Document:

exv10w9

 

Exhibit 10.9

PREFERRED STOCK SECURITIES PURCHASE AGREEMENT

     PREFERRED STOCK SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of March 31, 2006,
by and among Global Employment Solutions, Inc., a Colorado corporation, with headquarters located
at 9090 Ridgeline Boulevard, Suite 205, Littleton, Colorado 80129 (the “Company”), and the
investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and
collectively, the “Buyers”).

     WHEREAS:

     A. The Company and each Buyer is executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as
amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.

     B. Prior to the Closing (as defined below) and immediately following the consummation of the
Share Exchange (as defined below), the Company will cause PubCo (as defined below) to authorize a
new series of its preferred stock, designated as Series A Convertible Preferred Stock (the “Series
A Preferred Stock“), which preferred stock shall be convertible into PubCo’s common stock (the
“Common Stock”) in accordance with the terms of, and shall be subject to the terms, rights and
preferences set forth in, the Certificate of Designations, Preferences and Rights attached hereto
as Exhibit A (the “Certificate of Designation”).

     C. Each Buyer wishes to purchase, and the Company wishes PubCo to sell, upon the terms and
conditions stated in this Agreement, (i) that number of shares of Series A Preferred Stock (the
“Preferred Shares”) set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers
(with an aggregate purchase price for all Buyers of $12,750,000) and (ii) warrants, in the form
attached hereto as Exhibit B (the “Warrants”), to acquire up to that number of additional
shares of Common Stock set forth opposite such Buyer’s name in column (4) of the Schedule of Buyers
(as exercised, collectively, the “Warrant Shares”).

     D. Contemporaneously with the Closing, the Buyers and PubCo will execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit C (as amended or
modified from time to time, the “Registration Rights Agreement”), pursuant to which the Company
agrees to cause PubCo to provide certain registration rights with respect to the shares of Common
Stock into which the Preferred Shares are convertible (the “Conversion Shares”) and the Warrant
Shares under the 1933 Act and the rules and regulations promulgated thereunder, and applicable
state securities laws.

     E. The Preferred Shares, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the “Securities.”

 

 

     NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

     1. PURCHASE AND SALE OF SERIES A PREFERRED STOCK AND WARRANTS.

          (a) Purchase of Series A Preferred Stock and Warrants. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall cause PubCo to
issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from
PubCo on the Closing Date (as defined below), (x) that number of Preferred Shares as is set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers and (y) Warrants to acquire up
to that number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers (the “Closing”).

          (b) Closing. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York City time, on a date mutually agreed to by the Company and Buyers holding the right
to purchase not less than 66-2/3% of the Preferred Shares to be sold hereunder, such Closing Date
to be as soon as practicable following satisfaction (or waiver) of the conditions to the Closing
set forth in Sections 6 and 7 below at the offices of Drinker Biddle & Reath LLP, One Logan Square,
Philadelphia, PA 19103-6996.

          (c) Purchase Price. The aggregate purchase price for the Preferred Shares and the
Warrants to be purchased by each Buyer at the Closing (the “Purchase Price”) shall be the amount
set forth opposite such Buyer’s name in column (5) of the Schedule of Buyers. Each Buyer shall pay
$1,000 for each share of Series A Preferred Stock and related Warrants to be purchased by such
Buyer at the Closing.

          (d) Form of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase Price
to PubCo for the Preferred Shares and the Warrants to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately available funds in accordance with the Company’s or
PubCo’s written wire instructions, and (ii) the Company shall cause PubCo to deliver to each Buyer
(A) the Preferred Shares which such Buyer is then purchasing and (B) the Warrants (in the amounts
as such Buyer shall request) which such Buyer is purchasing, in each case duly executed on behalf
of PubCo and registered in the name of such Buyer or its designee.

     2. BUYER’S REPRESENTATIONS AND WARRANTIES.

          Each Buyer represents and warrants with respect to only itself that:

          (a) No Public Sale or Distribution. Such Buyer is (i) acquiring the Preferred Shares
and the Warrants and (ii) upon conversion of the Preferred Shares and exercise of the Warrants will
acquire the Conversion Shares and the Warrant Shares (less any Warrant Shares forfeited upon a
Cashless Exercise (as defined in the Warrants)), in each case, for its own account and not with a
view towards, or for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.
Such Buyer is acquiring the Securities hereunder in the ordinary

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course of its business. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.

          (b) Accredited Investor Status. Such Buyer is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D.

          (c) Reliance on Exemptions. Such Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

          (d) Information. Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained herein. Such Buyer understands that its
investment in the Securities involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.

          (e) No Governmental Review. Such Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

          (f) Transfer or Resale. Such Buyer understands that except as will be provided in the
Registration Rights Agreement: (i) the Securities have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to
PubCo an opinion, in generally acceptable form, of counsel selected by the Buyer and reasonably
satisfactory to PubCo, to the effect that such Securities to be sold, assigned or transferred may
be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer
provides PubCo with reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto)
(collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the Person (as defined in
Section 3(o)) through whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) none of the Company, PubCo or any other
Person is under any obligation to

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register the Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder.

          (g) Legends. Such Buyer understands that the certificates or other instruments
representing the Preferred Shares and Warrants and, until such time as the resale of the Conversion
Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear any legend that is required by the “blue sky”
laws of any state and a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER AND
REASONABLY ACCEPTABLE TO THE ISSUER, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and PubCo shall issue a certificate without such legend
to the holder of the Securities upon which it is stamped, if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer, such holder provides PubCo with an opinion of
counsel reasonably acceptable to PubCo, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration under the
applicable requirements of the 1933 Act, or (iii) such holder provides PubCo with reasonable
assurances of the holder’s belief that the Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A.

          (h) Validity; Enforcement. This Agreement has been, and when the other Transaction
Documents (as defined below) to which such Buyer is a party are executed and delivered in
accordance with the terms and conditions contemplated hereby and thereby, such documents shall have
been, duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer

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enforceable against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

          (i) Residency. Such Buyer is a resident of the jurisdiction specified below its
address on the Schedule of Buyers.

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 

          The Company represents and warrants to each of the Buyers that:

          (a) Organization and Qualification. The Company and its “Subsidiaries” (which for
purposes of this Agreement means any entity in which the Company and/or after the Closing, PubCo,
directly or indirectly, owns capital stock or holds an equity or similar interest) are entities
duly organized and validly existing in good standing under the laws of the jurisdiction in which
they are formed, and have the requisite power and authority to own their properties and to carry on
their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified
as a foreign entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good standing would
not reasonably be expected to have a Material Adverse Effect. As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole, or on the transactions contemplated hereby and the other
Transaction Documents (as defined below) or by the agreements and instruments to be entered into in
connection herewith or therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents to which it is a party. The Company has no
Subsidiaries except as set forth on Schedule 3(a).

          (b) Authorization; Enforcement; Validity. The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement and each of the other
agreements entered into by the parties hereto in connection with the transactions contemplated by
this Agreement to which the Company is a party (such documents, and together with the Certificate
of Designation, the Warrants, the Registration Rights Agreement, the Irrevocable Transfer Agent
Instructions, and each of the other agreements to be entered into in connection with the
transactions contemplated by this Agreement, collectively, the “Transaction Documents”). The
execution and delivery of the Transaction Documents to which the Company is a party and the
consummation by the Company of the transactions contemplated hereby and thereby have been duly
authorized by the Company’s Board of Directors and no further filing, consent, or authorization is
required by the Company, its Board of Directors or its stockholders. This Agreement and the other
Transaction Documents to which the Company is a party have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance,

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liquidation or similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

          (c) Offer of Securities. The offer by the Company of the Securities is exempt from
registration under the 1933 Act.

