Document:

Unassociated Document

    
      Exhibit
10.1

    

     

    AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

     

    THIS AGREEMENT (this “Agreement”) is made
and entered into as of the 14th day of August, 2009, by and between COMVEST CAPITAL, LLC, a
Delaware limited liability company (the “Lender”), and CLEARPOINT BUSINESS RESOURCES, INC.,
a Delaware corporation (the “Borrower”).

     

    W I T N E S S E T H
:

     

    WHEREAS, the Borrower and its
Subsidiaries are engaged in the business of providing comprehensive workforce
management solutions throughout the United States, including outsourcing
placement and recruiting services, vendor management services and staff
augmentation programs as well as offering clients the ability to streamline
their process of procuring and managing temporary labor by utilizing the
Borrower’s proprietary technology-based iLabor platform (collectively, the
“Business
Operations”); and

     

    WHEREAS, the Lender and the
Borrower are parties to a Revolving Credit and Term Loan Agreement dated as of
June 20, 2008 (the “Original Agreement”),
pursuant to which the Lender has made available to the Borrower a revolving
credit facility and a term loan; and

     

    WHEREAS, in order to assist
the Borrower to better manage its anticipated cash flow needs and conform its
credit facilities with the needs of the Business Operations, and to address
certain concerns raised by the Lender, the Lender and the Borrower have agreed
to amend and restate the Original Agreement on the terms and conditions set
forth herein (such that, from and after the Closing Date, the terms of the
relationship between the Borrower and the Lender shall be governed by the terms
of this Agreement and the other Loan Documents described herein and/or
contemplated hereby), including an increase in the Revolving Credit Commitment
and the repayment in full of the Term Loan; and in connection herewith, the
Borrower shall use the proceeds of the increased Revolving Credit Commitment to
repay the Term Loan borrowed under the Original Agreement;

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein contained, the
parties hereby agree as follows:

     

    I.           DEFINITIONS

     

    Section
1.01.  Defined Terms.  In addition to the other terms
defined elsewhere in this Agreement, as used herein, the following terms shall
have the following meanings:

     

    “Accounts” shall mean
“accounts” (as defined in the UCC) of the Borrower and its Subsidiaries from
time to time.

     

    “Account Debtor” shall
mean any Person who is obligated on an Account.

     

    “Acknowledgements of
Pledge” shall mean the Acknowledgements of Pledge, dated as of the
Original Closing Date, executed by each Subsidiary which is not a corporation,
confirming the Lien of the Lender in the limited liability company interests in
such Subsidiary and the notation of such Lien on the books and records of such
Subsidiary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations
thereunder.

     

    “Advances” has the
meaning set forth in Section 2.01 below.

     

    “Affiliate” shall
mean, with respect to any Person, any other Person in Control of, Controlled by,
or under common Control with the first Person, and any other Person who has a
substantial interest, direct or indirect, in the first Person or any of its
Affiliates, including, without limitation, any officer or director of the first
Person or any of its Affiliates; provided, however, that, except
as otherwise provided herein, neither the Lender nor any of its Affiliates shall
be deemed an “Affiliate” of the Borrower for any purposes of this
Agreement.  For the purpose of this definition, a “substantial
interest” shall mean the direct or indirect legal or beneficial ownership of
more than ten (10%) percent of any class of stock or similar
interest.

     

    “Agreement” shall mean
this Amended and Restated Revolving Credit Agreement as it may from time to time
be amended, modified, supplemented and/or restated.

     

    “Applicable Law” shall
mean all applicable provisions of all (a) constitutions, statutes, ordinances,
rules, regulations and orders of all governmental and/or quasi-governmental
bodies, (b) Government Approvals, and (c) order, judgments and decrees of all
courts and arbitrators.

     

    “Assignee Lender”
shall have the meaning ascribed thereto in Section 8.02 below.

     

    “Availability” shall
mean the amount (if any) by which, at the time of determination, (a) the Maximum
Revolving Amount, exceeds (b) the outstanding principal amount of
Advances.

     

    “Board” shall mean the
Board of Directors of the Borrower as constituted from time to
time.

     

    “Borrowing Date” means
the Business Day on which the Lender makes a Loan hereunder.

     

    “Business Day” shall
mean a day other than (a) a Saturday, (b) a Sunday, or (c)  a day on
which banking institutions in either the State of Florida or the Commonwealth of
Pennsylvania are authorized or required by law or executive order to
close.

     

    “Capital Expenditures”
shall mean with respect to any Person, all expenditures of such Person for
tangible assets which are capitalized, and the fair value of any tangible assets
leased by such Person under any lease which would be a Capitalized Lease,
determined in accordance with GAAP, including all amounts paid or accrued by
such Person in connection with the purchase (whether on a cash or deferred
payment basis) or lease (including Capitalized Lease Obligations) of any
machinery, equipment, real property, improvements to real property (including
leasehold improvements), or any other tangible asset of such Person which is
required, in accordance with GAAP, to be treated as a fixed asset on the
consolidated balance sheet of such Person.

     

    
      
        
        

      

      
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    “Capitalized Lease”
shall mean any lease which is or should be capitalized on the balance sheet of
the lessee thereunder in accordance with GAAP.

     

    “Capitalized Lease
Obligation” shall mean with respect to any Person, the amount of the
liability which reflects the amount of future payments under all Capitalized
Leases of such Person as at any date, determined in accordance with
GAAP.

     

    “Cash Equivalents”
shall mean (a) marketable securities issued, or directly and fully guaranteed or
insured, by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof) having maturities of not more than twelve (12)
months from the date of acquisition; (b) time deposits, demand deposits,
certificates of deposit, acceptances or prime commercial paper issued by, or
repurchase obligations for underlying securities of the types described in
clause (a) entered into with any commercial bank having a short-term deposit
rating of at least A-2 or the equivalent thereof by Standard & Poor’s
Corporation or at least P-2 or the equivalent thereof by Moody’s Investors
Service, Inc.; (c) commercial paper with a rating of A-I or A-2 or the
equivalent thereof by Standard & Poor’s Corporation or P-1 or P-2 or the
equivalent thereof by Moody’s Investors Service, Inc. and in each case maturing
within twelve (12) months after the date of acquisition; (d) marketable direct
obligations issued by any state in the United States or any agency or
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof and, at the time of acquisition, have one of the two highest
ratings generally obtainable from either Standard & Poor’s Corporation or
Moody’s Investors Services, Inc.; (e) tax-exempt commercial paper of United
States municipal, state or local governments rated at least A-2 or the
equivalent thereof by Standard & Poor’s Corporation or at least P-2 or the
equivalent thereof by Moody’s Investors Services, Inc. and maturing within
twelve (12) months after the date of acquisition thereof; (f) any other items
selected by the Borrower and approved by the Lender (which approval shall not be
unreasonably withheld or delayed); or (g) any mutual fund or other pooled
investment vehicle which invests principally in the foregoing
obligations.

     

    “Closing Date” shall
mean the date of this Agreement, simultaneously with the funding of the Advance
utilized to repay the Term Loan in full.

     

    “Code” shall mean the
Internal Revenue Code of 1986, and the rules and regulations promulgated
thereunder, as in effect from time to time.

     

    “Collateral” shall
mean all collateral pledged by the Borrower and/or any of the Subsidiaries as
security for the payment and performance of the Obligations, whether pursuant to
the Collateral Agreement or any other Security Document.

     

    
      
        
        

      

      
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    “Collateral Agreement”
shall mean the Collateral Agreement, dated as of the Original Closing Date, by
and among the Borrower, the Subsidiaries and the Lender, as same may be amended,
modified, supplemented and/or restated from time to time.

     

    “Common Stock” shall
mean the authorized common stock of the Company, $.0001 par value per
share.

     

    “Confidential
Information” shall mean information that the Borrower furnishes to the
Lender pursuant to any Loan Document, but does not include any such information
once such information has become, or if such information is, generally available
to the public or available to the Lender from a source other than the Borrower
which is not, to the Lender’s knowledge, bound by any confidentiality agreement
in respect thereof.

     

    “Contract” shall mean
any indenture, agreement (other than this Agreement), other contractual
restriction, lease in which the Borrower or any Subsidiary is a lessor or
lessee, license or instrument.

     

    “Control” shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms “Controlling” and
“Controlled”
shall have meanings correlative thereto.

     

    “Control Agreement”
shall mean, with respect to each bank account (including lockbox service) and/or
securities account maintained by or in the name of the Borrower or any
Subsidiary from time to time, an agreement, in form and substance reasonably
satisfactory to the Lender and executed and delivered by the Borrower (or the
subject Subsidiary, as applicable) and the account intermediary, whereby the
account intermediary acknowledges the Lender’s Lien on such account and all
funds or property therein, and “control” (within the meaning of the UCC) over
such account is established in favor of the Lender.

     

    “Costs and Expenses”
shall have the meaning ascribed thereto in the Registration Rights
Agreement.

     

    “CPR” shall mean
ClearPoint Resources, Inc., a Delaware corporation which is a Wholly-Owned
Subsidiary of the Borrower.

     

    “Debt Extension
Agreements” shall mean, collectively, (a) the outstanding agreement,
dated on or about the Original Closing Date, pursuant to which ALS, LLC has
agreed to defer any principal payments on Indebtedness owed by the Borrower or
any Subsidiary until a date not earlier than March 31, 2014, and (b) the
outstanding agreement, dated on or about the Original Closing Date, pursuant to
which B&N Associates, LLC, Alyson P. Drew, Fergco Bros. Partnership and
Matthew Kingfield have agreed to defer all principal payments on Indebtedness to
such Persons owed by the Borrower or any Subsidiary until a date not earlier
than March 31, 2010.

     

    
      
        
        

      

      
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    “Default” shall mean
any of the events specified in Article VII hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

     

    “Disclosure Schedule”
shall mean the disclosure schedule, dated as of the Closing Date, executed and
delivered by the Borrower to the Lender, the section numbers of which correspond
to the Section numbers of this Agreement.

     

    “Dollars” or “$” shall mean United
States Dollars, lawful currency for the payment of public and private
debts.

     

    “Domestic Subsidiary”
shall mean any Subsidiary which is incorporated or formed under the laws of the
United States, any State or Commonwealth in the United States, or the District
of Columbia.

     

    “EBITDA” shall mean,
for the subject period, for the Borrower and its Subsidiaries on a consolidated
basis, the sum of (a) Net Income, plus (b) Interest
Expense deducted in the calculation of such Net Income, plus (c) all income
taxes deducted in the calculation of such Net Income, plus (d) depreciation
and amortization expense deducted in the calculation of such Net Income, plus (e) other
non-cash charges and expenses deducted in the calculation of such Net Income,
excluding accruals for cash operating expenses made in the ordinary course of
business, minus (f) any and all
dividends and distributions made by the Borrower to its stockholders, plus (g) expenses
deducted in the calculation of such Net Income which were non-recurring,
one-time and/or extraordinary in nature.

     

     

    “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as in effect from time to
time.

     

    “ERISA Affiliate”
shall mean, with respect to any Person, any other Person which is under common
control with the first Person within the meaning of Section 414(b) or 414(c) of
the Code; provided, however, that with
respect to the Borrower, no Person which is an Affiliate of the Lender (other
than the Borrower and its Subsidiaries) shall be deemed an ERISA Affiliate for
purposes of this Agreement

     

    “Event of Default” has
the meaning set forth in Article VII below.

     

    “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.

     

    “Financial Statements”
has the meaning set forth in Section 3.01(a) below.

     

    “Fiscal Year” shall
mean the fiscal year of the Borrower which ends on December 31 of each
year.

     

    “Fixed Charges” shall
mean, for the period in question, the sum of (a) all cash principal payments
scheduled or required to be made during or with respect to such period in
respect of Indebtedness of the Borrower and its Subsidiaries (excluding
mandatory prepayments in respect of the Revolving Credit Note), plus (b) all cash
Interest Expense of the Borrower and its Subsidiaries for such period, plus (c) all cash
income taxes paid for the Borrower and its Subsidiaries for such
period.

     

    
      
        
        

      

      
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    “Foreign Subsidiary”
shall mean any Subsidiary which is not a Domestic Subsidiary.

     

    “GAAP” shall mean
generally accepted accounting principles in the United States of America,
consistently applied, unless the context otherwise requires, with respect to any
financial terms contained herein, as then in effect with respect to the
preparation of financial statements; provided, however, that in the
event of any change in GAAP which materially affects any numerical or financial
calculation under this Agreement, then the parties shall negotiate in good faith
appropriate amendments to such numerical or financial covenants or calculations
(pending which GAAP shall be applied hereunder without giving effect to such
change in GAAP).

     

    “Government Approval”
shall mean an authorization, consent, non-action, approval, license or exemption
of, registration or filing with, or report to, any governmental or
quasi-governmental department, agency, body or other unit.

     

    “Guaranty”, “Guaranteed” or to
“Guarantee”, as
applied to any Indebtedness, liability or other obligation, shall mean (a) a
guaranty, directly or indirectly, in any manner, including by way of endorsement
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), of any part or all of such obligation, and (b) an
agreement, contingent or otherwise, and whether or not constituting a guaranty,
assuring, or intended to assure, the payment or performance (or payment of
damages in the event of non-performance) of any part or all of such obligation
by any means (including, without limitation, the purchase of securities or
obligations, the purchase or sale of property or services, or the supplying of
funds).

     

    “Guaranty Agreement”
shall mean the Guaranty Agreement, dated as of the Original Closing Date (and as
same may be amended, modified, supplemented and/or restated from time to time),
executed by each Subsidiary in favor of the Lender, pursuant to which the
Subsidiaries guaranty the full and timely payment and performance of all of the
Obligations.

     

    “Indebtedness” shall
mean (without duplication), with respect to any Person, (a) all obligations or
liabilities, contingent or otherwise, for borrowed money, (b) any and all
obligations represented by promissory notes, bonds, debentures or the like, or
on which interest charges are customarily paid, (c) any liability secured by any
mortgage, pledge, lien or security interest on property owned or acquired,
whether or not such liability shall have been assumed, (d) obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of property or services
(excluding trade payables and accrued obligations incurred in the ordinary
course of business), (f) any obligations (contingent or otherwise) of such
Person as an account party or applicant in respect of letters of credit and/or
bankers’ acceptances, and (g) Guarantees, endorsements (other than for
collection in the ordinary course of business) and other contingent obligations
in respect of the obligations of others.

     

    
      
        
        

      

      
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    “Intercreditor
Agreement” shall mean the Intercreditor Agreement, dated as of the
Original Closing Date, by and among the Lender, M&T, the Borrower and CPR,
pursuant to which, among other things, (a) the Lender and M&T have
established their relative rights and priorities with respect to their
respective claims against and Liens on the assets of the Borrower and its
Subsidiaries, and (b) M&T has agreed, as long as any Obligations are
outstanding, to limit the collection of the remaining Indebtedness owed by the
Borrower and/or its Subsidiaries to the proceeds of certain designated assets or
sources of collection, and thereafter collect any remaining balance of such
Indebtedness after the repayment in full of the Obligations and on a basis
otherwise satisfactory to the Lender.

     

    “Interest Expense”
shall mean, for the relevant period, interest expense (including, without
limitation, interest attributable to Capitalized Leases in accordance with GAAP)
and fees (including, without limitation, the Modification Fee and financing fees
and costs associated with the transactions contemplated by this Agreement and
any other financings permitted hereunder) with respect to
Indebtedness.

     

    “Investment”, as
applied to the Borrower or any Subsidiary, shall mean: (a) any shares of capital
stock, evidence of Indebtedness or other security issued by any other Person to
the Borrower or any Subsidiary, (b) any loan, advance or extension of credit to,
or contribution to the capital of, any other Person, other than credit terms
extended to customers in the ordinary course of business, (c) any other
investment by the Borrower or any Subsidiary in any assets or securities of any
other Person, and (d) any commitment to make any Investment.

     

    “Knowledge” or “Known”
or words of similar import shall mean, with respect to the Borrower and/or any
Subsidiary, the actual knowledge of Michael D. Traina and/or John Phillips,
after reasonable inquiry of the appropriate employees of the Borrower and the
Subsidiaries; provided, however, that for
purposes of any representations and warranties made as of the Original Closing
Date (including any affirmation or reaffirmation made by operation of this
Agreement, that relate to the Original Closing Date), there shall be no
requirement for John Phillips to make inquiry of such employees.

     

    “Landlord Waiver”
shall mean a landlord waiver, subordination and/or access agreement, in form and
substance reasonably satisfactory to the Lender, executed in favor of the Lender
by the landlord of a Real Property which is leased by the Borrower or a
Subsidiary as lessee.

     

    “Liabilities and
Contingencies” has the meaning set forth in Section 3.01(c)
below.

