Document:

Unassociated Document

    Exhibit
10.1

     

    SECOND
FORBEARANCE AGREEMENT

     

    THIS SECOND FORBEARANCE AGREEMENT (this
“Agreement”) is made and entered into as of April
20, 2009, by and among, BUTLER SERVICE GROUP, INC., a New Jersey corporation
(“Borrower”), the other Credit Parties signatory
hereto, the Lenders signatory hereto and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (“GECC”), as Lender and as administrative
agent for the Lenders (in such capacity, the “Agent”) under the Credit Agreement (as
hereinafter defined).

     

    RECITALS

     

               WHEREAS, Borrower, the other Credit
Parties, Lenders and Agent are party to that certain Third Amended and Restated
Credit Agreement, dated as of August 29, 2007 (as amended to date, the
“Credit
Agreement”; capitalized
terms used herein and not defined herein shall have the meanings assigned to
them in the Credit Agreement), pursuant to which the Lenders have made available
to Borrower a revolving loan and other extensions of credit (including letters
of credit) in the original maximum principal amount of $45,000,000;
and

     

               WHEREAS, Borrower, the other Credit
Parties, Lenders and Agent entered into a Forbearance Agreement, dated as of
March 20, 2009 (the “Prior
Forbearance Agreement”),
pursuant to which Lenders and Agent, inter
alia, agreed to forbear
from exercising their rights and remedies with respect to certain ongoing
Defaults and Events of Default; and

     

               WHEREAS, on the date hereof, the
aggregate outstanding principal balance of the Revolving Loan is $14,612,212.39;
and

     

               WHEREAS, Events of Default have occurred
and are continuing under Sections
8.1(b), 8.1(c), 8.1(d), 8.1(e), 8.1(f) and 8.1(l) of the Credit Agreement arising out of
(a) Borrower’s failure to comply with the minimum Borrowing Availability
covenant set forth in clause
(d) of Annex
G of the Credit Agreement
for each of the August 1, 2008, August 15, 2008 and September 12, 2008, February
6, 2009, March 6, 2009, March 13, 2009, March 20, 2009, March 27, 2009, April 3,
2009 and April 17, 2009 testing dates as required to be maintained pursuant to
Section
6.10 of the Credit
Agreement, (b) Borrower’s delivery of a Borrowing Base Certificate to Agent on
July 22, 2008 which contained certain information which was untrue or incorrect,
(c) Borrower’s failure to promptly pay and discharge all Charges payable by it
as required by Section
5.2(a) of the Credit
Agreement, (d) Borrower’s failure to deliver to Agent the financial and other
information (other than Borrower’s 10-Q for the Fiscal Quarter ended September
30, 2007) required by Section
4.1(a) and clause
(r) of Annex
E of the Credit Agreement
to be delivered on or prior to September 15, 2008, (e) Borrower’s failure to
deliver to Agent the financial and other information required by Section
4.1(a) and clause
(a) of Annex
E of the Credit Agreement
for the Fiscal Month ended on September 28, 2008 to be delivered on or prior to
October 28, 2008, (f) Borrower’s failure to deliver to Agent the financial and
other information required by Section
4.1(a) and clause
(b) of Annex
E of the Credit Agreement
for the Fiscal Month ended on September 28, 2008 to be delivered on or prior to
November 12, 2008, (g) Borrower’s failure to comply with Section
6.1 of the Credit
Agreement, (h) Borrower’s failure to comply with Section
6.20 of the Second Lien
Credit Agreement, (i) Borrower’s failure to comply with Section
4(f) of that certain
Seventh Amendment to Second Lien Credit Agreement dated as of December 31, 2008,
(j) Borrower’s failure to comply with those certain Side Letters, dated as of
December 23, 2008 and January 15, 2009, respectively, by and among Agent and the
Credit Parties, by failing to enter into definitive purchase or financing
agreement for an asset sale or refinancing by not later than March 1, 2009, and
(k) a Change of Control having occurred under Section
8.1(l) of the Credit
Agreement (collectively, the “Existing
Events of Default”);
and

     

    
      
        
        

      

      
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               WHEREAS, as a result of the occurrence
and continuance of the Existing Events of Default, Agent has the right to demand
immediate payment of all of the Obligations, to make demand upon Guarantors for
the payment of all of the Obligations and to exercise any and all rights and
remedies available to Agent and the Lenders at law, in equity or by agreement
(including, without limitation, pursuant to the Security Agreements and the
other Loan Documents) (collectively, “Rights and
Remedies”);
and

     

               WHEREAS, Borrower recognizes the
occurrence and continuance of the Existing Events of Default;
and

     

               WHEREAS, the Prior Forbearance Agreement
has expired under its own terms as of the date hereof; and

     

               WHEREAS, Borrower and Guarantors have
each requested that Agent on behalf of Lenders continue to forbear from the
exercise of Agent’s and Lenders’ Rights and Remedies available under the Credit
Agreement as a result of the occurrence of the Existing Events of Default;
and

     

    WHEREAS, Agent and Requisite Lenders are
willing to grant such forbearance upon the terms and subject to the conditions
and limitations set forth herein.

     

    NOW, THEREFORE, in consideration of the
foregoing premises and the agreements and undertakings contained herein, for
$10.00, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:

    

    1.           Acknowledgments
by the Credit Parties.  Borrower and each of the
Credit Parties acknowledges and agrees as follows:

     

    (a)           Acknowledgment
of Default.  That
on and as of the Effective Date (as defined below): (i) Events of Default exist
and continue to exist, including, without limitation, the Existing Events of
Default; (ii) timely, adequate and proper notice (notwithstanding that such
notice is not required under Section
8.2 of the Credit
Agreement) of the occurrence of the Existing Events of Default has been received
by Borrower and Guarantors from Agent (and Borrower waives any requirement that
any such notice be in writing); (iii) all grace periods, if any, applicable to
the cure of such Existing Events of Default after receipt of such notice have
expired; (iv) each of said Events of Default was and is continuing without
timely cure by the Borrower or Guarantors; and (v) Agent and Lenders have not
waived in any respect any or all of such Events of Default or their respective
Rights and Remedies with respect thereto.

