                

              
	
                Section
                  8.2

              	
                Amendments;
                  Waivers.

              	
                70

              
	
                Section
                  8.3

              	
                Cumulative
                  Remedies.

              	
                71

              
	
                Section
                  8.4

              	
                Severability.

              	
                72

              
	
                Section
                  8.5

              	
                Assignments
                  by Lender.

              	
                72

              
	
                Section
                  8.6

              	
                Participations
                  by Lender.

              	
                73

              
	
                Section
                  8.7

              	
                Disclosure
                  of Information by Lender.

              	
                
                  73

                

              
	
                Section
                  8.8

              	
                Successors
                  and Assigns.

              	
                
                  73

                

              
	
                Section
                  8.9

              	
                Continuing
                  Agreements.

              	
                
                  73

                

              
	
                Section
                  8.10

              	
                Enforcement
                  Costs.

              	
                
                  73

                

              
	
                Section
                  8.11

              	
                Applicable
                  Law; Jurisdiction.

              	
                74

              
	
                8.11.1

              	
                Applicable
                  Law.

              	
                
                  74

                

              
	
                8.11.2

              	
                Submission
                  to Jurisdiction.

              	
                
                  74

                

              
	
                8.11.3

              	
                Service
                  of Process.

              	
                
                  74

                

              
	
                Section
                  8.12

              	
                Duplicate
                  Originals and Counterparts.

              	
                
                  74

                

              
	
                Section
                  8.13

              	
                Headings.

              	
                75

              
	
                Section
                  8.14

              	
                No
                  Agency.

              	
                
                  75

                

              
	
                Section
                  8.15

              	
                Date
                  of Payment.

              	
                
                  75

                

              
	
                Section
                  8.16

              	
                Entire
                  Agreement.

              	
                
                  75

                

              
	
                Section
                  8.17

              	
                Waiver
                  of Trial by Jury.

              	
                
                  75

                

              
	
                Section
                  8.18

              	
                LIMITATION
                  ON LIABILITY; WAIVER OF PUNITIVE DAMAGES.

              	
                
                  76

                

              
	
                Section
                  8.19

              	
                Liability
                  of Lender.

              	
                
                  76

                

              
	
                Section
                  8.20

              	
                Indemnification.

              	
                
                  76

                

              
	
                Section
                  8.21

              	
                Confidentiality.

              	
                77

              
	
                Section
                  8.22

              	
                Patriot
                  Act Notice.

              	
                
                  77

                

              
	
                Section
                  8.23

              	
                Compliance
                  with Laws.

              	
                
                  77

                

              
	
                Section
                  8.24

              	
                Electronic
                  Transmission of Data.

              	
                78

              

      

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    AMENDED
      AND RESTATED FINANCING
      AND SECURITY AGREEMENT

     

    THIS
      AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT (this “Agreement”) is made
      as of August 6, 2007, 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. General
      Physics, MXL Industries, Inc., a Delaware corporation (“MXL”) and Skillright,
      Inc., a Delaware corporation (“Skillright”) and Lender are parties to a
      Financing and Security Agreement dated August 13, 2003 (the “Original Financing
      Agreement”) and pursuant to the terms of a First Amendment to Financing and
      Security Agreement dated as of March 30, 2004 (the “First Amendment”), the
      Original Financing Agreement was modified to eliminate all references to MXL
      and
      any and all obligations of MXL under the Original Financing
      Agreement.

     

    B. The
      Original Financing Agreement has been further modified by a Second Amendment
      to
      Financing and Security Agreement dated as of July
      2,
      2004, a Third Amendment to Financing and Security Agreement dated as of July
      30,
      2004 and a Fourth Amendment to Financing and Security Agreement dated as of
      January 19, 2006 (together with the Original Financing Agreement and the First
      Amendment, the “Original Amended Financing Agreement”).

     

    C. General
      Physics has applied to Lender for (i) an extension of the maturity date of
      the
      credit facilities under the Original Amended Financing Agreement consisting
      of
      (a) a revolving credit facility in the maximum principal amount of $25,000,000
      and (b) a letter of credit facility as part of that revolving credit facility,
      to be used by General Physics for the Permitted Uses (as hereinafter defined),
      (ii) the elimination of Skillright as a “Borrower” under the terms of the
      Original Amended Financing Agreement and (iii) a change in the pricing
      applicable to the revolving credit facility.