     

    “Lien”, as applied to
the property or assets (or the income or profits therefrom) of the Borrower or
any Subsidiary, shall mean (in each case, whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise): (a) any mortgage, lien, pledge, hypothecation, attachment,
assignment, deposit arrangement, encumbrance, charge, lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest or encumbrance of any kind in respect of
any property (including, without limitation, stock of any Subsidiary) of the
Borrower or any Subsidiary, or upon the income or profits therefrom; (b) any
arrangement under which any property of the Borrower or any Subsidiary is
transferred, sequestered or otherwise identified for the purpose of subjecting
or making available the same for the payment of Indebtedness or the performance
of any other liability in priority to the payment of the general, unsecured
creditors of the Borrower or any Subsidiary; (c) any Indebtedness or liability
which remains unpaid after the same shall become due and payable and which, if
unpaid, by law or otherwise is given any priority whatsoever over the general
unsecured creditors of the Borrower or any Subsidiary; and (d) any agreement
(other than this Agreement) or other arrangement which, directly or indirectly,
prohibits the Borrower or any Subsidiary from creating or incurring any lien on
any of its properties or assets or which conditions the ability to do so on the
security, on a pro rata or other basis,
of Indebtedness other than Indebtedness outstanding under this
Agreement.

     

    
      
        
        

      

      
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    “Loan Documents” shall
mean the collective reference to this Agreement, the Revolving Credit Note, the
Security Documents, the Intercreditor Agreement, the Subordination Agreements,
the Warrant, the Registration Rights Agreement, and any and all other
agreements, instruments, certificates and other documents as may be executed and
delivered by the Borrower and/or any of the Subsidiaries pursuant hereto or
thereto.

     

    “Loans” shall mean,
collectively, the Advances.

     

    “Lockbox” shall mean
the lockbox and/or lockbox account maintained pursuant to the Lockbox Agreement
in effect from time to time.

     

    “Lockbox Agreement”
shall mean (a) the Lockbox Service Agreement to be entered into on or promptly
following the Closing Date, by and between the Lender, CPR and Wachovia Bank
National Association, and (b) any replacement lockbox service agreement from
time to time.

     

    “Lockbox Bank” shall
mean the bank or other financial institution acting under any Lockbox Agreement
in effect from time to time.

     

    “M&T” shall mean
Manufacturers and Traders Trust Company.

     

    “Material Adverse
Effect” shall mean any event, act, omission, condition or circumstance
which has or would reasonably be expected to have a material adverse effect on
(a) the business, operations, properties, assets or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) the
ability of the Borrower or any Subsidiary to pay or perform any of its
obligations under any of the Loan Documents, or (c) the validity or
enforceability of, or the Lender’s rights and remedies under, any of the Loan
Documents, other than due to the acts or omissions of the Lender or any of its
Affiliates.

     

    
      
        
        

      

      
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    “Maximum Revolver
Amount” shall mean $10,500,000, as same is reduced from time to time
pursuant to Section 2.01(g) below, and as same may be increased from time to
time pursuant to Section 2.02 below.

     

    “Modification Fee”
shall mean the sum of $210,000, which shall be payable in accordance with
Section 2.03(a) below.

     

    “Net Income” shall
mean the consolidated net income (or loss) of the Borrower and its Subsidiaries
for the period in question, after giving effect to deduction of or provision for
all operating expenses, all taxes and reserves (including reserves for deferred
taxes) and all other proper deductions, all determined in accordance with GAAP;
provided, however, that for
purposes of calculating Net Income, there shall be excluded and no effect shall
be given to any Net Income attributable to any Subsidiary to the extent that the
Borrower (or any Subsidiary through which the Borrower owns the subject
Subsidiary) is prohibited (by law, Contract, minority ownership rights or
otherwise) from receiving a distribution of such Net Income from such
Subsidiary.

     

    “Obligations” shall
mean the collective reference to all Indebtedness and other liabilities and
obligations of every kind and description owed by the Borrower and/or any
Subsidiaries to the Lender from time to time under or pursuant to this
Agreement, the Revolving Credit Note, the Security Documents and the other Loan
Documents (excluding the Warrant and Registration Rights Agreement, other than
amounts payable from time to time pursuant to Section 1.4 of the Warrant (to the
extent due and payable on the Revolving Credit Maturity Date or the earlier
acceleration of the Obligations) and Section 2(c) of the Registration Rights
Agreement), and/or otherwise in respect of the Loans, however evidenced, created
or incurred, fixed or contingent, now or hereafter existing, due or to become
due.

     

    “Operating Expenses”
shall mean all costs of sales, selling, general and administrative expenses,
research and development expenses, and all other operating expenses of the
Borrower and its Subsidiaries on a consolidated basis, all calculated in
accordance with GAAP; provided, that
“Operating Expenses” shall not include any amounts deducted or deductible in the
calculation of iLabor Revenue.

     

    “Organic Documents”
shall mean, with respect to any Person, the certificate of incorporation,
articles of incorporation, certificate of formation, certificate of limited
partnership, by-laws, operating agreement, limited liability company agreement,
limited partnership agreement or other such document of such
Person.

     

    “Original Agreement”
shall have the meaning ascribed thereto in the second “WHEREAS” paragraph
above.

     

    “Original Closing
Date” shall mean June 20, 2008, which was the “Closing Date” under, as
defined in and for purposes of the Original Agreement.

     

    “Participant” shall
have the meaning ascribed thereto in Section 8.01 below.

     

    
      
        
        

      

      
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    “Permitted Discretion”
shall mean a determination or judgment made by the Lender in good faith in the
exercise of reasonable business judgment from the perspective of a secured
lender.

     

    “Permitted
Indebtedness” shall mean any and all Indebtedness expressly permitted
pursuant to Section 6.01 below.

     

    “Permitted Liens”
shall mean those Liens expressly permitted pursuant to Section 6.02
below.

     

    “Person” shall mean
any individual, partnership, corporation, limited liability company, banking
association, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

     

    “Real Properties”
shall mean, collectively, any real properties (land, buildings and/or
improvements) now owned or leased or occupied by the Borrower or any of the
Subsidiaries, and, during the period of the Borrower’s and/or Subsidiary’s
occupancy thereof, any other real properties heretofore owned or leased by the
Borrower or any Subsidiary (provided that, with respect to leased properties,
the term “Real Property” shall refer only to the portion of the subject property
(excluding common areas) leased by the Borrower or a Subsidiary).

     

    “Register” shall have
the meaning ascribed thereto in Section 8.03(a) below.

     

    “Registration Rights
Agreement” shall mean the Registration Rights Agreement, dated as of the
Original Closing Date, made by the Borrower for the benefit of the Lender and
all other and/or subsequent Holders (as such term is defined in the Registration
Rights Agreement), as same may be amended, modified, supplemented and/or
restated from time to time.

     

    “Revolving Credit
Commitment” shall mean the Lender’s agreement to make Advances to the
Borrower within the limitations set forth in Section 2.01 below.

     

    “Revolving Credit Maturity
Date” shall mean December 31, 2010; provided, however, that (a) in
the event that the Advances are prepaid or required to be prepaid pursuant to
Section 2.07 below, then the Revolving Credit Maturity Date shall be deemed to
have occurred simultaneously with such prepayment or required prepayment, and
(b) the Revolving Credit Maturity Date may be extended in accordance with
Section 2.01(e) below.

     

    “Revolving Credit
Note” shall mean the promissory note of the Borrower issued to the Lender
to represent the Advances and interest thereon, as described in Section 2.01(f)
below.

     

    
      
        
        

      

      
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    “Sale” shall mean any
transaction or series of related transactions (a) whereby a majority of the
outstanding capital stock of the Borrower which ordinarily has voting power for
the election of directors (including preferred stock counted on an “as
converted” basis into common stock and common stock counted on a fully diluted
basis) is sold, assigned or transferred, (b) whereby the Borrower issues shares
of its capital stock which, after giving effect to such transaction or
transactions, constitutes a majority of the outstanding capital stock of the
Borrower which ordinarily has voting power for the election of directors
(including preferred stock counted on an “as converted” basis into common stock
and common stock counted on a fully diluted basis), (c) whereby Control of the
Borrower is held by a Person (or group of Persons acting in concert) who does
not hold such Control on the date of this Agreement, (d)  in which the
Borrower is a constituent party to any merger or consolidation and as a result
thereof (i) the holders of the outstanding capital stock of the Borrower which
ordinarily has voting power for the election of directors (including preferred
stock counted on an “as converted” basis into common stock) immediately prior to
such merger or consolidation cease to own a majority of the outstanding capital
stock of the Borrower which ordinarily has voting power for the election of
directors (including preferred stock counted on an “as converted” basis into
common stock), or (ii) the Borrower is not the surviving corporation, or (e)
whereby all or any material portion of the assets of the Borrower or any
Subsidiary are sold, assigned or transferred; provided, however, that a
“Sale” shall not be deemed to have occurred by reason of any of the
aforedescribed transactions (other than a sale of assets) if, after giving
effect to the consummation of the subject transaction, (A) the Borrower or the
surviving entity in such transaction shall be a corporation whose common stock
is traded or listed on any national securities exchange, the Nasdaq Global
Market, or the Nasdaq Global Select Market or is actively quoted on the OTC
Bulletin Board, (B) if the surviving entity is not the Borrower, then such
surviving entity assumes all of the Borrower’s obligations under the Warrant (on
the same exchange or conversion basis as the outstanding Common Stock was
treated in the subject transaction) and the Registration Rights Agreement, (C)
the Borrower or other surviving entity is Controlled by one or more significant
stockholders of the Borrower on the date of this Agreement, and (D) no Default
or Event of Default occurred in the performance of the subject transaction or
exists upon the consummation of the subject transaction.

     

    “SEC” shall mean the
United States Securities and Exchange Commission, and any successor agency
performing the functions thereof.

     

    “SEC Reports” shall
mean the periodic and current reports, registration statements, proxy statements
and other reports filed or required to be filed by the Borrower with the SEC
pursuant to the Act and/or the Exchange Act, and any amendments or supplements
thereto filed with the SEC.

     

    “Security Documents”
shall mean the Collateral Agreement, any collateral assignments, control
agreements, financing statements or other such agreements or documents pursuant
thereto, the Acknowledgments of Pledge, the Lockbox Agreement, the Guaranty
Agreement, the Validity Guaranties, and any other agreements or instruments
(including, without limitation, Control Agreements and Landlord Waivers)
securing or creating or evidencing Liens securing the Obligations.

     

     “Subordinated Debt”
shall mean all Indebtedness for money borrowed and other liabilities of the
Borrower, whether or not evidenced by promissory notes, which is contractually
subordinated in right of payment, in a manner satisfactory to the Lender (as
evidenced by the Lender’s prior written approval thereof), to all Obligations of
the Borrower to the Lender.

     

    
      
        
        

      

      
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    “Subordination
Agreements” shall mean, collectively, the outstanding subordination
agreements, dated on or about the Original Closing Date, by and between the
Lender and (a) ALS, LLC, and (b) B&N Associates, LLC, Alyson P. Drew, Fergco
Bros. Partnership and Matthew Kingfield, respectively, pursuant to which such
holders of Indebtedness of the Borrower and/or CPR (as the case may be) have
agreed, among other things, (i) not to accept any prepayment of any such
Indebtedness, and (ii) upon notice of an Event of Default, not to accept
any payment (scheduled, accelerated or otherwise) in respect of such
Indebtedness except after such time or upon such conditions as are satisfactory
to the Lender.

     

    “Subsidiary” or “Subsidiaries” shall
mean the individual or collective reference to any corporation, limited
liability company or other entity of which 50% or more of the outstanding shares
of stock or other equity interests of each class having ordinary voting power
and/or rights to profits (other than stock having such power only by reason of
the happening of a contingency) is at the time owned by the Borrower, directly
or indirectly through one or more Subsidiaries of the Borrower.

     

    “Term Loan” shall mean
the term loan made by the Lender to the Borrower pursuant to the Original
Agreement, which term loan is evidenced by the Term Note.

     

    “Term Note” shall mean
the Term Note of the Borrower issued to the Lender pursuant to the Original
Agreement (as such Term Note has heretofore been amended).

     

    “UCC” means the
Uniform Commercial Code as in effect in the State of New York on the date hereof
and hereafter from time to time.

     

    “Unused Commitment
Fees” shall mean the fees payable to the Lender pursuant to Section
2.03(b) below.

     

    “Validity Guaranties”
shall mean the collective reference to the Validity Guaranties, dated as of the
Original Closing Date, by and among the Lender, the Borrower and Michael D.
Traina, and by and among the Lender, the Borrower and John Phillips,
respectively.

     

    “Warrant” shall mean
the amended and restated warrant to purchase shares of Common Stock (such
warrant initially covering an aggregate of 2,210,825 shares of Common Stock,
subject to adjustment) to be issued by the Borrower to the Lender on the Closing
Date, and any and all replacement warrants therefor.

     

    “Warrant Shares” shall
have the meaning ascribed thereto in the Warrant.

     

    “Wholly-Owned
Subsidiary” shall mean each Domestic Subsidiary of which all of the
outstanding equity securities (other than directors’ qualifying shares) are
owned by the Borrower or another such Wholly-Owned Subsidiary.

     

    
      
        
        

      

      
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    Section 1.02.  Use
of Defined Terms.  All terms defined in this Agreement shall
have their defined meanings when used in the Revolving Credit Note, the Security
Documents, the other Loan Documents, and all certificates, reports or other
documents made or delivered pursuant to this Agreement, unless otherwise defined
therein or unless the specific context shall otherwise require.

     

    Section
1.03.  Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP.

     

    Section
1.04.  Other Definitional Provisions.  The words
“hereof,” “herein”, “hereto” 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 Section references are to this
Agreement unless otherwise specified.  The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms
of such terms.  The word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless
otherwise specified.

     

    II.           GENERAL
TERMS

     

    Section
2.01.                                Revolving Credit
Loans.

     

    (a)           Subject
at all times to all of the terms and conditions of this Agreement, the Lender
hereby agrees to extend to the Borrower a secured revolving credit facility,
from the Closing Date to the Revolving Credit Maturity Date, in an aggregate
principal amount not to exceed, at any time outstanding, the Maximum Revolver
Amount then in effect (the “Revolving Credit
Commitment”).

     

    (b)           Such
revolving credit loans are herein sometimes referred to individually as an
“Advance” and
collectively as the “Advances.”  Subject
at all times to all of the terms and conditions of this Agreement, from the
Closing Date to the Revolving Credit Maturity Date and within the limits of the
Revolving Credit Commitment, the Lender shall lend, and the Borrower may borrow,
prepay (without premium or penalty) and reborrow under this Section
2.01.  Each request for an Advance (i) shall be irrevocable for the
amount requested therein, (ii) shall be deemed to constitute an express
affirmation that all conditions precedent set forth in part B of Article IV
below are satisfied on the date of such request and will be satisfied on the
requested Borrowing Date, and (iii) shall be made to the Lender in writing, not
later than three (3) Business Days prior to the requested Borrowing Date, by an
authorized officer of the Borrower or by telephonic communication by such
authorized officer to the Lender, which shall be confirmed by written notice to
the Lender to be delivered to the Lender by the Business Day next following the
subject request.  In no event shall the Borrower request, or shall the
Lender be required to honor, (A) any request for an Advance in an amount greater
than the Availability at such time, (B) any request for an Advance in an amount
less than $100,000 (or, if less, the remaining Availability at such time), or
(C) more than two (2) requests for the borrowing of Advances in any seven (7)
calendar day period.  Anything elsewhere contained in this Agreement
to the contrary notwithstanding, on the Closing Date, the Lender shall make an
Advance to the Borrower in an amount equal to the outstanding principal balance
of and unpaid accrued interest on the Term Loan, the proceeds of which shall be
used on the Closing Date to repay in full such principal and interest of the
Term Loan (whereupon the Lender shall mark the Term Note as “paid in full” and
cancel same).

     

    
      
        
        

      

      
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    (c)           The
Borrower shall pay the Lender interest on all Advances at the rate(s) per annum
as in effect from time to time in accordance with the Revolving Credit Note,
which shall be computed on the daily unpaid balance of all Advances made under
the Borrower’s revolving credit loan accounts with the Lender, based on a three
hundred sixty (360) day year, counting the actual number of days
elapsed.  Such interest shall be payable in the amounts and at the
times provided in the Revolving Credit Note.  The Borrower hereby
authorizes the Lender to charge the Borrower’s revolving credit loan accounts
for all such interest; provided, however, that the
Lender shall be under no obligation to make any such charge to the Borrower’s
revolving credit loan accounts (including, without limitation, if there is
insufficient Availability at the time such interest is due and
payable).