     

    (b)           Acknowledgment
of Right of Acceleration.  That (i) on and as of the
Effective Date, the Revolving Loan and all accrued and unpaid interest thereon,
together with other outstanding charges permissible under the Credit Agreement,
are due and payable in full, and Agent has the right to accelerate and declare
all Obligations to be immediately due and payable and to make demand upon
Borrower and Guarantors for the payment in full of all Obligations; (ii) such
acceleration and demand for payment is in all respects adequate and proper;
(iii) that Agent on its own behalf, or on behalf of the Lenders, has the right
to exercise all other rights and remedies permitted under the Loan Documents;
and (iv) Borrower waives any and all further notice, presentment, notice of
dishonor or demand with respect to the Obligations.

     

    
      
        
        

      

      
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    (c)           Acknowledgment
of Obligations.  That on and as of the
Effective Date, (i) Borrower is indebted to Lenders in the amount set forth in
the recitals to this Agreement, plus costs and fees payable pursuant to and in
accordance with the Credit Agreement; (ii) all such amounts are due and payable
in full, without offset, deduction or counterclaim of any kind or character
whatsoever, but are subject to increase, decrease or other adjustment as a
result of any and all interest, fees and other charges including, without
limitation, attorneys’ fees and costs of collection, which are payable to Agent
and Lenders under the Credit Agreement and the other Loan Documents; and (iii)
Agent’s liens and security interests in the Collateral are fully enforceable,
non-avoidable and of first priority status (provided, that with respect to the Montvale
Property Agent’s liens and security interests are of second priority status
subject only to the lien of the Second Lien Agent).

     

    (d)           Acknowledgment
that Liabilities Continue in Full Force and Effect.  That the Credit Agreement,
the other Loan Documents, and all other respective liabilities and obligations
of Borrower to Agent and Lenders shall, except as expressly modified herein,
remain in full force and effect, and shall not be released, impaired, diminished
or in any other way modified or amended as a result of the execution and
delivery of this Agreement or by the agreements and undertakings of the parties
contained herein.

     

    2.           Agreement to
Forbear.

     

    (a)           For the period (the “Forbearance
Period”) beginning as of
the date first above written and ending on the earlier to occur of (a) 5:00
p.m., New York time, on April 27, 2009, and (b) termination of this
forbearance as provided herein, Agent and Lenders, without waiving, curing or
ceasing the continuance of the Existing Events of Default, hereby agree to
forbear from the exercise of any of their Rights and Remedies available under
the Credit Agreement and the Loan Documents on account of the Existing Events of
Default.  Neither Agent nor Lenders shall have any obligation to make
any Loans, issue, extend or renew, and Borrower shall not request the issuance,
extension or renewal of, any Letters of Credit or otherwise extend credit to
Borrower under the Credit Agreement during the Forbearance
Period.  Lenders have considered and will continue to consider during
the Forbearance Period, in their sole discretion, whether to honor borrowing
requests or requests for issuances of Letters of Credit which shall, in any
case, be made pursuant to and in compliance with the Budget (as hereinafter
defined).  Any past or future Loans to, or issuances of Letters of
Credit for the account of, Borrower should not be considered an agreement,
express or implied, on the part of Lenders to make any additional Loans or to
issue any additional Letters of Credit or an agreement to waive any terms of the
Credit Agreement in the future, including, without limitation, the satisfaction
of conditions precedent to funding.  Agent’s and Lenders’ forbearance
provided for herein shall be effective only with respect to the Existing Events
of Default and shall terminate and cease to be of force and effect, and Agent
and Lenders may exercise all of their respective rights and remedies as may be
available under the Credit Agreement and under applicable law, in Agent’s
discretion by a written notice to Borrower upon or after the occurrence of any
other Default or Event of Default under the Credit Agreement or any Loan
Document (other than the Existing Events of Default) or a Default or Event of
Default under the terms of this Agreement (individually a “Forbearance
Default” and, collectively,
the “Forbearance
Defaults”).

     

    (b)           During the Forbearance Period, and
provided Agent has not elected to terminate the Forbearance Period following the
occurrence of a Forbearance Default in its discretion in accordance with the
last sentence of Section
2(a) of this Agreement and
that the terms and conditions of this Agreement are otherwise satisfied, Agent
and Lenders agree that Agent shall not accelerate, nor shall Lenders direct
Agent to accelerate, the Obligations owed to Lenders under the Credit Agreement
or otherwise exercise any of their rights and remedies, in each case, as a
result of the Existing Events of Default outlined herein.

     

    
      
        
        

      

      
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    (c)           Each of the parties hereto agree that
any making of Loans or issuances of additional Letters of Credit in the Lenders’
discretion as described in Section
2(a) of this Agreement,
whether now or at any time in the future, shall constitute Obligations under the
Credit Agreement and Overadvances made under Section
1.1(a)(iii) of the Credit
Agreement to protect and preserve the Collateral and the interests of the
Lenders.

     

    3.           Covenants.

     

    (a)           From and after the date of this
Agreement, the Borrower agrees to expend funds solely in accordance with a
budget attached to this Agreement as Exhibit
A (the “Budget”).  Under no circumstances
will the Borrower exceed the total budgeted amount or the amounts of any
expenditures contained in the Budget, except as authorized in writing by
Agent.  The Borrower may amend the Budget, provided that the Budget,
as so amended, has been previously approved by Agent in
writing.

