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Exhibit 10.2
 

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FIRST AMENDMENT AND WAIVER

TO THE

LOAN AND SECURITY AGREEMENT

BETWEEN

GENERAL EMPLOYMENT ENTERPRISES, INC., TRIAD PERSONNEL SERVICES, INC.,
BUSINESS MANAGEMENT PERSONNEL, INC., BMPS, INC., BMCH, INC., BMCHPA, INC.,
AND TRIAD LOGISTICS, INC.

AND

KELTIC FINANCIAL PARTNERS II, LP

DATED AS OF SEPTEMBER 27, 2013
 
 

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Effective Date: December 31, 2013

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FIRST AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT
 
RECITALS:
 
GENERAL EMPLOYMENT ENTERPRISES, INC., a corporation organized under the laws of
the State of Illinois (“GEE”), TRIAD PERSONNEL SERVICES, INC., a corporation
organized under the laws of the State of Illinois (“TPS”), BUSINESS MANAGEMENT
PERSONNEL, INC., a corporation organized under the laws of the State of Ohio
(“BUMPS”), BMPS, INC., a corporation organized under the laws of the State of
Ohio (“BMPSOH”), BMCH, INC., a corporation organized under the laws of the State
of Ohio (“BMCH”), BMCHPA, INC., a corporation organized under the laws of the
Commonwealth of Pennsylvania (“BMCHPA”), and TRIAD LOGISTICS, INC., a
corporation organized under the laws of the State of Ohio (“Triad”, and
collectively with the foregoing, “Borrower”) and KELTIC FINANCIAL PARTNERS II,
LP, a Delaware limited partnership (“Lender”), are parties to a Loan and
Security Agreement dated as of September 27, 2013 (the “Credit Agreement”), in
connection with which Borrower delivered a Revolving Credit Note dated September
27, 2013 in a maximum principal amount of $6,000,000 (the “Revolving Credit
Note”), and other agreements, documents and instruments in connection therewith
(all of the foregoing, as the same may be amended, restated, or otherwise
modified from time to time to be collectively referred to as the “Loan
Documents”).
 
Pursuant to Section 8.1 of the Credit Agreement Borrower is prohibited from
incurring Indebtedness except for Indebtedness expressly permitted by the terms
of Section 8.1, and pursuant to Section 8.7 of the Credit Agreement Borrower is
prohibited from paying any interest on, any principal of or any other amount
payable in connection with any Indebtedness not expressly permitted by the terms
of Section 8.1.  As evidenced by a Promissory Note dated January 15, 2014 by GEE
to Terry V. Norstrud in the original principal amount of $150,000 (the “Norstrud
Note”), Borrower incurred Indebtedness in violation of Section 8.1 of the Credit
Agreement, and repaid said Indebtedness.
 
Pursuant to Section 8.20 of the Credit Agreement Borrower is required to satisfy
certain “EBITDA” covenants as contained therein.  Borrower has failed to satisfy
Section 8.20 of the Credit Agreement for the measurement period ending on
December 30, 2013, 2013 (the “2013 EBITDA Default”).
 
Borrower has requested that (i) Lender waive all “Defaults” and “Events of
Default” (as such terms are defined in the Credit Agreement) under the Loan
Documents in connection with Borrower’s issuance of the Norstrud Note and the
incurrence and repayment of the Indebtedness evidenced thereby, (ii) Lender
waive all Defaults and Events of Default under the Loan Documents in connection
with the occurrence of the 2013 EBITDA Default, (iii) Lender modify the
prohibitions on the repayment of Indebtedness under the Credit Agreement, and
(iv) Lender modify the EBITDA covenants under the Credit Agreement.  Upon the
terms and conditions contained in this First Amendment and Waiver (this
“Agreement”) Lender shall agree to the foregoing.
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AGREEMENT:
 
1.        Defined Terms.  Unless otherwise defined in the Recitals or in the
body of this Agreement, all capitalized terms shall have the meanings ascribed
to such terms in the Loan Documents.
 
2.       Waiver.  Subject to the terms, conditions, representations and
warranties contained in this Agreement, Lender hereby agrees to waive all
Defaults and Events of Default occurring under the Loan Documents in connection
with Borrower’s issuance of the Norstrud Note and incurrence of the Indebtedness
evidenced thereby, and the occurrence of the 2013 EBITDA Default.
 