     

    (d)           In
the event and to the extent that, at any time, the outstanding principal amount
of Advances exceeds the Maximum Revolver Amount then in effect, then the
Borrower shall immediately, without notice or demand, make a payment to the
Lender in respect of the Advances in an amount sufficient to cause the
outstanding principal amount of Advances to be equal to or less than the Maximum
Revolver Amount then in effect.

     

    (e)           Unless
sooner due and payable by reason of an Event of Default hereunder having
occurred and having been continuing at the time of acceleration, the Borrower
shall pay in full all of the Obligations to the Lender in respect of all
Advances on or prior to the Revolving Credit Maturity Date.  If so
requested by the Borrower not earlier than September 30, 2010 and not later than
October 31, 2010, the Lender may, in its sole and absolute discretion, agree to
extend the Revolving Credit Maturity Date to December 31, 2011, provided that
any such extension must be stated in writing by the Lender and shall be
expressly subject to there being no continuing Default or Event of Default on
the originally scheduled Revolving Credit Maturity Date (which condition may be
waived in the Lender’s sole and absolute discretion).

     

    (f)           All
Advances shall be evidenced by a secured Amended and Restated Revolving Credit
Note of the Borrower payable to the Lender or registered assigns.

     

    (g)           On
the first Business Day of each of the first twelve (12) calendar weeks in each
calendar quarter commencing with the calendar quarter ending March 31, 2010, the
Maximum Revolver Amount shall be reduced by an amount equal to 1/12th of the
amount, calculated as of the last day of the immediately preceding calendar
quarter, equal to the sum of (i) the amount (if any) of Availability, plus (ii) all cash
and cash equivalents of the Borrower and its Subsidiaries determined in
accordance with GAAP on a consolidated basis, minus (iii) all
documented reasonable Costs and Expenses incurred and paid in cash by the
Borrower between the date of this Agreement and such quarter-end in connection
with the registration of the resale of the Warrant Shares.  Such
reduction amounts shall initially be based upon an estimated consolidated
balance sheet of the Borrower and its Subsidiaries to be delivered by the
Borrower to the Lender not later than the last day of the immediately preceding
calendar quarter, and such reductions shall be subject to adjustment and
reconciliation on the first weekly reduction date following delivery of the
final consolidated balance sheet for the immediately preceding calendar quarter;
and in the event that the Borrower is late in delivering any such estimated
balance sheet, the adjustments to be made pending delivery of the delinquent
balance sheet shall be made in such amounts as the Lender may determine in its
Permitted Discretion.  To the extent that, after giving effect to any
such reduction, the outstanding Advances shall exceed the Revolving Credit
Commitment, then the Borrower shall immediately, without notice or demand, make
a payment to the Lender in respect of the Advances in an amount sufficient to
cause the outstanding principal amount of Advances to be equal to or less than
the Revolving Credit Commitment then in effect.  In addition, the
Borrower may, at its option, without payment of any premium or penalty,
terminate or reduce the Maximum Revolver Amount at any time by giving ten (10)
Business Days’ prior written notice thereof to the Lender, and paying to the
Lender, (A) on the date fixed for termination, an amount equal to the sum of all
outstanding principal and accrued interest of the Advances, or (B) on the date
fixed for reduction, any amount required to cause the outstanding Advances to be
equal to or less than the Revolving Credit Commitment then in effect; and
following any such optional reduction, the starting point for the next mandatory
reduction shall be the Maximum Revolver Amount established pursuant to the
optional reduction.

     

    
      
        
        

      

      
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    Section
2.02.  Increase of Revolving Credit Commitment.  Upon
written request of the Borrower at any time, the Lender will consider in good
faith an increase in the Maximum Revolver Amount to an aggregate amount not in
excess of $11,250,000 minus any and all required reductions in the Maximum
Revolver Amount pursuant to Section 2.01(g) above and minus the outstanding
principal amount of any Indebtedness incurred pursuant to Section 6.01(j) below,
provided and on condition that the Borrower introduce the Lender to a
Participant, reasonably satisfactory to the Lender, to participate in the Loans
and the Revolving Credit Commitment, in a principal amount not less than the
requested increase in the Maximum Revolver Amount, on a pari passu basis with the
Lender pursuant to a participation agreement in form and substance reasonably
satisfactory to the Lender.

     

    Section
2.03.  Fees and Premiums.

     

    (a)           The
Borrower shall pay the Modification Fee in installments, which shall be due and
payable (i) $60,000 on January 1, 2010, and (ii) $50,000 on each of April 1,
2010, July 1, 2010 and October 1, 2010 (subject to acceleration in accordance
with Section 7.02 below); and the Borrower hereby authorizes the Lender to
charge any and all such installments, as and when due, to the Borrower’s
revolving credit loan account with the Lender.  The Modification Fee
shall be deemed fully earned on the Closing Date, and shall not be refundable in
whole or in part and shall not be subject to reduction or set-off under any
circumstances.

     

    (b)           The
Borrower shall further pay to the Lender, on the first (1st)
Business Day of each calendar month prior to the Revolving Credit Maturity Date
or the earlier termination of the Revolving Credit Commitment, and on the
Revolving Credit Maturity Date or the earlier termination of the Revolving
Credit Commitment and payment of the Obligations, an Unused Commitment Fee in an
amount equal to 0.25% per annum (calculated on the basis of a 360-day year
counting the actual number of days) of the amount by which the Maximum Revolving
Amount exceeded the average daily outstanding principal amount of Advances
during the immediately preceding calendar month (or other applicable calculation
period).  The Borrower hereby authorizes the Lender to charge any and
all such Unused Commitment Fees, as and when due, to the Borrower’s revolving
credit loan account with the Lender.

     

    
      
        
        

      

      
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    (c)           Payments
received in respect of the Obligations after 2:00 p.m. Eastern time on any day
shall be deemed to be received on the next succeeding Business Day, and if any
payment is received other than by wire transfer of immediately available funds,
such payment shall be subject to three (3) Business Days’ clearance prior to
being credited to the Obligations for interest calculation
purposes.

     

    Section 2.04.  Use
of Proceeds.  The Borrower shall utilize the proceeds of the
Loans (a) on the Closing Date, (i) to repay the outstanding principal of and all
unpaid accrued interest on the Term Loan, and (ii) to pay out-of-pocket costs
and expenses relating to the transactions contemplated by this Agreement, and
(b) from and after the Closing Date, for working capital and other general
corporate purposes of the Borrower.

     

    Section
2.05.  Further Obligations.  With respect to all
Obligations for which the interest rate is not otherwise specified herein or in
the applicable Loan Documents (whether such Obligations arise hereunder,
pursuant to the Security Documents, or otherwise), such Obligations shall bear
interest at the rate(s) in effect from time to time pursuant to the Revolving
Credit Note.

     

    Section
2.06.  Application of Payments.  All amounts paid to
or received by the Lender in respect of the Obligations from whatever source
(whether from the Borrower, any Subsidiary pursuant to the Guaranty Agreement,
any realization upon any Collateral, or otherwise) shall, unless otherwise
specified in this Agreement or otherwise directed by the Borrower with respect
to any particular payment (unless an Event of Default shall then be continuing,
in which event the Lender may disregard the Borrower’s direction), be applied
(a) first, to reimburse the Lender for all out-of-pocket costs and expenses
incurred by the Lender which are reimbursable to the Lender in accordance with
this Agreement, the Revolving Credit Note and/or any of the other Loan
Documents, (b) next, to any accrued but unpaid fees due under any of the Loan
Documents, (c) next, to unpaid accrued interest on the Advances to the
extent then due and payable in cash, (d) next, to the outstanding principal of
the Advances, and (e) finally, to the payment of any other outstanding
Obligations; provided, however, that during
the continuance of an Event of Default, the Lender may apply any and all such
amounts to such of the Obligations as the Lender may determine in its sole and
absolute discretion.  After payment in full of the Obligations (to the
extent then due and payable), any further amounts paid to or received by the
Lender in respect of the Obligations shall be paid over to the Borrower or such
other Person(s) as may be legally entitled thereto.

     

    Section
2.07.  Sale or Maturity Date.  Anything elsewhere
contained in this Agreement and/or the Revolving Credit Note to the contrary
notwithstanding, the Revolving Credit Commitment shall terminate and the
Advances and all other Obligations shall become immediately due and payable,
without requirement of notice or demand, upon the consummation of any Sale or on
the Revolving Credit Maturity Date.

     

    
      
        
        

      

      
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    Section
2.08.  Obligations Unconditional.

     

    (a)           The
payment and performance of all Obligations shall constitute the absolute and
unconditional obligations of the Borrower, and shall be independent of any
defense or rights of set-off, recoupment or counterclaim which the Borrower
might otherwise have against the Lender.  All payments required by
this Agreement and/or the Revolving Credit Note shall be paid free of any
deductions or withholdings for any taxes or other amounts and without abatement,
diminution or set-off.  If the Borrower is required by Applicable Law
to make such a deduction or withholding from a payment hereunder, the Borrower
shall pay to the Lender such additional amount as is necessary to ensure that,
after the making of such deduction or withholding, the Lender receives (free
from any liability in respect of any such deduction or withholding) a net sum
equal to the sum which it would have received and so retained had no such
deduction or withholding been made or required to be made.  The
Borrower shall (i) pay the full amount of any deduction or withholding, which it
is required to make by Applicable Law, to the relevant authority within the
payment period set by the relevant Applicable Law, and (ii) promptly after any
such payment, deliver to the Lender an original (or certified copy) official
receipt issued by the relevant authority in respect of the amount withheld or
deducted or, if the relevant authority does not issue such official receipts,
such other evidence of payment of the amount withheld or deducted as is
reasonably acceptable to the Lender.

     

    (b)           If,
at any time and from time to time after the Closing Date, (i) any change in any
existing Applicable Law, regulation, treaty or directive or in the
interpretation or application thereof, (ii) any new Applicable Law, regulation,
treaty or directive enacted or application thereof, or (iii) compliance by the
Lender with any request or directive (whether or not having the force of law)
from any governmental authority (A) subjects the Lender to any tax, levy,
impost, deduction, assessment, charge or withholding of any kind whatsoever with
respect to any Loan Document, or changes the basis of taxation of payments to
the Lender of any amount payable thereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or
commitment fees or other fees payable hereunder or changes in the rate of tax on
the overall net income of the Lender or its members), or (B) imposes on the
Lender any other condition or increased cost in connection with the transactions
contemplated thereby or participations therein, and the result of any of the
foregoing is to increase the cost to the Lender of making or continuing any Loan
or to reduce any amount receivable hereunder, then, in any such case, the
Borrower shall promptly pay to the Lender any additional amounts necessary to
compensate the Lender, on an after-tax basis, for such additional cost or
reduced amount as determined by the Lender.  If the Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.08(b), the
Lender shall promptly notify the Borrower of the event by reason of which the
Lender has become so entitled, and each such notice of additional amounts
payable pursuant to this Section 2.08(b) submitted by the Lender to the Borrower
shall, absent manifest error, be final, conclusive and binding for all
purposes.

     

    
      
        
        

      

      
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    Section
2.09.  Reversal of Payments.  To the extent that any
payment or payments made to or received by the Lender pursuant to this Agreement
or any other Loan Document are subsequently invalidated, declared to be
fraudulent or preferential, set aside, or required to be repaid to any trustee,
receiver or other person under any state or federal bankruptcy or other such
law, then, to the extent thereof, such amounts shall be revived as Obligations
and continue in full force and effect hereunder as if such payment or payments
had not been received by the Lender.

     

    III.           REPRESENTATIONS AND
WARRANTIES

     

    As of the
Closing Date, on each day when an Advance is requested, and on each Borrowing
Date (unless the representation and warranty relates solely to a specific date,
in which case such representation and warranty shall continue to relate to such
specific date), the Borrower hereby makes the following representations and
warranties to the Lender, all of which representations and warranties shall
survive the Closing Date, the delivery of the Revolving Credit Note and the
making of the Loans, shall be continuing in nature so long as any Obligations
are outstanding or the Revolving Credit Commitment remains in effect, and are as
follows:

     

    Section
3.01.  Financial Matters.

     

    (a)           The
Borrower has heretofore furnished to the Lender (i) the audited consolidated
financial statements (including balance sheets, statements of income and
statements of cash flows, and including the notes thereto) of the Borrower and
its Subsidiaries as at December 31, 2006, 2007 and 2008, and for the Fiscal
Years then ended, and (ii) the unaudited consolidated financial statements of
the Borrower and its Subsidiaries (including the notes thereto) as of March 31,
2009 and for the three (3) months then ended (collectively, the “Financial
Statements”).

     

    (b)           The
Financial Statements (i) have been prepared in accordance with GAAP and
Regulation S-X promulgated under the Act on a consistent basis for all periods
(subject, in the case of unaudited statements, to the absence of full footnote
disclosures, and to normal non-material audit adjustments), (ii) are complete
and correct in all material respects, (iii) fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as of said dates, and
the results of their operations for the periods stated, (iv) contain and reflect
all necessary material adjustments and accruals for a fair presentation of the
Company’s consolidated financial condition and the results of its consolidated
operations as of the dates of and for the periods covered by such Financial
Statements, and (v) make full and adequate provision, subject to and in
accordance with GAAP, for the various assets and liabilities (including, without
limitation, deferred revenues) of the Company and its Subsidiaries, fixed or
contingent, and the results of their operations and transactions in their
accounts, as of the dates and for the periods referred to therein.

     

    (c)           Except
as set forth in Schedule 3.01 of the
Disclosure Schedule, the Borrower and its Subsidiaries do not have any
liabilities, obligations or commitments of any kind or nature whatsoever,
whether absolute, accrued, contingent or otherwise (collectively “Liabilities and
Contingencies”), including, without limitation, Liabilities and
Contingencies under employment agreements and with respect to any “earn-outs”,
stock appreciation rights, or related compensation obligations, except: (i)
Liabilities and Contingencies disclosed in the Financial Statements or footnotes
thereto, (ii) Liabilities and Contingencies incurred in the ordinary course of
business and consistent with past practice since the date of the most recent
Financial Statements, or (iii) those Liabilities  and Contingencies
which are not required to be disclosed under GAAP.  The reserves, if
any, reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries included in the most recent Financial Statements are appropriate
and reasonable.  Neither the Borrower nor any of its Subsidiaries has
had or presently has any Indebtedness for money borrowed, outstanding
obligations for the purchase price of property, contingent obligations or
liabilities for taxes, or any unusual forward or long-term
commitments,  except as specifically set forth or provided for in the
Financial Statements or in Schedule 3.01 of the
Disclosure Schedule.

     

    
      
        
        

      

      
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    (d)           Since
the date of the most recent Financial Statements, except for the transactions
pursuant to the Loan Documents and except as set forth in Schedule 3.01 of the
Disclosure Schedule, there has been no material adverse change in the working
capital, condition (financial or otherwise), assets, liabilities, reserves,
business, management or Business Operations of the Borrower or any of its
Subsidiaries, including, without limitation, the following:

     

    (i)           there
has been no material change in any assumptions underlying, or in any methods of
calculating, any bad debt, contingency or other reserve relating to the Borrower
or any Subsidiary;

     

    (ii)           there
have been (A) no write-downs in the value of any inventory of, and there have
been no write-offs as uncollectible of any notes, Accounts or other receivables
of, the Borrower or any Subsidiary other than write-offs of accounts receivable
reserved in full as of the date of the most recent financial statements
delivered to the Lender, and (B) no reserves established for the
uncollectibility of any notes, Accounts or other receivables of the Borrower or
any Subsidiary except to the extent that same have been disclosed to the Lender
in writing;

     

    (iii)           no
debts have been cancelled, no claims or rights of substantial value have been
waived and no properties or assets (real, personal or mixed, tangible or
intangible) have been sold, transferred, or otherwise disposed of by the
Borrower or any Subsidiary except (A) dispositions of worn-out or obsolete
personal property, and (B) otherwise in the ordinary course of business and
consistent with past practice;

     

    (iv)           there
has been no change in any method of accounting or accounting practice utilized
by the Borrower or any Subsidiary;

     

    (v)           no
material casualty, loss or damage has been suffered by the Borrower or any
Subsidiary, regardless of whether such casualty, loss or damage is or was
covered by insurance;

     

    
      
        
        

      

      
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    (vi)           to
the Borrower’s Knowledge, (A) there have been no announced changes in the
policies or practices of any customer, supplier or referral source which would
reasonably be expected to have a Material Adverse Effect, and (B) no material
Account Debtor has suffered or effected any of the conditions described in
Sections 7.01(f) or 7.01(g) below or otherwise indicated in writing its
inability to or its anticipated inability to pay its debts and obligations as
they become due;

     

    (vii)           there
has been no incurrence by the Company or any Subsidiary of (A) any material
liability or obligation outside of the ordinary course of business, or (B) any
Indebtedness other than Permitted Indebtedness;

     

    (viii)          there
has been no declaration, setting aside or payment of any dividend or
distribution or any other payment of any kind by the Borrower to or in respect
of any equity securities of the Borrower; and

     

    (ix)           no
action described in this Section 3.01(d) has been agreed to be taken by the
Borrower or any Subsidiary.

