Document:

ex4_01.htm

    
      

    

    Exhibit
4.01

    
      

      

      LOAN
AND SECURITY AGREEMENT

      (“Agreement”)

      

      This
document dated October27th, 2009, is an agreement between CRESTMARK BANK, a Michigan
banking corporation (“Crestmark”), and GENERAL EMPLOYMENT ENTERPRISES, INC.,
an Illinois corporation (“GEE”), and TRIAD PERSONNEL SERVICES,
INC., an Illinois corporation (“TPS”) (GEE and TPS are sometimes
individually and collectively referred to herein as “Borrower”). In this
Agreement, Crestmark and the Borrower are collectively the “Parties”. Any person
who guaranties the obligations of Borrower (each a “Guarantor” and/or “Validity
Guarantor”) is required to sign this Agreement. The Parties have the addresses
shown on the Schedule which is attached to this Agreement. These are the
addresses of the Parties for all purposes and may be changed by one party giving
notice to the other party in writing of the new address.

      

      
        	
                1.

              	
                PURPOSE.
      The purpose of this Agreement is to set out the terms for the loan from
      Crestmark to the Borrower detailed in the Schedule (“Loan”). The Schedule
      is part of this Agreement. The note to be signed by the Borrower, any
      guaranty(s), and any other documents now or hereafter signed by any of the
      Parties in connection with this Agreement, the Loan or any document issued
      by Crestmark or the bank holding the lockbox (“Lockbox Bank”) are also all
      part of this Agreement. All of the documents together are referred to
      collectively as the “Loan
Documents”.

              

      

       

      
        	
                2.

              	
                DISCRETION.
      Whether Crestmark makes an advance to or for Borrower’s benefit under the
      Loan Documents is in Crestmark’s sole discretion. Any disbursement of
      money or advance of credit by Crestmark, including but not limited to
      amounts advanced for the payment of interest, fees, expenses and amounts
      necessary to protect, maintain and preserve Crestmark’s Collateral under
      the Loan Documents (“Protective Disbursements”), is referred to
      collectively as an “Advance”. If an Advance is made, it will be made in
      accordance with the Advance Formula described in this Agreement and
      detailed in the Schedule. Crestmark may choose to make Protective
      Disbursement in excess of the Maximum Amount or Advance Formula (each as
      hereafter defined) in its sole discretion. Each time Crestmark makes an
      “Advance”, including a “Protective Disbursement”, the Advance will be
      debited against an account in the Borrower’s name on Crestmark’s books
      (“Loan Account”), and each payment will be credited against the Loan
      Account in the manner described in this
  Agreement.

              

      

       

      
        	
                3.

              	
                BORROWER’S
      OBLIGATIONS; LOAN.

              

      

       

      
        	
                 
      

              	
                A.

              	
                The
      Borrower must repay all Advances with respect to the Loan with interest,
      which is due monthly as specified in the note, along with all other fees
      and expenses of Crestmark set forth herein or in the Schedule. The
      Borrower must also comply with its representations, promises, covenants
      and reporting requirements set forth in this Agreement, in the Schedule
      and in the other Loan Documents. Borrower’s failure to do any of the
      foregoing is known as a default
(“Default”).

              

      

       

      
        	
                 
      

              	
                B.

              	
                The
      total amount Borrower owes to Crestmark will be the aggregate of the
      Advances made by Crestmark, including Protective Disbursements, the
      expenses and fees shown on the Schedule, any and all costs incurred by
      Crestmark (including its actual attorney’s fees), and interest at the rate
      shown in the note on all amounts Advanced. All of these amounts together
      are referred to as the
“Indebtedness”.

              

      

       

      
        	
                 
      

              	
                C.

              	
                Borrower
      understands that the entire Indebtedness is repayable on the demand of
      Crestmark.

              

      

       

      
        	
                 
      

              	
                D.

              	
                The
      interest rate may be changed to the Extra Rate described in the note in
      Crestmark’s discretion if the Borrower is in Default or if the Borrower
      fails to pay the Indebtedness on
demand.

              

      

       

      
        	
                 
      

              	
                E.

              	
                The
      total Indebtedness will not, at any time, exceed the maximum amount set
      forth on the Schedule (“Maximum Amount”), and the Borrower understands
      that if at any time it should owe more to Crestmark than the Maximum
      Amount it must repay that amount immediately, whether or not demand to
      repay the whole of the Indebtedness has been made. Further, Protective
      Disbursements must be immediately repaid whether or not the Maximum Amount
      has been exceeded.

              

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        	
                 
      

              	
                F.

              	
                Advances
      with respect to the Loan may be measured against a percentage of Eligible
      Accounts, Eligible Inventory and/or a Borrowing Base typically based on a
      value attributed to equipment or real estate (“Advance Formula”) depending
      on the agreement of the Parties as reflected in the Schedule. The
      percentage and the definition of which accounts or inventory are
      “Eligible” are found in the Schedule. If applicable, the Borrowing Base
      will also be stated in the Schedule. The Indebtedness may not exceed the
      lesser of the Maximum Amount or the Advance Formula. In the event the
      Borrower’s Indebtedness exceeds availability (an “Over Advance”),
      Crestmark may, in its sole discretion, charge an Over Advance Fee as
      reflected in the Schedule. There may be availability for an Advance
      (“Availability”) as long as the then outstanding Indebtedness is less than
      the lower of the Maximum Amount or the Advance Formula. GEE is required to
      provide detailed invoice information in form and substance acceptable to
      Crestmark prior to funding. TPS will initially be on a borrowing base
      certificate. In the event that as to TPS, cash on hand in less than three
      (3) months average losses (calculated on a monthly basis), then TPS will
      also convert to the full detail basis, similar to
  GEE.

              

      

       

      
        	
                4.

              	
                SECURITY
      INTEREST.

              

      

       

      
        	
                 
      

              	
                A.

              	
                Before
      Crestmark makes any Advance to the Borrower, the Borrower must give
      Crestmark security for repayment of the Indebtedness. This security is
      known as a “Security Interest”. Borrower, by signing this Agreement,
      grants to Crestmark a Security Interest in all of its accounts, goods,
      inventory, equipment, chattel paper, instruments, investment property,
      specifically identified commercial tort claims, documents, deposit
      accounts, letter of credit rights, general intangibles and supporting
      obligations for any of the foregoing (the “Collateral”), to secure
      repayment of the Indebtedness. The Collateral also includes all monies on
      deposit with Crestmark, or on deposit in the Lockbox Account which is
      described later. If any of the foregoing is at any time disposed of or
      sold, Crestmark also has a Security Interest in all of the proceeds of any
      of the foregoing.

              

      

       

      
        	
                 
      

              	
                B.

              	
                Crestmark
      has the right to perfect its Security Interest by filing what is known as
      a financing statement or by taking possession of certain Collateral. In
      connection with the Security Interest, Borrower gives Crestmark all of the
      rights of a secured creditor under the Uniform Commercial Code (the
      “UCC”). All expenses of Crestmark relating to the Security Interest are
      part of the Indebtedness. Borrower hereby authorizes Crestmark to file UCC
      financing statements as it deems necessary to perfect its security
      interest in the Collateral.

              

      

       

      
        	
                 
      

              	
                C.

              	
                In
      connection with the Security Interest, Borrower must notify all persons
      who owe it on account (“Account Debtor”) of the Crestmark Security
      Interest on a form approved by Crestmark and all Account Debtors must be
      instructed to make all payments on the account, whether by credit cards,
      check or electronic transfer, to the Lockbox Account, or as instructed by
      Crestmark in its sole discretion.

              

      

       

      
        	
                 
      

              	
                D.