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which the Company is a party and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) result in a violation of any certificate of
incorporation, certificate of formation, any certificate of designations or other constituent
documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its
Subsidiaries, or the bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.

          (e) Consents. The Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental agency or any regulatory
or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of
its obligations under or contemplated by the Transaction Documents to which it is a party, in each
case in accordance with the terms hereof or thereof, other than the current report on Form 8-K
required to be filed after Closing by PubCo pursuant to Section 4(h) of this Agreement, the Form D
filing required to be made following the Closing by PubCo with the SEC and the registration
statement and related state securities law filings required by the Registration Rights Agreement.

          (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges
and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby and thereby and that
no Buyer is (i) an officer or director of the Company, (ii) an “affiliate” of the Company (as
defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of more than
10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange
Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect
to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each Buyer that the decision of the
Company and each of the Subsidiaries to enter into the Transaction Documents, as applicable, has
been based solely on the independent evaluation by the Company, its Subsidiaries and their
representatives.

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          (g) No General Solicitation; Placement Agent’s Fees. None of the Company, any of its
affiliates, or any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim. The Company acknowledges that it has engaged Rodman & Renshaw, LLC
as placement agent (the “Agent”) in connection with the sale of the Securities. The Company will
also pay a fee of up to $810,000 to Ewing Bemiss & Co. (“Bemiss”) contemporaneously with the
Closing. Other than the Agent and Bemiss, the Company has not engaged any placement agent or other
agent in connection with the sale of the Securities.

          (h) No Integrated Offering. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that would
require registration of any of the Securities under the 1933 Act or cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the securities of the
Company are listed or designated.

          (i) Financial Statements. The financial statements of the Company have been prepared
in accordance with United States generally accepted accounting principles consistently applied
(“GAAP”), during the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except for liabilities and obligations incurred
in the ordinary course of business and consistent with past practice, liabilities and obligations
reflected on or reserved against in the January 1, 2006 audited balance sheet prepared in
accordance with GAAP delivered pursuant to Section 7(o) (the “Balance Sheet”) and as otherwise
disclosed herein or in the disclosure schedules to this Agreement, since January 2, 2006, inclusive
of such date, the Company has not incurred any liabilities or obligations that would be required to
be reflected or reserved against in a balance sheet of the Company prepared in accordance with the
principles used in preparation of the Balance Sheet.

          (j) Absence of Certain Changes. Since January 1, 2006, there has been no change or
development in the business, properties, operations, condition (financial or otherwise), results of
operations or prospects of the Company or its Subsidiaries that has had or could reasonably be
expected to have a Material Adverse Effect. Since January 1, 2006, the Company has not (i)
declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess
of $100,000 outside of the ordinary course of business, (iii) had capital expenditures,
individually or in the aggregate, in excess of $500,000 or (iv) waived any material rights with

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respect to any Indebtedness or other rights in excess of $100,000 owed to it. The Company has
not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company is not as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing will not be, Insolvent (as defined below). For purposes of this
Section 3(j), “Insolvent” means (i) the present fair saleable value of the Company’s assets is less
than the amount required to pay the Company’s total Indebtedness (as defined in Section 3(o)), (ii)
the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as such debts mature or
(iv) the Company has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.

          (k) Conduct of Business; Regulatory Permits. Neither the Company nor its Subsidiaries
is in violation of any term of or in default under its certificate of incorporation, certificate of
formation, any certificate of designations or other constituent documents or its bylaws. Neither
the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries, except for
possible violations which would not, individually or in the aggregate, have a Material Adverse
Effect. The Company and its Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit.

          (l) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor
any director, officer, agent, employee or other Person acting on behalf of the Company or any of
its Subsidiaries has, in the course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.

          (m) Transactions With Affiliates. Except as set forth in Schedule 3(m)
hereto, other than the issuance of restricted stock disclosed on Schedule 3(n), none of the
officers, directors or employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any such

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officer, director, or employee has a substantial interest or is an officer, director, trustee
or partner.

          (n) Equity Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of common stock, $.01 par value, 2,693,370 of which are
issued and outstanding and (ii) 50,000,000 shares of preferred stock, $.01 par value, of which
7,000,000 shares have been designated as Series C Preferred Stock, 6,825,780 of which are issued
and outstanding, and 30,000,000 have been designated as Series D Preferred Stock, 21,841,930.34 of
which are issued and outstanding. All of such outstanding shares have been, or upon issuance will
be, validly issued and are fully paid and nonassessable. Except as disclosed in Schedule
3(n) or Schedule 3(o): (i) none of the Company’s share capital is subject to
preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any share capital of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional share capital of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any share capital of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness (as defined in Section 3(o) hereof) of the Company
or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become
bound; (iv) there are no financing statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company; (v) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the 1933 Act (except the Registration Rights Agreement); (vi)
there are no outstanding securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement; (ix) all of the Company’s
outstanding options and warrants shall be cancelled at Closing; and (x) no securities of the
Company or PubCo are listed or quoted on any stock exchange or automated quotation system.
Immediately after giving effect to the Merger and the Share Exchange (as such terms are defined in
Section 7(n) hereof), (i) all of the Company’s issued and outstanding stock shall be owned by PubCo
and (ii) all other securities issued by the Company (including, without limitation, the Series C
Preferred Stock, the Series D Preferred Stock and any securities disclosed in Schedule
3(n)) shall have been exchanged for shares of PubCo’s Class A Common Stock (the “Class A Common
Stock”), PubCo’s Class B Common Stock (the “Class B Common Stock”), or PubCo’s Common
Stock, as
applicable. The Company has furnished to the Buyer true, correct and complete copies of the
Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the
“Certificate of Incorporation”), the Company’s Bylaws, as amended and as in effect on the date
hereof (the “Bylaws”), and all agreements relating to securities convertible into, or exercisable
or

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exchangeable for, shares of Common Stock and the material rights of the holders thereof in
respect thereto.

          (o) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(o),
neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined
below), (ii) is a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or instrument would result
in a Material Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv)
is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse
Effect. Schedule 3(o) provides a detailed description of the material terms of any such
outstanding Indebtedness. Immediately after giving effect to the Merger and the Share Exchange (as
such terms are defined in Section 7(n) hereof), neither the Company nor PubCo shall have any
outstanding Indebtedness, other than the Senior Secured Convertible Notes to be issued pursuant to
the terms of the Notes Securities Purchase Agreement in the form attached hereto as Exhibit
D (the “Notes”) (which Notes shall be in the form attached hereto as Exhibit E), the
Senior Indebtedness (as such term is defined in the Notes) and the Permitted Indebtedness (as such
term is defined in the Notes) set forth on Schedule 3(o)(i). For purposes of this
Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of
property or services including, without limitation, “capital leases” in accordance with U.S. GAAP
(other than trade payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition of property, assets
or businesses, (E) all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to any property or
assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar arrangement which, in
connection with U.S. GAAP, consistently applied for the periods covered thereby, is classified as a
capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is
to provide assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or that the holders of
such liability will be protected (in whole or in part) against loss with respect thereto; and (z)
“Person” means an individual, a limited liability company, a partnership,

10

 

a joint venture, a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

          (p) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation that is material, individually or in the aggregate, before or by, any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of the Company’s
Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors.

          (q) Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

          (r) Employee Relations.