     

    D. Lender
      has agreed to amend the Original Amended Financing Agreement and, in connection
      therewith, agreed with Borrower to restate the Original Amended 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).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “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
      the Closing Date by and among General Physics, Lender and Fleet National Bank,
      the Blocked Account Agreement dated as of the Closing Date by and among General
      Physics and the Blocked Account Agreement dated as of the Closing Date by and
      among Skillright, 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).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “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 August 13, 2003.

     

    “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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “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 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:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (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 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;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (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, 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;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (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 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;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (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.

     

    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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    “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 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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “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 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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “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).

     

    “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).

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    “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).

     

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

     

    “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.

     

    “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.

     

    “NPDC”
      means National Patent Development Corporation, a Delaware corporation, and
      its
      successors and assigns.

     

    “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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    “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 a 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).

     

    “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
      4.1.21 attached
      hereto and made a part hereof.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Uses” means (a) an amount not to exceed $10,000,000 to be used to repurchase
      issued and outstanding stock of GPX and (b) general working capital purposes
      arising in the ordinary course of Borrowers’ business and 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).

     

    “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 Net Worth Ratio and the Interest Coverage
      Ratio, collectively.

     

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

     

    “Purchaser”
      has the meaning described in the Note and Warrant Purchase Agreement dated
      August 8, 2003 by and among GPX, NPDC, the purchasers party thereto and Gabelli
      Funds, LLC, as agent.

     

    “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.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    “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 August 31, 2009, 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).

     

    “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.

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “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
      Debt” means the 6% conditional secured subordinated notes due 2008 in the
      aggregate principal amount of $7,500,000 purchased by Purchaser.

     

    “Subordinated
      Debt Loan Documents” means any and all promissory notes, agreements, documents
      or instruments now or at any time evidencing, securing, guarantying or otherwise
      executed and delivered in connection with the Subordinated Debt, as the same
      may
      from time to time be amended, restated, supplemented or modified.

     

    “Subordinated
      Indebtedness” means all Indebtedness, including, without limitation, the
      Subordinated Debt, 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.

     

    “Subordination
      Agreement” means that certain Subordination Agreement dated August 13, 2003 by
      and between Purchaser, Borrower and Lender, as the same may be from time to
      time
      amended, restated, supplemented or modified.

     

    “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.

     

    “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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    “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
      1160-0001 titled “Sales earned not billed”.

     

    “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.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      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 Twenty Five Million Dollars ($25,000,000) 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.

       

      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.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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 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.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

       

      
        	 	
                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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      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) 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.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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. 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 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 One Million Dollars ($1,000,000)

       

      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 customary
        fee charged commercial customers for 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 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 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.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      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.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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;

       

      (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.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      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, 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.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      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 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 275 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, 2003
        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:

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      
        	
                Pricing
                  Ratio

                (both
                  covenants achieved for two (2) consecutive quarters)

              	 	
                Applicable
                  Margin 

              
	
                Total
                  Liabilities to Tangible Net Worth

              	 	
                Interest
                  Coverage Ratio

              	 	 
	
                Equal
                  to or less than 2.50 to 1.00

              	 	
                Greater
                  than 3.0 to 1.00

              	 	
                275
                  basis points

              
	
                Equal
                  to or less than 2.50 to 1.00

              	 	
                Greater
                  than 5.0 to 1.00

              	 	
                250
                  basis points

              
	
                Equal
                  to or less than 2.50 to 1.00

              	 	
                Greater
                  than 6.0 to 1.00

              	 	
                175
                  basis points

              
	
                Equal
                  to or less than 2.00 to 1.00

              	 	
                Greater
                  than 8.0 to 1.00

              	 	
                150
                  basis points

              
	
                Equal
                  to or less than 2.00 to 1.00 

              	 	
                Greater
                  than 10.0 to 1.00

              	 	
                125
                  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 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.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      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 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.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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 Two Hundred Fifty Thousand Dollars
        ($250,000), which fee has been fully earned and is non-refundable. Prior
        to the
        Closing Date Borrowers have paid a portion of the Origination Fee in the
        amount
        of Seventy Five Thousand Dollars ($75,000); the balance due as of the Closing
        Date is One Hundred Seventy Five Thousand Dollars ($175,000). There is no
        origination fee connected with this amended and restated agreement.