              	
                The
      Security Interest gives Crestmark rights with respect to the Collateral
      and the Security Interest and this Agreement imposes duties upon the
      Borrower which relate to the Collateral. Some of the rights and duties
      are: (i) the right of Crestmark at any time to notify any persons who may
      hold any part of the Collateral, such as Account Debtors, of Crestmark’s
      Security Interest. Borrower should understand that Crestmark will verify
      accounts with the Account Debtors; (ii) the Borrower must cooperate with
      Crestmark in obtaining control of any Collateral in the possession of
      third persons, particularly Collateral consisting of deposit accounts,
      investment property, letter of credit rights or other collateral which is
      evidenced by electronic entries; (iii) except for the right of Borrower to
      sell its inventory in the ordinary course of business, the Borrower agrees
      not to sell or transfer any of its Collateral or grant any other Security
      Interest in the Collateral, except as Crestmark may specifically agree to
      in writing. Borrower remains liable to perform all of its obligations with
      respect to the Collateral such as the recognition of any warranties in
      inventory sold and Crestmark is under no responsibility to perform any of
      the obligations of the Borrower; and (iv) Borrower must notify Crestmark
      immediately if it knows that any Account Debtor disputes an
      account.

              

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        	
                5.

              	
                LOAN
      ADVANCES.

              

      

       

      
        	
                 
      

              	
                A.

              	
                Advances
      with respect to the Loan are always discretionary with Crestmark. In
      connection with any request for an Advance, if the request is based upon
      specific Eligible Accounts, the Borrower must also furnish to Crestmark at
      the same time invoices, credit memos, purchase orders, evidence of
      delivery, proof of shipment, timesheets or any other documents Crestmark
      requests, in its sole discretion, with respect to the accounts that
      Borrower is tendering to Crestmark to support the Advance (“Account
      Documents”). At the request of Crestmark Borrower will provide a Borrowing
      Certificate in form approved by Crestmark before the Advance is made.
      Crestmark will endeavor to provide the requested funds by 4:00 p.m.
      Eastern Standard Time on the date that it receives the request so long as
      the complete package of information for the request has been received by
      10:30 a.m. All requests for funding will be subject to Crestmark’s then
      standard fees for electronic funds transfer, wire transfers and check
      services.

              

      

       

      
        	
                 
      

              	
                B.

              	
                All
      documents related to the accounts must be marked by Borrower to show
      assignment to Crestmark and the Borrower must notify each Account Debtor
      by mail, in accordance with a form approved by Crestmark that the account
      has been assigned to Crestmark and that all payments on the account
      whether made by mail or electronically or otherwise must be made payable
      to the Borrower at the address provided in the letter, which is the
      Lockbox Account. The address for payments will be the Lockbox Bank
      specified in the Schedule. All expenses for notification of each Account
      Debtor will be paid by the Borrower. All expenses plus any applicable
      administration fees of the Lockbox will be paid by Borrower. All accounts
      specifically submitted to Crestmark with Account Documents for which an
      Advance is made will be known as Crestmark Accounts (the “Crestmark
      Accounts”).

              

      

       

      
        	
                 
      

              	
                C.

              	
                Borrower
      agrees that Crestmark has the right to determine, in its sole discretion,
      whether any account is an Eligible Account, or which inventory constitutes
      Eligible Inventory, but no account or inventory will be eligible for
      Advance unless the eligibility requirements set forth in the Schedule are
      met.

              

      

       

      
        	
                6.

              	
                RESERVES.
      If Crestmark believes in its sole discretion that the prospect for
      repayment of the Indebtedness is impaired or that its Collateral margin is
      insufficient, Crestmark may establish cash reserves and credit balances to
      protect its interests and the repayment of the Indebtedness. Money in the
      reserve account will not earn interest for Borrower, and Crestmark may
      apply the funds in the Reserve to reduce the Indebtedness at any time
      Crestmark elects.

              

      

       

      
        	
                7.

              	
                FEES
      AND EXPENSES. In connection with the Loan there are several types
      of fees that may be charged. The fees to be charged with respect to the
      Loan are shown on the Schedule. In addition, all expenses of every kind
      incurred by Crestmark in connection with the Loan, or any Advance or for
      collection of the Indebtedness, or inspection and examination are to be
      paid by Borrower, including but not limited to Crestmark’s actual
      attorney’s fees, postage and UCC search charges. Crestmark may charge
      other usual and customary fees as indicated on the Schedule to Loan and
      Security Agreement attached hereto and made a part hereof by
      reference.

              

      

       

      
        	
                8.

              	
                MINIMUM
      BALANCE. Borrower agrees that it will maintain a minimum Loan
      balance in the amount shown on the Schedule for the period shown and
      Borrower understands that the Interest Rate and Maintenance Fee has been
      calculated on that minimum loan
balance.

              

      

       

      
        	
                9.

              	
                LOAN
      ACCOUNT. All of the Indebtedness which is owed by Borrower will be
      shown in the Loan Account and Borrower will receive a monthly interest
      statement. The statement is binding on Borrower unless Borrower provides a
      written objection to Crestmark that is actually received by Crestmark
      within ten (10) business days of the time the Loan Account statement is
      mailed.

              

      

       

      
        	
                10.

              	
                CALCULATION
      OF INDEBTEDNESS. Each time an Advance is made, the amount of the
      Indebtedness will be increased by the amount of the Advance. Five (5)
      business days after checks or other credit instruments are deposited in
      the Lockbox Account, Crestmark will credit the Loan Account with the net
      amount of cash actually received and will no longer charge Interest and
      Maintenance Fee upon such amount after the expiration of the clearance
      days set forth above. Also, on the date the deposit is made the Borrower
      will receive immediate credit on the funds deposited in determining
      Availability. Should a check or other credit instrument not be collected
      after the Borrower has been given credit, then the credit will be
      reversed. The Borrower should understand, however, that if Crestmark has
      some question about the collectability of funds it does not have to give
      credit until the funds are actually collected and in such event if the
      deposit is held for a longer period of time then the Maintenance Fee will
      still be payable.

              

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        	
                11.

              	
                PAYMENTS.
      When Crestmark receives a payment from an Account Debtor, it will try to
      apply it against the appropriate Debtor. If it is not clear which accounts
      the payment is suppose to be applied against, Crestmark will contact the
      Borrower for assistance. Unless there is clear error, the application of
      repayment by Crestmark is final. Any payments received by Crestmark if
      made with respect to a Crestmark Account will be applied to the Advance on
      that account, then to the Maintenance Fee for that account, then to the
      interest on that account, then to expenses, then either to the reserve or
      to Borrower in the form of
availability.

              

      

       

      
        	
                12.

              	
                LOCKBOX. Borrower will direct
      all Account Debtors and any other person or party that is liable to the
      Borrower (collectively a “Debtor”) to mail or send all payments due
      Borrower to the account (“Lockbox Account”) at the bank identified on the
      Schedule as the Lockbox Bank. If notwithstanding the notice to the Debtors
      Borrower receives any funds from a Debtor, including but not limited to
      any cash, checks, drafts or wire transfers from the collection,
      enforcement, sale or other disposition of the Collateral whether derived
      in the ordinary course of business or not, or if Borrower receives any
      proceeds of insurance, tax refunds or any and all other funds of any kind,
      Borrower must hold such funds in trust for Crestmark, shall not mix such
      funds received with any other funds, and shall immediately deposit such
      funds in the Lockbox Account in the form received. That means if the funds
      are received by mail, the checks will be sent to the Lockbox Account, and
      if the funds are received electronically, the funds will be transferred to
      the Lockbox Account electronically. Crestmark will have sole control over
      the Lockbox Account. The Lockbox Bank will process all deposits and
      Borrower has no right to the Lockbox Account, it belongs to Crestmark.
      Borrower gives Crestmark an irrevocable Power of Attorney which is coupled
      with an interest to endorse all items delivered to the Lockbox Account
      with Borrower’s name. Crestmark is the owner of all deposits in the
      Lockbox Account, and has no duty as to collection or protection of funds
      as long as it is not grossly negligent or commits actual
      fraud.