     

    (b)           Borrower and each other Credit Party
agrees to provide to Agent such resolutions and such other documents,
instruments and agreements as Agent may reasonably request.

     

    (c)           Each Credit Party covenants and agrees
that it will continue to pay all Charges in accordance with Section
5.2 of the Credit Agreement
from and after the Effective Date, and that such Credit Party will not permit
the aggregate amount of liabilities of the Borrower and the other Credit Parties
for unpaid payroll taxes arising out of payroll paid prior to the date set forth
as the “last payroll payment date” in any Borrower certification to Agent or any
Lender as to the amount of outstanding payroll taxes to exceed $656,888.75.

     

    (d)           The Borrower shall deliver to Agent, on
a weekly basis no later than 9:00 a.m. (New York time) on each Tuesday, a variance
report setting forth the actual receipts and disbursements to the Budget for
such week and a comparison to the actual receipts and disbursements to the
Budget for the prior week.

     

    (e)           The Borrower acknowledges and agrees
that on or prior to the Effective Date Overadvances have occurred and that
non-refundable fees have accrued and are outstanding in the aggregate amount of
$1,900,000 in accordance with Section
1.9(e) of the Credit
Agreement (such fees, collectively, the “Overadvance
Fee”).  Notwithstanding the
requirements of Section
1.9(e) of the Credit
Agreement, Agent agrees that such Overadvance Fee shall be payable, and Borrower
covenants and agrees that it will pay the Overadvance Fee, on the Commitment
Termination Date.

     

    4.           Representations
and Warranties.  The Borrower and each other
Credit Party represents and warrants to Agent and Lenders that: (i) it has had
the opportunity to consult with counsel, and has been fully advised by legal
counsel of its rights and responsibilities under this Agreement and of the legal
effect hereof; (ii) it has read and fully understands the contents of this
Agreement, and each has freely and voluntarily executed this Agreement; (iii) it
is sophisticated and knowledgeable in financial matters, both generally and with
respect to transactions of the type described in the Loan Documents and the
modification to these transactions to be effected by this Agreement and the
documents, instruments and transactions contemplated thereby; (iv) it has
received and has independently reviewed and evaluated a copy of this Agreement
and all other documents and instruments executed or delivered in connection
therewith, and fully understand the transactions contemplated thereby; (v) it
has made such independent review and evaluation, as well as all other decisions
pertaining to the execution and delivery of this Agreement, without any reliance
upon any oral or written representation, warranty, advice or analysis of any
kind whatsoever from the Released Parties (as defined below), however obtained;
(vi) it has determined, following such independent review and evaluation, that
the benefits of the transactions contemplated by this Agreement are direct and
substantial; (vii) the individual signing this Agreement on behalf of the
Borrower and each other Credit Party is duly authorized and fully empowered to
do so; (viii) the consideration flowing to Borrower and each other Credit Party
under this Agreement is in all respects substantial and sufficient; (ix) this
Agreement has been duly and validly executed and delivered by the Borrower and
each other Credit Party and is the valid and legally binding obligation of the
Borrower, enforceable in accordance with its terms, (x) Agent and Lenders are
authorized to discuss financial and other matters related to the Borrower and
each other Credit Party, (xi) the Borrower and each other Credit Party hereby
restates and renews each and every representation and warranty heretofore made
by it in the Credit Agreement and the other Loan Documents as fully as if made
on the Closing Date and with specific reference to this Agreement and all other
Loan Documents executed and/or delivered in connection herewith, but excluding
therefrom the effect of the Existing Events of Default, and (xii) as of
April 20, 2009,
the aggregate amount of
liabilities of the Borrower and the other Credit Parties for unpaid payroll
taxes equals $656,888.75, consisting of (i) $619,227.51 in liabilities for unpaid payroll taxes
arising out of payroll paid prior to April 20, 2009, and (ii) $37,661.24 in liabilities for unpaid payroll taxes
arising out of payroll paid on April 17, 2009.

     

    
      
        
        

      

      
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    5.           No
Novation.  Nothing in this Agreement
shall be construed to constitute a novation of the Notes or any other
Obligations arising under the Loan Documents, related to any of the Notes, or to
release, satisfy, discharge or otherwise affect or impair in any manner
whatsoever: (i) the validity or enforceability of the Notes or any other
Obligations arising under the Credit Agreement or any other Loan Document; (ii)
the charges, liens, pledges, security interests, assignments and conveyances
effected by any agreement securing the Obligations arising under the Credit
Agreement or any other Loan Document, or the priority thereof; (iii) the
liability of Guarantors and Borrower under the Credit Agreement and all other
Loan Documents or any other person that may now or hereafter be liable under the
Credit Agreement and the other Loan Documents or any agreement securing the
same; and (iv) any other security or instrument now or hereafter held by Agent
as security for or as evidence of any of the above described
indebtedness.  Without limiting the foregoing, the parties agree that
Agent and Lenders hereby reserve any and all legal rights and remedies available
to them at law, in equity, under the Credit Agreement and the Loan
Documents.

     

    6.           Strict
Compliance.  As a
result of Agent and Lenders’ current and prior accommodations to Borrower, to
ensure that there is no misunderstanding and to provide Borrower with reasonable
notice that Agent and Lenders intend to rely on the exact terms of the Credit
Agreement, as amended, Borrower is hereby notified that Agent and Lenders will
insist on strict compliance with the Credit Agreement, except as otherwise
provided herein.