     

    (e)           Except
as otherwise provided in the SEC Reports, as evaluated at the end of each fiscal
quarter in the case of disclosure controls and procedures, and as evaluated at
the end of each Fiscal Year in the case of internal controls, the Borrower and
its Subsidiaries have in place adequate systems of internal controls and
disclosure controls and procedures sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and Regulation S-X
and to maintain asset accountability, (iii) access to assets is permitted only
in accordance with management’s general or specific authorization, (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences, and (v) the Borrower and its management are able to obtain timely
and accurate information regarding the Business Operations and all material
transactions relating to the Borrower and the Subsidiaries; and no material
deficiency exists with respect to the Borrower’s or any Subsidiary’s systems of
internal controls.

     

    (f)           All
of the SEC Reports, as of the respective dates thereof (but giving effect to any
amendments or supplements thereto filed prior to the date of this Agreement),
complied in all material respects, as applicable, with the Act and the Exchange
Act.

     

    Section
3.02.  Organization; Corporate Existence.

     

    (a)           The
Borrower (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) has all requisite
corporate power and authority to own its properties and to carry on its business
as now conducted and as proposed hereafter to be conducted, (iii) is qualified
to do business as a foreign corporation in each jurisdiction (including, without
limitation, the Commonwealth of Pennsylvania) in which the failure of the
Borrower to be so qualified would have a Material Adverse Effect, and (iv) has
all requisite corporate power and authority to execute and deliver, and perform
all of its obligations under, the Loan Documents.  True and complete
copies of the Organic Documents of the Borrower, together with all amendments
thereto, have been furnished to the Lender.

     

    
      
        
        

      

      
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    (b)           On
the date of this Agreement, the outstanding capital stock of the Borrower, the
number, amount and holders of all outstanding options, warrants, convertible
securities, subscriptions and other rights to acquire capital stock of the
Company, and the holders of all registration rights in respect of Common Stock
(and the number of shares of Common Stock covered by such registration rights),
are as set forth in Schedule 3.02 of the
Disclosure Schedule.  All of the “Specified Warrants” (as such term is
defined in the Original Agreement) have either been exercised, terminated or
expired.

     

    (c)           Schedule 3.02 of the
Disclosure Schedule further sets forth, with respect to each Subsidiary on the
date of this Agreement, (i) its proper legal name, (ii) its jurisdiction of
incorporation or formation, (iii) the jurisdictions in which it is qualified to
do business as a foreign entity, (iv) the number of shares of capital stock or
ownership interests outstanding, and (v) the owner of such outstanding capital
stock or other ownership interests.  Each of the Subsidiaries (A) is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation, (B) has all requisite
power and authority to own its properties and to carry on its business as now
conducted and as proposed hereafter to be conducted, and to execute and deliver,
and perform all of its obligations under, the Loan Documents to which it is a
party, and (C) is not required to be qualified to do business as a foreign
entity in any jurisdiction in which it is not so qualified and the failure to be
so qualified would reasonably be expected to have a Material Adverse
Effect.  True and complete copies of the Organic Documents of each
Subsidiary, together with all amendments thereto to the date hereof, have been
furnished to the Lender.

     

    Section
3.03.  Authorization.

     

    (a)           The
execution, delivery and performance by the Borrower and the Subsidiaries of
their respective obligations under the Loan Documents have been duly authorized
by all requisite corporate, company and other action and will not, either prior
to or as a result of the consummation of the transactions contemplated by this
Agreement: (i) violate any provision of Applicable Law, any order of any court
or other agency of government, any provision of the Organic Documents of the
Borrower or any Subsidiary, or any material Contract,
indenture, agreement or other instrument to which the Borrower or any of the
Subsidiaries is a party, or by which the Borrower or any of the Subsidiaries or
any of its assets or properties are bound, or (ii) be in conflict with, result
in a breach of, or constitute (after the giving of notice or lapse of time or
both) a default under, or, except as may be provided in the Loan Documents,
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the property or assets of the Borrower or any of the Subsidiaries
pursuant to, any Contract, indenture, agreement or other
instrument.  When executed and delivered, each Loan Document to which
the Borrower or any Subsidiary is a party will constitute the valid and binding
obligation of the Borrower or such Subsidiary (as applicable), enforceable
against the Borrower or such Subsidiary in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors’ rights generally, and by general principles of
equity.

     

    
      
        
        

      

      
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    (b)           Neither
the Borrower nor any of the Subsidiaries is required to obtain any Government
Approval, consent or authorization from, or to file any declaration or statement
with, any governmental instrumentality or agency in connection with or as a
condition to the execution, delivery or performance of any of the Loan
Documents.

     

    Section
3.04.  Litigation.  Except as disclosed on Schedule 3.04 of the
Disclosure Schedule, there is no action, suit or proceeding at law or in equity
or by or before any governmental instrumentality or other agency now pending or,
to the Knowledge of the Borrower, threatened against or affecting the Borrower
or any of the Subsidiaries or any of their respective assets, which, if
adversely determined, would have a Material Adverse Effect.  The
Borrower has no Knowledge of any state of facts, events, conditions or
circumstances which would properly constitute grounds for or the basis of any
meritorious suit, action, arbitration, proceeding or investigation (including,
without limitation, any unfair labor practice charges, interference with union
organizing activities, or other labor or employment claims) against or with
respect to the Borrower or any Subsidiary which, if adversely determined, would
have a Material Adverse Effect.

     

    Section
3.05.  Material Contracts.  Except as disclosed on
Schedule 3.05
of the Disclosure Schedule, neither the Borrower nor any of the Subsidiaries is
(a) a party to any Contract, agreement or instrument or subject to any charter
or other corporate or organizational restriction which has had or, on the date
of this Agreement with respect to Contracts or obligations outstanding on the
date of this Agreement and at the time of entry into any Contracts or
obligations entered into subsequent to the date of this Agreement, could
reasonably be expected to have a Material Adverse Effect, (b) a party to any
collective bargaining agreement, or (c) in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contract, agreement or instrument to which it is a party or by
which any of its assets or properties is bound, which default, individually or
in the aggregate, would have or could reasonably be expected to have a Material
Adverse Effect.

     

    Section
3.06.  Title to Properties.  The Borrower and each of
the Subsidiaries has good title to all of its properties and assets, free and
clear of all mortgages, security interests, restrictions, encumbrances or other
Liens of any kind, except for restrictions on the nature of use thereof imposed
by Applicable Law, and except for Permitted Liens, none of which materially
interfere with the use and enjoyment of such properties and assets in the normal
course of the Business Operations as presently conducted, or materially impair
the value of such properties and assets for the purpose of such
business.

     

    Section
3.07.  Real Property.  Schedule 3.07 of the
Disclosure Schedule sets forth a correct and complete list of all Real
Properties currently leased or occupied by the Borrower and/or any of the
Subsidiaries.  Neither the Borrower nor any of the Subsidiaries owns
any Real Properties.  The Borrower and each Subsidiary has a valid
lessee’s interest in each Real Property currently leased or occupied by the
Borrower or such Subsidiary.  Except as disclosed in Schedule 3.07 of
the Disclosure Schedule, neither the Borrower, any Subsidiary, or, to the
Borrower’s Knowledge, any other party thereto, is in material breach or
violation of any requirements of any such lease; and such Real Properties are in
good condition (reasonable wear and tear excepted) and are adequate for the
current and proposed businesses of the Borrower and the
Subsidiaries.  The Borrower has completed the consolidation of its
corporate headquarters  in its offices in Chalfont,
Pennsylvania.

     

    
      
        
        

      

      
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    Section
3.08.  Machinery and Equipment.  The machinery and
equipment owned and/or used by the Borrower and the Subsidiaries is, as to each
individual material item of machinery and equipment, and in the aggregate as to
all such equipment, in good and usable condition and in a state of good
maintenance and repair (reasonable wear and tear excepted), and adequate for its
use in the Business Operations.

     

    Section
3.09.  Capitalization.  Except as set forth in Schedule 3.02 and
Schedule 3.09
of the Disclosure Schedule and for new Subsidiaries formed in accordance with
Section 5.11 below, the Borrower does not, directly or indirectly, own any
capital stock of or any form of equity interest in any other
Person.

     

    Section
3.10.  Solvency.  After giving effect to the Loans
and the other transactions contemplated hereby, the borrowings made and/or to be
made by the Borrower under this Agreement do not and will not render the
Borrower insolvent or with unreasonably small capital for its business; the
Borrower is not contemplating either the filing of a petition under any state or
federal bankruptcy or insolvency law, or the liquidation of all or any
substantial portion of its assets or property; the Borrower has no knowledge of
any Person contemplating the filing of any such petition against the Borrower;
and the Borrower reasonably anticipates that it will be able to pay its debts as
they mature.

     

    Section 3.11.  No
Investment Company.  The Borrower is not an “investment
company” or a company “controlled” by an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended.

     

    Section
3.12.  Margin Securities.  The Borrower does not own
or have any present intention of acquiring any “margin security” or any “margin
stock” within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System (herein called “margin security” and “margin
stock”).  None of the proceeds of the Loans will be used, directly or
indirectly, 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 security or margin stock or for any other purpose which
might constitute the transactions contemplated hereby a “purpose credit” within
the meaning of said Regulations T, U or X, or cause this Agreement to violate
any other regulation of the Board of Governors of the Federal Reserve System or
the Exchange Act, or any rules or regulations promulgated under such
statutes.

     

    Section
3.13.  Taxes.

     

    (a)           Except
as disclosed in Schedule 3.13 of
the Disclosure Schedule, (i) all federal, state and local tax returns and
tax reports required to be filed by the Borrower and/or any Subsidiary have been
timely filed with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, except where the
failure to make any such filing or timely filing would not, individually or in
the aggregate, have a Material Adverse Effect, (ii) all material federal,
state and local income, franchise, sales, use, property, excise, ad valorem,
value-added, payroll and other taxes (including interest, penalties and
additions to tax and including estimated tax installments where required to be
filed and paid) due from or with respect to the Borrower and the Subsidiaries
have been paid to the extent due and payable, and appropriate accruals have been
made on the Borrower’s books for taxes not yet due and payable, (iii) all
material taxes and other assessments and levies which the Borrower and/or any
Subsidiary is required by law to withhold or to collect have been duly withheld
and collected, and have been paid over to the proper governmental authorities to
the extent due and payable, and (iv) there are no outstanding or pending
material claims, deficiencies or assessments for taxes, interest or penalties
with respect to any taxable period of the Borrower or any Subsidiary, and no
outstanding tax Liens.

     

    
      
        
        

      

      
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    (b)           Except
as disclosed in Schedule 3.13 of the
Disclosure Schedule, the Borrower has no Knowledge and has not received notice
of any pending audit with respect to any federal, state or local tax returns of
the Borrower or any Subsidiary, and no waivers of statutes of limitations have
been given or requested with respect to any tax years or tax filings of the
Borrower or any Subsidiary.

     

    Section
3.14.  ERISA.  Except as set forth in Schedule 3.14 of the
Disclosure Schedule, neither the Borrower nor any ERISA Affiliate of the
Borrower maintains or has any obligation to make any contributions to any
pension, profit sharing or other similar plan providing for deferred
compensation to any employee.  With respect to any such plan(s) as may
now exist or may hereafter be established by the Borrower or any ERISA Affiliate
of the Borrower, and which constitutes an “employee pension benefit plan” within
the meaning of Section 3(2) of ERISA, except as set forth on Schedule 3.14 of the
Disclosure Schedule:  (a) the Borrower or the subject ERISA Affiliate
has paid and shall cause to be paid when due all amounts necessary to fund such
plan(s) in accordance with its terms, (b) except for normal premiums payable by
the Borrower to the Pension Benefit Guaranty Corporation (“PBGC”), the Borrower
or the subject ERISA Affiliate has not taken and shall not take any action which
could result in any material liability to the PBGC, or any of its successors or
assigns, (c) the present value of all accrued benefits thereunder shall not at
any time exceed the value of the assets of such plan(s) allocable to such
accrued benefits, (d) there have not been and there shall not be any
transactions such as would cause the imposition of any material tax or penalty
under Section 4975 of the Code or under Section 502 of ERISA, which would
adversely affect the funded benefits attributable to the Borrower or the subject
ERISA Affiliate, (e) there has not been and there shall not be any termination
or partial termination thereof (other than a partial termination resulting
solely from a reduction in the number of employees of the Borrower or an ERISA
Affiliate of the Borrower, which reduction is not anticipated by the Borrower),
and there has not been and there shall not be any “reportable event” (as such
term is defined in Section 4043(b) of ERISA) on or after the effective date of
Section 4043(b) of ERISA with respect to any such plan(s) subject to Title IV of
ERISA, (f) no “accumulated funding deficiency” (as defined in Section 412 of the
Code) has been or shall be incurred on or after the effective date of Section
412 of the Code, (g) such plan(s) have been and shall be determined to be
“qualified” within the meaning of Section 401(a) of the Code, and have been and
shall be duly administered in compliance with ERISA and the Code, and (h) the
Borrower has no Knowledge of any fact, event, condition or cause which might
adversely affect the qualified status thereof.  As respects any
“multi-employer plan” (as such term is defined in Section 3(37) of ERISA) to
which the Borrower or any ERISA Affiliate thereof has heretofore been, is now,
or may hereafter be required to make contributions, the Borrower or such ERISA
Affiliate has made and shall make all required contributions thereto, and there
has not been and shall not be any “complete withdrawal” or “partial withdrawal”
(as such terms are respectively defined in Sections 4203 and 4205 of ERISA)
therefrom on the part of the Borrower or such ERISA Affiliate.

     

    
      
        
        

      

      
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    Section
3.15.  Intellectual Property.  Except as set forth in
Schedule 3.15 of
the Disclosure Schedule, the Borrower and the Subsidiaries own or have the valid
right to use all material patents, trademarks, copyrights, software, computer
programs, equipment designs, network designs, equipment configurations,
technology and other intellectual property used, marketed and/or sold in the
Business Operations, and the Borrower and the Subsidiaries are in compliance in
all material respects with all licenses, user agreements and other such
agreements regarding the use of intellectual property used in the Business
Operations; and the Borrower has no Knowledge that or received notice claiming
that any of such intellectual property infringes upon or violates the valid
rights of any other Person.

     

    Section
3.16.  Compliance with Laws.  The Borrower and the
Subsidiaries are in compliance with all occupational safety, health, wage and
hour, employment discrimination, environmental, flammability, labeling and other
Applicable Law (including, without limitation, healthcare laws and regulations,
and healthcare reimbursement laws and regulations) which are applicable to the
Business Operations, except where such non-compliance would not, individually or
in the aggregate, have a Material Adverse Effect.  To the Borrower’s
Knowledge, there are no state of facts, events, conditions or occurrences which
may now or hereafter constitute or result in a violation of any Applicable Law,
or which may give rise to the assertion of any such violation, which could have
a Material Adverse Effect.  Neither the Borrower nor any Subsidiary
has received written notice of default or violation, nor is the Borrower or any
Subsidiary in default or violation, with respect to any judgment, order, writ,
injunction, decree, demand or assessment issued by any court or any federal,
state, local, municipal or other governmental agency, board, commission, bureau,
instrumentality or department, domestic or foreign, relating to any aspect of
the Borrower’s or any Subsidiaries’ business, affairs, properties or assets,
which default(s) or violation(s) would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  Neither the
Borrower nor any Subsidiary has received written notice of or been charged with,
or is, to the Borrower’s Knowledge, under investigation with respect to, any
violation(s) of any provision of any Applicable Law, which violation(s) would,
individually or in the aggregate, have a Material Adverse Effect.

     

    Section
3.17.  Licenses and Permits.  The Borrower and each
Subsidiary has all federal, state and local licenses and permits required to be
maintained in connection with the Business Operations, except where the failure
to maintain any such license or permit would not, individually or in the
aggregate, have a Material Adverse Effect; and all such licenses and permits are
valid and in full force and effect.  The Borrower and each Subsidiary
has complied with the requirements of such licenses and permits in all material
respects, and has received no notice of any pending or threatened proceedings
for the suspension, termination, revocation or limitation thereof. There is no
circumstance or condition Known to the Borrower that would cause or permit any
of such licenses or permits to be voided, revoked or withdrawn.