               (i) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company and its Subsidiaries believe that their
relations with their employees are good. None of Howard Brill, Dan Hollenbach, Robert Larkin,
Steve Pennington or any officer in the capacity of President-Professional Staffing or any other
person holding a similar office or holding an office at a similar level as the foregoing (the
“Executive Officers”) have notified the Company that such officer intends to leave the Company or
otherwise terminate such officer’s employment with the Company. No Executive Officer of the
Company, to the knowledge of the Company, is, or is expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each Executive Officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters.

               (ii) The Company and its Subsidiaries are in compliance with all federal, state, local and
foreign laws and regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to be in compliance
would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

          (s) Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each case free and clear
of all liens, encumbrances and defects except for the blanket lien securing the Senior Indebtedness
(as defined in the Notes) and such as do not materially affect the value of such

11

 

property and do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.

          (t) Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, service marks, and all applications and
registrations therefor, trade names, patents, patent rights, copyrights, original works of
authorship, inventions, licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective
businesses as now conducted. None of the Company’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened, against the Company or
its Subsidiaries regarding its Intellectual Property Rights. The Company is unaware of any facts
or circumstances which might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their Intellectual Property Rights.

          (u) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with
any and all applicable Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit,
license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse
Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder.

          (v) Subsidiary Rights. Except as set forth in Schedule 3(v), the Company or
one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or each Subsidiary.

          (w) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all
foreign, federal and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental

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assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set
aside on its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. No liens have been filed and
no claims are being asserted by or against the Company or any of its Subsidiaries with respect to
any taxes (other than liens for taxes not yet due and payable). Neither the Company nor it
Subsidiaries has received notice of assessment or proposed assessment of any taxes claimed to be
owed by it or any other Person on its behalf. Except as disclosed on Schedule 3(w),
neither the Company nor any Subsidiary is a party to any tax sharing or tax indemnity agreement or
any other agreement of a similar nature that remains in effect. Each of the Company and its
Subsidiaries has complied in all material respects with all applicable legal requirements relating
to the payment and withholding of taxes and, within the time and in the manner prescribed by law,
has withheld from wages, fees and other payments and paid over to the proper governmental or
regulatory authorities all amounts required.

          (x) Internal Accounting Controls. The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with U.S. GAAP and to maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference.

          (y) Upon the payment of cash and shares of Common Stock in the amounts set forth on
Schedule 3(y)(i) (the “Required Repayments”) to the holders of the Indebtedness identified
as “Subordinated Indebtedness” on Schedule 3(o), the Company shall have fulfilled any and
all of its obligations to the holders of the Indebtedness identified as “Subordinated Indebtedness”
on Schedule 3(o) arising from, under or with respect to the Master Investment Agreement,
dated as of November 15, 2001, by and among the Company, Global Investment I, LLC and the other
parties identified therein, as currently in effect (the “Master Investment Agreement”). Upon the
payment of the cash and shares of Common Stock to the parties and in the amounts set forth on
Schedule 3(y)(ii) (collectively, the “Management Payments”), the Company shall have
fulfilled any and all of its obligations to such parties arising from, under or with respect to (i)
the Certificate of Incorporation, (ii) the Company’s Series C Preferred Stock, (iii) the Company’s
Series D Preferred Stock, (iv) the Company’s Restricted Stock Plan, as currently in effect, and (v)
the Master Investment Agreement, as applicable.

          (z) Disclosure. All disclosure, oral or written, provided to the Buyers regarding the
Company, its business and the transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on behalf of the Company, taken as a whole, is true and correct and does
not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading.

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     4. COVENANTS.

          (a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the
conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

          (b) Form D and Blue Sky. The Company agrees to cause PubCo to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such
action, or cause PubCo to take such action, as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of
the United States (or to obtain an exemption from such qualification), and shall provide evidence
of any such action so taken to the Buyers on or prior to the Closing Date.

          (c) Reporting Status. Until the date on which the Investors (as defined in the
Registration Rights Agreement) shall have sold all the Conversion Shares and Warrant Shares and
none of the Preferred Shares or Warrants is outstanding (the “Reporting Period”), the Company shall
cause PubCo to use every reasonable effort to timely file all reports required to be filed with the
SEC pursuant to the 1934 Act, and the Company shall not permit PubCo to terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.

          (d) Financial Information. (i) The Company agrees to cause PubCo to send the
following to each Investor during the Reporting Period unless the following are filed with the SEC
through EDGAR and are available to the public through the EDGAR system, within one Business Day
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K or 10-KSB, any
interim reports or any consolidated balance sheets, income statements, stockholders’ equity
statements and/or cash flow statements for any period other than annual, any Current Reports on
Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act, (ii) on the same day as the release thereof, facsimile copies of all press releases
issued by PubCo, the Company or any of its Subsidiaries, and (iii) copies of any notices and other
information made available or given to the stockholders of PubCo or the Company generally,
contemporaneously with the making available or giving thereof to the stockholders.

          (e) Until the Closing, the Company agrees to promptly deliver to each Buyer a copy of all
financial statements prepared by the Company for distribution to any of the Company’s shareholders,
lenders or its board of directors.

          (f) Fees. The Company and PubCo shall reimburse Radcliffe SPC, Ltd. for and on behalf
of the Class A Convertible Crossover Segregated Portfolio (“Radcliffe”), or its designee(s), for
all reasonable costs and expenses (in addition to any amounts previously paid) incurred in
connection with the transactions contemplated by the Transaction Documents (including all
reasonable legal fees and disbursements in connection therewith, documentation and implementation
of the transactions contemplated by the Transaction Documents and due diligence in connection
therewith), which amount may be, at the sole option of Radcliffe, after application of the $35,000
advance toward such fees and expenses previously paid by the

14

 

Company to Radcliffe, withheld by such Buyer from its Purchase Price at the Closing. The
Company and PubCo, as applicable, shall be responsible for the payment of any placement agent’s
fees, financial advisory fees, or broker’s commissions (other than for Persons engaged by any
Buyer) relating to or arising out of the transactions contemplated hereby, including, without
limitation, any fees or commissions payable to the Agent. The Company shall pay, or cause PubCo to
pay, and hold, or cause PubCo to hold, each Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any claim relating to any such payment. Except as otherwise set forth in the
Transaction Documents, each party to this Agreement shall bear its own expenses in connection with
the sale of the Securities to the Buyers.

          (g) Pledge of Securities. The Company, on behalf of itself and PubCo, acknowledges
and agrees that the Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities
shall be required to provide the Company or PubCo with any notice thereof or otherwise make any
delivery to the Company or PubCo pursuant to this Agreement or any other Transaction Document,
including, without limitation, Section 2(f) hereof; provided that an Investor and its pledgee shall
be required to comply with the provisions of Section 2(f) hereof in order to effect a sale,
transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and
deliver, and to cause PubCo to execute and deliver, such documentation as a pledgee of the
Securities may reasonably request in connection with a pledge of the Securities to such pledgee by
an Investor.