     

    7.           Outstanding
Obligations; Release.

     

    (a)           Each of Borrower and the other Credit
Parties hereby acknowledges and agrees that as of April 20, 2009, the aggregate
outstanding principal amount of the Revolving Loan is $14,612,212.39 (of which
$1,969,515.95 constitutes the aggregate outstanding Letters of Credit
Obligations), and that such principal amounts are payable pursuant to the Credit
Agreement without defense, offset, withholding, counterclaim or deduction of any
kind.  Borrower, on behalf of itself and the other Credit Parties
hereby releases, acquits, forever discharges and covenants not to sue GECC,
Agent or any of the Lenders, and each and every past and present subsidiary,
affiliate, stockholder, officer, director, agent, servant, employee,
representative, and attorney of GECC, Agent and each Lender (collectively, the
“Released
Parties”), from or for any
and all claims, causes of action, suits, debts, liens, obligations, liabilities,
demands, losses, costs and expenses (including attorneys’ fees) of any kind,
character or nature whatsoever, known or unknown, fixed or contingent, which any
Borrower or any other Credit Party may have or claim to have now arising out of
or connected with any act of commission or omission of GECC, Agent or any of the
Lenders existing or occurring prior to the Effective Date or any instrument
executed prior to the Effective Date including, without limitation, any claims,
liabilities or obligations arising with respect to the Obligations evidenced by
the Credit Agreement, the Loans or any of the Loan Documents.  The
provisions of this Agreement shall be binding upon the Borrower and each other
Credit Party shall inure to the benefit of GECC, Agent and each of the Lenders,
and shall likewise be binding upon the Borrower’s and each other Credit Party’s
respective heirs, executors, administrators, successors and
assigns.

     

    
      
        
        

      

      
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    (b)           Each Credit Party that is a signatory
hereto shall jointly and severally indemnify and hold harmless each of GECC,
Agent, Lenders and their respective Affiliates, and each such Person’s
respective officers, directors, employees, attorneys, agents and representatives
(each, an “Indemnified
Party”), from and against
any and all suits, actions, proceedings, claims, damages, losses, liabilities
and expenses (including reasonable attorneys’ fees and disbursements and other
costs of investigation or defense, including those incurred upon any appeal)
that may be instituted or asserted against or incurred by any such Indemnified
Person as the result of credit having been extended, suspended or terminated
under the Credit Agreement, this Agreement or any other Loan Document and the
administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including but not limited to, the enforcement of
Agent and Lenders’ rights and remedies under this Agreement, and any other
instruments or documents delivered in connection with this Agreement and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to this
Agreement or any of the Loan Documents; provided, that no such Credit Party shall be
liable for any indemnification to an Indemnified Party to the extent that any
such suit, action, proceeding, claim, damage, loss, liability or expense results
from that  Indemnified Party’s gross negligence or willful
misconduct.  To the extent that the undertaking to indemnify set forth
in this paragraph may be unenforceable because it violates any law or public
policy, Borrower, on behalf of itself and the other Credit Parties shall satisfy
such undertaking to the maximum extent permitted by law.  Any
liability, obligation, loss, damage, penalty, cost or expense covered by this
indemnity shall be paid to each Indemnified Party upon demand, and, failing
prompt payment, shall, together with interest thereon at the Default Rate from
the date incurred by each Indemnified Party until paid, be added to the
Obligations of the Borrower and be secured by the Collateral, within the meaning
of the Agreement.  The provisions of this section shall survive the
satisfaction and payment of the other Obligations, the termination of any
additional funding by Lenders and the termination of this
Agreement.

     

    8.           Receipt and
Application of Payments.  Borrower acknowledges and
agrees that Agent shall be entitled during the term of this Agreement to accept
such payments and proceeds as are remitted pursuant to any provision of the Loan
Documents or this Agreement, that Agent shall be entitled to apply any and all
such proceeds and payments against the liabilities and obligations owed by
Borrower and Guarantors to Agent and Lenders in such order of application as
Agent in its sole and absolute discretion shall determine proper, and that the
acceptance by Agent of any such proceeds and payments as are remitted pursuant
to the Loan Documents or this Agreement or otherwise shall in no way affect or
impair the status of the Obligations owed to Agent and Lenders by the Borrower
or Guarantors or be deemed to be a waiver of any Event of Default or any
acquiescence therein.

     

    
      
        
        

      

      
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    9.           Events of
Default.

     

    The following shall constitute Events of
Default under this Agreement:

     

    (a)           The Borrower expends any funds in any
manner inconsistent with the Budget.

     

    (b)           The Borrower or any other Credit Party
violates any covenant, representation or warranty under this
Agreement.

     

    (c)           The Borrower or any other Credit Party
violates any covenant, representation or warranty under the Credit Agreement or
any other Loan Document.

     

    (d)           The commencement by Second Lien
Collateral Agent of a Standstill Period (as such terms are defined in the
Intercreditor Agreement).

     

    (e)           The commencement by the Second Lien
Agent or any Second Lien Claimholder (as such term is defined in the
Intercreditor Agreement) of any case, action, claim, lawsuit, demand,
investigation or other  proceeding against any of the Credit Parties
(including without limitation the commencement of an Insolvency or Liquidation
Proceeding (as such terms are defined in the Intercreditor Agreement) against
any of the Credit Parties), or the taking of any action by the Second Lien Agent
or any Second Lien Claimholder in a manner inconsistent with, or in violation
of, the Intercreditor Agreement.

     

    (f)           Any Event of Default under the Credit
Agreement other than an Existing Event of Default shall
occur.