     

    
      
        
        

      

      
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    Section
3.18.  Insurance.  Schedule 3.18 of the
Disclosure Schedule lists all insurance coverages maintained by the Borrower and
the Subsidiaries, including the names of insurers, policy limits and
deductibles.  Neither the Borrower nor any Subsidiary has received
written notice of cancellation or intent not to renew any of such policies, and
to the Borrower’s Knowledge, there has not occurred, and there does not exist,
any condition (other than general industry-wide conditions) such as would cause
any of such insurers to cancel any of such insurance coverages, or would be
reasonably likely to materially increase the premiums charged to the Company and
the Subsidiaries for coverages consistent with the scope and amounts of
coverages as in effect on the date of this Agreement.

     

    Section
3.19.  Environmental Laws.

     

    (a)           The
Borrower and each Subsidiary has complied with all Environmental Laws relating
to its business and properties, except where non-compliance would not,
individually or in the aggregate, have a Material Adverse Effect; and to the
Borrower’s Knowledge, there exist no Hazardous Substances in amounts in
violation of applicable Environmental Laws on any of the Real Properties the
existence of which would have a Material Adverse Effect, except those that are
stored and used in compliance with Applicable Laws.

     

    (b)           Neither
the Borrower nor any Subsidiary has received notice of any pending or threatened
litigation or administrative proceeding which in any instance (i) asserts or
alleges any violation of applicable Environmental Laws on the part of the
Borrower or any Subsidiary, (ii) asserts or alleges that the Borrower or any
Subsidiary is required to clean up, remove or otherwise take remedial or other
response action due to the disposal, depositing, discharge, leaking or other
release of any Hazardous Substances or materials, or (iii) asserts or alleges
that the Borrower or any Subsidiary is required to pay all or any portion of the
costs of any past, present or future cleanup, removal or remedial or other
response action which arises out of or is related to the disposal, depositing,
discharge, leaking or other release of any hazardous substances or materials by
the Borrower or any Subsidiary.  To the Borrower’s Knowledge, neither
the Borrower nor any Subsidiary is subject to any judgment, decree, order or
citation related to or arising out of any Environmental Laws.  To the
Borrower’s Knowledge, neither the Borrower nor any Subsidiary has been named or
listed as a potentially responsible party by any governmental body or agency in
any matter arising under any Environmental Laws.  Neither the Borrower
nor any Subsidiary is a participant in, nor does the Borrower have Knowledge of,
any governmental investigation involving any of the Real
Properties.

     

    (c)           Neither
the Borrower or any Subsidiary nor, to the Borrower’s Knowledge, any other
person, firm, corporation or governmental entity has caused or permitted any
Hazardous Substances or other materials to be stored, deposited, treated,
recycled or disposed of on or at any of the Real Properties which materials, if
known to be present, would reasonably be expected to require or authorize
cleanup, removal or other remedial action under any applicable Environmental
Laws.

     

    
      
        
        

      

      
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    (d)           As
used in this Section 3.19 and in Section 5.08 below, the following terms have
the following meanings:

     

    “Environmental Laws”
include all federal, state, and local laws, rules, regulations, ordinances,
permits, orders, and consent decrees agreed to by the Borrower or any
Subsidiary, relating to health, safety, and environmental matters applicable to
the business and property of the Borrower or any Subsidiary.  Such
laws and regulations include but are not limited to the Resource Conservation
and Recovery Act (“RCRA”), 42 U.S.C.
§6901 et seq., as amended; the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C.
§9601 et seq., as amended; the Toxic Substances Control Act (“TSCA”), 15 U.S.C.
§2601 et seq., as amended; and the Clean Water Act, 33 U.S.C. §1331 et seq., as
amended.

     

    “Hazardous
Substances”, “Release”, “Respond” and “Response” shall have
the meanings assigned to them in CERCLA, 42 U.S.C. §9601, as
amended.

     

    “Notice” means any
actual summons, citation, directive, information request, notice of potential
responsibility, notice of violation or deficiency, order, claim, complaint,
investigation, proceeding, judgment, letter, or other written communication from
the United States Environmental Protection Agency or other federal, state, or
local agency or authority, or any other entity or individual, public or private,
concerning any intentional or unintentional act or omission which involves
management of Hazardous Substances in amounts in violation of Environmental Laws
on or transported off any Real Properties; the imposition of any liens asserted
by government entities in connection with any Borrower’s or Subsidiary’s
response to the presence or Release of Hazardous Substances in amounts in
violation of Environmental Laws; and any alleged violation of or responsibility
under any Environmental Laws.

     

    Section
3.20.  Sensitive Payments.  Neither the Borrower nor
any Subsidiary has (a) made any contributions, payments or gifts to or for the
private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift is illegal under
the laws of the United States or the jurisdiction in which made, (b) established
or maintained any unrecorded fund or asset for any purpose or made any false or
artificial entries on its books, (c) made any payments to any person with the
intention that any part of such payment was to be used for any purpose other
than that described in the documents supporting the payment, or (d) done
business with or proposes to do business with any country, or any Person in any
country, which is prohibited or restricted under any Applicable Law of the
United States, or engaged in or proposes to engage in any “trading with the
enemy” or other transactions violating any rules or regulations of the Office of
Foreign Assets Control or any similar laws, rules or regulations of any federal,
state, local or foreign government or governmental agency.

     

    Section
3.21.  Full Disclosure.  No statement of fact made by
the Borrower in this Agreement or any other Loan Document, in any SEC Report (as
of the date thereof, but giving effect to any amendments or supplements thereto
filed prior to the date of this Agreement), or in any information memorandum,
business summary, agreement, certificate or schedule furnished by the Borrower
to the Lender pursuant hereto, contains or will contain any untrue statement of
a material fact, or omits or will omit to state any material fact necessary to
make any statements contained herein or therein not
misleading.  Except for matters of a general economic or political
nature which do not affect the Borrower or any Subsidiary uniquely, there is no
fact presently Known to the Borrower or any Subsidiary which has not been
disclosed to the Lender, which has had or would reasonably be expected to have a
Material Adverse Effect.

     

    
      
        
        

      

      
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    Section
3.22.  Reaffirmation.  Each and every request by the
Borrower for Advances shall constitute a reaffirmation of the truth and accuracy
of the Borrowers’ representations and warranties made in this Agreement and the
Security Documents on and as of the date of such request and the subject
Borrowing Date (unless the representation and warranty relates solely to a
specific date, in which case such representation and warranty shall continue to
relate to such specific date).

     

    IV.           CONDITIONS OF MAKING THE
LOANS

     

    A.           The
obligation of the Lender to make the Advance on the Closing Date and to
consummate the other transactions contemplated hereby are subject to the
following conditions precedent:

     

    Section
4.01.  Representations and Warranties.  The
representations and warranties set forth in Article III hereof and in the other
Loan Documents shall be true and correct on and as of the Closing
Date.

     

    Section
4.02.  Loan Documents.  The Borrower and the
Subsidiaries (as applicable) shall have duly executed and/or delivered to the
Lender all of the following:

     

    (a)           The
Revolving Credit Note;

     

    (b)           A
reaffirmation by the Subsidiaries of their obligations under the Guaranty
Agreement;

     

    (c)           A
reaffirmation by the individuals party to the Validity Guaranties, reaffirming
their respective obligations under their respective Validity
Guaranties;

     

    (d)           The
Warrant;

     

    (e)           A
certificate of the Secretary or an Assistant Secretary of the Borrower,
certifying (i) the vote of the Boards of Directors of the Borrower, authorizing
and directing the execution and delivery of this Agreement, the Revolving Credit
Note, the Warrant and all further agreements, instruments, certificates and
other documents pursuant hereto and thereto, and (ii) that there have been no
changes to the Organic Documents of the Borrower since the Original Closing
Date; and

     

    
      
        
        

      

      
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    (f)           Such
other agreements, instruments, documents and certificates (including, without
limitation, satisfactory lien and judgment searches respecting the Borrower and
the Subsidiaries) as the Lender or its counsel may reasonably
request.

     

    Section
4.03.  Other Agreements.  The Debt Extension
Agreements and Subordination Agreements shall be in full force and effect, and
the consents of any parties thereto which may be required in connection with the
execution, delivery and performance of this Agreement shall have been obtained
and shall be in full force and effect; and the Lockbox Agreement shall be in
full force and effect, and all Account Debtors of the Borrower and its
Subsidiaries shall have been notified to direct all payments on the Accounts to
the account designated in the Lockbox Agreement.

     

    Section
4.04.  Status of Other Indebtedness.  The Borrower
shall have provided to the Lender a certificate or other written evidence
reasonably satisfactory to the Lender that all of the Borrower’s and its
Subsidiaries’ Indebtedness current and not in default.

     

    Section
4.05.  Expenses.  The Borrower shall have paid or
reimbursed, or at the Closing Date shall pay or reimburse, the Lender for its
reasonable out-of-pocket costs, charges and expenses incurred to the Closing
Date in connection with this Agreement and the transactions contemplated hereby;
and in connection herewith, the Borrower hereby irrevocably authorizes the
Lender, and the Lender hereby agrees, to charge such amounts as Advances to the
Borrower’s revolving credit loan account.  Failure of the Lender to
effect any such charge shall not excuse the Borrower from its obligation to pay
such amounts.

     

    Section
4.06.  Further Matters.  All legal matters, and the
form and substance of all documents, incident to the transactions contemplated
hereby shall be reasonably satisfactory to the Lender and its
counsel.

     

    Section 4.07.  No
Default.  No Default or Event of Default shall have occurred
and be continuing.

     

    B.           The
obligation of the Lender to make any Advances subsequent to the Closing Date is
subject to (a) the representations and warranties set forth in Article III and
in the other Loan Documents being true and correct in all material respects
(except that, to the extent that any representation or warranty is already
qualified by concepts of materiality and/or Material Adverse Effect, then such
representations and warranties shall be true and correct in all respects while
giving effect to the materiality and/or Material Adverse Effect qualifiers
therein) on and as of the subject Borrowing Date (except to the extent that any
specific representation or warranty relates solely to a specific date, in which
case such representation and warranty shall remain true and correct as of such
specific date), (b) the Lender’s receipt of a borrowing request in respect of
the subject Advance in accordance with Section 2.01(b) above, (c) the execution
and delivery of such further Security Documents as the Lender may have
reasonably requested pursuant to the Security Documents theretofore executed and
delivered, and (d) there being no continuing Default or Event of
Default.

     

    
      
        
        

      

      
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    V.           AFFIRMATIVE
COVENANTS

     

    The
Borrower hereby covenants and agrees that, from the date hereof and until all
Obligations (whether now existing or hereafter arising) have been paid in full
and the Revolving Credit Commitment has been terminated, unless the Lender shall
otherwise consent in writing, the Borrower shall, and shall cause each of its
Subsidiaries to:

     

    Section
5.01.  Corporate and Insurance.  Do or cause to be
done all things necessary to at all times (a) preserve, renew and keep in full
force and effect its corporate or other legal existence, rights, licenses,
permits and franchises, (b) comply with the Loan Documents and any other
agreements and instruments executed and delivered hereunder and thereunder (to
the extent a party thereto), (c) maintain, preserve and protect all of its
material trade names (except to the extent that the failure to do so would not
cause or would not reasonably be expected to result in a Material Adverse
Effect), and preserve all of its material property used or useful in the conduct
of its business and keep the same in good repair, working order and condition
(reasonable wear and tear excepted), and from time to time make, or cause to be
made, all needed and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the Business Operations carried on in connection
therewith may be properly and advantageously conducted at all times,
(d) maintain insurance in amounts, on such terms and against such risks
(including fire and other hazards insured against by extended coverage, public
liability insurance covering claims for personal injury, death or property
damage, and professional liability insurance) as are customary for companies of
similar size in the same or similar businesses and operating in the same or
similar locations, as well as all such other insurance as is required by the
Collateral Agreement, each of which policies (other than workers compensation)
shall be issued by a financially sound and reputable insurer reasonably
satisfactory to the Lender and shall name the Lender as loss payee and
additional insured as its interest appears and provide for the Lender to receive
written notice thereof at least thirty (30) days prior to any cancellation of
the subject policy, and (e) comply in all material respects with all material
Contracts and material obligations to which it is a party or by which it is
bound, all benefit plans which it maintains or is required to contribute to, and
all Applicable Law (including, without limitation, Environmental Laws,
healthcare laws and regulations) material to its Business Operations, and all
requirements of its insurers, whether now in effect or hereafter enacted,
promulgated or issued.  The Borrower will provide to the Lender a
certificate of the foregoing insurance, promptly upon request.

     

    Section
5.02.  Payment of Taxes.  File, pay and discharge, or
cause to be paid and discharged, all material taxes, assessments and
governmental charges or levies imposed upon the Borrower and/or any Subsidiary
or upon its income and profits or upon any of its property (real, personal or
mixed) or upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials, supplies and otherwise, which,
if unpaid when due, might become a Lien or charge upon such property or any part
thereof; provided, however, that neither
the Borrower nor any Subsidiary shall be required to pay and discharge or cause
to be paid and discharged any such tax, assessment, charge, levy or claim so
long as (a) the validity thereof shall be contested in good faith by appropriate
proceedings and the Borrower or such Subsidiary shall have set aside on its
books adequate reserves with respect to any such tax, assessment, charge, levy
or claim so contested, and (b) payment with respect to any such tax, assessment,
charge, levy or claim shall be made before any of the Borrower’s or such
Subsidiary’s property shall be seized or sold in satisfaction
thereof.

     

    
      
        
        

      

      
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    Section
5.03.  Notices.  Give prompt written notice to the
Lender of (a) the filing by the Borrower of any SEC Reports (which notices may
be given by e-mail to the Borrower’s relationship officer at the Lender), (b)
any proceedings instituted against the Borrower or any Subsidiary in any federal
or state court or before any commission or other regulatory body, whether
federal, state or local, which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect, and (c) the occurrence of any
material casualty to any Collateral, any Material Adverse Effect, or any Default
or Event of Default, and the action that the Borrower has taken, is taking, or
proposes to take with respect thereto.

     

    Section
5.04.  Periodic Reports.  Furnish to the
Lender:

     

    (a)           Within
ninety (90) calendar days after the end of each Fiscal Year, consolidated
balance sheets, and consolidated and consolidating statements of income,
statements of stockholders’ equity, and statements of cash flows of the Borrower
and its Subsidiaries, together with footnotes and supporting schedules thereto,
certified (as to the consolidated statements) by independent certified public
accountants selected by the Borrower and reasonably satisfactory to the Lender
(and the Lender hereby confirms that the Borrower’s independent certified public
accountants on the date of this Agreement, Parente Randolph, LLC, are
satisfactory to the Lender), showing the financial condition of the Borrower and
its Subsidiaries at the close of such Fiscal Year and the results of operations
of the Borrower and its Subsidiaries during such Fiscal Year;

     

    (b)           Within
thirty (30) calendar days after the end of each calendar month (forty-five (45)
calendar days in the case of the end of a fiscal quarter), consolidated (and, if
specifically requested by the Lender reasonably in advance, but not more
frequently than quarterly, consolidating) unaudited balance sheets, statements
of income and statements of cash flows of the Borrower and its Subsidiaries,
together with supporting schedules thereto, prepared by the Borrower and
certified by the Borrower’s Chief Executive Officer, Chief Financial Officer or
Chief Accounting Officer, such balance sheets to be as of the close of such
calendar month and such statements of income and statements of cash flows to be
for the period from the beginning of the then-current Fiscal Year to the end of
such calendar month, together with comparative statements of income and cash
flows for the corresponding period in the immediately preceding Fiscal Year, in
each case subject to normal audit and year-end adjustments;

     

    (c)           Concurrently
with the delivery of each of the financial statements required by Sections
5.04(a) and 5.04(b) above, a certificate on behalf of the Borrower (signed by
the Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer
of the Borrower), certifying that he has examined the provisions of this
Agreement and that no Default or Event of Default has occurred and/or is
continuing;

     

    
      
        
        

      

      
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    (d)           Within
fifteen (15) calendar days after the end of each calendar month, an accounts
receivable aging report and an accounts payable aging report for the Borrower
and the Subsidiaries (each on a consolidated and consolidating
basis);

     

    (e)           As
soon as approved by the Borrower’s Board of Directors (but in any event not
later than the beginning of each Fiscal Year), a budget and operating plan (on a
month-by-month basis) for such Fiscal Year, in such detail as may reasonably be
required by the Lender;

     

    (f)           As
and when distributed to the Borrower’s stockholders, copies of all proxy
materials, reports and other information which the Borrower provides to its
stockholders in their capacity as such; and as and when distributed to any other
holders of Indebtedness of the Borrower or the Subsidiaries, copies of all
reports, statements and other information provided in writing to such lenders;
and

     

    (g)           Promptly,
from time to time, such other information regarding the Borrower’s or any
Subsidiary’s operations, assets, business, affairs and financial condition, as
the Lender may reasonably request.

