Common use of Senior Subordinated Notes Clause in Contracts

Senior Subordinated Notes. On March 13, 1998, the Company entered into a senior subordinated Note Purchase Agreement as part of its acquisition of Temporary Placement Service, Inc. and Excell Personnel Service Corporation. This agreement was amended on July 29, 1998, and September 11, 1998, in conjunction with the Company’s acquisitions of four other companies. This agreement was further amended on November 15, 2001 as part of a recapitalization. The senior subordinated notes bore interest at a fixed annual rate of 13% per annum. Monthly interest payments of approximately $151,000 were originally to be paid through September 30, 2004. However, interest payments have not been made after November 2000, and as amended in conjunction with a 2001 recapitalization, all remaining principal, together with all unpaid interest as of November 15, 2001, was payable on February 28, 2005. However, on February 25, 2005 the maturity date of these notes was extended to February 28, 2007. Interest ceased to accrue on these notes effective November 15, 2001. If the Company is sold prior to maturity, the subordinated note holders will be entitled to receive only the amount provided for by the sales proceeds distribution schedule as described in the Master Investment Agreement. The Company will retire the senior subordinated notes on the closing of the transaction contemplated by the Agreements through a payment partly in cash, partly in PubCo Common Stock. Purchase Money Subordinated Notes In conjunction with the Company’s purchase of Southeastern Staffing, Inc., the Company issued subordinated notes to the sellers that bore interest at a fixed rate of 8% per annum, payable quarterly. Quarterly principal payments were to commence June 30, 2000, until paid in full, with any remaining balance due at maturity on July 29, 2005. As part of a 2001 recapitalization, effective November 15, 2001, the remaining notes no longer bear interest and were scheduled to mature July 29, 2005, or share in proceeds from a sale of the Company along with other subordinated note holders. On February 25, 2005, the maturity date of these notes was extended to February 28, 2007. The Company will retire the purchase money subordinated notes on the closing of the transaction contemplated by the Agreements through a payment partly in cash, partly in PubCo Common Stock. KRG Colorado, LLC Subordinated Note In 2001, KRG advanced working capital funds to the Company in the approximate principal amount of $1,500,000 in exchange for a promissory note. These advances are non-interest bearing and were to mature on February 5, 2005, or share in distributable proceeds from a sale of the Company along with other holders of the Company’s subordinated debt. On February 25, 2005, the maturity date of these notes was extended to February 28, 2007. The Company will retire the subordinated note on the closing of the transaction contemplated by the Agreements through a payment partly in cash, partly in PubCo Common Stock. Financing Statements to Secure Indebtedness Debtor Secured Party Type File # Collateral Global Employment Solutions, Inc. Wxxxx Fargo Business Credit, Inc. Financing Statement (and 3 amendments) 20012107251 20022009136 20022017483 20022032356 Personal property Global Employment Solutions, Inc. U.S. Bancorp Financing Statement 20012113564 Equipment lease Bay HR, Inc. Wxxxx Fargo Business Credit, Inc Financing Statement 200407033031 Personal property Excell Personnel Service Corporation Wxxxx Fargo Business Credit, Inc Financing Statement (and 1 amendment) 4465054000 4807456 Personal property Friendly Advanced Software Technology, Inc. Wxxxx Fargo Business Credit, Inc Financing Statement (and 3 amendments) 228104 040570 040572 070535 Personal property Main Line Personnel Services, Inc. Wxxxx Fargo Business Credit, Inc Financing Statement (and 1 amendment) 34590242 34941059 Personal property Main Line Personnel Services, Inc. CIT Technology Financing Services, Inc. Financing Statement 20220007868 Equipment lease Main Line Personnel Services, Inc. Citicorp Vendor Finance, Inc. Financing Statement 20040080356 Equipment lease Main Line Personnel Services, Inc.(1) General Electric Capital Corporation Financing Statement 2006011902869 Accounts receivable Southeastern Georgia HR, Inc. Wxxxx Fargo Business Credit, Inc. Financing Statement 000-0000-000000 Personal property Southeastern Personnel Management, Inc. Wxxxx Fargo Business Credit, Inc. Financing Statement 200202990026 Personal property Southeastern Staffing, Inc. Wxxxx Fargo Business Credit, Inc. Financing Statement 200200554253 Equipment lease Southeastern Staffing, Inc. Greatamerica Leasing Corporation Financing Statement 200202295468 Equipment lease Debtor Secured Party Type File # Collateral Southeastern Staffing, Inc. Eplus Group, Inc. Financing Statement 200304038731 Equipment lease Southeastern Staffing, Inc. Ixxxx Business Finance Corporation Financing Statement 200304744067 Equipment lease Southeastern Staffing, Inc. Ixxxx Business Finance Corporation Financing Statement 200305356982 Equipment lease Southeastern Staffing, Inc. Greatamerica Leasing Corporation Financing Statement 20040722922X Equipment lease Southeastern Staffing, Inc. Credential Leasing Corp of Florida, Inc. Financing Statement 200509981737 Equipment lease Southeastern Staffing, Inc. Inter-Tel Leasing Financing Statement 200601654402 Equipment lease Temporary Placement Service, Inc. US Bancorp Financing Statement 000-0000-000000 Equipment lease Temporary Placement Service, Inc. Wxxxx Fargo Business Credit, Inc. Financing Statement (and 4 amendments) 000-0000-000000 000-0000-000000 000-0000-000000 000-0000-000000 000-0000-000000 Personal property