              

      

       

      
        	
                13.

              	
                REPRESENTATIONS.
      Borrower makes the following statements (representations) to Crestmark and
      such statements must be true at all times until the Indebtedness is paid
      in full. If Borrower learns that a statement once made is no longer true,
      it has the duty to immediately notify Crestmark in
  writing:

              

      

       

      
        	
                 
      

              	
                A.

              	
                Borrower
      is in good standing under the laws of the state shown on the Schedule ,
      has the power and authority to enter into this Agreement, and the persons
      signing this Agreement and all persons who sign any documents with
      Crestmark have the appropriate authority. Borrower’s identification
      numbers and addresses are as shown on the
  Schedule.

              

      

       

      
        	
                 
      

              	
                B.

              	
                Borrower’s
      entry into the Loan Documents do not violate any agreement which Borrower
      has or which binds Borrower.

              

      

       

      
        	
                 
      

              	
                C.

              	
                The
      Loan Documents are fully enforceable against
  Borrower.

              

      

       

      
        	
                 
      

              	
                D.

              	
                There
      is no litigation pending or threatened against Borrower and Borrower is
      not in default of any order or judgment of any court or any governmental
      agency of any kind.

              

      

       

      
        	
                 
      

              	
                E.

              	
                The
      financial information furnished to Crestmark has been prepared in
      accordance with generally accepted accounting principles, all financial
      statements are true, and any projections of the business operations of
      Borrower that have been given or will be given to Crestmark in the future
      will be based upon Borrower’s reasonable assumptions and
      estimates.

              

      

       

      
        	
                 
      

              	
                F.

              	
                The
      Borrower is the owner of all of the Collateral and there are no other
      liens or claims against the Collateral, except the Security Interest of
      Crestmark or as shown on the
Schedule.

              

      

       

      
        	
                 
      

              	
                G.

              	
                All
      of the Collateral is personal property and none of the Collateral will be
      affixed to real estate.

              

      

       

      
        	
                 
      

              	
                H.

              	
                Borrower
      has filed and will file all federal, state, local and foreign tax returns
      that it is required to file and has paid and will pay all taxes and all
      other governmental charges as they become
due.

              

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        	
                 
      

              	
                I.

              	
                That
      Borrower is solvent, is able to pay its debts as they become due, and has
      sufficient capital to carry on its business. This Agreement, the Loan
      Documents and the loans made by Crestmark do not render Borrower
      insolvent, and the Security Interest granted to Crestmark does not render
      Borrower insolvent.

              

      

       

      
        	
                14.

              	
                BORROWER’S
      PROMISES. Borrower makes the following promises to Crestmark and
      these promises are effective until the Indebtedness is fully
      paid:

              

      

       

      
        	
                 
      

              	
                A.

              	
                To
      pay all Indebtedness when due and perform all terms, conditions and
      obligations of the Loan Documents.

              

      

       

      
        	
                 
      

              	
                B.

              	
                To
      permit Crestmark, or its representatives, access to the Collateral on
      Borrower’s premises and to Borrower’s computer systems, books of account
      and financial records.

              

      

       

      
        	
                 
      

              	
                C.

              	
                To
      notify Crestmark promptly of any litigation, administrative or tax
      proceeding or other action threatened or instituted against the Borrower
      or its property, or of any other material matter which may adversely
      affect Borrower’s financial condition. The amount of claims as to which
      Borrower must notify Crestmark is specified in the
    Schedule.

              

      

       

      
        	
                 
      

              	
                D.

              	
                To
      pay when due all taxes, assessments and governmental charges, provided
      that the Borrower has the right to contest the same as long as it has, in
      the opinion of Crestmark, sufficient cash reserves to pay the charge when
      due.

              

      

       

      
        	
                 
      

              	
                E.

              	
                To
      maintain its business by complying with the Financial Covenants described
      in the Schedule.

              

      

       

      
        	
                 
      

              	
                F.

              	
                To
      maintain property and liability insurance on its business activities in
      such amount and in such form as Crestmark may from time to time require,
      and with respect to such insurance, Crestmark shall be named as “Lender
      Loss Payee” under the property policy and additional insured under the
      liability policy and receive evidence of the insurance on an annual basis,
      as well as workers’ compensation insurance in such amount and in such form
      as Crestmark may from time to time require, and with respect to such
      workers’ compensation insurance, Crestmark shall be named as “Certificate
      Holder” under the policy and receive evidence of the insurance on an
      annual basis. All insurance which protects Crestmark shall have at least a
      30-day notice to Crestmark prior to any cancellation. With respect to the
      insurance, Borrower appoints Crestmark as its attorney-in-fact to
      negotiate any and all claims under all insurance policies and Crestmark
      also has the power to negotiate any payments on the insurance policies.
      Further, Borrower shall at all times maintain workers’
      compensation

              

      

       

      
        	
                 
      

              	
                G.

              	
                To
      comply with all laws, ordinances and regulations or other requirements of
      any governmental authority or agency applicable to Borrower’s
      business.

              

      

       

      
        	
                 
      

              	
                H.

              	
                To
      maintain and preserve all Collateral in good repair, working order and
      condition, and with respect to accounts, pursue collections
      thereof.

              

      

       

      
        	
                 
      

              	
                I.

              	
                To
      provide Crestmark with evidence of ownership of any
      Collateral.

              

      

       

      
        	
                 
      

              	
                J.

              	
                To
      provide Crestmark, promptly after the sending or filing thereof, copies of
      all proxy statements, financial statements and reports which GEE or any
      subsidiary sends to its stockholders, and copies of all regular, periodic
      and special reports, and all registration statements which GEE or any
      subsidiary files with the United States Securities and Exchange Commission
      (“SEC”) or any governmental authority which may be substituted therefore,
      or with any national security
exchange.

              

      

       

      
        	
                 
      

              	
                K.

              	
                To
      provide Crestmark, immediately upon receipt, with copies of any notice
      received from the SEC or any state securities authority, taking or
      threatening to take any action against
GEE.

              

      

       

      
        	
                15.

              	
                NEGATIVE
      COVENANTS. Borrower agrees until the Indebtedness is paid in full,
      it will not:

              

      

       

      
        	
                 
      

              	
                A.

              	
                Change
      its state of organization or its name, or move its executive office
      without giving Crestmark at least 60 days prior written notice or at any
      time adopt any assumed name.

              

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        	
                 
      

              	
                B.

              	
                Declare
      or pay any dividend or make any other distribution with regard to its
      equity or purchase or retire any of its equity, provided if it is taxed as
      an S Corporation or other “pass through” entity, Borrower may distribute
      profits to its equity holders in an amount necessary to enable such
      holders to pay personal, state and federal taxes directly attributable to
      the profits earned by Borrower for such
year.

              

      

       

      
        	
                 
      

              	
                C.

              	
                Make
      any loan or assume any obligations or liabilities, as guarantor, surety,
      indemnitor or otherwise.

              

      

       

      
        	
                 
      

              	
                D.

              	
                Enter
      into any transaction with its equity holders or any affiliates of Borrower
      except on terms at least as favorable as would be usual and customary in
      similar transactions if the person with whom the transaction is entered
      into was not related to Borrower.

              

      

       

      
        	
                 
      

              	
                E.

              	
                Release,
      redeem, require, purchase or acquire any of its equity
      interest.

              

      

       

      
        	
                 
      

              	
                F.

              	
                Default
      in the payment of any debt to any other
person.

              

      

       

      
        	
                 
      

              	
                G.

              	
                Suffer
      or permit any judgment, decree or order not fully covered by insurance to
      be entered against the Borrower or a Guarantor and/or Validity Guarantor,
      or permit or suffer any warrant or attachment to be filed against
      Borrower, any Guarantor and/or Validity Guarantor, or against any property
      or asset of Borrower or Guarantor and/or Validity
    Guarantor.

