SECOND AMENDMENT TO CREDIT AND
SECURITY AGREEMENT
THIS SECOND AMENDMENT (this
“Amendment”), dated as of April 29, 2009, is
entered into by and between GLOBAL EMPLOYMENT SOLUTIONS, INC., a
Colorado corporation (“Global”), EXCELL PERSONNEL
SERVICES CORPORATION, an Illinois corporation
(“Excell”), FRIENDLY ADVANCED SOFTWARE TECHNOLOGY,
INC., a New York corporation (“Friendly”), TEMPORARY
PLACEMENT SERVICE, INC., f/k/a Michaels & Associates, Inc. and
successor by merger to Temporary Placement Service, Inc., a Georgia
corporation (“TPS”), GLOBAL EMPLOYMENT SOLUTIONS PEO
INC., f/k/a Southeastern Staffing, Inc., a Florida corporation
(“Southeastern”), GLOBAL EMPLOYMENT SOLUTIONS PEO V
INC., f/k/a Southeastern Personnel Management, Inc., a Florida
corporation (“SPM”), MAIN LINE PERSONNEL SERVICES,
INC., a Pennsylvania corporation (“Main Line”), GLOBAL
EMPLOYMENT SOLUTIONS PEO III INC., f/k/a Bay HR, Inc., a Florida
corporation (“BHR”), GLOBAL EMPLOYMENT SOLUTIONS PEO IV
INC., f/k/a Southeastern Georgia HR, Inc., a Georgia corporation
(“SGHR”), GLOBAL EMPLOYMENT SOLUTIONS PEO II INC.,
f/k/a Southeastern Staffing II, Inc., a Florida corporation
(“SEII”), GLOBAL EMPLOYMENT SOLUTIONS PEO VI INC.,
f/k/a Southeastern Staffing III, Inc., a Florida corporation
(“SEIII”), GLOBAL EMPLOYMENT SOLUTIONS PEO VII INC.,
f/k/a Southeastern Staffing IV, Inc., a Florida corporation
(“SEIV”), GLOBAL EMPLOYMENT SOLUTIONS PEO VIII INC.,
f/k/a Southeastern Staffing V, Inc., a Florida corporation
(“SEV”), GLOBAL EMPLOYMENT SOLUTIONS PEO IX INC., f/k/a
Southeastern Staffing VI, Inc., a Florida corporation
(“SEVI”), and KEYSTONE ALLIANCE, INC., a Florida
corporation (“Keystone”) (Global, Excell, Friendly,
TPS, Southeastern, SPM, Main Line, BHR, SGHR, SEII, SEIII, SEIV,
SEV, SEVI, and Keystone are each referred to herein as a
“Borrower” and collectively as the
“Borrowers”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION (the “Lender”), acting through its Wells
Fargo Business Credit operating division.
The Borrowers and the Lender are parties to a
Credit and Security Agreement dated as of April 29, 2008 (as
amended from time to time, the “Credit Agreement”).
Capitalized terms used in these recitals have the meanings given to
them in the Credit Agreement unless otherwise specified.
The Borrowers have requested that certain
amendments be made to the Credit Agreement, which the Lender is
willing to make pursuant to the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises
and of the mutual covenants and agreements herein contained, it is
agreed as follows:
1. Defined Terms . Capitalized
terms used in this Amendment which are defined in the Credit
Agreement shall have the same meanings as defined therein, unless
otherwise defined herein. In addition, Section 1.1 of the
Credit Agreement is amended by adding or amending, as the case may
be, the following definitions:
“ 2009 Term Advance ” is
defined in Section 2.17.
“ 2009 Term Note ” means the
Borrowers’ term promissory note, payable to the order of the
Lender, dated as of April 29, 2009, and any note or notes
issued in substitution therefore, as the same may be renewed and
amended from time to time, and all replacements thereto.
“
Advance ” means a Revolving Advance, a Term Advance or
the 2009 Term Advance.
“ Availability ” means
(i) with respect to all Borrowers on a consolidated basis, the
difference between (x) the aggregate Borrowing Base for all
Borrowers and (y) the sum of (A) the outstanding
principal balance of the Revolving Note, (B) the L/C Amount,
(C) the Borrowing Base Reserve, (D) the Tax Reserve and
(E) the Indebtedness that all Borrowers on a consolidated
basis owe to the Lender that has not yet been advanced on the
Revolving Note, and the dollar amount that the Lender in its
reasonable discretion then determines to be a reasonable
determination of the Borrowers’ aggregate credit exposure
with respect to any swap, derivative, foreign exchange, hedge,
deposit, treasury management or other similar transaction or
arrangement offered to the Borrowers by the Lender that is not
described in Article II of this Agreement and any indebtedness
owed by the Borrowers to Wells Fargo Merchant Services, L.L.C., and
(ii) with respect to any Borrower individually, the difference
between (x) the Borrowing Base for that Borrower and
(y) the sum of (A) the outstanding principal balance of
Revolving Advances made to that Borrower, (B) the L/C Amount
for that Borrower, (C) the Borrowing Base Reserve related to
that Borrower and (D) the Indebtedness that such Borrower on a
consolidated basis owes to the Lender that has not yet been
advanced on the Revolving Note, and the dollar amount that the
Lender in its reasonable discretion then determines to be a
reasonable determination of such Borrower’s aggregate credit
exposure with respect to any swap, derivative, foreign exchange,
hedge, deposit, treasury management or other similar transaction or
arrangement offered to such Borrower by the Lender that is not
described in Article II of this Agreement and any indebtedness
owed by such Borrower to Wells Fargo Merchant Services,
L.L.C.