     

    In the event any such Event of Default
under this Agreement exists, in Agent’s sole discretion and upon written notice
to the Borrower by Agent, Borrower’s right to any funding under the Credit
Agreement shall terminate immediately.  The provisions of Section
7 of this Agreement shall
survive an Event of Default under this Agreement.

     

    10.           Effectiveness.  This Agreement shall become
effective as of April 20, 2009 (the “Effective
Date”) only upon Agent’s
receipt of four (4) fully-executed copies of this Agreement, duly executed and
delivered by Agent, Requisite Lenders, Borrower and each other Credit
Party.

     

    11.           Miscellaneous.

     

    (a)           Retention of
Consultant.  The
Borrower has previously retained and, unless otherwise agreed to by Agent in its
sole discretion, covenants and agrees to continue to retain the services of RAS
Management, Inc. (the “Consultant”) to (i) market the Borrower’s assets,
including all real and personal property, for sale in a manner acceptable to
Agent in its reasonable discretion, (ii) effectuate the sale of the Borrower’s
property in a manner reasonably acceptable to Agent in its sole discretion, and
(iii) provide Agent with information including, without limitation, information
concerning offers, proceeds of sales, and other items concerning the Borrower’s
assets as Agent shall request from time to time.  Each of the Credit
Parties irrevocably authorize, and shall cause, the Consultant to (x) disclose
to Agent and Lenders the nature or content of any oral or written communication
prepared by the Consultant or any information gained from the inspection of any
record or document of such Credit Party by the Consultant and (y) communicate
with Agent and Lenders concerning, and disclose fully and promptly to Agent and
the Lenders and their respective representatives, all developments in connection
with the efforts of the Credit Parties and the Consultant described
herein.

     

    
      
        
        

      

      
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    (b)           Entire
Agreement; Amendments.  This Agreement reflects the
entire understanding of the parties with respect to the subject matter herein
contained and supersedes any prior agreements, whether written or oral, in
regard thereto.  This Agreement may not be amended or modified and the
Forbearance Period extended unless agreed to in writing executed by all parties
signatory to this Agreement or as may otherwise be provided for under the terms
of the Credit Agreement and the other Loan Documents.  This Agreement
shall constitute a Loan Document for all purposes under the Credit
Agreement.

     

    (c)           Full Force
and Effect.  Except as expressly
modified herein, all terms of the Loan Documents, including the Credit Agreement
and Guaranties, shall be and shall remain in full force and effect and shall
constitute the legal, valid, binding and enforceable obligations of Borrower and
Guarantors, as applicable, to Agent and Lenders.

     

    (d)           No
Waiver.  This
Agreement is not intended to operate as, and shall not be construed as, a waiver
of any Event of Default, including the Existing Events of Default, whether known
or unknown to Agent or Lenders, as to which all rights of Agent and Lenders,
including all rights of foreclosure, shall remain reserved.

     

    (e)           GOVERNING
LAW.  THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

     

    (f)           WAIVER OF
RIGHT TO JURY TRIAL.  THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT,
LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS
AGREEMENT.

     

    (g)           Counterparts.  This Agreement may be
executed in multiple counterparts, each of which shall be an original and all of
which, taken together, shall constitute but one and the same agreement among the
parties.

     

    (h)           Binding
Nature.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

     

    (i)           Captions.  The captions to the
Sections and paragraphs of the Agreement are for the convenience of the parties
only, and are not a part of this Agreement.

     

    (j)           Time of the
Essence.  Time is
of the essence under this Agreement.

     

    (k)           No
Third-Party Beneficiaries.  The parties agree that no
such third-party beneficiaries are intended under this Agreement, and, except as
expressly set forth herein, nothing in this Agreement shall create any rights
for or in any person or entity who is not a party to this
Agreement.

     

    
      
        
        

      

      
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    (l)           Notice.  Any notices required to be
provided to Agent shall be served upon:

     

    
                 If to Agent or GECC,
at

    

               General Electric Capital
Corporation

               201 Merritt 7

               P.O. Box 5201

               Norwalk,
CT  06856-5201

               Attention: James
Kaufman

               Telephone No.:  (203)
229-1832

    
                 Telecopier No.:  (203)
567-8200

    

     

    with copies to:

     

               Paul, Hastings, Janofsky & Walker
LLP

               75 E. 55th St.

               New York, NY 10022

               Attention:  Richard
Denhup

               Telephone No.:  (212)
230-5161

    
                 Telecopier No.:  (212)
318-6366

    

    

               General Electric Capital
Corporation

               201 Merritt

               P.O. Box 5201

               Norwalk,
CT  06856-5201

               Attention:  Corporate
Counsel-Commercial Finance

               Telephone No.:  (203)
956-4381

    
                 Telecopier No.:  (203)
956-4259

    

    

    Any notices required to be provided to
the Borrower shall be served upon:

                        

    
                 Butler Service Group,
Inc.

    

               110 Summit Avenue

               Montvale,
NJ  07645

               Attention: Ron
Uyematsu

               Telephone
No.:  310-591-8731

    
                 Telecopier
No.:  201-573-9723

    

     

    with a copy to:

     

    
      
        Moses & Singer
LLP

        The Chrysler Building

        405 Lexington Avenue

        NY, NY 10174-1299

        Attention:  Jeffrey M.
Davis

        Telephone No.: (212)
554-7837

        Telecopier No.: (917)
206-4337

      

    

    
    

     

    IN WITNESS WHEREOF, the parties have
hereunto set their hands effective as of the date first above
written.