       

      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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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, 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.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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

       

      (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;

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      (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;

       

      (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.

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      (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;

       

      (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 

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      (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 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.

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      (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, each Borrower shall each deliver to Lender a list
        on
        the form provided by Lender (the “Collateral Disclosure List”) 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 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.

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      (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:

       

      (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.

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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 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.

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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, 2006 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
        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.

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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

              	
                Subordinated
                  Debt.

              

      

       

      None
        of
        the Subordinated Debt Loan Documents has been amended, supplemented, restated
        or
        otherwise modified except as otherwise disclosed to Lender in writing on
        or
        before the effective date of any such amendment, supplement, restatement
        or
        other modification. In addition, there does not exist any default or any
        event
        which upon notice or lapse of time or both would constitute a default under
        the
        terms of any of the Subordinated Debt Loan Documents.

       

      
        	 	
                4.1.15

              	
                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.

       

      
        	 	
                4.1.16

              	
                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, 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”.

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      
        	 	
                4.1.17

              	
                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.

       

      
        	 	
                4.1.18

              	
                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).

       

      
        	 	
                4.1.19

              	
                Employee
                  Relations.

              

      

       

      Except
        as
        disclosed on Schedule
        4.1.19
        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, (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,
        and (d) no Borrower nor any Subsidiaries is subject to an employment contract,
        severance agreement, commission contract, consulting agreement or bonus
        agreement. 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.

       

      
        	 	
                4.1.20

              	
                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.

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

       

      
        	 	
                4.1.21

              	
                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
        4.1.21 attached
        hereto and made a part hereof.

       

      
        	 	
                4.1.22

              	
                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.

       

      
        	 	
                4.1.23

              	
                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.

       

      
        	 	
                4.1.24

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

       

      
        	 	
                4.1.25

              	
                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.

       

      
        	 	
                4.1.26

              	
                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.

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

       

      
        	 	
                4.1.27

              	
                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).

       

      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:

       

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

       

      (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.

       

       

      
        	 	
                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);

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

      (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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                5.1.14

              	
                Field
                  Examination.

              

      

       

      Lender
        shall have completed a field examination of Borrowers’ business, operations and
        income, the results of which field examination shall be in all respects
        acceptable to Lender in its sole and absolute discretion and shall include
        reference discussions with key customers and vendors.

       

      
        	 	
                5.1.15

              	
                Subordination
                  Agreement.

              

      

       

      Lender
        shall have received the fully executed Subordination Agreement in form and
        content acceptable to Lender. Lender shall have received and approved copies
        of
        the fully executed Subordinated Debt Loan Documents, all of which must be
        in
        form and content acceptable to Lender.

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      
        	 	
                5.1.16

              	
                Subordinated
                  Indebtedness.

              

      

       

      Lender
        shall have received a certificate signed by a Responsible Officer of General
        Physics, certifying to Lender that General Physics (a) has received the proceeds
        of the Subordinated Debt and has applied the same to such purposes as has
        been
        previously disclosed to, and approved by, Lender and (b) has delivered to
        Lender
        a true and correct photocopy of all Subordinated Debt Loan
        Documents.

       

      5.1.17 Blocked
        Account Agreements.

       

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

       

      5.1.18 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).

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

      (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 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.

       

      
        
          
          

        

        
          51

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      (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, up to three (3) times 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 the
        audits
        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.

       

      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                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.

              

      

       

      Borrowers
        will, and will cause each of their Subsidiaries to, at all times maintain
        with
“A” or better rated insurance companies such insurance as is required by
        applicable Laws and such other insurance, in such amounts, of such types
        and
        against such risks, hazards, liabilities, casualties and contingencies as
        are
        usually insured against in the same geographic areas by business entities
        engaged in the same or similar business. Without limiting the generality
        of the
        foregoing, Borrowers will, and will cause each of their Subsidiaries to,
        keep
        adequately insured all of its property against loss or damage resulting from
        fire or other risks insured against by extended coverage and maintain public
        liability insurance against claims for personal injury, death or property
        damage
        occurring upon, in or about any properties occupied or controlled by it,
        or
        arising in any manner out of the businesses carried on by it. Borrowers shall
        deliver to Lender on the Closing Date (and thereafter on each date there
        is a
        material change in the insurance coverage) a certificate of a Responsible
        Officer of Borrowers containing a detailed list of the insurance then in
        effect
        and stating the names of the insurance companies, the types, the amounts
        and
        rates of the insurance, dates of the expiration thereof and the properties
        and
        risks covered thereby.