          (h) Disclosure of Transactions and Other Material Information. On or before 8:30
a.m., New York Time, on the first Business Day following the Closing Date, the Company shall cause
PubCo to file a press release (the “Press Release”) describing the material terms of the
transactions contemplated by the Transaction Documents. On or before 8:30 a.m., New York Time, on
the second Business Day following the Closing Date, the Company shall cause PubCo to file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this Agreement), the
Certificate of Designation, the form of Warrant and the Registration Rights Agreement) as exhibits
to such filing (including all attachments, the “8-K Filing”). From and after the issuance of the
Press Release, no Buyer shall be in possession of any material, nonpublic information received from
the Company, PubCo, any of its Subsidiaries or any of their respective officers, directors,
employees or agents, that is not disclosed in the Press Release. The Company shall not, and shall
cause PubCo and each of their Subsidiaries and their and each of their respective officers,
directors, employees and agents, not to, provide any Buyer with any material, nonpublic information
regarding the Company, PubCo or any of their Subsidiaries from and after the issuance of the Press
Release without the express written consent of such Buyer. In the event of a breach of the
foregoing covenant by the Company, any of their Subsidiaries, or any of their respective officers,
directors, employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such material, nonpublic information without
the prior approval by the Company, their Subsidiaries, or any of

15

 

their respective officers, directors, employees or agents. No Buyer shall have any liability
to the Company, PubCo, its Subsidiaries, or any of their respective officers, directors, employees,
stockholders or agents for any such disclosure. Subject to the foregoing, neither the Company,
PubCo, nor any Buyer shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that PubCo shall be
entitled, without the prior approval of any Buyer, to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) the holders of 66-2/3% of the outstanding shares of Series A
Preferred Stock shall be consulted by PubCo in connection with and given an opportunity to review
and comment on any such press release or other public disclosure prior to its release).
Notwithstanding the foregoing, neither PubCo nor the Company shall publicly disclose the name of
any Buyer, or include the name of any Buyer in any filing with the SEC or any regulatory agency or
the National Association of Securities Dealers, Inc.’s OTC Bulletin Board (the “Principal Market”)
or the stock exchange or automated quotation system upon which PubCo’s shares of Common Stock are
traded, including, without limitation, any and all discounted issuance rules, if applicable,
without the prior written consent of such Buyer, except (i) for disclosure thereof in the 8-K
Filing or Registration Statement or (ii) as required by law or Principal Market regulations, the
regulations of the stock exchange or automatic quotation system upon which PubCo’s shares of Common
Stock are then traded or any order of any court or other governmental agency, in which case PubCo
shall provide such Buyer with prior notice of such disclosure and the opportunity to review and
comment on such disclosure.

          (i) Special Dividend; Restriction on Redemption and Other Cash Dividends. Immediately
after giving effect to the Merger and the Share Exchange (as such terms are defined in Section 7(n)
hereof), PubCo shall declare and pay an aggregate cash dividend of not more than $25.58528 per
share on its outstanding Class A Common Stock (the “Class A Dividend”) and an aggregate cash
dividend of not more than $3.21374 per share on its outstanding Class B Common Stock (the “Class B
Dividend,” and collectively with the Class A Dividend, the “Special Dividend”). Immediately
following the payment of the Special Dividend, each share of Class A Common Stock and each share of
Class B Common Stock shall, automatically and without further action by the Company, PubCo or any
other party, convert into one share of Common Stock (such conversions, the “Required Conversions”).
So long as any Preferred Shares are outstanding, the Company shall cause PubCo not to, directly or
indirectly, redeem, or declare or pay any cash dividend or distribution on, the Common Stock
without the prior express written consent of the holders of shares of Series A Preferred Stock
representing not less than 66-2/3% of the then outstanding shares of Series A Preferred Stock;
provided that the foregoing shall not prohibit the payment of the Special Dividend as contemplated
hereby.

          (j) Additional Series A Preferred Stock; Variable Securities; Dilutive Issuances. For
so long as any Buyer beneficially owns any Securities, the Company shall cause PubCo not to issue
any shares of Series A Preferred Stock other than to the Buyers as contemplated hereby and the
Company shall cause PubCo not to issue any other securities that would cause a breach of the terms
of the Series A Preferred Stock contained in the Certificate of Designation. For so long as any
shares of Series A Preferred Stock or Warrants remain outstanding, the Company shall cause PubCo
not to, in any manner, issue or sell any rights, warrants or options to subscribe for or purchase
Common Stock or directly or indirectly

16

 

convertible into or exchangeable or exercisable for Common Stock at a price which varies or
may vary with the market price of the Common Stock, including by way of one or more reset(s) to any
fixed price unless the conversion, exchange or exercise price of any such security cannot be less
than the then applicable Conversion Price (as defined in the Certificate of Designation) with
respect to the Common Stock into which the shares of Series A Preferred Stock are convertible or
the then applicable Exercise Price (as defined in the Warrants) with respect to the Common Stock
into which any Warrant is exercisable. For so long as any Preferred Shares or Warrants remain
outstanding, the Company shall cause PubCo not to, in any manner, enter into or affect any Dilutive
Issuance (as defined in the Certificate of Designation) if the effect of such Dilutive Issuance is
to cause PubCo to be required to issue upon conversion of any shares of Series A Preferred Stock or
exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common
Stock which PubCo may issue upon conversion of the Preferred Shares and exercise of the Warrants
without breaching PubCo’s obligations under the rules or regulations of the Principal Market or the
stock exchange or automated quotation system upon which PubCo’s shares of Common Stock are traded,
including, without limitation, any and all discounted issuance rules, if applicable.

          (k) Corporate Existence. So long as any Buyer beneficially owns any Securities, the
Company shall cause PubCo not to be party to any Fundamental Transaction (as defined in the
Certificate of Designation) unless PubCo is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Certificate of Designation and the Warrants.

          (l) Reservation of Shares. The Company shall cause PubCo to take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, after the Closing Date,
130% of the number of shares of Common Stock issuable upon conversion of all shares of Series A
Preferred Stock and upon exercise of the Warrants.

          (m) Conduct of Business. The business of PubCo, the Company and their Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of any governmental entity,
except where such violations would not result, either individually or in the aggregate, in a
Material Adverse Effect.

          (n) Additional Issuances of Securities.

                      (i) For purposes of this Section 4(n), the following definitions shall apply.

          (A) “Convertible Securities” means any stock or securities (other than Options) convertible
into or exercisable or exchangeable for shares of Common Stock.

          (B) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

          (C) “Common Stock Equivalents” means, collectively, Options and Convertible Securities.

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               (ii) From the date hereof until the date that is 180 Trading Days (as defined in the
Certificate of Designations) following the Effective Date (as defined in the Registration Rights
Agreement), as such date may be extended by one Trading Day for each Trading Day following the
Effective Date on which the Registration Statement required to be filed by PubCo pursuant to the
Registration Rights Agreement cannot be utilized by the holders of Preferred Shares for the resale
of all of the Registrable Securities (as defined in the Registration Rights Agreement) (the
“Trigger Date”), neither PubCo nor the Company will, directly or indirectly, offer, sell, grant any
option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its Subsidiaries’ equity or equity equivalent
securities, including without limitation any debt, preferred stock or other instrument or security
that is, at any time during its life and under any circumstances, convertible into or exchangeable
or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a “Subsequent Placement”) without the prior
written approval of the holders of 66-2/3% of the outstanding shares of Series A Preferred Stock.

               (iii) From the Trigger Date until the two year anniversary of the Closing Date, the Company
shall cause PubCo not to, directly or indirectly, effect any Subsequent Placement unless PubCo
shall have first complied with this Section 4(n)(iii).

          (A) PubCo shall deliver to each Buyer a written notice (the “Offer Notice”) of any proposed or
intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered
Securities”) in a Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold
or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged,
(y) identify the persons or entities (if known) to which or with which the Offered Securities are
to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such
Buyers a pro rata portion of 50% of the Offered Securities (a) based on such Buyer’s pro rata
portion of the outstanding Preferred Shares purchased hereunder (the “Basic Amount”), and (b) with
respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the
Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts
(the “Undersubscription Amount”).