              

      

       

      
        	
                 
      

              	
                H.

              	
                GEE
      will not suffer or permit its common stock to be de-listed by any major
      stock exchange.

              

      

       

      
        	
                16.

              	
                FINANCIAL
      REPORTS. Borrower promises that until the Indebtedness is fully
      paid and this Agreement is terminated, it will keep books in a manner
      satisfactory to Crestmark and Crestmark will have the right at any time to
      verify any of the Collateral, documentation or books in whatever manner
      and as often as Crestmark deems necessary. Borrower will furnish to
      Crestmark the financial reports identified on the Schedule, certified to
      by the president or chief financial officer of the Borrower. All financial
      reports will be prepared in accordance with generally acceptable
      accounting principles and will be true and
  accurate.

              

      

       

      
        	
                17.

              	
                CRESTMARK’S
      REMEDIES. Crestmark has all the remedies available at law or in
      equity (including those under the UCC) in the event Borrower either
      violates this Agreement or fails to pay the Indebtedness on demand,
      including but not limited to the following: to charge the Extra Rate; to
      notify Account Debtors to make the payments directly to Crestmark; to
      settle or compromise any disputed account, sue on any account and make any
      agreement to deal with the accounts as if it were the owner; to offset any
      of Borrower’s or Guarantor’s and/or Validity Guarantor’s funds under the
      control of Crestmark against the Indebtedness; and to require the Borrower
      to gather up the Collateral and make it available to Crestmark for
      Crestmark to conduct public or private UCC foreclosure sales. If Crestmark
      should proceed against the Collateral and sell any of the Collateral on
      credit, the Borrower will be credited on the Indebtedness only with the
      amount actually received by Crestmark and the Borrower waives any and all
      provisions as to notice or a particular method of sale of any of the
      Collateral. The Borrower will pay all expenses in connection with the
      assembly or sale of the Collateral. Crestmark does not have to incur its
      own expenses in realizing upon the Collateral, but all the expenses are
      for the account of the Borrower. Borrower recognizes that at no time is
      Crestmark its agent in dealing with the Collateral, but Crestmark acts
      only in its own interest.

              

      

       

      
        	
                18.

              	
                STANDARDS
      APPLICABLE TO REMEDIES. If Crestmark should exercise any remedies,
      Borrower agrees that it is not commercially unreasonable for Crestmark: to
      fail to exercise remedies against any Collateral or any particular Account
      Debtor; to proceed against Account Debtors either directly or through
      collection agencies; to advertise disposition of Collateral through
      publications or media of general circulation; to hire professional
      auctioneers to dispose of Collateral; to dispose of Collateral in
      wholesale or retail markets; to disclaim warranties with respect to
      Collateral; or to obtain services of attorneys or other professionals. The
      foregoing section is to provide an exhaustive list and nothing contained
      in the foregoing grants any rights to the Borrower, which are not granted
      by applicable law or the Loan Documents. Borrower agrees that under no
      circumstances is Crestmark the agent or representative of the
      Borrower.

              

      

       

      
        	
                19.

              	
                APPLICATION
      OF PROCEEDS. Once collection efforts are commenced by Crestmark,
      any proceeds of sale or disposition of Collateral may be applied by
      Crestmark first to expenses authorized by this Agreement including
      Crestmark’s actual attorneys’ fees which Borrower must pay, and the
      balance to payment of the Indebtedness in such manner as Crestmark may
      elect. Borrower and Guarantor and/or Validity Guarantor remain liable for
      any deficiency.

              

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        	
                20.

              	
                NOTICES.
      Any notice is effective by either party if sent in writing or facsimile
      with confirmation of receipt or by certified mail or personal delivery or
      expedited mail services to the addresses shown on the
      Schedule.

              

      

       

      
        	
                21.

              	
                MISCELLANEOUS
      PROVISIONS.

              

      

       

      
        	
                 
      

              	
                A.

              	
                This
      Agreement is binding upon and is for the benefit of the Borrower,
      Guarantor and/or Validity Guarantor and Crestmark, and their respective
      successors and assigns. However, under no circumstances may Borrower
      assign this Agreement or its rights and duties hereunder. Crestmark may
      assign this Agreement and its rights under the Loan Documents and Borrower
      will make payments to any such assignee if so
  directed.

              

      

       

      
        	
                 
      

              	
                B.

              	
                Crestmark
      has the right at any time to assign, transfer, negotiate or sell
      participations in this Agreement or the Indebtedness or the rights of
      Crestmark hereunder. In connection with any assignment, Borrower consents
      to disclosure of any and all books, records, files, Loan Documents and all
      other documents in the possession or under the control of
      Crestmark.

              

      

       

      
        	
                 
      

              	
                C.

              	
                No
      delay or failure of Crestmark in exercising any right or remedy will
      affect such right or remedy. No delay or failure of Crestmark to demand
      strict adherence to the terms of this Agreement will be deemed to waive
      Crestmark’s rights to demand such adherence at any time in the
      future.

              

      

       

      
        	
                 
      

              	
                D.

              	
                This
      Agreement and the Loan Documents will be interpreted and determined under
      the laws of the State of Michigan without any regard to any conflict of
      laws provisions.

              

      

       

      
        	
                 
      

              	
                E.

              	
                Borrower
      and Guarantor and/or Validity Guarantor, at Crestmark’s request, will
      make, execute and acknowledge any and all further instruments or
      agreements necessary to carry out the intent of this Agreement the Loan
      Documents.

              

      

       

      
        	
                 
      

              	
                F.

              	
                Borrower
      hereby agrees to indemnify, defend and hold Crestmark harmless against any
      and all liabilities of any kind, nature or description and damages whether
      they are direct, indirect or consequential and actual attorney’s fees
      incurred or suffered directly or indirectly by Crestmark or asserted
      against Crestmark by anyone whosoever, including Borrower or Guarantor
      and/or Validity Guarantor, which arise out of the Loan Documents or the
      relationship and transaction between the
  Parties.

              

      

       

      
        	
                 
      

              	
                G.

              	
                Neither
      Crestmark or its affiliates directors, officers, agents, attorneys or
      employees are liable to Borrower or Guarantor and/or Validity Guarantor or
      affiliates for any action taken or omitted by it or any of them under the
      Loan Documents except for such liability as may be imposed by law for
      gross negligence or actual fraud, and no claim shall be made by Borrower
      or Guarantor and/or Validity Guarantor or any of Borrower’s affiliated,
      directors, officers, agents, employees for any special or consequential
      damages or punitive damages arising out of, or related to the Loan
      Documents or the transactions between the
  Parties.

              

      

       

      
        	
                 
      

              	
                H.

              	
                This
      Agreement is the complete Agreement between the parties and there are no
      other agreements. This Agreement may be amended only in
      writing.

              

      

       

      
        	
                 
      

              	
                I.

              	
                If
      any provision of this Agreement is in conflict with any law or statue or
      is otherwise unenforceable, then the provision will be deemed null and
      void only to the extent of such provision and the provision will be deemed
      severable and the remainder of this Agreement shall be in full force and
      effect.

              

      

       

      
        	
                 
      

              	
                J.

              	
                Any
      payment made to Crestmark by either Borrower or Guarantor and/or Validity
      Guarantor which is subsequently invalidated, declared fraudulent or
      preferential or otherwise set aside under any bankruptcy, state, federal
      or equitable law, then to the extent of such invalidity such payment will
      be deemed not to have been made and the obligation will continue in full
      force and effect.

              

      

       

      
        	
                 
      

              	
                K.