     

    To the
extent that the financial statements required by Sections 5.04(a) and 5.04(b)
are contained in any SEC Reports filed by the Borrower within the required time
period for the delivery of such financial statements (allowing for extensions
for late filings as permitted by the SEC, provided that the Borrower has made
the appropriate filing to obtain such permitted extension), then the Borrower
shall be deemed to have complied with the subject financial statement delivery
by notifying the Lender of the filing of the subject SEC Report.

     

    To the
extent that any report or other delivery required under this Section 5.04 or
elsewhere in this Agreement will, at the time of anticipated delivery to the
Lender, contain any material non-public information, the Borrower will notify
the Lender thereof as promptly as practicable prior to the delivery of such
report (but without disclosing the specific items of material non-public
information or the nature thereof), and if so requested by the Lender prior to
the required date of the information delivery hereunder, the Borrower shall (x)
if reasonably practicable, redact such material non-public information from the
subject report prior to the delivery thereof to the Lender, or (y) defer
delivery of such report until such time as the Borrower has made public
disclosure of the subject material information or the Lender has affirmatively
requested delivery of such report.  Absent timely request by the
Lender as aforesaid, the Borrower shall make the required delivery to the Lender
on a timely basis.

     

    Section
5.05.  Books and Records; Inspection.  Maintain
centralized books and records regarding all of the Business Operations at the
Borrower’s principal place of business, and permit agents or representatives of
the Lender at reasonable intervals to inspect, at any time during normal
business hours, upon reasonable advance notice, and without undue material
disruption of the Business Operations, all of the Borrower’s and its
Subsidiaries’ various facilities, books and records (wherever located), to make
copies, abstracts and/or reproductions thereof, and to discuss the business and
affairs of the Borrower and the Subsidiaries with the management of the
Borrower; and without limitation of the foregoing, subject to the proviso in Section
5.07 below, Lender may engage an independent auditing firm to conduct an audit
of the Collateral and the Borrower’s books and records on an annual basis (or
more frequently during the continuance of a Default or an Event of
Default).

     

    
      
        
        

      

      
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    Section
5.06.  Accounting.  Maintain a standard system of
accounting in order to permit the preparation of financial statements in
accordance with GAAP and Regulation S-X promulgated under the Act.

     

    Section
5.07.  Reimbursements.  Pay or reimburse the Lender
or other appropriate Persons on demand for all reasonable costs, expenses and
other charges incurred or payable from time to time in connection with the
transactions contemplated by this Agreement, any routine SEC filings required to
report the Lender’s and its Affiliates’ initial post-Closing Date beneficial
ownership of Common Stock, any waivers or amendments in respect of any Loan
Documents, any “workout” or enforcement action, and any bankruptcy or insolvency
proceedings relating to the Borrower or any Subsidiary, including but not
limited to any and all reasonable search fees, recording fees, costs of
inspections and legal and accounting fees; provided that, except
for any such audit conducted during the continuance of an Event of Default, the
Borrower shall not be obligated to pay or reimburse the Lender for the cost of
more than one (1) audit performed by an independent auditing firm (as
contemplated by Section 5.05 above) in any twelve (12) month
period.

     

    Section
5.08.  Environmental Response.  In the event of any
material discharge, spill, injection, escape, emission, disposal, leak or other
Release of Hazardous Substances in amounts in violation of applicable
Environmental Laws by the Borrower or any Subsidiary on any Real Property owned
or leased by the Borrower or any Subsidiary, which is not authorized by a permit
or other approval issued by the appropriate governmental agencies and which
requires notification to or the filing of any report with any federal or state
governmental agency, the Borrower shall promptly: (a) notify the Lender; and (b)
comply with the notice requirements of the Environmental Protection Agency and
applicable state agencies, and take all steps necessary to promptly clean up
such discharge, spill, injection, escape, emission, disposal, leak or other
Release in accordance with all applicable Environmental Laws and the Federal
National Contingency Plan, and, if required by Applicable Law, receive a
certification from all applicable state agencies or the Environmental Protection
Agency, that such Real Property has been cleaned up to the satisfaction of such
agency(ies).

     

    Section
5.09.  Management.  Cause Michael D. Traina to
continue to be employed or to function as the chief executive officer of the
Borrower, unless a successor is appointed within sixty (60) days after the
termination of such individual’s employment, and such successor is reasonably
satisfactory to the Lender; and submit for approval by the Lender (which
approval will not be unreasonably withheld or delayed) all members of senior
management of the Borrower (including, without limitation, any and all
employment agreements or other contracts with respect to such management
personnel) prior to the hiring of such personnel or the execution and delivery
of such agreements or commitments.

     

    
      
        
        

      

      
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    Section 5.10.  Use
of Proceeds.  Cause all proceeds of the Loans to be utilized
solely in the manner and for the purposes set forth in Section 2.04
hereof.

     

    Section
5.11.  Future Subsidiaries.  At any time and from
time to time when the Borrower or any of its Subsidiaries proposes to form or
acquire any Subsidiary subsequent to the Closing Date, the Borrower shall give
written notice thereof to the Lender reasonably in advance of the formation or
acquisition of such Subsidiary, providing information therefor of the type
called for in Schedule
3.02 of the Disclosure Schedule; and contemporaneously with the formation
or acquisition of such new Subsidiary, the Borrower shall cause such new
Subsidiary to execute and deliver (a) a guaranty agreement in substantially the
form of the Guaranty Agreement (or a joinder agreement with respect to the
existing Guaranty Agreement in form and substance reasonably satisfactory to the
Lender), and (b) a Collateral Agreement (with completed perfection certificate
and other appropriate Security Documents) in substantially the form of the
Collateral Agreement as currently in place (or a joinder agreement with respect
to the existing Collateral Agreement in form and substance reasonably
satisfactory to the Lender) and other Security Documents as reasonably requested
by the Lender.  Nothing contained in this Section 5.11 shall be deemed
to constitute any waiver by the Lender of any consent otherwise required under
this Agreement or any other Loan Document with respect to the formation or
acquisition of any Subsidiary.

     

    Section
5.12.  Landlord Waivers.  To the extent reasonably
requested by the Lender from time to time subsequent to the Closing Date, use
commercially reasonable efforts to obtain, within thirty (30) days after the
Lender’s request therefor, in form and substance reasonably satisfactory to the
Lender, any and all bailee waivers, warehousemen’s waivers, Landlord Waivers
and/or access agreements requested by the Lender in respect of locations where
there is stored or held any material books or records, or any other Collateral
having an aggregate fair market value in excess of $10,000; and this Section
5.12 shall be applicable to any material leased premises for which a Landlord
Waiver has not been obtained as of the Closing Date.

     

    Section
5.13.  Deposit Accounts.  Notify the Lender upon
opening any new bank account or securities account, and cause the subject bank
or securities intermediary promptly to execute and deliver to the Lender upon
request a Control Agreement in respect of such bank account or securities
account; and this Section 5.13 shall also be applicable to any and all bank
accounts into which royalty payments are received or deposited and for which
Control Agreements have not been entered into on the Closing Date if (a) the
funds in such bank account exceed $10,000, or (ii) the funds held in the such
bank accounts for which Control Agreements are not in place exceed $25,000 in
the aggregate; and to the extent that a required Control Agreement is not
entered into within thirty (30) days after the Closing Date, then the subject
bank account(s) shall be promptly closed and the funds held therein shall be
transferred to one or more accounts at another banking institution which has
executed and delivered a Control Agreement in respect of such account(s) in form
and substance satisfactory to the Lender.  The Control Agreements in
respect of operating/disbursement accounts which are not collection accounts
shall be of a “springing” variety, under which the Lender must notify the
banking institution of the existence of an Event of Default as a condition to
asserting dominion over the subject account and the funds therein.

     

    
      
        
        

      

      
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    Section
5.14.  Lockbox and Collections.  Notify all Account
Debtors in writing (including, without limitation, by conspicuous direction on
each invoice), and require all Account Debtors, to remit all payments in respect
of the Accounts, or otherwise payable to the Borrower or its Subsidiaries, to
the Lockbox.

     

    Section
5.l5.  Deferral Agreements.  Within thirty (30) days
after the date of this Agreement, deliver to the Lender a written agreement of
each holder of Indebtedness covered by a Debt Extension Agreement or
Subordination Agreement, and all other holders of material Indebtedness of the
Borrower or any Subsidiary (excluding Indebtedness held by M&T), each in
form and substance reasonably satisfactory to the Lender, agreeing to defer and
postpone all scheduled payments of principal and interest in respect of such
Indebtedness until one or more dates on or after December 31, 2009.

     

    Section 5.16. Board
Designees.  Within forty-five (45) days after the Closing Date,
and at all times thereafter, cause the Board to include two (2) individuals
designated by the Lender  (such individuals to be placed in separate
classes within the classified Board), which individuals shall be unaffiliated
with and independent of the Lender; and in the event of the death, disability,
resignation or other inability or unwillingness to serve of either or both of
such designees, replace such designee(s) on the Board with another individual(s)
designated by the Lender and meeting the criteria of this Section
5.16.

     

    Section
5.17.  Internal Controls; Disclosure Controls and
Procedures.  Not later than December 31, 2009, the Borrower and
its Subsidiaries shall make all necessary adjustments and improvements in their
systems of internal controls and disclosure controls and procedures such that
the representation and warranty made in Section 3.01(e) above is true and
accurate without giving affect to the qualifying exception appearing at the
beginning of Section 3.01(e) above.

     

    VI.           NEGATIVE
COVENANTS

     

    The
Borrower hereby covenants and agrees that, until all Obligations (whether now
existing or hereafter arising) have been paid in full and the Revolving Credit
Commitment has been terminated, unless the Lender shall otherwise consent in
writing, the Borrower shall not, and shall not permit any Subsidiary to,
directly or indirectly:

     

    Section
6.01.  Indebtedness.  Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
Indebtedness, other than the following (referred to herein as “Permitted
Indebtedness”):

     

    (a)           Indebtedness
to the Lender pursuant to the Loan Documents;

     

    (b)           liabilities
with respect to trade obligations, accounts payable, or other similar payments,
operating leases and other normal accruals incurred in the ordinary course of
business, or with respect to which the Borrower or the subject Subsidiary is
contesting in good faith the amount or validity thereof by appropriate
proceedings, and then only to the extent that the Borrower or the subject
Subsidiary has set aside on its books adequate reserves therefor;

     

    
      
        
        

      

      
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    (c)           Indebtedness
existing on the date of this Agreement owed to those Persons, in those amounts
and having those maturities as set forth in Schedule 6.01 of the
Disclosure Schedule, including any extensions, renewals or refinancings of such
Indebtedness provided that (i) there is no increase in the principal amount
thereof at the time of such extension, renewal or refinancing, and (ii) there is
no other material change in the terms of such Indebtedness which is materially
adverse to the Borrower or to the Lender;

     

    (d)           Capitalized
Leases reflected in the Financial Statements, and Capitalized Leases hereafter
entered into by the Borrower or its Subsidiaries in the ordinary course of the
Business Operations and within the limitations provided in Section 6.17
below;

     

    (e)           purchase
money Indebtedness incurred in connection with the Borrower’s or its
Subsidiaries’ acquisition of capital assets in the ordinary course of the
Business Operations and within the limitations provided in Section 6.17
below;

     

    (f)           Subordinated
Debt in such amounts and upon such terms and conditions as shall be acceptable
to the Lender in its sole and absolute discretion;

     

    (g)           other
unsecured Indebtedness on terms and conditions reasonably satisfactory to the
Lender, and which will not reasonably be expected to result in any breach or
violation of Section 6.18 below;

     

    (h)           intercompany
Indebtedness between the Borrower and any Wholly-Owned Subsidiary or between
Wholly-Owned Subsidiaries;

     

    (i)           Guarantees
to the extent permitted pursuant to Section 6.03 below; and

     

    (j)           Indebtedness
up to a maximum principal amount outstanding of $750,000, minus any increase in
the Maximum Revolver Amount then in effect pursuant to Section 2.02 above, which
Indebtedness may be secured subject to Section 6.02(i) below.

     

    Section
6.02.  Liens.  Create, incur, assume or suffer to
exist any Lien or other encumbrance of any nature whatsoever on any of its
assets, now or hereafter owned, other than the following (referred to herein as
“Permitted
Liens”):

     

    (a)           subject
to Section 5.02 above, Liens securing the payment of taxes which are either not
yet due or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower or the subject Subsidiary shall have
set aside on its books adequate reserves;

     

    (b)           deposits
under workers’ compensation, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for the
repayment of money borrowed) or leases, or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or other similar
bonds in the ordinary course of business;

     

    
      
        
        

      

      
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    (c)           statutory
Liens of landlords and Liens imposed by law, such as, carriers’, warehousemen’s,
materialmen’s or mechanics’ liens, incurred by the Borrower or any Subsidiary in
good faith in the ordinary course of business and discharged promptly after same
are incurred and prior to delinquency thereof; fully bonded Liens arising out of
a judgment or award against the Borrower or any Subsidiary with respect to which
the Borrower or such Subsidiary shall then be prosecuting an appeal, a stay of
execution pending such appeal having been secured; and Liens arising out of a
judgment or award against the Borrower or any Subsidiary which are fully covered
by insurance (subject to applicable deductibles) and for which the relevant
insurer has not denied or disclaimed coverage;

     

    (d)           other
Liens incurred in connection with Indebtedness expressly permitted pursuant to
Section 6.01(d) and/or Section 6.01(e) above, or existing on the subject assets
at the time of acquisition thereof, provided that such Liens do not extend to
any assets or property other than the specific assets or properties acquired
pursuant to such permitted Indebtedness;

     

    (e)           encumbrances
consisting of easements, rights-of-way, survey exceptions and other similar
restrictions on the use of Real Property, or minor irregularities in title
thereto which do not materially impair the use of such property in the operation
of the business of the Borrower and its Subsidiaries;

     

    (f)           Liens
in existence on the date of this Agreement, as set forth on Schedule 6.02 of the
Disclosure Schedule;

     

    (g)           leases,
subleases, licenses and sublicenses granted in the ordinary course of business
by the Borrower or any Subsidiary which is party to the Guaranty Agreement and
the Collateral Agreement, provided that same do not interfere in any material
respect with the normal Business Operations;

     

    (h)           Liens
in favor of the Lender;

     

    (i)           Liens
securing any Indebtedness incurred in accordance with Section 6.01(j) above,
provided that, prior to or in conjunction with the grant of such Liens, the
holder of such Liens shall enter into an intercreditor agreement with the Lender
and the Persons granting such Liens, pursuant to which the holder of such Liens
shall agree to refrain from demanding, requiring or taking any action with
respect to any Collateral at any time prior to the indefeasible payment in full
of the Obligations, subject only to the right of the holder of the Indebtedness
secured by such Liens to receive a pro rata share (ratably
in proportion to the principal amounts of Indebtedness owed by the Borrower and
its Subsidiaries to the Lender and such other creditor) of any and all net cash
collections received by the Lender from any enforcement action against the
Collateral; and

     

    (j)           extensions,
renewals or replacements of any Lien referred to in clauses (a) through (f)
above, provided that same shall not effect any increase in any principal amount
secured thereby.

     

    
      
        
        

      

      
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    Section
6.03.  Guarantees.  Guarantee, endorse or otherwise
in any manner become or be responsible for obligations of any other Person,
except (a) endorsements of negotiable instruments for collection in the ordinary
course of business, and (b) guarantees by the Borrower of obligations of
Wholly-Owned Subsidiaries in the ordinary course of business.

     

    Section
6.04.  Sales of Assets and Management.  (a) Sell,
lease, transfer, encumber or otherwise dispose of any of the Borrower’s or any
Subsidiary’s properties, assets, rights, licenses or franchises (including,
without limitation, equity interests in Subsidiaries) other than (i) sales of
inventory in the ordinary course of business, (ii) licenses, joint ventures and
related transactions entered into, modified, terminated or replaced in the
ordinary course of business, (iii) the disposition of surplus or obsolete
personal properties in the ordinary course of business, or (iv) (A) sales of
discontinued business operations or (B) licensing or subcontracting of client
contracts currently being serviced by Select Staffing, if such client contract
reverts to the Borrower or a Subsidiary in the event of a default or breach by
Select Staffing, or (b) permit any Affiliate of the Borrower (other than a
Domestic Subsidiary which is a party to the Collateral Agreement) to own or
obtain any patent, patent application, copyright, copyright application,
trademark, trademark application, license, or other intangible asset relating to
the Business Operations except in the normal course of business on terms and
conditions no less favorable to the Borrower or any Subsidiary than those which
could be obtained in an arms’ length transaction with an unaffiliated third
party.

     

    Section
6.05.  Sale-Leaseback.  Enter into any arrangement
with any Person whereby the Borrower or any Subsidiary shall sell or transfer
any property (real, personal or mixed) used or useful in the Business
Operations, whether now owned or hereafter acquired, and thereafter rent or
lease such property.