          (B) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to PubCo
prior to the end of the 10th Business Day after such Buyer’s receipt of the Offer Notice
(the “Offer Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects
to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice
of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the total of all
of the Basic Amounts, then each Buyer who has set forth an Undersubscription Amount in its Notice
of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Buyer
who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion
of the Available Undersubscription Amount as the Basic Amount of

18

 

such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for
Undersubscription Amounts, subject to rounding by PubCo to the extent its deems reasonably
necessary, which process shall be repeated until the Buyers shall have had the opportunity to
subscribe for any remaining Undersubscription Amount.

          (C) PubCo shall have 10 Business Days from the expiration of the Offer Period above to offer,
issue, sell or exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Buyers (the “Refused Securities”), but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not more favorable to the
acquiring person or persons or less favorable to PubCo than those set forth in the Offer Notice.

          (D) In the event PubCo shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 4(n)(iii) above), then each Buyer
may, at its sole option and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not less than the
number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section
4(n)(iii)(2) above multiplied by a fraction, (i) the numerator of which shall be the number or
amount of Offered Securities PubCo actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section 4(n)(iii) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Buyer so elects to reduce the number or amount of Offered
Securities specified in its Notice of Acceptance, PubCo may not issue, sell or exchange more than
the reduced number or amount of the Offered Securities unless and until such securities have again
been offered to the Buyers in accordance with Section 4(n)(iii) above.

          (E) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Buyers shall acquire from PubCo, and PubCo shall issue to the Buyers, the number or
amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section
4(n)(iii) above if the Buyers have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Buyers of any Offered Securities is subject in all cases to the
preparation, execution and delivery by PubCo and the Buyers of a purchase agreement relating to
such Offered Securities reasonably satisfactory in form and substance to the Buyers and their
respective counsel.

          (F) Any Offered Securities not acquired by the Buyers or other persons in accordance with
Section 4(n)(iii) above may not be issued, sold or exchanged until they are again offered to the
Buyers under the procedures specified in this Agreement.

               (iv) The restrictions contained in subsections (ii) and (iii) of this Section 4(n) shall not
apply in connection with any Excluded Issuance (as defined in the Certificate of Designation) or
any bona fide firm commitment underwritten public offering with a nationally recognized underwriter
pursuant to an effective registration statement under the 1933 Act that generates net proceeds to
the Company or PubCo, as applicable, of at least $30 million (other than an “at-the-market
offering” as defined in Rule 415(a)(4) under the 1933 Act and “equity lines”).

19

 

          (o) Integration. None of PubCo, the Company, their Subsidiaries, their affiliates and
any Person acting on their behalf will take any action or steps referred to in Section 3(h) that
would require registration of any of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.

          (p) Holding Period. For the purposes of Rule 144, the Company acknowledges, on behalf
of itself and PubCo, based on current securities laws, that the holding period of the Conversion
Shares may be tacked onto the holding period of the Preferred Shares and the holding period of the
Warrant Shares may be tacked onto the holding period of the Warrants (in the case of Cashless
Exercise (as defined in the Warrants)) and the Company, on behalf of itself and PubCo, agrees not
to take a position contrary to this Section 4(p).

          (q) OTC Bulletin Board. The Company shall cause PubCo to use best efforts and to
cooperate in Rodman & Renshaw, LLC’s application to cause the Common Stock to become designated for
quotation on the Principal Market as soon as practicable following the Closing Date and thereafter
to comply with the rules of the Principal Market. If the Common Stock is not designated for
quotation on the Principal Market by the 10th Business Day after the earlier to occur of
the Effective Date (as defined in the Registration Rights Agreement) or the applicable
Effectiveness Deadline (as defined in the Registration Rights Agreement) (such date, the “OTC
Deadline”), then, as partial relief for the damages to any holder by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not
be exclusive of any other remedies available at law or in equity), the Company shall pay to each
Investor (as such term is defined in the Registration Rights Agreement) an amount in cash equal to
(i) one percent of the aggregate Face Amount (as such term is defined in the Certificate of
Designation) of such Investor’s shares of Series A Preferred Stock on the day of the OTC Deadline
and (ii) two percent of the aggregate Face Amount of such Investor’s shares of Series A Preferred
Stock on every 30th day after the day of the OTC Deadline (pro rated for periods
totaling less than 30 days) until the Common Stock is designated for quotation on the Principal
Market. The payments to which an Investor shall be entitled pursuant to this Section 4(q) are
referred to herein as “OTC Delay Payments.” OTC Delay Payments shall be paid on the earlier of (x)
the dates set forth above and (y) the third Business Day after the first day that the Common Stock
is designated for quotation on the Principal Market. In the event the Company fails to make OTC
Delay Payments in a timely manner, such OTC Delay Payments shall bear interest at the rate of two
percent per month (prorated for partial months) until paid in full. Notwithstanding anything
herein or in the Registration Rights Agreement to the contrary, (i) no OTC Delay Payments shall be
due and payable with respect to the Warrants or the Warrant Shares and (ii) in no event shall the
aggregate amount of OTC Delay Payments payable to any Investor, together with any Registration
Delay Payments (as defined in the Registration Rights Agreement) payable to such Investor, in each
case that are outside of the control of the Company or PubCo, exceed, in the aggregate, 10% of the
aggregate Face Amount of such Investor’s shares of Series A Preferred Stock.

          (r) Required Repayments; Management Payments. Contemporaneously with the Closing, the
Company or its agent shall make the Required Repayments and the Management Payments; provided,
however, (i) that prior to making any Required Repayment, the Company shall have received from the
holders of the Indebtedness identified as “Subordinated Indebtedness” on Schedule 3(o) a
written statement acknowledging that upon payment by the

20

 

Company of the Required Repayments, all of such Indebtedness shall be satisfied and cancelled;
and (ii) that prior to making any Management Payment, the Company or its agent shall have received
a letter of transmittal from each intended recipient of such Management Payment acknowledging that
such Management Payment satisfies all of the Company’s obligations to such recipient under (A) the
Certificate of Incorporation, (B) the Company’s Series C Preferred Stock, (C) the Company’s Series
D Preferred Stock, (D) the Company’s Restricted Stock Plan, as in effect on the date hereof, and
(E) the Master Investment Agreement, and, in each case, releasing the Company from any and all
further obligations arising from, under or with respect thereto.

     5. REGISTER; TRANSFER AGENT INSTRUCTIONS.

          (a) Register. The Company shall cause PubCo to maintain at its principal executive
offices (or such other office or agency of PubCo as it may designate by notice to each holder of
Securities), a register for the Series A Preferred Stock and the Warrants, in which PubCo shall
record the name and address of the Person in whose name the shares of Series A Preferred Stock and
the Warrants and have been issued (including the name and address of each transferee), the number
of shares of Series A Preferred Stock held by such Person, the number of Conversion Shares issuable
upon conversion of the Series A Preferred Stock and Warrant Shares issuable upon exercise of the
Warrants held by such Person. The Company shall cause PubCo to keep the register open and
available at all times during business hours for inspection of any Buyer or its legal
representatives.