              	
                USA Patriot Act Notification –
      The following notification is provided to Borrower pursuant to
      Section 3265 of the USA Patriot Act of 2001, 31 U.S.C. Section
      5318:

              

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that identifies
each person or entity that opens an account, including any deposit account,
treasury management account, loan or other extension of credit. We will ask for
the name, address, date of birth, and other information that will allow us to
identify all Borrower’s owners. We will also ask to see your driver’s license or
other identifying documents.

       

      
        	
                22.

              	
                JURISDICTION. BORROWER AND GUARANTOR
      AND/OR VALIDITY GUARANTOR AGREE THAT ANY ACTION TO ENFORCE BORROWER’S OR
      GUARANTOR’S AND/OR VALIDITY GUARANTOR’S OBLIGATIONS TO CRESTMARK SHALL BE
      PROSECUTED EITHER IN THE CIRCUIT COURT OF OAKLAND COUNTY MICHIGAN OR THE
      UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN, UNLESS
      CRESTMARK, IN ITS SOLE DESCRETION, ELECTS SOME OTHER JURISDICTION AND
      BORROWER AND GUARANTOR AND/OR VALIDITY GUARANTOR SUBMIT TO THE
      JURISDICTION OF ANY SUCH COURT SELECTED BY CRESTMARK. BORROWER AND
      GUARANTOR AND/OR VALIDITY GUARANTOR WAIVE ANY AND ALL RIGHTS TO CONTEST
      THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND
      BORROWER AND GUARANTOR AND/OR VALIDITY GUARANTOR MAY BRING ANY ACTION
      AGAINST CRESTMARK ONLY IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND OR
      THE FEDERAL COURT OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN
      DISTRICT OF MICHIGAN.

              

      

       

      
        	
                23.

              	
                WAIVER.
      ALL PARTIES, INCLUDING BORROWER AND GUARANTOR AND/OR VALIDITY GUARANTOR
      EACH KNOWINGLY AND VOLUNTARILY WAIVE ANY CONSTITUTIONAL RIGHT TO A TRIAL
      BY JURY WITH RESPECT TO ANY CLAIM, DISPUTE OR CONFLICT BETWEEN THE PARTIES
      OR UNDER THE LOAN DOCUMENTS AND AGREE THAT ANY LITIGATION SHALL BE HEARD
      BY A COURT OF COMPETENT JURISDICTION SITTING WITH OUT A JURY. BORROWER AND
      GUARANTOR AND/OR VALIDITY GUARANTOR ACKNOWLEDGE THAT THEY HAVE HAD THE
      OPPORTUNITY TO REVIEW THE EFFECT OF THIS PROVISION WITH COUNSEL OF THEIR
      CHOICE.

              

      

       

      
        	
                24.

              	
                RELEASE.
      BORROWER AND GUARANTOR AND/OR VALIDITY GUARANTOR RELEASE AND FOREVER
      DISCHARGE CRESTMARK, ITS AFFILIATES, OFFICERS, AGENTS, EMPLOYEES AND
      DIRECTORS FROM ANY AND ALL CLAIMS OF ANY KIND WHATSOEVER FROM THE
      BEGINNING OF TIME TO DATE OF THIS
AGREEMENT.

              

      

       

      
        	
                25.

              	
                JOINT
      AND SEVERAL OBLIGATIONS; DEALINGS WITH MULTIPLE BORROWERS. If more
      than one person or entity is named as Borrower hereunder, all obligations,
      representations, warranties, covenants and indemnities set forth herein or
      in any other loan documents between the Borrower, Crestmark and any
      guarantors of the Borrower’s obligations to Crestmark (collectively the
      “Loan Documents”) to which such person or entity is a party shall be joint
      and several. Crestmark shall have the right to deal with any individual of
      any Borrower with regard to all matters concerning the rights and
      obligations of Crestmark and Borrower hereunder and pursuant to applicable
      law with regard to the transactions contemplated under the Loan Documents.
      All actions or inactions of the officers, managers, members and/or agents
      of any Borrower with regard to the transactions contemplated under the
      Loan Documents shall be deemed with full authority and binding upon all
      Borrowers hereunder. Each Borrower hereby appoints each other Borrower as
      its true and lawful attorney-in-fact, with full right and power, for
      purposes of exercising all rights of such person hereunder and under
      applicable law with regard to the transactions contemplated under the Loan
      Documents. The foregoing is a material inducement to the agreement of
      Crestmark to enter into this Agreement and to consummate the transactions
      contemplated hereby. The Borrower represents that GENERAL EMPLOYMENT ENTERPRISES,
      INC., an Illinois corporation, and TRIAD PERSONNEL SERVICES,
      INC., an Illinois corporation are operated as part of one
      consolidated business entity and are directly dependent upon each other
      for and in connection with their respective business activities and
      financial resources. Each Borrower will receive a direct economic and
      financial benefit from the obligations incurred under this Agreement and
      the incurrence of such obligations is in the best interests of each
      Borrower.

              

      

       

      The
parties have executed this Agreement as of the date and year first written
above.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      CRESTMARK:

      

      CRESTMARK BANK, a Michigan
banking corporation

      

      
        	
                By:/s/ Gayle S. Finger

              	 
      

      

      Gayle S.
Finger

      Its:
First Vice President

      

      

      BORROWER:

      

      GENERAL
EMPLOYMENT ENTERPRISES, INC.

      An
Illinois corporation

      

      
        	
                By:/s/ Ronald E. Heineman

              	 
      

      

      Ronald E.
Heineman

      Its:
Chief Executive Officer

      

      TRIAD
PERSONNEL SERVICES, INC.

      An
Illinois corporation

      

      
        	
                By:/s/ Ronald E. Heineman

              	 
      

      

      Ronald E.
Heineman

      Its:
Chief Executive Officer

      

      

      The
undersigned Validity Guarantor by signing this Agreement agree that they have
read and understand the Agreement and Validity Guarantor agrees to all of its
terms.

      

      VALIDITY
GUARANTOR:

      

      
        	
                /s/ Ronald E. Heineman

              	 
      
	
                Ronald
      E. Heineman

              	 
      
	 
      	 
      
	 
      	 
      
	
                /s/ Stephen B. Pence

              	 
      
	
                Stephen
      B. Penceex4_02.htm

    
      

    

    Exhibit
4.02

    
      

      

      SCHEDULE
TO LOAN AND SECURITY AGREEMENT

      DATED: as
of October 27, 2009

      

      This
Schedule is part of the Agreement between:

      

      CRESTMARK
BANK (“CRESTMARK”)

      5480
CORPORAT DRIVE

      SUITE
350

      TROY,
MICHIGAN 48098

       

      AND

      

      GENERAL
EMPLOYMENT ENTERPRISES, INC. (“GEE”)

      TRIAD
PERSONNEL SERVICES, INC. (“TPS”) (collectively “BORROWER”)

      One Tower
Lane

      Oakbrook
Terrace, IL 60181

      

      The
following paragraph numbers correspond to paragraph numbers contained in the
Agreement.

      

      
        	
                 
      

              	
                3.

              	
                LOAN.
      The Indebtedness will not exceed an amount which is the lesser
      of:

              

      

      

      
        	
                 
      

              	
                I.

              	
                As
      to TPS:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Two
      Million Four Hundred Fifty Thousand Dollars ($2,450,000.00) (“TPS Maximum
      Amount”),

              

      

       

      or

      

      
        	
                 
      

              	
                (b)

              	
                up
      to eighty-five percent (85%) of Eligible
  Accounts

              

      

      (the “TPS
Advance Formula”).

      

      
        	
                 
      

              	
                II.

              	
                As
      to GEE:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                The
      lesser of (i) One Million Fifty Thousand Dollars ($1,050,000.00) or (ii)
      thirty percent (30%) of the amount outstanding to TPS under the TPS
      Advance Formula (“GEE Maximum Amount”),
or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                up
      to eighty-five percent (85%) of Eligible
  Accounts

              

      

      (the “GEE
Advance Formula”).

