Contract
EXHIBIT
10.5
THIS
NOTE IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT DATED APRIL 24,
2007
IN FAVOR OF COMVEST INVESTMENT PARTNERS III, L.P. OR AN AFFILIATE THEREOF,
AS
ASSIGNEE OF XXXXXX X.X. (THE “INTERCREDITOR AGREEMENT”), WHICH IS INCORPORATED
HEREIN BY REFERENCE.
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$2,850,000
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December
31, 2007
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REVOLVING
CREDIT NOTE
FOR
VALUE
RECEIVED, the undersigned, TECHNICAL CAREER INSTITUTES, INC., a New York
corporation (“TCI”),
and
PENNSYLVANIA SCHOOL OF BUSINESS, INC., a Pennsylvania corporation (“PSB”)
(singly and collectively, the “Maker”),
hereby jointly and severally promise to pay to ComVest Investment Partners
III,
L.P., a Delaware limited partnership (“ComVest),
or
registered assigns (hereinafter, collectively with ComVest, the “Payee”),
the
sum of Two Million Eight Hundred Fifty Thousand ($2,850,000) Dollars or, if
less, the aggregate unpaid principal amount of all Advances made by the Payee
to
the Maker pursuant to the Loan Agreement of even date herewith by and between
ComVest and the Maker (the “Principal”),
with
interest thereon, on the terms and conditions set forth herein and in the Loan
Agreement. Terms defined in the Loan Agreement and not otherwise defined herein
shall have the meanings assigned thereto in the Loan Agreement.
Payments
of principal of, interest on and any other amounts with respect to this Note
are
to be made in lawful money of the United States of America.
1. Payments.
(a) Interest.
This
Note shall bear interest (“Interest”)
on
Principal amounts outstanding from time to time from the date hereof at the
rate
of eighteen (18%) percent per annum; provided,
however,
that
during the continuance of any Event of Default under the Loan Agreement, the
interest rate hereunder shall be twenty (20%) percent per annum. All Interest
shall be computed on the daily unpaid Principal balance of this Note based
on a
three hundred sixty (360) day year, and shall be payable monthly in arrears
on
the first day of each calendar month commencing January 1, 2008. On each due
date for the payment of Interest hereunder, all unpaid accrued Interest
hereunder shall be added to the Principal of this Note; and, from and after
the
due date of such accrued Interest, such Interest which has been added to
Principal shall bear Interest at the rate(s) per annum in effect from time
to
time hereunder, which shall be payable as provided herein. The Payee shall
record on its books the addition of any and all accrued non-cash Interest to
the
Principal of this Note on the scheduled due date thereof; and the Payee’s books
and records shall be conclusive as to the aggregate Principal balance hereunder
from time to time, absence manifest error.
(b) Principal.
The
outstanding Principal of this Note shall be payable in full on March 31, 2009,
or sooner as provided in Section 2(b) below.
(c) Non-Business
Day.
If any
scheduled payment date as aforesaid is not a business day in the State of New
York or the State of Florida, then the payment to be made on such scheduled
payment date shall be due and payable on the next succeeding business day,
with
additional interest on any Principal amount so delayed for the period of such
delay.
2. Prepayment.
(a) Optional
Prepayment of Principal.
Subject
to the Intercreditor Agreement, all or any portion of the unpaid Principal
balance of this Note, together with all accrued and unpaid Interest on the
Principal amount being prepaid, may at the Maker’s option be prepaid in whole or
in part, at any time or from time to time upon ten (10) days’ prior written
notice to the Payee.
(b) Mandatory
Prepayments of Principal.
The
entire Principal balance of this Note, and all accrued and unpaid Interest
hereunder, (i) shall be required to be prepaid upon the consummation of any
Sale, and (ii) may be required to be prepaid upon the occurrence of any Event
of
Default.
(c) Application
of Payments.
Any and
all prepayments hereunder shall be applied first to unpaid accrued Interest
on
the Principal amount being prepaid, and then to Principal.
3. Events
of Default.
The
occurrence or existence of an Event of Default under the Loan Agreement shall
constitute a default under this Note and shall entitle the Payee to accelerate
the entire indebtedness hereunder and take such other action as may be provided
for in the Loan Agreement and/or in any and all other instruments evidencing
and/or securing the indebtedness under this Note, or as may be provided under
the law.