3.        Reserved
 
4.        EBITDA Covenant.  Section 8.20 of the Credit Agreement shall be
deleted in its entirety and replaced with the following:
 
“8.20.            EBITDA.  Permit EBITDA as of and for:
 
(a) The six (6) consecutive calendar month period ending on March 31, 2014, to
be less than Two Hundred Ninety Five Thousand and 00/100 Dollars ($295,000.00);
 
(b) The nine (9) consecutive calendar month period ending on June 30, 2014, to
be less than Seven Hundred Ten Thousand and 00/100 Dollars ($710,000.00);
 
(d) The Fiscal Year ending on September 30, 2014, to be less than Eight Hundred
Ninety Thousand and 00/100 Dollars ($890,000.00); and
 
(e) For any period commencing on or after October 1, 2014, no less than such
amounts as are established by Lender for such period based on the annual
financial projections including such period delivered by Borrower pursuant to
Section 6.6, above.  Borrower acknowledges and agrees that the above EBITDA
covenant levels, and Lender’s adjustment in accordance with the preceding
sentence, have been established by Lender based on Borrower’s operations as
conducted on the Effective Date, and that any material change to such
operations, whether by Strategic Acquisition or otherwise, will necessitate an
adjustment by Lender of the above EBITDA covenant levels, and that Lender will
make such adjustments in Lender’s permitted discretion.”
 
5.        Reimbursement of Lender.  As consideration for Lender’s waiver of the
2013 EBITDA Default and amendment of the Credit Agreement described above, and
pursuant to Section 10.10 of the Credit Agreement, Borrower shall (a) pay to
Lender on the date hereof a fee in the amount of Fifteen Thousand and 00/100
Dollars ($15,000.00), and (b) reimburse, indemnify and hold Lender harmless for
the reasonable fees and costs and expenses incurred by Lender for the services
of legal professionals engaged by Lender in connection with the negotiation and
preparation of this Agreement.  With respect to any amount required to be paid
or reimbursed by Borrower pursuant to the foregoing provisions of this paragraph
5, it is hereby agreed that Lender may charge any such amount to the Revolving
Credit on the dates such payment is due or such reimbursement is made.
 
6.        Effective Date.  This Agreement shall be effective as of December 31,
2013.
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7.        Specificity of Provisions.  The waiver and amendments set forth herein
are limited precisely as written and shall not be deemed to (a) be a consent to
or a waiver of any other term or condition of the Credit Agreement or any of the
documents referred to therein, or (b) prejudice any right or rights which Lender
may now have or may have in the future under or in connection with the Credit
Agreement or any or any other Loan Document.  From and after the effective date
of this Agreement, whenever the Credit Agreement is referred to in the Credit
Agreement or in any of the other Loan Documents, it shall be deemed to mean the
Credit Agreement as modified by this Agreement.
 
8.        Binding Effect of Loan Documents. Borrower hereby acknowledges and
agrees that upon giving effect to this Agreement, the Credit Agreement, the
Revolving Credit Note and each Loan Document shall continue to be binding upon
such Borrower and shall continue in full force and effect.
 
9.        No Other Events of Default. Borrower hereby represents and warrants
that upon giving effect to the terms and provisions of this Agreement no default
or Event of Default shall have occurred and be continuing under the terms of the
Credit Agreement.
 
10.    Choice of Law.  This Agreement and the legal relations among the parties
hereto shall be governed by and construed in accordance with the internal laws
of the State of New York without regard to conflicts of law principles.
 
11.    Counterparts.  This Agreement may be executed by one or more the parties
to this Agreement on any number of separate counterparts, each of which shall be
considered an original and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers.
 
LENDER:
 
KELTIC FINANCIAL PARTNERS II, LP
By:   Keltic Financial Services, LLC, its general partner
 
By:
 
 
 
Name:
 
 
 
Its:
 
 
 
Date:
 
 

BORROWER:
 

GENERAL EMPLOYMENT ENTERPRISES, INC. TRIAD PERSONNEL SERVICES, INC.  
By:
 
By:
 
 
Name:
 
Name:
 
 
Its:
 
Its:
 
 
Date:
 
Date:
 

 

BUSINESS MANAGEMENT PERSONNEL, INC. BMPS, INC.  
By:
 
By:
 
 
Name:
 
Name:
 
 
Its:
 
Its:
 
 
Date:
 
Date:
 

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BMCH, INC.
BMCHPA, INC.
 
By:
 
By:
 
 
Name:
 
Name:
 
 
Its:
 
Its:
 
 
Date:
 
Date:
 

 
TRIAD LOGISTICS, INC.
 
By:
 
 
 
Name:
 
 
 
Its:
 
 
 
Date:
 
 

 
 
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