      

      The
aggregate of the TPS Maximum Amount and the GEE Maximum Amount may sometimes be
collectively referred to as the “Maximum Amount” or the “Maximum
Facility.”

      

      Crestmark
shall not allow any advances against (A) Accounts not previously approved by
Crestmark where the expected dollar value for such Account Debtor is greater
than ten (10%) percent of Borrower's existing Accounts, subject to review and
change by Crestmark from time to time; provided, however, as to SunGard Higher
Education, Inc., only, the lesser of (i) twenty-five (25%) percent of Borrower's
existing Accounts, or (ii) $300,000.00, subject to review and change by
Crestmark from time to time thereafter; and provided, however, as to Uranium
Disposition Services, LLC, only, the lesser of (i) fifteen (15%) percent of
Borrower's existing Accounts, or (ii) $150,000.00, subject to review and change
by Crestmark from time to time thereafter; or (B) all of the Accounts owed by an
Account Debtor where 25% or more of all of the Accounts owed by that Account
Debtor are unpaid more than (a) as to GEE, 30 days from the invoice date; and
(b) as to TPS, 90 days from the invoice date.

      

      Crestmark
may in its sole discretion raise or lower the advance rate with respect to the
Advance Formula. In addition, Crestmark may establish cash reserves and credit
balances to protect its interests as set forth in the Agreement, including,
without limitation, a Dilution Reserve. “Dilution Reserve” means the Dilution
Percentage less the Base Dilution. The Dilution Percentage is defined as: (i)
uncollectable sales (as determined by Crestmark in its sole discretion,
exercised in a commercially reasonable manner, and including all sales subject
to a customer dispute) excluding Accounts that remain unpaid but are
collectable, divided by (ii) total sales and (iii) stated as a percentage,
as determined by Crestmark. Base Dilution means: (a) as to GEE, one percent
(1%); and (b) at to TPS five percent (5%). Crestmark shall reduce the advance
rate for Eligible Accounts by one percent (1%) for each percentage point that
Base Dilution exceeds: (a) as to GEE, 1%; (b) as to TPS, 5%.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Eligible
Accounts are
accounts that arise in the ordinary course of business, are represented by an
invoice, are presently due, are free from any dispute, are not from any parent,
subsidiary or affiliate of Borrower, and are acceptable to Crestmark in its sole
discretion. Excluded from Eligible Accounts are accounts that: (i) are more than
(a) 30 days from employee start date as to GEE; and (b) 90 days from invoice
date as to TPS; (ii) are from an Account Debtor that is located outside the
United States; (iii) are from an Account Debtor on a bill and hold, guaranteed
sale, C.O.D. sale, return sale of any kind, sale on approval, consignment or
other conditional sale; (iv) are for tooling; or (v) are contra accounts or are
from an Account Debtor who is owed money by Borrower; or are deemed unacceptable
by Crestmark in its sole discretion.

      

      
        	
                 
      

              	
                7.

              	
                Fees. The following fees
      will be charged to the Borrower:

              

      

      

      Late
Reporting Fee: Borrower will pay Crestmark a fee (the “Late Reporting
Fee”) in an amount equal to One Hundred Fifty ($150.00) Dollars per document per
business day for any day in which any report, financial statement or schedule
required by the Agreement is delivered late.

      

      Loan
Fee: Borrower
will pay at closing and on each annual anniversary of the date of the Agreement,
Crestmark a non-refundable loan fee in the amount of one percent (1%) of the
Maximum Amount, which will be fully due on each such date, but, as a courtesy to
Borrower, may be paid in twelve (12) equal consecutive monthly payments
commencing on date of execution of this Agreement and continuing on the first
day of each month thereafter.

      

      Maintenance
Fee. Each month Borrower will pay Crestmark a monthly maintenance fee
(the "Maintenance Fee") of Three Thousand Five Hundred and 00/100 Dollars
($3,500.00) commencing on the first (1st) day of November, 2009 and continuing
on the first (1st) day of each month thereafter until Borrower has no
Indebtedness outstanding and this Agreement is terminated.

      

      Lockbox
Fee. Each month
the Borrower will pay all costs in connection with the Lockbox and the Lockbox
Account, as determined by Crestmark from time to time.

      

      8.         
   MINIMUM
LOAN BALANCE. At all times the minimum Loan balance that Borrower must
maintain is $0.00.

      

      
        	
                 
      

              	
                12.

              	
                LOCKBOX. The Lockbox Bank
      is:

              

      

      Drawer
#

      PO Box
5935

      Troy, MI
48007-5935

      

      
        	
                 
      

              	
                13.

              	
                REPRESENTATIONS.

              

      

      

      
        	
                 
      

              	
                (A)

              	
                Both
      GEE and TPG are corporation organized in the State of
      Illinois.

              

      

      

      (F)           List
Security Interests in the Collateral held by creditors other than Crestmark as
Permitted Encumbrances:

      _____________________________________

      

      _____________________________________

      

      _____________________________________

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      NOTE: As to the interests
listed above, the listing thereof in this Loan and Security Agreement shall not,
in any manner whatsoever, be deemed to be an acknowledgement by Crestmark as to
the perfection, priority, validity or enforceability thereof.

      

      14. (E)  Financial
Covenants:
Borrower, on a consolidated basis, will maintain the following Financial
Covenants, which will be tested on a monthly basis.

      

      
        	
                 
      

              	
                A.

              	
                Working
      Capital Ratio at all times of at least
1.1:1.0

              

      

      

      
        	
                 
      

              	
                B.

              	
                Tangible
      Net Worth Ratio at all times of not greater than
  3.0:1.0.

              

      

      

      “Working
Capital Ratio” means current assets divided by current liabilities.

      

      “Tangible
Net Worth Ratio” means the aggregate of all obligations outstanding under this
Agreement divided by Tangible Net Worth.

      

      “Tangible
Net Worth" means, as of the date of determination, total assets less total
liabilities less the sum of (i) the aggregate amount of non-trade Accounts
Receivable, including Accounts Receivable from affiliated or related Persons;
(ii) prepaid expenses; (iii) deposits; (iv) net leasehold improvements; (v)
goodwill; and (vi) any other asset which would be treated as an intangible asset
under GAAP.

      

      Availability
as calculated above must exceed accrued payroll and accrued and withheld payroll
taxes at the time of Closing.

      

      In
addition, at no time shall Borrower: (i) make any loans, advances, intercompany
transfers or cash flow between the Borrower and any subsidiary, related entity
or affiliate of the Borrower or with any company that has common shareholders,
officers or directors with the Borrower; (ii) make any distribution or declare
or pay any dividends (in cash or in stock) on, or purchase, acquire, redeem or
retire any of its common stock, membership or partnership interests, of any
class, whether now or hereafter outstanding; (iii) enter into an agreement for
the acquisition of the stock or assets of another company, or any merger or
business combination without the prior written consent of Crestmark; or (iv) pay
total compensation to officers of Borrower (or any of their relatives),
including salaries, withdrawals, fees, bonuses, commissions, drawing accounts
and other payments, whether directly or indirectly, in money or otherwise,
during the each fiscal year of Borrower during the term of this Agreement in an
aggregate amount for all such officers in excess of one hundred and fifty
percent (150%) of the total compensation paid in the prior fiscal
year.

      

      All of
the financial covenants in this Agreement shall be determined in accordance with
GAAP, unless otherwise provided. "GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board that
are applicable to the circumstances as of the date of determination and applied
on a consistent basis.

       

      
        	
                 
      

              	
                16.

              	
                FINANCIAL
      REPORTS.