     

    Section
6.06.  Investments; Acquisitions.  Make any
Investment in, or otherwise acquire or hold securities (including, without
limitation, capital stock and evidences of Indebtedness) of, or make loans or
advances to, or enter into any arrangement for the purpose of providing funds or
credit to, any other Person (including any Affiliate), except:

     

    (a)           Investments
in Wholly-Owned Subsidiaries which have complied with the requirements of
Section 5.11 hereof;

     

    (b)           advances
(to the extent permitted by Applicable Law, including federal securities laws)
to employees of the Borrower or any Wholly-Owned Subsidiaries (other than
Dissolving Subsidiaries) for normal business expenses not to exceed at any time
$10,000 in the aggregate;

     

    (c)           Investments
of excess cash generated in the Business Operations in Cash Equivalents;
and

     

    (d)           Investments
of cash in overnight deposits or other customary cash management Investments
with commercial banks or in commercial paper satisfying the criteria for such
banks or commercial paper as set forth in the definition of Cash
Equivalents.

     

    
      
        
        

      

      
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    Section
6.07.  Real Property; Corporate Form;
Acquisitions.  Acquire or hold any fee interest in any Real
Property; or dissolve or liquidate, or consolidate or merge with or into, sell
all or substantially all of the assets of the Borrower or any Subsidiary to, or
acquire all or substantially all of the securities, assets or properties of, any
other Person, except for (a) consolidations of a Subsidiary with a Wholly-Owned
Subsidiary; (b) mergers of a Wholly-Owned Subsidiary into the Borrower or into a
Wholly-Owned Subsidiary; or (c) sales to the Borrower or another Subsidiary for
fair value.

     

    Section
6.08.  Dividends and Redemptions.  Declare or pay any
dividends, or make any distribution of cash or property, or both, to any Person
in respect of any of the shares of the capital stock or other equity securities
of the Borrower or any other Person, or directly or indirectly redeem, purchase
or otherwise acquire for consideration any securities or shares of the capital
stock or other equity securities of the Borrower or any other Person; provided, that this
Section 6.08 shall not be deemed to prohibit the payment of dividends or
distributions by any Subsidiary to the Borrower or to any other direct or
indirect Wholly-Owned Subsidiary.

     

    Section
6.09.  Compensation.  Pay any compensation of any
types or in any amounts to any executive officers of the Borrower except (a) in
accordance with the employment agreements between the Borrower and such
executive officers as in effect on the Closing Date, as same may be amended or
modified in accordance with subsection (c) of this Section 6.09, (b) in
accordance with the compensation levels disclosed in Schedule 6.09 of the
Disclosure Schedule, or (c) as otherwise approved by the independent
Compensation Committee of the Board of Directors of the Borrower but in no case
in any amount or amounts which would cause or reasonably be expected to cause a
Material Adverse Effect.

     

    Section
6.10.  Change of Business.  (a) Engage in a business
materially different from the general nature of the Business Operations (i) as
now being conducted, or (ii) as the same may hereafter be reasonably expanded
from time to time in like areas of business; (b) wind up the Business Operations
or cease substantially all of its normal Business Operations for a period in
excess of ten (10) consecutive days; or (c) suffer any material disruption,
interruption or discontinuance of a material portion of its normal Business
Operations for a period in excess of ten (10) consecutive days, except to the
extent that any such disruption, interruption or discontinuance of operations is
caused by fire, flood, storm, explosion, riot, armed conflict, strike or other
labor unrest, embargo, action of civil or military authority, act of God or
public enemy, telecommunications failure, earthquake, or other cause beyond the
reasonable control of the Borrower and no Material Adverse Effect is caused or
is reasonably expected to be caused thereby.

     

    Section
6.11.  Receivables.  Sell or assign in any way any
accounts receivable, promissory notes or trade acceptances held by the Borrower
or any Subsidiary with or without recourse, except for (a) collections
(including endorsements) in the ordinary course of business, (b) transfers to or
among the Borrower and Domestic Subsidiaries which are party to the Guaranty
Agreement and the Collateral Agreement, and (c) payments to M&T pursuant to
the Loan Modification and Restructure Agreement dated the Original Closing
Date.

     

    
      
        
        

      

      
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    Section
6.12.  Certain Amendments.  Agree, consent, permit or
otherwise undertake to amend any of the terms or provisions of the Borrower’s or
any Subsidiary’s Organic Documents in a manner which may impair in any respect
any of the Lender’s rights under any of the Loan Documents.

     

    Section
6.13.  Affiliate Transactions.  Enter into any
Contract, agreement or transaction with any Affiliate of the Borrower except (a)
as disclosed in Schedule 6.13 of the
Disclosure Schedule, (b) for intercompany Indebtedness between the Borrower and
any Wholly-Owned Subsidiary or between any Wholly-Owned Subsidiaries, or (c) in
the normal course of business on terms and conditions no less favorable to the
Borrower or any Subsidiary than those which could be obtained in an arms’ length
transaction with an unaffiliated third party.

     

    Section
6.14.  Fiscal Year.  Amend its Fiscal
Year.

     

    Section
6.15.  Subordinated Debt.  Prepay, redeem or purchase
any Subordinated Debt except as permitted in accordance with the applicable
Subordination Agreement or the Intercreditor Agreement.

     

    Section
6.16.  ERISA.  Suffer or permit any condition or
circumstance contrary to or in violation of Section 3.14 above.

     

    Section
6.17.  Capital Expenditures.  Make aggregate Capital
Expenditures (whether through cash purchase, principal payments under
Capitalized Leases, or otherwise), in the aggregate for the Borrower and all
Subsidiaries, in excess of $500,000 in the Fiscal Year ending December 31, 2009
or in any Fiscal Year thereafter.

     

    Section
6.18.  Coverage Test.  Permit the ratio of EBITDA to
Fixed Charges to be less than (a) 0.65 to 1.0 for the quarter ending March 31,
2010, (b) 0.9 to 1.0 for the quarter ending June 30, 2010, (c) 1.0 to 1.0 for
the quarter ending September 30, 2010, and (d) 1.1 to 1.0 for the quarter ending
December 31, 2010 and any quarter thereafter.

     

    Section
6.19.  Operating Expenses.  Permit consolidated
operating expenses of the Borrower and its Subsidiaries (determined in
accordance with GAAP) to exceed (a) $450,000 in any of the months from August
2009 through and including December 2009, (b) $525,000 in any of the months of
January, February or March 2010, (c) $550,000 in any of the months of April, May
or June 2010, (d) $600,000 in any of the months of July, August or September
2010, or (e) $700,000 in any month from and after October 2010; provided, however, that such
maximum amounts under clauses (b) through (e) shall be subject to adjustment by
mutual agreement of the Lender and the Borrower based on the Borrower’s good
faith budget and projections for the subject time periods as approved by the
Board and the Lender.

     

    VII.           DEFAULTS

     

    Section
7.01.  Events of Default.  Each of the following
events is herein, and in the Revolving Credit Note, sometimes referred to as an
Event of Default:

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    (a)           if
any representation or warranty made herein or in any other Loan Document, or in
any certificate, financial statement, Borrowing Base report, instrument or other
written statement furnished by the Borrower or any Subsidiary in connection with
this Agreement or any of the borrowings hereunder, shall be false, inaccurate or
misleading in any material respect when made or when deemed made
hereunder;

     

    (b)           any
default in the payment of any principal or interest under the Revolving Credit
Note or any other Obligations when the same shall be due and payable, whether at
the due date thereof or at a date required for prepayment or by acceleration or
otherwise, and the continuance of any such non-payment (in whole or in part) for
a period of five (5) Business Days;

     

    (c)           any
default in the due observance or performance of any covenant, condition or
agreement contained in any Section of Article VI hereof, which, if capable of
being cured, is not fully cured within thirty (30) days after the occurrence
thereof;

     

    (d)           any
default in the due observance or performance of any covenant, condition or
agreement to be observed or performed under Article V hereof, or otherwise
pursuant to the terms hereof or any other Loan Document and not addressed in
Sections 7.01(a), (b) or (c), and the continuance of such default unremedied for
a period of thirty (30) days (five (5) Business Days in the case of Section
5.01(d) hereof) after written notice thereof to the Borrower, or such other cure
period as may be provided in the applicable Loan Document;

     

    (e)           any
default with respect to any Indebtedness for money borrowed of the Borrower or
any of the Subsidiaries (other than to the Lender) in an amount in excess of
$100,000, if the effect of such default is to permit the holder, with or without
notice or lapse of time or both, to accelerate the maturity of any such
Indebtedness for money borrowed or to cause such Indebtedness for money borrowed
to become due prior to the stated maturity thereof; provided, however, that the
claim of Blue Lake Rancheria (“Blue Lake”) that the
Borrower’s Amended and Restated Promissory Note issued to Blue Lake (the “Blue Lake Note”)
cannot be paid in full through the delivery of Common Stock to Blue Lake (and
the failure to make any payments in cash demanded by Blue Lake thereunder), and
any litigation brought in respect thereof, does not constitute an Event of
Default, provided that and so long as payments under the Blue Lake Note are paid
solely in shares of Common Stock.

     

    (f)           if
the Borrower or any Subsidiary shall: (i) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of it or any of its
properties, (ii) admit in writing its inability to pay its debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent or be the subject of an order for relief
under Title 11 of the United States Code, or (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage or 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 him or
it in any proceeding under any such law, or (vi) take or permit to be taken any
action in furtherance of or for the purpose of effecting any of the
foregoing;

     

    
      
        
        

      

      
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    (g)           if
any order, judgment or decree shall be entered, without the application,
approval or consent of the Borrower or any Subsidiary, by any court of competent
jurisdiction, approving a petition seeking reorganization of the Borrower or any
Subsidiary, or appointing a receiver, trustee, custodian or liquidator of the
Borrower or any Subsidiary, or of all or any substantial part of its assets, and
such order, judgment or decree shall continue unstayed and in effect for any
period of sixty (60) days;

     

    (h)           if
final judgment(s) for the payment of money in an uninsured amount in excess of
$100,000 individually or in the aggregate shall be rendered against the Borrower
and/or any Subsidiary, and the same shall remain undischarged or unbonded for a
period of thirty (30) consecutive days, during which execution shall not be
effectively stayed;

     

    (i)           the
occurrence of any levy upon or seizure or attachment of, or any uninsured loss
of or damage to, any property of the Borrower or any Subsidiary having an
aggregate fair value or repair cost (as the case may be) in excess of $100,000
individually or in the aggregate, and any such levy, seizure or attachment shall
not be set aside, bonded or discharged within thirty (30) days after the date
thereof;

     

    (j)           if
any Lien purported to be created by any Security Document shall cease to be a
valid perfected first priority Lien (subject only to any priority accorded by
law to Permitted Liens) on the assets or properties covered thereby, or the
Borrower or any Subsidiary shall assert in writing that any Lien purported to be
created by any Security Document is not a valid perfected first priority lien
(subject only to any priority accorded by law to Permitted Liens) on the assets
or properties purported to be covered thereby;

     

    (k)           if
(i) any of the Loan Documents shall cease to be in full force and effect (other
than as a result of the discharge thereof in accordance with the terms thereof
or by written agreement of all parties thereto), or (ii) the Borrower or any
Subsidiary shall disclaim or deny the validity of any Loan Document or its
obligations thereunder;

     

    (l)           if
there shall at any time be pending any litigation, arbitration or other legal
proceedings (other than the “pending litigation” or “threatened litigation” set
forth in Schedule
3.04 of the Disclosure Schedule) brought by any creditors of the Borrower
or any Subsidiary in respect of past due amounts owed by the Borrower or any
Subsidiary (other than amounts being disputed in good faith) in an aggregate
claimed amount (exclusive of claims for consequential or punitive damages)
which, when aggregated with any and all outstanding uninsured judgments for the
payment of money against the Borrower and/or any Subsidiary, exceed the
aggregate sum of $300,000;

     

    (m)           if
the Borrower or any Subsidiary shall be indicted for or convicted of any
criminal offense; or

     

    (n)           there
shall occur any Material Adverse Effect.

     

    Section
7.02.  Remedies.  Upon the occurrence of any Event of
Default, and at all times thereafter during the continuance thereof: (a) the
Revolving Credit Note, and any and all other Obligations, shall, at the Lender’s
option (except in the case of Sections 7.01(f) and 7.01(g) hereof, the
occurrence of which shall automatically effect acceleration, regardless of any
action or forbearance in respect of any prior or ongoing Default or Event of
Default which may be inconsistent with such automatic acceleration), become
immediately due and payable, both as to principal, interest and other charges,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Revolving Credit
Note or other evidence of such Obligations to the contrary notwithstanding, (b)
all outstanding Obligations under the Revolving Credit Note, and all other
outstanding Obligations, shall bear interest at the default rate of interest
provided in the Revolving Credit Note, (c) the Lender may file suit against the
Borrower on the Revolving Credit Note and against the Borrower and the
Subsidiaries under the other Loan Documents and/or seek specific performance or
injunctive relief thereunder (whether or not a remedy exists at law or is
adequate), (d) the Lender shall have the right, in accordance with the Security
Documents, to exercise any and all remedies in respect of such or all of the
Collateral as the Lender may determine in its discretion (without any
requirement of marshalling of assets, or other such requirement), (e) the
Revolving Credit Commitment shall, at the Lender’s option (except in the case of
Sections 7.01(f) and 7.01(g) hereof, the occurrence of which shall automatically
effect termination, regardless of any action or forbearance in respect of any
prior or ongoing Default or Event of Default which may be inconsistent with such
automatic termination), be immediately terminated or reduced, and the Lender
shall be under no further obligation to consider making any further Advances,
and (f) upon request therefor by the Lender, the Borrower shall provide the
Lender with immediate, full and unobstructed access to and control of all books,
records, systems and other elements of the business and management of the
Borrower and its Subsidiaries, so as to assist the Lender in its efforts to
collect the Obligations by any and all means necessary or
appropriate.

     

    
      
        
        

      

      
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    VIII.                      PARTICIPATING LENDERS;
ASSIGNMENT.

     

    Section
8.01.  Participations.  Anything in this Agreement to
the contrary notwithstanding, the Lender may, at any time and from time to time,
without in any manner affecting or impairing the validity of any Obligations,
transfer, assign or grant participating interests in the Loans as the Lender
shall in its sole discretion determine, to such other Persons (the “Participants”) as the
Lender may determine.  Upon any such transfer, assignment or granting
of participating interests, the Participants shall be deemed to be included
within the term “Lender” for all purposes of this Agreement, subject to such
agreements and arrangements as the Lender and the Participants may agree upon.
Notwithstanding the granting of any such participating interests: (a) the
Borrower shall look solely to the Lender for all purposes of this Agreement and
the transactions contemplated hereby, (b) the Borrower shall at all times have
the right to rely upon any waivers or consents signed by the Lender as being
binding upon all of the Participants, and (c) all communications in respect of
this Agreement and such transactions shall remain solely between the Borrower
and the Lender (exclusive of Participants) hereunder.

     

    Section
8.02.  Transfer.  Anything in this Agreement to the
contrary notwithstanding, the Lender may, at any time and from time to time,
without in any manner affecting or impairing the validity of any Obligations,
transfer and assign all or any portion of its interest in this Agreement, the
Revolving Credit Note and the other Loan Documents to any Person (an “Assignee Lender”) as
the Lender may determine; provided, however, that, unless
an Event of Default has occurred and is continuing, the Lender shall not,
without the Borrower’s express prior written consent,  transfer or
assign any interest in this Agreement, the Revolving Credit Note or any Loan
Documents to any Person which, directly or through any parent entity of such
Person or any direct or indirect subsidiary of such Person, derives any material
revenues from the conduct of any business which is competitive with the Business
Operations on a worldwide basis, or to any Person known to the Lender to be
under common Control with any such competitor.  Upon any such transfer
or assignment, the Assignee Lender shall be deemed to succeed (to the extent of
the interest assigned) to the rights and obligations of the Lender for all
purposes of this Agreement.  In the event of any transfer and
assignment of the Lender’s entire interest in this Agreement, the Revolving
Credit Note and the Security Documents, the Lender shall be replaced by the
Assignee Lender as “Secured Party” under the Collateral Agreement and all other
Security Documents.

     

    
      
        
        

      

      
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    Section
8.03.  Recordation of Assignment.  In respect of any
negotiation, transfer or assignment of all or any portion of any Lender’s
interest in this Agreement, the Revolving Credit Note and/or any other Loan
Documents at any time and from time to time, the following provisions shall be
applicable:

     

    (a)           The
Borrower, or any agent appointed by the Borrower, shall maintain a register (the
“Register”) in
which there shall be recorded the name and address of each Person holding any
Note(s) hereunder or any commitment to lend hereunder, and the principal amount
payable to such Person under such Person’s Revolving Credit Note or committed by
such Person under such Person’s lending commitment.  The Borrower
hereby irrevocably appoints the Lender (and/or any subsequent Lender appointed
by the Lender then maintaining the Register) as the Borrower’s agent for the
purpose of maintaining the Register.