4. Assignment.
This
Note shall be binding upon and shall inure to the benefit of the respective
successors and permitted assigns of the parties hereto, provided that the Maker
may not assign any of its rights or obligations hereunder without the prior
written consent of the Payee.
5. Waiver
and Amendment.
No
waiver of a right in any instance shall constitute a continuing waiver of
successive rights, and any one waiver shall govern only the particular matters
waived. Neither any provision of this Note nor any performance hereunder may
be
amended or waived except pursuant to an agreement in writing signed by the
party
against whom enforcement thereof is sought. Except as otherwise expressly
provided in this Note, the Maker hereby waives diligence, demand, presentment
for payment, protest, dishonor, nonpayment, default, notice of any and all
of
the foregoing, and any other notice or action otherwise required to be given
or
taken under the law in connection with the delivery, acceptance, performance,
default, enforcement or collection of this Note, and expressly agrees that
this
Note, or any payment hereunder, may be extended, modified or subordinated (by
forbearance or otherwise) from time to time, without in any way affecting the
liability of the Maker. The Maker further waives the benefit of any exemption
under the homestead exemption laws, if any, or any other exemption, appraisal
or
insolvency laws, and consents that the Payee may release or surrender, exchange
or substitute any personal property or other collateral security now held or
which may hereafter be held as security for the payment of this
Note.
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6. Governing
Law.
This
Note shall be construed in accordance with and governed by the
laws
of the State of New York, except to the extent superseded by Federal
enactments.
7. Consent
to Jurisdiction; Waiver of Jury Trial.
The
Maker hereby consents to the jurisdiction of all courts of the State of New
York
and the United States District Court for the Southern District of New York,
as
well as to the jurisdiction of all courts from which an appeal may be taken
from
such courts, for the purpose of any suit, action or other proceeding arising
out
of or with respect to this Note. The Maker hereby waives the right to interpose
any counterclaims (other than compulsory counterclaims) in any action brought
by
the Payee hereunder, provided that this waiver shall not preclude the Maker
from
pursuing any such claims by means of separate proceedings. THE MAKER HEREBY
EXPRESSLY WAIVES ANY AND ALL OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY
OF
SUCH COURTS, AND ALSO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. The Payee may file a copy of this Note as evidence of
the
foregoing waiver of right to jury trial.
8. Usury
Savings Clause.
All
agreements between the Maker and the Payee are hereby expressly limited to
provide that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Payee for the use, forbearance
or detention of the indebtedness evidenced hereby exceed the maximum amount
which the Payee is permitted to receive under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof or of the Loan
Agreement or any Loan Document thereunder, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall
automatically be reduced to the limit of such validity, and if from any
circumstance the Payee shall ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal balance of any of the Maker’s
Obligations (as such term is defined in the Loan Agreement) to the Payee, and
not to the payment of interest hereunder. To the extent permitted by applicable
law, all sums paid or agreed to be paid for the use, forbearance or detention
of
the indebtedness evidenced by this Note shall be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment in full,
to the end that the rate or amount of interest on account of such indebtedness
does not exceed any applicable usury ceiling. As used herein, the term
“applicable law” shall mean the law in effect as of the date hereof, provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Note shall be governed by such
new law as of its effective date. This provision shall control every other
provision of all agreements between the Maker and the Payee.
9. Collection
Costs.
In the
event that the Payee shall place this Note in the hands of an attorney for
collection during the continuance of any Event of Default, the Maker shall
further be liable to the Payee for all costs and expenses (including reasonable
attorneys’ fees) which may be incurred by the Payee in enforcing this Note, all
of which costs and expenses shall be obligations under and part of this Note;
and the Payee may take judgment for all such amounts in addition to all other
sums due hereunder.
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IN
WITNESS WHEREOF, the Maker has executed this Note on the date first above
written.
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TECHNICAL
CAREER INSTITUTES, INC.
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By:
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/s/
Xx. Xxxx X.
XxXxxxx
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Name:
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Xx.
Xxxx X. XxXxxxx
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Title:
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Chairman
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PENNSYLVANIA
SCHOOL OF BUSINESS, INC.
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By:
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/s/
Xx. Xxxx X.
XxXxxxx
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Name:
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Xx.
Xxxx X. XxXxxxx
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Title:
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Chief
Executive Officer and President
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