Document:

Exhibit 10.2

 

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

 

 

 

Effective Date: December 31, 2013

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:

	
 

Page 4 of 6

	
BMCH, INC.

		
BMCHPA, INC.

	 				
	
By:

	
 

		
By:

	
 

	 				
	
Name:

	
 

		
Name:

	
 

	 				
	
Its:

	
 

		
Its:

	
 

	 				
	
Date:

	
 

		
Date:

	
 

 

TRIAD LOGISTICS, INC.

 

	
By:

	
 

	
 

	 		
	
Name:

	
 

	
 

	 		
	
Its:

	
 

	
 

	 		
	
Date:

	
 

	
 

 

 

Page 5 of 6LINE OF CREDIT

	$1,000,000.00	September
    1, 2011

 

For value received, Drywave Technologies,
Inc., with offices at 1281 E. Magnolia, Suite D 106, Fort Collins, Colorado 80524, as principal ("Borrower"), promises
to pay to the order of AntriaBio, Inc., ("Lender") at 55 Broad St., 19th Floor, New York, NY or at such other
address as Lender shall from time to time specify in writing, a principal sum of up to ONE MILLION DOLLARS ($1,000,000.00),
in legal and lawful money of the United States of America, with interest on the outstanding principal from the date advanced
until paid at the rate set out below. Interest shall be computed on a per annum basis of a year of 360 days and for the actual
number of days elapsed, unless such calculation would result in a rate greater than the highest rate permitted by applicable law,
in which case interest shall be computed on a per annum basis of a year of 365 days or 366 days in a leap year, as the case may
be.

 

1. Payment
Terms. Interest shall be due and payable at maturity on August 31, 2012 (the “Original Maturity Date”) when the
entire amount hereof, principal and interest then remaining unpaid, shall be then due and payable; interest being calculated on
the unpaid principal each day principal is outstanding and all payments made credited to any collection costs and late charges,
to the discharge of the interest accrued and to the reduction of the principal, in such order as Lender shall determine.

 

2. Late Charge.
Upon maturity of this Note, if the outstanding principal balance (plus all accrued but unpaid interest) is not paid within 10
days of the maturity date, Borrower will be charged a delinquency charge of (i) 5% of the sum of the outstanding principal balance
(plus all accrued but unpaid interest). Borrower agrees with Lender that the charges set forth herein are reasonable compensation
to Lender for the handling of such late payments.

 

3. Interest
Rate. Interest on the outstanding and unpaid principal balance hereof shall be computed at a per annum rate equal to the lesser
of 10% or (a) a rate equal to the Wall Street Journal Prime Rate (as hereinafter defined) plus one percent (5%) per annum, with
said rate to be adjusted to reflect any change in The Wall Street Journal Prime Rate at the time of any such change or (b) the
highest rate permitted by applicable law, but in no event shall interest contracted for, charged or received hereunder plus any
other charges in connection herewith which constitute interest exceed the maximum interest permitted by applicable law, said rate
to be effective prior to maturity (however such maturity is brought about). As used herein, for any date, the "Wall Street
Journal Prime Rate" shall mean the Prime Rate quoted in the most recently published issue of The Wall Street Journal (Central
Edition) in the "Money Rates" column. If the Wall Street Journal Prime Rate ceases to be made available by the publisher,
or any successor to the publisher of The Wall Street Journal (Central Edition), the interest rate will be determined by
using a comparable index. If more than one Wall Street Journal Prime Rate is quoted, the higher rate shall apply. The Wall Street
Journal Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

 

    	 

    	 

    

 

4. Default.
It is expressly provided that upon (a) default in the punctual payment of this Note or any part hereof, principal or interest,
as the same shall become due and payable, or (b) the occurrence of a Default of even date herewith between Borrower and Lender,
the holder of this Note may, at its option, without further notice or demand, (i) declare the outstanding principal balance of
and accrued but unpaid interest on this Note at once due and payable, (ii) refuse to advance any additional amounts under this
Note, (iii) foreclose all liens securing payment hereof, including the sale of the Collateral (iv) pursue any and all other rights,
remedies and recourses available to the holder hereof at law or in equity, or (v) pursue any combination of the foregoing; and
in the event default is made in the prompt payment of this Note when due or declared due, and the same is placed in the hands
of an attorney for collection, or suit is brought on same, or the same is collected through probate, bankruptcy or other judicial
proceedings, then the Borrower agrees and promises to pay all costs of collection, including reasonable attorney's fees.

 

5. Joint
and Several Liability; Waiver. Each maker, signer, surety and endorser hereof, as well as all heirs, successors and legal
representatives of said parties, shall be directly and primarily, jointly and severally, liable for the payment of all indebtedness
hereunder. Lender may release or modify the obligations of any of the foregoing persons or entities, or guarantors hereof, in
connection with this loan without affecting the obligations of the others. Such persons or entities expressly waive presentment
and demand for payment, notice of default, notice of intent to accelerate maturity, notice of acceleration of maturity, protest,
notice of protest, notice of dishonor, and all other notices and demands for which waiver is not prohibited by law, and diligence
in the collection hereof; and agree to all renewals, extensions, indulgences, partial payments, releases or exchanges of collateral,
or taking of additional collateral, with or without notice, before or after maturity. No delay or omission of Lender in exercising
any right hereunder shall be a waiver of such right or any other right under this Note.

 

6. No Usury
Intended; Usury Savings Clause. In no event shall interest contracted for, charged or received hereunder, plus any other charges
in connection herewith which constitute interest, exceed the maximum interest permitted by applicable law. The amounts of such
interest or other charges previously paid to the holder of the Note in excess of the amounts permitted by applicable law shall
be applied by the holder of the Note to reduce the principal of the indebtedness evidenced by the Note, or, at the option of the
holder of the Note, be refunded. To the extent permitted by applicable law, determination of the legal maximum amount of interest
shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated
term of the loan and indebtedness, all interest at any time contracted for, charged or received from the Borrower hereof in connection
with the loan and indebtedness evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform
throughout the term hereof.

 

7. Security
and Collateral. This Note is secured by 1,000,000 Common Shares of Drywave Technologies Inc., which shares will be deposited
to an accout of the Lender’s choosing and held as Collateral. Within 5 business days upon full satisfaction of the payment
terms of this Line of Credit, Lender will return the Common Shares to Borrower.

 

8. Governing
Law, Venue. This Note is being executed and delivered, and is intended to be performed in the State of Colorado. Except to
the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Colorado shall
govern the validity, construction, enforcement and interpretation of this Note. In the event of a dispute involving this Note
or any other instruments executed in connection herewith, the undersigned irrevocably agrees that venue for such dispute shall
lie in any court of competent jurisdiction in Denver County, Colorado.

 

    	 

    	 

    

 

10. Purpose
of Loan. All advances hereunder shall be used solely for business, commercial, investment, or other similar purposes.

 

11. Captions.
The captions in this Note are inserted for convenience only and are not to be used to limit the terms herein.

 

	 	BORROWER:
	 	 
	 	Drywave Technologies, Inc.
	 	1281 E. Magnolia
	 	Suite D-106
	 	Ft. Collins, CO 80524
	 	 
	 	By: /s/ Steve R. Howe
	 	 
	 	Name: Steve R. Howe
	 	 
	 	Title: Chief Executive Officer
	 	 
	 	LENDER:
	 	 
	 	AntriaBio, Inc.
	 	55 Broad St., 19th Floor
	 	New York, NY 10004
	 	 
	 	By: /s/ Nickolay V. Kukekov
	 	 
	 	Name: Nickolay V. Kukekov
	 	 
	 	Title: Director

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