       

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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;

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

       

      (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 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;

       

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

       

      (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

       

      (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 as of June 30, 2007 and at all times
        thereafter, 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
        2.75 to 1.00 as of June 30, 2007 and not more than 2.50 to 1.00 as of September
        30, 2007 and all times thereafter.

       

      (c) Interest
        Coverage Ratio. Borrowers shall maintain, at all times, an Interest Coverage
        Ratio equal to not less than 3.0 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
        $2,250,000 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.

       

      
        
          
          

        

        
          56

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        
          
          

        

        
          57

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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 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.

       

      
        
          
          

        

        
          58

          
            

          

        

        
          
          

        

      

       

      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 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, (b) for interest due in connection with the Subordinated Debt and
        (c)
        for payments permitted under Section 6.2.7(g).

       

      
        
          
          

        

        
          59

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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);

       

      
        
          
          

        

        
          60

          
            

          

        

        
          
          

        

      

       

      (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;

       

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

       

      (e) management
        fees paid to GPX or NPDC 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;

       

      (g) payment
        to GPX for costs and expenses related to the spin-off of NPDC to the extent
        actually incurred, but in no event to exceed $250,000; and

       

      (h) 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,
        including, without limitation, the Subordinated Debt, 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;

       

      
        
          
          

        

        
          61

          
            

          

        

        
          
          

        

      

       

      (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 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:

       

      
        
          
          

        

        
          62

          
            

          

        

        
          
          

        

      

       

      (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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          63

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          65

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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:

       

      
        	 	
                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.

       

      
        
          
          

        

        
          66

          
            

          

        

        
          
          

        

      

       

      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 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;

       

      
        
          
          

        

        
          67

          
            

          

        

        
          
          

        

      

       

      (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;

       

      (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.

       

      
        
          
          

        

        
          68

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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

       

      
        
          
          

        

        
          69

          
            

          

        

        
          
          

        

      

       

       

      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

       

      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.

       

      
        
          
          

        

        
          70

          
            

          

        

        
          
          

        

      

       

      (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 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

       

      
        
          
          

        

        
          71

          
            

          

        

        
          
          

        

      

       

      (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:

       

      (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.

       

      
        
          
          

        

        
          72

          
            

          

        

        
          
          

        

      

       

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

       

      
        
          
          

        

        
          73

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        
          
          

        

        
          74

          
            

          

        

        
          
          

        

      

       

      
        	 	
                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.

       

      
        	 	
                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.

       

      
        
          
          

        

        
          75

          
            

          

        

        
          
          

        

      

       

      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 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.

       

      
        
          
          

        

        
          76

          
            

          

        

        
          
          

        

      

       

      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. 

       

      
        
          
          

        

        
          77

          
            

          

        

        
          
          

        

      

       

      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:	
                 (Seal)

              
	
                

              	 	 	
                

                Sharon
                  Esposito-Mayer

                Executive
                  Vice President and 

                Chief
                  Financial Officer

              
	
              	 	 	
              

      

      
         

        
          	WITNESS: 	 	
                  WACHOVIA
                    BANK,
                    NATIONAL ASSOCIATION

                   

                   

                
	
                	 	By:	
                   (Seal)

                
	
                  

                	 	 	
                  

                  Lucy
                    C. Campbell

                  Senior
                    Vice President

                
	
                	 	 	
                

        

         

      

      
        
          
            
            

          

          
            78

            
              

            

          

          
            
            

          

        

      

       

      LIST
        OF EXHIBITS

       

      A. Additional
        Borrower Joinder Supplement

       

      B. Revolving
        Credit Note

       

      C. Form
        of
        Compliance Certificate

       

      
        
          
          

        

        
          79

          
            

          

        

        
          
          

        

      

      

      LIST
        OF SCHEDULES

      

        
          	