     

    (b)           In
connection with any negotiation, transfer or assignment as aforesaid, the
transferor/assignor shall deliver to the Lender then maintaining the Register an
assignment and assumption agreement executed by the transferor/assignor and the
transferee/assignee, setting forth the specifics of the subject transaction,
including but not limited to the amount and nature of Obligations and/or lending
commitments being transferred or assigned (and being assumed, as applicable),
and the proposed effective date of such transfer or assignment and the related
assumption (if applicable).

     

    (c)           Subject
to receipt of completed tax forms (indicating withholding status, or exemption
from withholding, as applicable, of the transferee/assignee) reasonably required
by the Person then maintaining the Register, and (if required by such Person)
surrender of the negotiated, transferred or assigned Revolving Credit Note for
reissuance by the Borrower, such Person shall record the subject transfer,
assignment and assumption in the Register.  Anything contained in any
Revolving Credit Note or other Loan Document to the contrary notwithstanding, no
negotiation, transfer or assignment shall be effective until it is recorded in
the Register pursuant to this Section 8.03(c).  The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error; and the Borrower and each Lender shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by the
Borrower and each Lender at any reasonable time and from time to time upon
reasonable prior notice.

     

    
      
        
        

      

      
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    IX.           MISCELLANEOUS

     

    Section
9.01.  Survival.  This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto, shall survive the making by the Lender of the Loans
and the execution and delivery to the Lender of the Revolving Credit Note, and
shall continue in full force and effect for so long as the Revolving Credit Note
or any other Obligations are outstanding and unpaid or the Revolving Credit
Commitment remains outstanding.  Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party; and all covenants, promises and
agreements in this Agreement contained, by or on behalf of the Borrower shall
inure to the benefit of the successors and assigns of the Lender.

     

    Section
9.02.  Indemnification.  The Borrower shall indemnify
the Lender and its managers, directors, officers, employees, attorneys and
agents against, and shall hold the Lender and such Persons harmless from, any
and all losses, claims, damages and liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by the Lender or any such Person
arising out of, in any way connected with, or as a result of: (a) the use of any
of the proceeds of the Loans made by the Lender to the Borrower; (b) this
Agreement, the ownership and operation of the Borrower’s and any Subsidiary’s
assets, including all Real Properties and improvements or any Contract, the
performance by the Borrower or any other Person of their respective obligations
thereunder, and the consummation of the transactions contemplated by this
Agreement; (c) any finder’s fee, brokerage commission of other such obligation
payable or alleged to be payable in respect of the transactions contemplated by
this Agreement which arises or is alleged to arise from any agreement, action or
conduct of the Borrower or any of its Affiliates, and/or (d) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not the Lender or its managers, directors, officers, employees,
attorneys or agents are a party thereto; provided that such
indemnity shall not apply to any such losses, claims, damages, liabilities or
related expenses arising from (i) any unexcused breach by the Lender of any of
its obligations under this Agreement, (ii) the willful misconduct or gross
negligence of the Lender as determined by a final, non-appealable judgment of a
court of competent jurisdiction, or (iii) the breach of any commitment or legal
obligation of the Lender to any Person other than the Borrower or its
Affiliates, provided that such
breach is determined pursuant to a final and non-appealable decision of a court
of competent jurisdiction.  The foregoing indemnity shall remain
operative and in full force and effect regardless of the expiration or any
termination of this Agreement, the consummation of the transactions contemplated
by this Agreement, the repayment of the Loans, the invalidity or
unenforceability of any term or provision of any Loan Document, any
investigation made by or on behalf of the Lender, and the content or accuracy of
any representation or warranty made by the Borrower or any Subsidiary in any
Loan Document.  All amounts due under this Section 9.02 shall be
payable on written demand therefor.

     

    
      
        
        

      

      
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    Section
9.03.  Governing Law.  This Agreement and the other
Loan Documents shall (irrespective of where same are executed and delivered) be
governed by and construed in accordance with the laws of the State of New York
(without giving effect to principles of conflicts of laws other than Sections
5-1401 and 5-1402 of the New York General Obligations Law).

     

    Section
9.04.  Waiver and Amendment.  Neither any
modification or waiver of any provision of this Agreement, the Revolving Credit
Note, or any other Loan Document, nor any consent to any departure by the
Borrower or any Subsidiary therefrom, shall in any event be effective unless the
same shall be set forth in writing duly signed or acknowledged by the Lender and
all parties to such Loan Document, and then such waiver or consent shall be
effective only in the specific instance, and for the specific purpose, for which
given.  No notice to or demand on the Borrower in any instance shall
entitle the Borrower to any other or future notice or demand in the same,
similar or other circumstances.

     

    Section
9.05.  Reservation of Remedies.  Neither any failure
nor any delay on the part of the Lender in exercising any right, power or
privilege hereunder or under the Revolving Credit Note or any other Loan
Document shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or future exercise, or the exercise of any
other right, power or privilege.

     

    Section
9.06.  Notices.  All notices, requests, demands and
other communications under or in respect of this Agreement or any transactions
hereunder shall be in writing (which may include telecopied communication) and
shall be personally delivered or mailed (by prepaid registered or certified
mail, return receipt requested), sent by prepaid recognized overnight courier
service, or telecopied by facsimile transmission to the applicable party at its
address or telecopier number indicated below.

     

    If to the
Lender:

     

    ComVest
Capital, LLC

    CityPlace
Tower

    525
Okeechobee Blvd., Suite 1050

    West Palm
Beach, Florida 33401

    Attention:
Chief Financial Officer

    Telecopier:
(212) 829-5986

     

    with a
copy to:

     

    Greenberg
Traurig, LLP

    200 Park
Avenue

    New York,
New York  10166

    Attention:  Shahe
Sinanian, Esq.

    Telecopier:
(212) 801-6400

     

    
      
        
        

      

      
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    If to the
Borrower:

     

    ClearPoint
Business Resources, Inc.

    1600
Manor Drive, Suite 110

    Chalfont,
Pennsylvania 18914

    Attention:
Chief Executive Officer

    Telecopier:
(215) 997-7711

     

    with
copies to:

     

    ClearPoint
Business Resources, Inc.

    1600
Manor Drive, Suite 110

    Chalfont,
Pennsylvania 18914

    Attention:  John
G. Phillips, Chief Financial Officer

    Telecopier:
(215) 997-7711

     

    Blank
Rome LLP

    One Logan
Square

    Philadelphia,
PA 19103

    Attention:  Alan
L. Zeiger, Esq.

    Telecopier:  (215)
569-5754

     

    or, as to
each party, at such other address or telecopier number as shall be designated by
such party in a written notice to the other party delivered as
aforesaid.  All such notices, requests, demands and other
communications shall be deemed given (a) when personally delivered, (b) three
(3) Business Days after being deposited in the mails with postage prepaid (by
registered or certified mail, return receipt requested), (c) one (1) Business
Day after being delivered to the nationally recognized overnight courier service
addressed as aforesaid and with all charges prepaid or billed to the account of
the sender, or (d) when sent by facsimile transmission to a telecopier number
designated by such addressee.

     

    Section
9.07.  Binding Effect.  This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that the Borrower shall not assign any
of its rights or obligations hereunder without the prior written consent of the
Lender.

     

    Section
9.08.  Consent to Jurisdiction; Waiver of Jury
Trial.  The Borrower hereby consents to the jurisdiction of all
courts of the State of New York and the United States District Court for the
Southern District of New York, as well as to the jurisdiction of all courts from
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of or with respect to this Agreement, any
other Loan Document, any other agreements, instruments, certificates or other
documents executed in connection herewith or therewith, or any of the
transactions contemplated hereby or thereby, or any of the Borrower’s or any
Subsidiary’s obligations hereunder or thereunder.  The Borrower hereby
waives the right to interpose any counterclaims (other than compulsory
counterclaims) in any action brought by the Lender hereunder or in respect of
any other Loan Document, provided that this waiver shall not preclude the
Borrower from pursuing any such claims by means of separate
proceedings.  THE BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL
OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS, AND ALSO WAIVES
TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.  The Lender may
file a copy of this Agreement as evidence of the foregoing waiver of right to
jury trial.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    Section
9.09.  Certain Waivers.  The Borrower and the Lender
each hereby waives any claims for special, consequential or punitive damages in
any way arising out of or relating to this Agreement, any of the other Loan
Documents, or any breach hereof or thereof.

     

    Section
9.10.  Severability.  If any provision of this
Agreement is held by a court of competent jurisdiction to be invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed modified only
to the extent necessary to render same valid, or not applicable to given
circumstances, or excised from this Agreement, as the situation may require, and
this Agreement shall be construed and enforced as if such provision had been
included herein as so modified in scope or application, or had not been included
herein, as the case may be.

     

    Section
9.11.  Captions.  The Article and Section headings in
this Agreement are included herein for convenience of reference only, and shall
not affect the construction or interpretation of any provision of this
Agreement.

     

    Section
9.12.  Sole and Entire Agreement.  This Agreement,
the Revolving Credit Note, the other Loan Documents, and the other agreements,
instruments, certificates and documents referred to or described herein and
therein constitute the sole and entire agreement and understanding between the
parties hereto as to the subject matter hereof, and supersede all prior
discussions, agreements and understandings of every kind and nature between the
parties as to such subject matter.

     

    Section
9.13.  Confidentiality.  The Lender shall not
disclose any Confidential Information to any Person without the prior consent of
the Borrower; provided, however, that nothing
herein contained shall limit any disclosure of the tax structure of the
transactions contemplated hereby, or the disclosure of any information (a) to
the extent required by statute, rule, regulation or judicial process, (b) to
counsel, accountants and other professional advisors for the Lender, (c) to bank
examiners, auditors, accountants or, if required by law, any regulatory
authority, (d) to the officers, partners, managers, directors, employees, agents
and advisors (including independent auditors and counsel) of the Lender, (e) in
connection with any litigation which relates to this Agreement to which the
Lender is a party, (f) to a subsidiary or Affiliate of the Lender, or (g) to any
assignee or participant (or prospective assignee or participant) which agrees to
be bound by this Section 9.13, and further provided, that in no
event shall the Lender be obligated or required to return any materials
furnished by the Borrower.  The obligations of the Lender under this
Section 9.13 shall supersede and replace the obligations of the Lender under any
confidentiality letter in respect of this financing previously signed and
delivered by the Lender to the Borrower.

     

    Section
9.14.  Counterparts; Fax Signatures.  This Agreement
may be executed in any number of counterparts, all of which shall constitute one
and the same agreement.  This Agreement may be executed by fax and/or
PDF signatures, each of which shall be fully binding on the signing
party.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    Section
9.15.  Effect on Other Loan Documents.  From and
after the Closing Date, (a) this Agreement shall amend, modify and supersede the
Original Agreement in its entirety, provided that this Agreement shall not
revoke any transactions effected under the Original Agreement or effect a
novation of any Obligations outstanding under the Original Agreement, (b) all
references to the “Loan Agreement” in the various Loan Documents shall be deemed
to refer to this Agreement, (c) all references to the “Revolving Credit Note” or
the “Note” or “Notes” contained in the various Loan Documents shall mean and
refer to the Amended and Restated Revolving Credit Note issued pursuant to this
Agreement, and (d) all references to the “Warrant” contained in the various Loan
Documents shall mean and refer to the Warrant issued pursuant to this
Agreement.

     

    

     

    [Remainder
of page intentionally blank]

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their duly
authorized officer as of the day and year first written above.

     

    
      
        	 	COMVEST CAPITAL,
      LLC	 
	 	By:  	ComVest
      Management LLC, its Manager	 
	 	 	 	 
	
              	
                By:
      

              	/s/
      Gary E. Jaggard	 
	 	 	Name:
      Gary E. Jaggard	 
	 	 	Title:
      Managing Director	 

      

    

     

    
      
         

        
          
            	 	CLEARPOINT BUSINESS RESOURCES,
      INC.	 
	 	 	 	 
	
                  	
                    By:
      

                  	/s/
      Michael D. Traina	 
	 	 	Name:
      Michael D. Traina	 
	 	 	tle:
      Chairman and Chief Executive Officer	 

          

        

      

    

    

    
      
        
        

      

      
        50Unassociated Document

    Exhibit
10.2

     

                        August 14,
2009

     

    ClearPoint
Business Resources, Inc.

    1600
Manor Drive, Suite 110

    Chalfont,
PA  18914

    

    Re:  Waiver
Letter

     

    Dear
Sirs:

     

    Reference
is made to (a) the Revolving Credit and Term Loan Agreement dated as of June 20,
2008 (the “Original
Agreement”) by and between ComVest Capital, LLC (the “Lender”) and
ClearPoint Business Resources, Inc. (the “Borrower”), and (b)
the Amended and Restated Revolving Credit Agreement (the “Amended Agreement”)
being executed and delivered by the Lender and the Borrower on the date
hereof.

    

    On the
date hereof, prior to giving effect to the transactions contemplated by the
Amended Agreement, there exist Events of Default under the Original Agreement
consisting of the failure to pay certain principal installments required under
the Term Note (as amended) issued pursuant to the Original Agreement, failure to
make interest payments which were due and owing under the Original Agreement on
August 1, 2009 and the other Events of Default listed on Exhibit A attached
hereto (collectively, the “Existing Events of
Default”).

     

    Subject
to the consummation of the transactions contemplated by the Amended Agreement
(including the payment in full of the Term Note out of the proceeds of the
initial Advance pursuant to the Amended Agreement), the Lender hereby waives the
Existing Events of Default, provided that the
Borrower hereby agrees to pay to the Lender, on March 31, 2010 (or sooner by
reason of any further Event of Default), (a) the difference between interest
calculated at the default rate and at the non-default rate under the Term Note
on the outstanding principal balance of the Term Note for the period from March
1, 2009 through the date hereof (the “Default Period”), and
(b) the difference between interest calculated at the default rate and at the
non-default rate under the original Revolving Credit Note on the outstanding
principal balance of the Advances (as defined in the Original Agreement) from
time to time during the Default Period.

     

    Such
payments shall be in addition to the outstanding principal balance of the Term
Note, and all unpaid accrued interest under the Term Note at the non-default
rate through the date hereof, which are payable out of the initial Advance
pursuant to the Amended Agreement.

     

    Except
for the Existing Events of Default, no other waiver is granted hereby, and the
granting of the within waiver in respect of the Existing Events of Default shall
not be construed or implied to mean that any waiver of any other or further
Event of Default (whether of like or unlike nature) will be granted at any other
time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Borrower
acknowledges and agrees that all representations and warranties set forth in the
Amended Agreement executed and delivered on the date hereof are true and correct
in all respects on and as of such date.

     

    By its
countersignature below, the Borrower hereby acknowledges and agrees to the
foregoing..

    

    
      
        
          	
                  Very
      truly yours,

                
	 
      
	
                  COMVEST
      CAPITAL, LLC

                
	 
      	 
      
	
                  By:

                	
                  /s/ Gary E. Jaggard

                
	 
      	
                  Name:
      Gary E. Jaggard

                
	 
      	
                  Title:  Managing
      Director

                

        

      

      Acknowledged,
Confirmed and Agreed To:

    

    

    
      
        
          	
                  CLEARPOINT
      BUSINESS RESOURCES, INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/ Michael Traina

                
	 
      	
                  Name:  Michael
      Traina

                
	 
      	
                  Title:  CEO

                

        

      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      EXHIBIT
A

    

    

    
      ADDITIONAL
EVENTS OF DEFAULT

    

    

    1.           Various
Events of Default arising under Section 7.01(e) of the Original Agreement (and
arising under any other applicable section of the Original Agreement) as a
result of Borrower’s default with respect to Indebtedness for borrowed money
owing to: (a) Fergco Bros pursuant to and in connection with certain promissory
notes executed by Borrower; (b)  Allison Drew pursuant to and in
connection with certain promissory notes executed by Borrower; (c) B&N
Associates pursuant to and in connection with certain promissory notes executed
by Borrower; (d) Matt Kingfield pursuant to and in connection with certain
promissory notes executed by Borrower; (e)
Staffbridge pursuant to and in connection with certain promissory notes executed
by Borrower; and (f) Blue Lake Rancheria pursuant to and in connection
with certain promissory notes executed by Borrower.

    

    2.           Any
Events of Default arising under Section 7.01(a) of the Original Agreement as a
result of Borrower failing to disclose any information required to be disclosed
by Sections 3.13 and 3.04 thereof, but only to the extent that any such
information not disclosed is disclosed in the Disclosure Schedules delivered in
connection with the Amended Agreement.

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