              

      

      

      Management
Prepared Financial Statements: Borrower will deliver to Crestmark
management prepared financial statements, balance sheets, and profit and loss
statements for the month then ended, certified to by the president or chief
financial officer of Borrower. Such reports will set forth the financial affairs
and true condition of Borrower for such time period and will be delivered to
Crestmark no later than thirty (30) days after the end of each
month.

      

      All
financial statements are and will be prepared in accordance with GAAP applied on
a consistent basis, and on a consolidated and consolidating basis.

      

      Annual
Financial Statements:
Each year Borrower will deliver to Crestmark annual audited financial
statements, cash flow statements, balance sheets, and profit and loss statements
prepared by a certified public accountant acceptable to Crestmark, all without
exceptions. Such reports will set forth in detail Borrower's true condition as
of the end of Borrower's fiscal year no later than ninety (90) days after the
end of Borrower's fiscal years.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Accounts
Receivable, Accounts Payable Aging and Inventory Reports: Borrower will
furnish to Crestmark the following certified to by the president or chief
financial officer of Borrower within the time periods set forth:

      

      
        	
                 
      

              	
                (a)

              	
                Accounts
      Receivable Reports: Monthly detailed Accounts Receivable Aging
      Reports no later than fifteen (15) days after the end of each
      month;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Accounts
      Payable Reports: Monthly detailed Accounts Payable Aging Reports no
      later than fifteen (15) days after the end of each month;
    and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Payroll
      Reports:
      Monthly payroll and tax payment reports no later than fifteen (15)
      days after the end of each month.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Borrowing
      Base Certificate:
      Weekly borrowing base certificates together with all such
      documentation as required by
Crestmark.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Weekly
      Reports:
      Weekly detailed invoice reporting including invoices and proof of
      service, and including detailed credit memo report including copies of all
      credit memos and detailing of cash receipts, as well as detailed accounts
      receivable agings.

              

      

      

      Guarantor's
Financial Statements: Guarantor will provide
Crestmark with annual statement of net worth on forms supplied by Crestmark.
Such reports will set forth with detail Guarantor's financial affairs and the
true financial condition of Guarantor, as of the end of each calendar year and
shall be delivered to Crestmark on the earlier of April 30th or 120 days after the end of
each calendar year.

      

      Tax
Returns:
Guarantor and Borrower will each provide Crestmark with current annual
tax returns prior to April 15 of each year or if an extension is filed, at the
earlier of (a) filing, or (b) the extension deadline.

      

      Field
Examinations: Borrower shall reimburse Crestmark for the costs to perform
field examinations of Borrower's assets and liabilities, to be performed by
Crestmark's inspector, whether a Crestmark officer or an independent party with
all expenses (whether for a Crestmark employee or otherwise, at the rate of
$850.00 per person per day for each day of the field examination including
preparation of the field examination report, together with all out of pocket
expenses including, but not limited to, transportation, hotel, parking, and
meals) paid by Borrower.

      

      Tax
Deposit Evidence: Submit weekly payroll summaries and copies of monthly
bank statements from which the funds are impounded and such other evidence of
payment, including, without limitation, EFTPS receipts.

      

      Customer
Lists: Upon Crestmark’s request, Borrower will deliver to Crestmark
detailed customer lists showing the customer's name, address, phone number and
any other information Crestmark requests.

      

      Projections:
Borrower shall deliver to Crestmark, within sixty (60) days prior to each
year-end, an annual financial projection for the following year, broken down
monthly.

      

      Other
Information: Borrower and Guarantor will also deliver to Crestmark such
other financial statements, financial reports, documentation, tax returns and
other information as Crestmark requests from time to time.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                II.

              	
                Modifications

              

      

      

      The
following provisions of the Loan and Security Agreement are amended as
follows:

      

      a.   The
following language is added to the end of Section 3.F. of the
Agreement:

      

      “In the
event that Advances are made in excess of Availability and the Borrower does not
repay such overage immediately, Crestmark, in addition to its other rights
herein, may charge a fee of 0.0493% per day on the amount of such
overage.”

      

      b.    Section
4., subsections A., B. and C are deleted in their entirety and the following are
substituted in their place:

      

      “A.          Before
Crestmark makes any Advance to the Borrower, the Borrower must give Crestmark
security for repayment of the Indebtedness. This security is known as a
“Security Interest”. Borrower, by signing this Agreement, grants to Crestmark a
Security Interest in all of its assets, now existing and hereafter arising,
wherever located, including, without limitation, all accounts, goods, inventory,
equipment, chattel paper, instruments, investment property, specifically
identified commercial tort claims, documents, deposit accounts, letter of credit
rights, general intangibles and supporting obligations for any of the foregoing
(the “Collateral”), to secure repayment of the Indebtedness. The Collateral also
includes all monies on deposit with Crestmark, or on deposit in the Lockbox
Account which is described later. If any of the foregoing is at any time
disposed of or sold, Crestmark also has a Security Interest in all of the
proceeds of any of the foregoing.

      

      B.          
 Crestmark has the right to perfect its Security Interest by filing what is
known as a financing statement or by taking possession of certain Collateral. In
connection with the Security Interest, Borrower gives Crestmark all of the
rights of a secured creditor under the Uniform Commercial Code (the “UCC”). All
expenses of Crestmark relating to the Security Interest are part of the
Indebtedness. In addition, the Borrower grants Crestmark the authority to file
all appropriate documentation in order for Crestmark to perfect its security
interest in the Collateral, including, without limitation, a UCC-1 financing
statements that lists the collateral as “All assets of the Debtor, now existing
and hereafter arising, wherever located,” or similar terms.

      

      C.           In
connection with the Security Interest, Borrower must notify all persons who owe
it on account (“Account Debtor”) of the Crestmark Security Interest on a form
approved by Crestmark and all Account Debtors must be instructed to make all
payments on the account, whether by credit cards, check or electronic transfer,
to the Lockbox Bank, or as instructed by Crestmark in its sole
discretion.”

      

      c.
Section 5. subsections A. and B. are deleted in their entirety and the following
are substituted in their place:

      

      “A.          Advances
with respect to the Loan are always discretionary with Crestmark. In connection
with any request for an Advance, if the request is based upon specific Eligible
Accounts, the Borrower must also furnish to Crestmark at the same time invoices,
credit memos, purchase orders, evidence of delivery, proof of shipment,
timesheets, a cash receipts journal or summary thereof, and any other documents
Crestmark requests, in its sole discretion, with respect to the accounts that
Borrower is tendering to Crestmark to support the Advance (“Account Documents”).
At the request of Crestmark Borrower will provide a Borrowing Certificate in
form approved by Crestmark before the Advance is made. Crestmark will endeavor
to provide the requested funds by the end of the business day on the date that
it receives the request so long as the complete package of information for the
request has been received by 10:30 a.m. Eastern Time. All requests for funding
will be subject to Crestmark’s then standard fees for electronic funds transfer,
wire transfers and check services.

      

      B.          
 Borrower must instruct all Account Debtors to remit all collateral
proceeds to the Lockbox Bank. At Crestmark’s request, all documents related to
the accounts must be marked by Borrower to show assignment to Crestmark and the
Borrower must notify each Account Debtor by mail, in accordance with a form
approved by Crestmark that the account has been assigned to Crestmark and that
all payments on the account whether made by mail or electronically or otherwise
must be made payable to the Borrower at the address provided in the letter,
which is the Lockbox Account. The address for payments will be the Lockbox Bank
specified in the Schedule. All expenses for notification of each Account Debtor
will be paid by the Borrower. All expenses plus any applicable administration
fees of the Lockbox will be paid by Borrower. All accounts specifically
submitted to Crestmark with Account Documents for which an Advance is made will
be known as Crestmark Accounts (the “Crestmark Accounts”). Crestmark may at any
time and from time to time, and at its sole discretion, notify any Account
Debtor of Borrower or any third party payer to make payments directly to
Crestmark. ”

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      a.
Section 8 is deleted and the following is substituted in its place:

      

      “8.           MINIMUM
BALANCE. Borrower agrees that it will maintain a minimum Loan balance in
the amount shown on the Schedule for the period shown and Borrower understands
that the Interest Rate and the Maintenance Fee will be calculated on the greater
of the Minimum Loan Balance or the Actual Loan Balance.”