     

    [Signature Pages
Follow]

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    BUTLER SERVICE GROUP,
INC., as
Borrower

     

    
      By: /s/ Gerald P. Simone

      Name:
Gerald P. Simone

      Title:
SVP Finance &
Accounting

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    GENERAL ELECTRIC
CAPITAL CORPORATION, as
Agent and Lender

     

    By: /s/ James A.
Kaufman

     

    Name: James A.
Kaufman

    Title:   Duly Authorized
Signatory

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    The following Persons are signatories to
this Amendment in their capacity as Credit Parties and not as
Borrower.

     

    
      	
              BUTLER INTERNATIONAL,
      INC.

              BUTLER SERVICES INTERNATIONAL,
      INC.

              BUTLER TELECOM,
      INC.

              BUTLER PUBLISHING,
      INC.

              BUTLER OF NEW JERSEY REALTY
      CORP.

              BUTLER SERVICES,
      INC.

              BUTLER UTILITY SERVICE,
      INC.

              BUTLER RESOURCES,
      LLC

               

              By:
      /s/ Gerald P. Simone

              Name:
      Gerald P. Simone

              Title:
      SVP Finance & Accounting

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Exhibit
A

    

    Budget

     

     

     

     

     

    13Exhibit 10.1
    

    

    

    
      SETTLEMENT AGREEMENT
    

    
      THIS AGREEMENT made as of the 18th of April, 2009.
    

    
      

      

      BETWEEN:
    

    
      Babak Habibi,
    

    
      (hereinafter “Habibi”)
    

    
      AND:
    

    
      BRAINTECH INC.
    

    
      (hereinafter “Braintech”)
    

    
      AND:
    

    
      BRAINTECH CANADA INC.
    

    
      (hereinafter “Braintech Canada”)
    

    
      (Braintech and Braintech Canada Inc. are collectively referred to as the
      "Company")
    

    
      (Habibi, Braintech and Braintech Canada Inc. are collectively referred
      to as the “Parties”)
    

    
      WHEREAS:
    

    
      A.  Habibi was employed by the Company until February 3, 2009;
    

    
      B.  On February 10, 2009, Habibi commenced an action against the
      Company, Vancouver British Columbia Registry, No. S091003 (the
      "Action"). On March 30, 2009 the Company commenced a complaint in the
      Circuit Court of Fairfax County, Civil Action No. 2009-4696 against
      Habibi (the “Virginia Action”);
    

    
      C.  On February 10, 2009 Habibi obtained a Garnishing Order Before
      Judgment and successfully Garnished $336,045.73 from the Company (the
      “Garnished Funds”);
    

    
      D.  The Garnished Funds were paid into the Supreme Court of British
      Columbia.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 2 -
    

    
      NOW THEREFORE, in consideration of the terms, covenants and
      conditions set out below, and for other good and valuable consideration,
      the receipt and sufficiency of which is hereby acknowledged, the Parties
      agree as follows:
    

    
      1.  PAYMENT OF GARNISHED FUNDS
    

    
      1.1  On the signing of this agreement the Parties shall execute or cause
      to be executed the following documents with respect to the Action:
    

    
             (a)  a consent order for dismissal of the Action in the form
      attached hereto as “Schedule A” (the “Consent Dismissal Order”);
    

    
             (b)  Consent to Pay Out in the form attached hereto as “Schedule
      B”;
    

    
      1.2  Braintech will execute a Consent to Pay Out in the form attached
      hereto as “Schedule C”.
    

    
      1.3  The Company and Habibi will each instruct their solicitor to take
      all necessary steps to ensure that Garnished Funds, in the amount of
      $336,045.73, will be paid out of court with the consent of the Parties
      and paid to Heenan Blaikie in trust for Mr. Habibi and Braintech Inc.
      (“Trust Account”)
    

    
      1.4  Braintech will instruct its solicitor to pay to Braintech
      $86,045.71 CDN from the Trust Account.
    

    
      1.5  Upon execution of this Agreement the Company will instruct its
      United States’ attorneys to take all reasonable steps necessary to fully
      dismiss the Virginia Action on a with prejudice basis.
    

    
      1.6  Upon execution of this Agreement the Parties will instruct their
      Canadian solicitors to take all reasonable steps necessary to fully
      dismiss the Action on a with prejudice basis.
    

    
      1.7  Upon execution of the Agreement, Braintech will instruct its
      solicitor to file and enter the Consent Dismissal Order with the B.C.
      Supreme Court Vancouver Registry and deliver a copy of the filed Consent
      Dismissal Order to Habibi’s solicitor, James Gould.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 3 -
    

    
      1.8  Upon the filing of a Consent Dismissal Order, Braintech will
      instruct its solicitor to pay Habibi $70,000 CDN, by way of a trust
      cheque to Hamilton Howell, from the Trust Account.  
    

    
      1.9  Nothing herein shall constitute an admission of liability by the
      Parties.  
    

    
      2.  CANCELLATION OF PROMISSORY NOTE
    

    
      2.1  Braintech will revoke its demand to Habibi dated April 8, 2009 for
      payment of $100,000 on a promissory note executed by Habibi on or about
      June 26, 2001 (the “Promissory Note”).
    

    
      2.2  Braintech agrees that the Promissory Note is irrevocably cancelled
      and to never demand payment on the Promissory Note.
    

    
      2.3  Braintech hereby releases to Habibi 133,334 registered shares (the
      “Shares”) of Braintech from the escrow account of Grant Sutherland on or
      by June 1, 2009 per (release attached as Schedule D).  Habibi shall make
      best efforts to obtain the shares from Grant Sutherland.  In the event
      that Habibi is unable to obtain the Shares, Habibi shall notify the
      Company by June 1, 2009 and other arrangements shall be made by the
      Parties to obtain the Shares by July 1, 2009.  Habibi shall fully
      co-operate with any efforts of the Company is required to make to obtain
      the Shares.
    