“ Excess Cash Flow ” means,
for a given period, the sum of (a) Net Income, before tax,
plus (b) depreciation, amortization and other non-cash items,
minus (c) Capital Expenditures and the amount of the
Borrowers’ long-term debt and capitalized leases which become
due during such period including under the Term Note and the 2009
Term Note, minus (d) taxes actually paid with cash, each such
amount described in clauses (a) through (d) as determined
for such period in accordance with GAAP.
(a) with respect to the Revolving Advances
evidenced by the Revolving Note, an annual interest rate equal to
(i) during the period from April 29, 2009 to and
including June 14, 2009, the WFBC Base Rate plus two and one
quarter of one percent (2.25%) and (ii) on June 15, 2009
and thereafter, the WFBC Base Rate plus two and one half of one
percent (2.50%); and
2
(b) with respect to the Term Advances
evidenced by the Term Note and 2009 Term Advance evidenced by the
2009 Term Note, an annual interest rate equal to (i) during
the period from April 29, 2009 to and including June 14,
2009, the WFBC Base Rate plus three and one half of one percent
(3.50%) and (ii) on June 15, 2009 and thereafter, the
WFBC Base Rate plus four and three quarters of one percent
(4.75%),
which interest
rate shall, in each case, change whenever the WFBC Base Rate
changes.
“ Loan Documents ” means this
Agreement, the Revolving Note, the Term Note, the 2009 Term Note,
each Guaranty, each Subordination Agreement, each L/C Application,
each Standby Letter of Credit Agreement, each Commercial Letter of
Credit Agreement, and the Security Documents, together with every
other agreement, note, document, contract or instrument to which
the Borrowers now or in the future may be a party and which is
required by the Lender.
“ Maximum Line Amount ” means
(a) prior to April 29, 2009, $20,000,000 and (b) on
and after April 29, 2009, $13,000,000, unless, in each case,
this amount is reduced pursuant to Section 2.11, in which
event it means such lower amount.
“ Note ” means the Revolving
Note, the Term Note or the 2009 Term Note, and “ Notes
” means the Revolving Note, the Term Note and the 2009 Term
Note.
“ Tax Reserve ” means, on
May 31, 2009, $75,000, which amount shall be increased by an
additional $75,000 on the last day of each month during the period
from June 1, 2009 to and including December 31, 2009 and
which amount shall be increased further after December 31,
2009, as determined by the Lender in its sole discretion after good
faith negotiations with the Borrowers which negotiations shall not
extend beyond January 31, 2010.
2. Section 2.7(c) of the Credit
Agreement is hereby amended and restated to read in its entirety as
follows:
“(c) Default Interest Rate . At any
time during any Default Period or following the Termination Date,
in the Lender’s sole discretion and without waiving any of
its other rights or remedies, the principal of the Revolving Note,
the Term Note and the 2009 Term Note shall bear interest at the
Default Rate or such lesser rate as the Lender may determine,
effective as of the first day of the month in which any Default
Period begins through the last day of such Default Period, or any
shorter time period that the Lender may determine. The decision of
the Lender to impose a rate that is less than the Default Rate or
to not impose the Default Rate for the entire duration of the
Default Period shall be made by the Lender in its sole discretion
and shall not be a waiver of any of its other rights and remedies,
including its right to retroactively impose the full Default Rate
for the entirety of any such Default Period or following the
Termination Date.”
3
3. Section 2.8(c) of the Credit
Agreement is hereby amended and restated to read in its entirety as
follows:
“(c) Collateral Exam Fees . The
Borrowers shall pay the Lender, on demand, fees in connection with
any collateral exams, audits or inspections conducted by or on
behalf of the Lender of any Collateral or any Borrower’s
operations or business, including any surveys conducted by the
Lender with respect to any Borrower prior to the execution of this
Agreement, at the rates established from time to time by the Lender
as its collateral exam fees (which fees are currently $125 per hour
per collateral examiner), together with all actual out-of-pocket
costs and expenses incurred in conducting any such collateral
examination or inspection.”
4. Article II is hereby amended by a
new Section 2.17 and a new Section 2.18 to read in their
entirety as follows:
“Section 2.17 The 2009 Term
Advance . The Lender agrees, subject to the terms and
conditions of this Agreement, to make a single advance to the
Borrowers (the “2009 Term Advance”) in the amount of
$2,100,000. The Borrowers’ joint and several obligation to
pay the 2009 Term Advance shall be evidenced by the 2009 Term Note
and shall be secured by the Collateral as provided in
Article III. The Borrowers shall make the request for the 2009
Term Advance no later than the Cut-off Time on the Business Day on
which the Borrowers wish to receive the 2009 Term Advance. Such
request shall be by a Person authorized pursuant to
Section 2.2(a). Upon fulfillment of the applicable conditions
set forth in Article IV, the Lender shall deposit the proceeds
of the 2009 Term Advance by crediting the same to the
Borrowers’ demand deposit account specified in
Section 2.2(d). Upon the Lender’s request, the Borrowers
shall promptly confirm such request by executing and delivering an
appropriate confirmation certificate to the Lender. The Borrowers
shall be obligated to repay the 2009 Term Advance notwithstanding
the Lender’s failure to receive such confirmation and
notwithstanding the fact that the Person requesting the same was
not in fact authorized to do so. Any request for the 2009 Term
Advance, whether written or telephonic, shall be deemed to be a
representation by the Borrowers, upon which the Lender may rely,
that the Borrowers are in compliance with the conditions set forth
in Section 4.2 as of the time of the request. The 2009 Term
Advance may not be made through the Loan Manager.
Section 2.18 Payment of the 2009 Term
Note .
(a) So long as no Event of Default has
occurred and is continuing or will occur immediately following any
such prepayment, all voluntary prepayments with respect to the 2009
Term Note shall be applied first to any accrued and unpaid
interest
|