      

      b.     Section
13. is amended by the addition of subsection J. to provide as
follows:

      

      “J.     That
all Accounts assigned to Crestmark are bonafide accounts arising from the sale
of inventory or providing services, and are not subject to offset or
counterclaim and are free and clear of all encumbrances of any kind
whatsoever.”

      

      c.     Section
15.G. is deleted in its entirety and the following is substituted in its
place:

      

      “G.           Suffer
or permit any judgment, lien, tax lien, decree or order not fully covered by
insurance or cash reserve maintained by Crestmark to be entered against the
Borrower or a Guarantor, or permit or suffer any warrant or attachment to be
filed against Borrower, any Guarantor, or against any property or asset of
Borrower or Guarantor.

      

      d. By the
addition of Section 25 to provide as follows:

      

      “25.         INDEMNIFICATION:
Borrower hereby indemnifies and holds Crestmark and its executive committees,
parent, affiliates, subsidiaries, agents, directors, officers, participants,
employees, agents, and their successors and assigns (collectively the
“Indemnified Parties”) harmless against any damages or claims arising from
Crestmark collecting or attempting to collect any Accounts and from any and all
costs, claims, expenses, actions and liabilities, including fees of attorneys
and other professionals and experts, costs of suit and interest, arising out of
any failure by Borrower or Borrower's documentation to comply with all
applicable laws, rules and regulations.

      

      Should
any excise, sales, documentary stamp, intangible, service or other tax be
imposed by state, federal or local authorities with respect to any of the
transactions hereunder in such form that Crestmark is required to withhold,
collect or pay such taxes, Borrower agrees to disclose such requirement to
Crestmark and to indemnify the Indemnified Parties with respect to such
payments, and Crestmark shall be entitled to charge and collect such payments
from Borrower's account. In addition, Borrower agrees that if any taxing
authority, at any time hereafter, including after the termination of this
Agreement, takes the position that stamp or other taxes are applicable to this
Agreement, or any renewals or extensions thereof, or Crestmark make such
determination, Crestmark will pay all such taxes, and any interest and penalties
or other liabilities in connection therewith, and will collect such amounts from
the Borrower. Crestmark expressly disclaims any obligation to Borrower with
respect to state, local or Federal income taxation and the preparation of income
tax reports or returns, except as agreed to between the parties herein. It is
agreed that Crestmark shall not in any way be considered a “responsible party”
in connection with the payment of any taxes on behalf of Borrower.

      

      Borrower
hereby indemnifies and holds Indemnified Parties harmless from any and all
liability, claims and damages, including fees of attorneys (including in-house
counsel for the Indemnified Parties) and other professionals and experts, costs
of suit and interest which any of the Indemnified Parties may incur as a result
of the failure of Borrower to pay any taxes due and payable to any taxing
authority. Borrower does further agree to immediately notify Crestmark of any
failure to pay federal, state or local taxes due in connection with any of its
business enterprises. Borrower further agrees to provide to Crestmark true and
accurate copies of any tax liens or warning notices received by Borrower in
connection with its business enterprises whether related to this Agreement or
not.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Borrower
hereby indemnifies and holds Indemnified Parties harmless from any and all
liability, claims and damages, including fees of attorneys (including in-house
counsel for Crestmark) and other professionals and experts, costs of suit and
interest which any Indemnified Party may incur as a result of Crestmark, or any
of its agents, including any Indemnified Parties, initiating ACH Transfers from
or to any deposit account maintained by the Borrower.

      

      Borrower
hereby releases, discharges and holds harmless Indemnified Parties from all
liabilities, actions, suits, causes of action, costs, expenses, fines,
penalties, claims, judgments and demands whatsoever which the Borrower or any
other person or entity had or may have now or in the future against one or more
of them under or arising out of this Agreement between Borrower and Crestmark,
or any acts or omissions in connection herewith; provided, however, that nothing
herein shall preclude the enforcement by Borrower and Crestmark of all rights
and benefits conferred in this Agreement.

      

      Borrower
does hereby warrant that there has been no mortgage or loan broker involved in
connection with the transaction contemplated by this Agreement, and Borrower
agrees to indemnify and hold harmless the Indemnified Parties from any and all
liability, claims and damages, including fees of attorneys (including in-house
counsel for Crestmark) and other professionals and experts, costs of suit and
interest which Crestmark may incur as a result of any claim of compensation
payable to any mortgage or loan broker in connection with the transaction
contemplated by this Agreement.

      

      Borrower
hereby indemnifies and holds Indemnified Parties harmless from any and all
liability, claims and damages, including fees of attorneys (including in-house
counsel for Crestmark) and other professionals and experts, costs of suit and
interest which Crestmark may incur as a result of the failure of Borrower to
comply with any environmental laws.

      

      The
indemnifications set forth herein shall survive the termination of this
Agreement.”

      

      h.   By
the addition of Section 26 to provide as follows:

      

      26.           TERM This Agreement shall
continue in full force and effect until demand, but if not sooner demanded then
for three (3) years from the date hereof (the “Term”), and shall be
automatically renewed for consecutive two (2) year terms unless terminated by
written notice of either party sixty (60) days prior to the end of the initial
Term or any renewal Term. In the event of termination by Borrower of this
Agreement or repayment in full of the Indebtedness prior to the expiration of
the Term or any renewal Term, Borrower shall pay to Crestmark, as an early
termination fee: (i) an amount equal to three percent (3%) of the Maximum
Facility if such repayment is during the initial year of the Term or renewal
Term; two percent (2%) of the Maximum Facility if such repayment is during the
second year of the Term or renewal Term; and one percent (1%) of the Maximum
Facility if such repayment is during the final year of the Term; plus, in any
event, any unpaid Loan Fees due under the remaining Term of the Agreement (the
“Early Termination Fee”) . In the event that payment of the Indebtedness shall
be accelerated for any reason whatsoever by Crestmark, the Early Termination Fee
in effect as of the date of such acceleration shall be paid and such Early
Termination Fee shall also be added to the outstanding balance of the
Indebtedness in determining the debt for the purposes of any judgment of
foreclosure of any loan documents given to secure the Indebtedness.

      

      After
termination Borrower shall continue to be liable to Crestmark for the full and
prompt performance and payment of the full amount of all Indebtedness to
Crestmark which for any reason remain, or otherwise are, then outstanding and
unpaid, whether disputed or undisputed. Crestmark will continue to have a
security interest in the Collateral of Borrower until any and all Indebtedness
are paid in full. When Crestmark has received payment and performance in full of
all Indebtedness and an acknowledgment from Borrower that it is no longer
entitled to request any advances from Crestmark under this Agreement, Crestmark
shall execute a termination of all security interests given by Borrower to
Crestmark, upon the execution and delivery of general releases by Borrower, any
guarantor or surety of Borrower's Indebtedness to Crestmark.”

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	 
      	
                GENERAL
      EMPLOYMENT ENTERPRISES, INC.

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Ronald E. Heineman

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                Its:

              	
                CEO

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                TRIAD
      PERSONNEL SERVICES, INC.

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s / Ronald E. Heineman

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                Its:

              	CEO	 
      
	 
      	 
      	 
      	 
      
	 
      	
                CRESTMARK
      BANK

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Gayle S. Finger

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                Its:

              	
                First Vice President

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                /s/Ronald E. Heineman

              	 
      
	 
      	
                Ronald
      E. Heineman, individually

              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                /s/ Stephen B. Pence

              	 
      
	 
      	
                Stephen
      B. Pence, individually

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