    
      3.  LIABILITY
    

    
      3.1  Nothing herein shall constitute or be construed as an admission of
      liability on the part of Habibi or the Company.
    

    
      4.  PERFORMANCE
    

    
      4.1  Each of the Parties to this Settlement Agreement will, at the
      request of the other party, execute and deliver such further documents
      and do such further acts and things as may reasonably be requested in
      order to evidence, carry out and give full force and effect to the
      terms, conditions, intent and meaning of this Settlement Agreement.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 4 -
    

    
      5.  CONFIDENTIALITY
    

    
      5.1  The Parties, and each of them, covenant and agree that this
      agreement, including its existence, terms and conditions, is and will be
      kept confidential by each of them and will not be disclosed, in whole or
      in part, by either or both of them to any third party, other than their
      legal and financial advisors and the Escrow Agent except under
      compulsion of law.  
    

    
      6.  RELEASE
    

    
      6.1  The Company hereby remises, releases and forever discharges Habibi,
      and his heirs, executors, administrators, successors and assigns, and
      his estate and effects, of and from all claims, causes of action, sums
      of money, debts, contracts, bonds, actions and demands whatsoever, which
      it ever had, now has, or which its present, future or former directors,
      officers, agents, employees, successors and assigns, or any of them,
      hereafter can, shall or may have against Habibi including but not
      limited to any matter in respect of the Action and the Virginia Action
      and matters reasonably related to the Action and Virginia Action.
    

    
      6.2  The Company agrees to not make any claim, or to commence or
      maintain any action or proceeding against any person, firm, corporation
      or other entity in which any claim could arise against Habibi for
      contribution or indemnity whether at law, in equity, or howsoever, or
      otherwise including but not limited to any matter arising from or in
      respect of the Action, the Virginia Action and matters reasonably
      related to the Action and Virginia Action.
    

    
      6.3  Habibi hereby remises, releases and forever discharges the Company,
      and its present, future or former directors, officers, agents,
      employees, successors and assigns, or any of them, of and from all
      claims, causes of action, sums of money, debts, contracts, bonds,
      actions and demands whatsoever, which he ever had, now has,  hereafter
      can, shall or may have against the Company and its present, future or
      former directors, officers, agents, employees, successors and assigns,
      or any of them including but not limited to any matter in respect of the
      Action and the Virginia Action and matters reasonably related to the
      Action and Virginia Action.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 5 -
    

    
      6.4  Habibi agrees to not make any claim, or to commence or maintain any
      action or proceeding against any person, firm, corporation or other
      entity in which any claim could arise against the Company and its
      present, future or former directors, officers, agents, employees,
      successors and assigns, or any of them for contribution or indemnity
      whether at law, in equity, or howsoever, or otherwise including but not
      limited to any matter arising from or in respect of the Action, the
      Virginia Action and matters reasonably related to the Action and
      Virginia Action.
    

    
      6.5  The Parties agree not to commence, pursue, or maintain any action
      against each other anywhere, including without limitation in Canada or
      the United States, which is in any way connected or related to Habibi's
      employment with the Company or the termination of his employment with
      the Company, nor will the Parties commence, pursue, or maintain a
      complaint against each other under the British Columbia Human Rights
      Code, the British Columbia Employment Standards Act, or any other
      employment related statute in Canada or the United States. If, contrary
      to this paragraph, either Party commences, pursues, or maintains
      proceedings against the other, that Party consents to the other Party
      relying on this Settlement Agreement in order to have the proceedings
      dismissed or stayed.
    

    
      6.6  The Parties agree that neither Party will seek legal costs against
      the other.
    

    
      6.7  Notwithstanding the provisions of this Agreement, the Parties
      acknowledge and agree that the Parties shall, subject to its terms,
      retain all remedies at law for the enforcement of this Settlement
      Agreement.
    

    
      7.  INDEMINITY
    

    
      7.1  Habibi hereby undertakes and agrees to indemnify and save harmless
      the Company from and against all claims or demands arising under the Income
      Tax Act (Canada) for and in respect of withholding taxes which may
      arise from the payments under this settlement and any interest or
      penalties relating thereto and any reasonable costs or expenses incurred
      in defending such claims or demands.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 6 -
    

    
      7.2  Habibi hereby undertakes and agrees to indemnify the Company for
      any of them in respect of any claims or demands by the Government of
      Canada or any of its agencies for overpaid benefits which, according to
      the Government of Canada of any of its agencies, ought to have been
      deducted from any amounts paid pursuant to the settlement and to have
      been remitted to the Receiver General by the Company and any interest or
      penalties relating thereto and any reasonable costs or expenses incurred
      in defending such claims or demands.
    

    
      8.  NOTICE
    

    
      8.1  Notice under this agreement will be deemed effective notice if
      materials are sent to the Parties in the following manner:
    

    
             (a)  Habibi by Regular Mail or fax to Babak Habibi at:
    

    
      1680 Orkney Place
North Vancouver, British Columbia
Canada, V7H 2Z1
    

    
      (604) 484-8654
    

    
             (b)  Braintech by regular mail or fax at:
    

    
      1750 Tysons Blvd. Suite 350
McLean, Virginia
22102
    

    
      (703) 637-9772
    

    
             (c)  Braintech Canada by registered mail or fax at:
    

    
      1750 Tysons Blvd. Suite 350
McLean, Virginia
22102
    

    
      (703) 637-9772
    

    
      9.  PERFORMANCE
    

    
      9.1  All Parties agree to do everything necessary to ensure that the
      terms of this agreement take effect.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 7 -
    

    
      10.  NO ASSIGNMENT WITHOUT CONSENT
    

    
      10.1  This agreement is not assignable without the prior written consent
      of all of the Parties to this agreement.  Any attempt to assign any of
      the rights, duties or obligations of this agreement without written
      consent is void.
    