          (b) Transfer Agent Instructions. The Company shall cause PubCo to issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, which legend removal
instructions shall be consistent with Section 2(g) hereof and shall instruct such transfer agent to
issue certificates or credit shares to the applicable balance accounts at The Depository Trust
Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares issued at the Closing or upon conversion of the Series A
Preferred Stock or exercise of the Warrants in such amounts as specified from time to time by each
Buyer to PubCo upon conversion of the Series A Preferred Stock or exercise of the Warrants in the
form of Exhibit F attached hereto (the “Irrevocable Transfer Agent Instructions”). If a
Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(f)
hereof, the Company shall cause PubCo to permit the transfer and shall promptly instruct its
transfer agent to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such Buyer to effect such
sale, transfer or assignment. The Company acknowledges, on behalf of itself and PubCo, that a
breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges, on behalf of itself and PubCo, that the remedy at law for a breach of its
obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company or PubCo of the provisions of this Section 5(b), that a Buyer
shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.

21

 

     6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

          The obligation of the Company and PubCo hereunder to issue and sell the shares of Series A
Preferred Stock and the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company’s and PubCo’s benefit and may be waived by the Company or
PubCo at any time in their discretion by providing each Buyer with prior written notice thereof:

          (a) Such Buyer shall have executed each of the Transaction Documents to which it is a party
and delivered the same to the Company.

          (b) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for
the shares of Series A Preferred Stock (less, in the case of Radcliffe, the amounts withheld
pursuant to Section 4(f) of this Agreement) and the related Warrants being purchased by such Buyer
at the Closing by wire transfer of immediately available funds pursuant to the wire instructions
provided by the Company.

          (c) The representations and warranties of such Buyer shall be true and correct in all material
respects (except for those representations and warranties that are qualified by materiality or
Material Adverse Effect, which shall be true and correct in all respects) as of the date when made
and as of the Closing Date as though made at that time (except for representations and warranties
that speak as of a specific date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to
be performed, satisfied or complied with by such Buyer at or prior to the Closing Date.

     7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

          The obligation of each Buyer hereunder to purchase the Series A Preferred Stock and the
related Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for each Buyer’s sole benefit
and may be waived by such Buyer at any time in its sole discretion by providing the Company or
PubCo with prior written notice thereof:

          (a) Each of the Company, PubCo and each of their Subsidiaries, to the extent each is a party
thereto, shall have executed and delivered to such Buyer (i) each of the Transaction Documents,
(ii) certificates evidencing the number of Preferred Shares being purchased by such Buyer at the
Closing pursuant to this Agreement and (iii) the Warrants (in such amounts as such Buyer shall
request) being purchased by such Buyer at the Closing pursuant to this Agreement.

          (b) PubCo shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent
Instructions, in the form of Exhibit F attached hereto, which instructions shall have been
delivered to and acknowledged in writing by the Company’s transfer agent.

22

 

          (c) Such Buyer shall have received the opinion of Brownstein Hyatt & Farber, P.C. (“BHF”),
PubCo’s and the Company’s outside counsel, dated as of the Closing Date, in the form of Exhibit
G attached hereto.

          (d) The Company and PubCo shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company, PubCo and each of their Subsidiaries in such entity’s
jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within 10 days of the Closing Date.

          (e) The Company and PubCo shall have delivered to such Buyer a certificate evidencing the
Company’s and PubCo’s qualification as a foreign corporation and good standing issued by the
Secretary of State (or comparable office) of each jurisdiction in which the Company and PubCo,
conducts business, as of a date within 10 days of the Closing Date.

          (f) PubCo
shall have filed the Certificate of Designation with the Secretary of State
of the State of Delaware and such Certificate of Designation shall continue to be in full force and
effect as of the Closing Date. The Company and PubCo shall have delivered to such Buyer a
certified copy of the Certificate of Incorporation and the certificate of incorporation of PubCo,
as amended by the Certificate of Designation, as certified by the Secretary of State of the State
of Colorado and Delaware, respectively, within 10 days of the Closing Date.

          (g) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of
the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section
3(b) hereof as adopted by the Company’s Board of Directors in a form reasonably acceptable to such
Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the
Closing, in the form attached hereto as Exhibit H.

          (h) The representations and warranties of the Company shall be true and correct, and the
Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by
the Company at or prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to the other matters set forth in the form attached hereto as Exhibit
I.

          (i) PubCo shall have delivered to such Buyer a letter from PubCo’s transfer agent certifying
the number of shares of Common Stock outstanding as of the Closing Date before giving effect to the
transactions contemplated hereby.

          (j) The Company and PubCo shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities.

          (k) Wells Fargo Bank National Association, acting through its Wells Fargo Business Credit
operating division, the Company and certain of the Company’s Subsidiaries party to the Credit
Facility (as defined in the Notes) shall have entered into amendments to the documents related to
the Senior Indebtedness (as defined in the Notes) on the terms set forth on Exhibit J.

23

 

          (l) Not less than 90% of the Company’s equity shall be acquired in a manner and for
consideration described in the Share Purchase Agreement attached as Exhibit K hereto (the
“Share Purchase”) by Global Employment Holdings, Inc., a Delaware corporation (referred to herein
as “PubCo”), which entity shall be incorporated and in good standing in the State of Delaware, and
the terms of which shall otherwise be satisfactory to Radcliffe in its sole discretion.

          (m) The Company shall have (i) received pay-off letters (as provided in Section 4(r) hereof
and in the form attached hereto as Exhibit P) from the holders of the Indebtedness
identified as “Subordinated Indebtedness” on Schedule 3(o) providing for the satisfaction
and cancellation of such Indebtedness upon the payment by the Company of the Required Repayments,
(ii) satisfied the Company’s obligations under a management bonus pool plan of the Company (the
“Restricted Stock Plan”) by making the Management Payments, and the Company’s obligations under the
Series C Preferred Stock and the Series D Preferred Stock upon the payment of the cash and shares
of Common Stock to the persons and in the amounts set forth on Schedule 3(y)(ii) and (iii)
paid in full and retired all other Indebtedness of the Company and PubCo (other than the Permitted
Indebtedness and the Senior Indebtedness).

          (n) The Company or PubCo shall have filed a Certificate of Merger with the Colorado Secretary
of State pursuant to Section 7-111-104 of the Colorado Business Corporations Act whereby a
wholly-owned subsidiary of PubCo will be merged with and into the Company (the “Merger”), pursuant
to which each share of the remaining equity securities of the Company not acquired by PubCo in the
Share Purchase will be converted into the same number of shares of Common Stock as in the Share
Purchase (the “Share Exchange”), and after giving effect to the Merger, the Required Repayments and
the Management Payments, the shareholders of the Company, management and the holders of
Indebtedness identified as “Subordinated Indebtedness” on Schedule 3(o) immediately prior
to the Share Purchase, the Merger, the Required Repayments and the Management Payments will own, on
a fully-diluted basis following completion of the Share Purchase, the Merger, the Required
Repayments and the Management Payments but before giving effect to the Other Financing (as defined
in Section 7(t) hereof), not less than 97% of PubCo’s common equity.