                  Schedule
                    4.1.10 

                	
                   Litigation

                
	
                   

                	 
	
                  Schedule
                    4.1.13

                	
                   Other
                    Indebtedness

                
	
                   

                	 
	
                  Schedule
                    4.1.19

                	
                   Employee
                    Relations

                
	
                   

                	 
	
                  Schedule
                    4.1.21

                	
                   Permitted
                    Liens

                
	
                   

                	 
	
                  Schedule
                    6.2.6

                	
                   Indebtedness

                
	
                   

                	 
	
                  Schedule
                    6.2.7

                	
                   Investments,
                    Loans and Other Transactions

                

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schedule
        4.1.10

       

      LITIGATION

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schedule
        4.1.13

       

      OTHER
        INDEBTEDNESS

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Schedule
        4.1.19

       

      EMPLOYEE
        RELATIONS

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schedule
        4.1.21

       

      LIENS
        ON COLLATERAL

      

      
        	
                Unpaid
                  Principal

              	 	
                Asset
                  Covered

              	 	
                Lienholder

              	 	
                Balance

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schedule
        6.2.6

       

      INDEBTEDNESS

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schedule
        6.2.7

       

      INVESTMENTSNEURO-HITECH,
      INC.

    NON-MANAGEMENT
      DIRECTORS DEFERRAL PROGRAM

    

    1.
      Purpose
      of the Program.
      The
      Neuro-Hitech, Inc. Non-Management Directors Deferral Program (the “Program”) has
      been established by Neuro-Hitech, Inc. (the “Company”) to enable directors who
      are not employees of the Company or any of its subsidiaries to elect to receive
      the compensation for their service as members of the Board of Directors of
      the
      Company in part or in whole in the form of Options on Company Common Stock
      in
      lieu of cash. It is contemplated that all Options to be issued pursuant to
      the
      Program will be granted under the Company’s 2006 Amended and Restated Incentive
      Stock Plan (the “Plan”).

    

    2.
      Definitions.

    

    (a)
      “Board” means the Board of Directors of the Company.

    

    (b)
      “Closing Price” means the closing price on the principal securities exchange on
      which shares of Common Stock are listed (if the shares of Common Stock are
      so
      listed), or on the NASDAQ Stock Market (if the shares of Common Stock are
      regularly quoted on the NASDAQ Stock Market), or, if not so listed or regularly
      quoted, the mean between the closing bid and asked prices of publicly traded
      shares of Common Stock in the over the counter market, or, if such bid and
      asked
      prices shall not be available, as reported by any nationally recognized
      quotation service selected by the Company.

    

    (c)
      “Common Stock” means the common stock, par value $.001 per share, of the
      Company.

    

    (d)
      “Compensation Committee” means the Compensation Committee of the
      Board.

    

    (e)
      “Election” has the meaning set forth in Section 4(a) of this
      Program.

    

    (f)
      “Non-Management Director” means a member of the Board who is not an employee of
      the Company or any of its subsidiaries.

    

    (g)
      “Option” means an option to acquire Common Stock granted pursuant to the Plan
      and with the terms set forth in Section 4(c) of this Program.

    

    (h)
      “Payment Date” means the date on which the Company, in accordance with its
      regular payment policy, would otherwise pay a retainer or fee in cash to a
      Non-Management Director.

    

    (i)
      “Value” means the value of an Option for one share of Common Stock determined
      pursuant to the application of the valuation methodology and assumptions
      utilized by the Company in valuing Company stock options for the purposes of
      preparing the Company’s most recently publicly filed audited annual financial
      statements prior to the Payment Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    3.
      Administration
      of the Program.
      The
      Program shall be administered by the Compensation Committee, which, except
      as
      otherwise expressly provided herein, shall have the sole and complete authority
      to interpret the Program and to make all other determinations necessary for
      the
      Program’s administration. All action taken by the Compensation Committee in the
      interpretation and administration of the Program shall be final and binding
      on
      all concerned. The Compensation Committee may designate officers and employees
      of the Company to assist the Compensation Committee in the administration of
      the
      Program by executing documents on behalf of the Company relating to the
      administration of the Program and by performing such ministerial duties in
      connection with the administration of the Program as are assigned to them by
      the
      Compensation Committee.