    
      11.  EFFECTIVE DATE ON EXECUTION BY ALL PARTIES
    

    
      11.1  This agreement shall not be in force, or bind any of the Parties,
      until executed by all the Parties named in it.  
    

    
      12.  COUNTERPARTS
    

    
      12.1  This agreement may be executed in any number of counterparts with
      the same effect as if all Parties had signed the same document.  All
      counterparts shall be construed together and shall constitute one and
      the same agreement.
    

    
      13.  TIME OF THE ESSENCE
    

    
      13.1  Time is of the essence of this agreement.
    

    
      14.  AMENDMENTS
    

    
      14.1  If at any time during the continuance of this agreement the
      Parties shall deem it necessary or expedient to make any alteration or
      addition to this agreement, they may do so only by means of a written
      agreement among them which will supplement and form part of this
      agreement.
    

    
      15.  ENTIRETY
    

    
      15.1  This agreement and all attached schedules constitute the entire
      agreement between the Parties to this agreement pertaining to the
      subject matter hereof and supersede all prior and contemporaneous
      agreements, understandings, negotiations and discussions, whether oral
      or written, of the Parties and there are no warranties, representations
      or other agreements between the Parties in connection with the
      subject-matter of this agreement except as specifically set forth herein.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 8 -
    

    
      16.  FURTHER DOCUMENTS
    

    
      16.1  The Parties agree that each of them shall, upon reasonable request
      of any one or more of the others, do or cause to be done all further
      lawful acts, deeds and assurances whatever to the better performance of
      the terms and conditions of this agreement.
    

    
      17.  HEADINGS
    

    
      17.1  Descriptive headings are inserted solely for convenience of
      reference, do not form part of this agreement, and are not to be used as
      an aid in the interpretation of this agreement.
    

    
      18.  NUMBER AND GENDER
    

    
      18.1  It is agreed that unless the context of this agreement requires
      otherwise, the singular number shall include the plural and vice versa,
      the number of the verb shall be construed as agreeing with the word so
      substituted, words importing the masculine gender shall include the
      feminine and neuter genders, and words importing person shall firms and
      corporations and vice versa.  
    

    
      19.  GOVERNING LAW
    

    
      19.1  This agreement shall be governed by and construed in accordance
      with the laws of the Province of British Columbia and the Parties attorn
      to the jurisdiction of British Columbia for the resolution of any
      disputes in any way connected with this settlement agreement or any
      agreement attached hereto.
    

    
      20.  HEIRS, SUCCESSORS, ASSIGNS
    

    
      20.1  This agreement shall enure to the benefit of and be binding on the
      respective heirs, executors, administrators, successors and permitted
      assigns of each of the Parties.
    

    
      21.  INDEPENDENT LEGAL ADVICE
    

    
      21.1  The Parties each acknowledge having obtained their own independent
      legal advice with respect to the terms of this agreement prior to its
      execution.  
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 9 -
    

    
      IN WITNESS WHEREOF the Parties hereto have caused this agreement
      to be duly executed as of the year and day first above written.
    

    
    	
          
            SIGNED, SEALED and DELIVERED by
          

        	
          
            )
          

        	
          
             
          

        
	
          
            Babak Habibi in the presence of:
          

        	
          
            )
          

        	

        
	

        	
          
            )
          

        	

        
	
           
        	
          
            )
          

        	

        
	
          
            Signature
          

        	
          
            )
          

        	

        
	
           
        	
          
            )
          

        	
           
        
	
          
            Print Name
          

        	
          
            )
          

        	
          
            BABAK HABIBI
          

        
	
           
        	
          
            )
          

        	

        
	
          
            Address
          

        	
          
            )
          

        	

        
	
           
        	
          
            )
          

        	

        
	

        	
          
            )
          

        	
          
             
          

        
	
           
        	
          
            )
          

        	
          
            April 18, 2009
          

        
	
          
            Occupation
          

        	
          
            )
          

        	

        

    

    
      

      

    

    
    	
          SIGNED, SEALED and DELIVERED by
        	
          )
        	

        
	
          
            BRAINTECH INC. in the presence of:
          

        	
          )
        	

        
	

        	
          )
        	

        
	
           
        	
          )
        	

        
	
          Signature
        	
          )
        	
           
        
	
           
        	
          )
        	
          
            BRAINTECH INC.
          

        
	
          Print Name
        	
          )
        	

        
	
           
        	
          )
        	
          
            per Authorized Signatory
          

        
	
          Address
        	
          )
        	

        
	
           
        	
          )
        	

        
	

        	
          
            )
          

        	

        
	
           
        	
          )
        	
           
        
	
          Occupation
        	
          )
        	
          
            April 18, 2009
          

        

    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      - 10 -
    

    
    	
          SIGNED, SEALED and DELIVERED by
        	
          )
        	

        
	
          
            BRAINTECH CANADA INC. in the
          

        	
          )
        	

        
	
          presence of:
        	
          )
        	

        
	

        	
          )
        	

        
	
           
        	
          )
        	

        
	
          Signature
        	
          )
        	
           
        
	
           
        	
          )
        	
          
            BRAINTECH CANADA INC.
          

        
	
          Print Name
        	
          )
        	

        
	
           
        	
          )
        	
          
            per Authorized Signatory
          

        
	
          Address
        	
          )
        	

        
	
           
        	
          )
        	

        
	

        	
          
            )
          

        	

        
	
           
        	
          )
        	
           
        
	
          Occupation
        	
          )
        	
          
            April 18, 2009

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]