          (o) The Company shall have delivered to each Buyer audited financial statements of the Company
prepared in accordance with GAAP for the periods ended December 28, 2003, January 2, 2005 and
January 1, 2006, audited by Mayer Hoffman McCann P.C. or another auditing firm of regionally
recognized standing acceptable to Radcliffe in its sole discretion, which financial statements (i)
shall contain an opinion of such auditor prepared in accordance with generally accepted auditing
standards (which opinion shall be without (x) a “going concern” or like qualification or exception,
or (y) any qualification or exception as to the scope of such audit), (ii) shall fulfill the
financial statement requirements for inclusion in both the Current Report on Form 8-K and
registration statement on Form S-1 that PubCo will be obligated to file following the Closing,
(iii) shall be materially in conformity with the financial statements of the Company (audited by
Grant Thornton) for the periods ended December 28, 2003 and January 2, 2005 previously provided to
the Buyers (other than any non-material change in the balance of the accrued liability related to
the worker’s compensation insurance program in place prior to August 2002, as more fully explained
in notes A and N to the 2004 annual report (the “Worker’s Compensation Adjustment”)), and (iv)
shall reflect earnings before interest,

24

 

taxes, depreciation and amortization (EBITDA) (after adjustment for (A) the Worker’s
Compensation Adjustment, (B) the annual management fee to KRG Capital Partners, LLC, (C) charges
related to employee terminations in the first quarter of 2005, (D) fees and expenses related to the
Share Purchase, the Required Repayments, the Management Payments and the transactions contemplated
hereby and (E) accounting treatment of the Share Purchase, the Merger, the Required Repayments, the
Management Payments and the transactions contemplated hereby with respect to outstanding management
equity plan shares and preferred shares of the Company prior to giving effect to the transactions
contemplated hereby) for the fiscal year ended January 1, 2006 of at least $10,500,000.

          (p) Assuming the payment of the Special Dividend, the Required Repayments and the Management
Payments, PubCo’s capitalization and contingent liabilities shall be substantially identical to
that set forth on Exhibit L hereto, after giving effect to the Share Purchase, the Merger,
the Special Dividend, the Required Repayments, the Management Payments, the increase in the Senior
Indebtedness contemplated in Exhibit J hereto and the Other Financing (as defined below),
and Mayer Hoffman McCann P.C. (or the other auditing firm referred to in clause (o) above) shall
have delivered to such Buyer a statement that such firm has reviewed the pro forma capitalization
and contingent liabilities, such statement to be in substantially similar form to a customary
comfort letter issued to an underwriter in connection with a registration statement on Form S-1.

          (q) Each Executive Officer and officer of PubCo who assumes the duties of any such Executive
Officer after the date hereof shall have entered into non-competition and non-solicitation
agreements with the Company and PubCo in the form of Exhibit M and in substance
satisfactory to Radcliffe in its sole discretion, together with agreements between each such member
of management and PubCo providing that (i) PubCo shall not grant demand or piggyback registration
rights to any such individual or otherwise agree to register any securities held by any such
individual for resale, for a period of one year, and (ii) no such individual shall sell any
securities of PubCo owned of record or beneficially by such individual for one year from Closing
and no such individual shall sell more than one-third of his or her securities owned of record or
beneficially at the Closing for a period of within two years from the Closing Date.

          (r) There shall not have developed, occurred, or come into effect or existence after the date
hereof any change, or any development involving a prospective change, in or affecting the position
of the Company or PubCo, financial or otherwise, that has had, or would be expected to have, a
Material Adverse Effect on the Company’s or PubCo’s general affairs, management, financial
condition, shareholders’ equity, results of operations or prospects, as determined by Radcliffe in
its sole discretion.

          (s) There shall not have developed, occurred or come into effect or existence (A) any
suspension or material limitation in trading in securities generally or of PubCo’s shares, (B) a
moratorium on commercial banking activities by either federal or New York State authorities, or (C)
any event, action, state, condition or major financial occurrence of national or international
consequence, including any outbreak or escalation or hostilities, acts of terrorism, war, national
or international emergency, calamity or crisis or like event, or any governmental action, law,
regulation, inquiry or other occurrence of any nature which, in the case of any event specified in
this clause (C), in the sole opinion of Radcliffe, materially adversely affects or may

25

 

materially affect the financial markets or the business, operations, affairs or prospects of
the Company or PubCo.

          (t) The Company shall have, concurrently with the Closing, consummated the transactions
contemplated by the purchase agreements attached hereto as Exhibit D and Exhibit N
securing the financing of $30,000,000 of Notes and at least $4.25 million of Common Stock (the
“Common Equity”), respectively (collectively the “Other Financing”).

          (u) The Company shall have, concurrently with the Closing, paid in full and retired all other
Indebtedness of the Company and PubCo (other than the Permitted Indebtedness and the Senior
Indebtedness set forth on Schedule 3(o)).

          (v) PubCo shall have executed and delivered a Joinder to this Agreement (in the form attached
hereto as Exhibit O), dated as of the Closing Date, to the effect that upon the Closing (i)
each of the representations and warranties made by the Company set forth in Section 3 hereof,
mutatis mutundis, shall be true and correct as if each reference to the Company in such
representations and warranties was a reference to PubCo, (ii) PubCo assumes all covenants and
obligations of PubCo set forth herein and (iii) PubCo assumes all obligations and covenants of the
Company set forth herein (including, without limitation, all indemnification obligations) as if
each obligation of the Company and each reference thereto contained elsewhere herein was an
obligation of and a reference to PubCo.

          (w) Such Buyer shall have been satisfied, in its sole discretion, as to its due diligence
investigation of PubCo, including without limitation, the audited annual financial statements of
PubCo.

          (x) All equity securities and derivative securities convertible or exercisable into equity
securities of PubCo or the Company shall have been, concurrently with the Closing, cancelled or
terminated.

          (y) The Company shall have delivered to such Buyer such other customary documents relating to
the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably
request.

     8. TERMINATION. In the event that the Closing shall not have occurred with respect to
a Buyer on or before March 31, 2006 due to the Company’s or such Buyer’s failure to satisfy the
conditions set forth in Sections 6 and 7 above (and a nonbreaching party’s failure to waive such
unsatisfied condition(s)), any such nonbreaching party shall have the option to terminate Sections
1, 5, 6 and 7 of this Agreement with respect to such breaching party at the close of business on
such date without liability of any party to any other party, except as set forth below; provided,
however, if the foregoing Sections of this Agreement are terminated pursuant to this Section 8, the
Company shall remain obligated to reimburse the non-breaching Buyers for the amounts described in
Section 4(f) above.

     9. MISCELLANEOUS.

          (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the

26

 

internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.

          (c) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

          (d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.

          (e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyers, the Company, their affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the holders of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock issued hereunder, and any amendment to this Agreement made in conformity with the
provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable. No provision hereof may be waived other than by an instrument in writing signed by the
party against whom enforcement is sought. No such

27

 

amendment shall be effective to the extent that it applies to less than all of the holders of
the applicable Securities then outstanding. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties to the Transaction
Documents, holders of shares of Series A Preferred Stock, or holders of the Warrants, as the case
may be. The Company has not, directly or indirectly, made any agreements with any Buyers relating
to the terms or conditions of the transactions contemplated by the Transaction Documents except as
set forth in the Transaction Documents.

          (f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

If to the Company:

Global Employment Solutions, Inc.

9090 Ridgeline Boulevard, Suite 205

Littleton, Colorado 80129

Telephone: (303) 216-9500

Facsimile: (303) 216-9533

Attention: Chief Executive Officer

Copy to:

Brownstein Hyatt & Farber, P.C.

410 17th Street

Denver, CO 80202

Telephone: (303) 223-1160

Facsimile: (303) 223-1111

Attention: Jeff Knetsch

          If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with
copies to such Buyer’s representatives as set forth on the Schedule of Buyers,

Copy (for informational purposes only) to:

Drinker Biddle & Reath LLP

One Logan Square

Philadelphia, PA 19103-6996

Telephone: (215) 988-2880

Facsimile: (215) 988-2757

Attention: Stephen T. Burdumy, Esq.

28

 

or to such other address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party five days prior to
the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

          (g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including any purchasers of the
Series A Preferred Stock or the Warrants. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the holders of at least
66-2/3% of the aggregate number of outstanding shares of Series A Preferred Stock issued hereunder,
including by way of a Fundamental Transaction (unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the Certificate of
Designation and the Warrants). A Buyer may assign some or all of its rights hereunder without the
consent of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with
respect to such assigned rights.