    

    4.
      Election.
      

    

    (a)
      Each
      Non-Management Director who is entitled to receive a retainer or fee from the
      Company for serving on the Board or as member of a committee of the Board may
      elect, in respect of all or any portion of the payment of such retainer or
      fee,
      as specified by the Non-Management Director, to receive, in lieu of a payment
      in
      cash, Options for a number of whole shares of Common Stock determined as set
      forth in this Section 4(a) (an “Election”). Any retainer or fee subject to an
      Election shall not be paid to the Non-Management Director making the Election.
      The total amount of retainer or fee otherwise earned by the Non-Management
      Director during a calendar quarter but subject to an Election shall be
      multiplied by 1.5 (the “Deferral Amount”), and the Non-Management Director shall
      be issued on the day following the last day of the calendar quarter for which
      the retainer or fee otherwise would have been paid (the “Issue Date”) Options
      for a number of whole shares of Common Stock determined by dividing the Deferral
      Amount by the Value of an Option as of the Issue Date. Cash shall be paid to
      the
      Non-Management Director in lieu of an Option for a fraction of a share.

    

    (b)
      In
      order to be effective, an Election must be made prior to the year in which
      the
      services are performed in respect of which a retainer or fee is to be paid,
      and
      after the beginning of the year in which such services are to be performed
      such
      election shall be irrevocable, except that (i) in 2007, an Election must be
      made
      within 30 days from the effective date of this Program, which Election shall
      apply only to payments in respect of service performed after the date of the
      Election and for the remainder of 2007, and (ii) thereafter, if a individual
      first becomes a Non-Management Director during a year, then with respect to
      retainers or fees otherwise payable in such year, that individual’s Election
      must be made within 30 calendar days after the date the individual first becomes
      a Non-Employee Director, which election shall apply only to payments made after
      the Election is made. 

    

    (c)
      Options issued pursuant to the Program shall have the following terms: (i)
      the
      exercise price per share of Common Stock shall be the Closing Price of the
      Common Stock on the last trading day prior to the Payment Date, (ii) the term
      shall be ten years from the Payment Date, (iii) the Option shall not be
      transferable except upon death of the Non-Management Director, (iv) the Option
      shall become exercisable six months after the Payment Date, (v) the Option
      shall
      not be subject to vesting, (vi) the Option shall not be an “Incentive Option”
(as defined in the Plan) and (vii) the Option shall not be subject to early
      termination upon termination of service by death, disability or retirement
      or
      termination for “cause.”

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (d)
      The
      Board shall cause Options to be granted under the Plan in accordance with this
      Program and effective Elections.

    

    5.
      No
      Registration.
      The
      Company shall have no obligation to register any of the shares of Common Stock
      issuable under the Options under the Securities Act of 1933, as amended, or
      under any state securities laws, but may in its discretion elect to do so if
      it
      determines that such registration is necessary or appropriate.

    

    6.
      Taxes.
      Each
      Non-Management Director shall be responsible for all applicable taxes on
      payments made to the Non-Management Director under the Program regardless of
      the
      form of such payments. The Company may make appropriate arrangements to collect
      from any Non-Management Director the taxes, if any, that the Company may be
      required to be withheld by any government or government agency prior to payment
      under the Program.

    

    7.
      No
      Right to Continued Service.
      Neither
      the eligibility to participate in the Program nor the receipt of any Option
      under the Program shall confer upon any Non-Management Director the right to
      continue to serve as a director of the Company if validly removed or the right
      to be nominated for reelection as director.

    

    8.
      Amendment
      and Termination.
      The
      Board may amend, suspend, or terminate the Program at any time; provided that
      no
      amendment shall be made without shareholder approval if stockholder approval
      is
      required by law, regulation, or securities exchange listing
      requirement.

    

    9.
      Governing
      Law.
      The
      Program shall be construed, administered, and regulated in accordance with
      the
      laws of the State of Delaware (excluding the choice of law provisions thereof)
      and any applicable requirements of federal law.

    

    10.
      Effectiveness
      and Expiration of the Program.
      The
      Program shall become effective upon stockholder approval of the Plan, and,
      unless terminated earlier by the Board, shall expire on December 31, 2016,
      after
      which no further Options may be issued under the Program.

     

    
      
         

      

      
        3

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