          (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except to the extent set forth
in Section 9(k) below.

          (i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in Sections 2 and 3 and the
agreements and covenants set forth in Sections 4, 5, 8 and 9 shall survive the Closing. Each Buyer
shall be responsible only for its own representations, warranties, agreements and covenants
hereunder.

          (j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

          (k) Indemnification. In consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company, on behalf of itself and
PubCo, shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, partners, members, officers, directors, employees and
direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and

29

 

expenses in connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company or PubCo in any Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company or PubCo contained in any Transaction Documents or (c) any
cause of action, suit or claim brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the Company or PubCo) and arising out
of or resulting from (i) the execution, delivery, performance or enforcement of any Transaction
Documents, (ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such
Buyer pursuant to Section 4(h) hereof, or (iv) the status of such Buyer or holder of the Securities
as an investor in the Company or PubCo pursuant to the transactions contemplated by the Transaction
Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and obligations under this
Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

          (l) No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

          (m) Remedies. Each Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes, on behalf of itself and PubCo,
that in the event that it fails to perform, observe, or discharge any or all of its obligations
under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers.
The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual damages and without
posting a bond or other security.

          (n) Payment Set Aside. To the extent that the Company or PubCo makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the
Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required
to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied

30

 

shall be revived and continued in full force and effect as if such payment had not been made
or such enforcement or setoff had not occurred.

          (o) Independent Nature of Buyers’ Obligations and Rights. The obligations of each
Buyer under any Transaction Document are several and not joint with the obligations of any other
Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any
other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity
or group, or create a presumption that the Buyers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Buyer confirms that it has independently participated in the negotiation of the transaction
contemplated by this Agreement and the Transaction Documents with the advice of its own counsel and
advisors, that it has independently determined to enter into the transactions contemplated hereby
and thereby, that it is not relying on any advice from or evaluation by any other Buyer, and that
it is not acting in concert with any other Buyer in making its purchase of Securities hereunder or
in monitoring its investment in PubCo. The Buyers and, to its knowledge, the Company agree that no
action taken by any Buyer pursuant hereto or to the other Transaction Documents shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity
or group, or create a presumption that the Buyers are in any way acting in concert or would deem
such Buyers to be members of a “group” for purposes of Section 13(d) of the 1934 Act. The Buyers
have not agreed to act together for the purpose of acquiring, holding, voting or disposing of
equity securities of PubCo. The Company has elected to provide all Buyers with the same terms and
Transaction Documents for the convenience of the Company and not because it was required or
requested to do so by any of the Buyers. The Company acknowledges that such procedure with respect
to the Transaction Documents in no way creates a presumption that the Buyers are in any way acting
in concert or as a “group” for purposes of Section 13(d) of the 1934 Act with respect to the
Transaction Documents or the transactions contemplated hereby or thereby. Each Buyer shall be
entitled to independently protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any proceeding for such
purpose.

[Signature Page Follows]

31

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	COMPANY:

GLOBAL EMPLOYMENT SOLUTIONS, INC.

 	 
	 	By:  	/s/
HOWARD BRILL 	 
	 	 	Howard Brill 	 
	 	 	Chief Executive Officer 	 
	 

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BUYERS:
	 
	 	 	 	 	 	 
	 	 	RADCLIFFE SPC, LTD.
	 	 	for and on behalf of the Class A Convertible
	 	 	Crossover Segregated Portfolio
	 
	 	 	 	 	 	 
	 	 	By:	 	RG Capital Management, L.P.
	 	 	 	 	By:  RGC Management Company, LLC
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ GERALD F. STAHLECKER
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Gerald F. Stahlecker
	 

	 	 	 	Title:
	 	Managing Director

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BUYERS:
	 
	 	 	 	 	 	 
	 	 	AMATIS LIMITED
	 

	 	 	 	By:
	 	Amaranth Advisors L.L.C.,
	 

	 	 	 	 	 	Its Trading Advisor
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ KARL J. WACHTER               SVC
	 	 	 	 	 
	 	 	 	 	Name:   Karl J. Wachter
	 	 	 	 	Title:    Authorized Signatory

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	MAGNETAR CAPITAL MASTER
	 	 	FUND, LTD
	 
	 	 	 	 
	 	 	By: Magnetar Financial LLC
	 	 	Its: Investment Manager
	 
	 	 	 	 
	 

	 	By:
	 	/s/ PAUL SMITH
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	Name: Paul Smith
	 	 	Title: General Counsel

It is expressly understood and agreed that any closing condition requiring the execution and delivery of any agreement containing a “lock-up” (including, without limitation, as set forth in Section 7(q)) shall not be applicable to the purchase by, or for the benefit of, Magnetar Capital Master Fund, Ltd. notwithstanding anything contained in this Agreement or in any such agreement.

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS: NITE CAPITAL LP
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ KEITH A. GOODMAN
	 

	 	 	 	 
	 

	 	 	 	Name:  Keith A. Goodman
	 

	 	 	 	Title: Manager of the General Partner

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS: Lakeview Fund L.P.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ ARI LEVY
	 

	 	 	 	 
	 

	 	 	 	Name: Ari Levy
	 

	 	 	 	Title: Chief Investment Officer

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS:
DIAMOND OPPORTUNITY FUND, LLC
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ RICHARD MARKS
	 

	 	 	 	 
	 

	 	 	 	Name: Richard Marks
	 

	 	 	 	Title: Managing Director

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	BUYERS:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:	 	/s/ JONATHAN WOOD
	 	 	 
	 

	 	Name:

Title:
	 	Whitebox Intermarket Partners LP

     Whitebox Intermarket Advisors LLC

          Whitebox Advisors LLC

               Jonathan Wood, Chief Financial Officer/Director
	 
	 	 	 	 
	 

	 	 	 	Whitebox Convertible Arbitrage Partners LP

     Whitebox Convertible Arbitrage Advisors LLC

          Whitebox Advisors LLC

               Jonathan Wood, Chief Financial Officer/Director
	 
	 	 	 	 
	 

	 	 	 	          Guggenheim Portfolio Company XXXI, LLC

               Guggenheim
Advisors, LLC

                    Whitebox Advisors LLC

                         Jonathan Wood, Chief Financial Officer
	 
	 	 	 	 
	 

	 	 	 	          Pandora Select Partners LP

               Pandora Select Advisors LLC

                    Jonathan Wood, Chief Financial Officer/Director

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS: Noam J. Rubinstein
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ NOAM J. RUBINSTEIN
	 

	 	 	 	 
	 

	 	 	 	Name: Noam J. Rubinstein
	 

	 	 	 	Title: Vice President

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS: Tariq Jawad
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ TARIQ JAWAD
	 

	 	 	 	 
	 

	 	 	 	Name: Tariq Jawad
	 

	 	 	 	Title: Director

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS:

	 
	 	By:  	/s/ WALTER D. GOLLER
 	 
	 	 	Name:  	Walter D. Goller 	 
	 	 	Title:  	COO, Downsview Capital, Inc.,
The General Partner of
Cranshire Capital, LP 	 
	 

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BUYERS: Enable
Growth Partners LP	 	 
	 
	 	 	 	 	 	 
	 	 	$700,800.00 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brendan O'Neil	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Brendan O'Neil	 	 
	 

	 	 	 	Title: Principal & Portfolio Manager	 	 

[Signature
Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BUYERS: Enable
Opportunity Partners LP	 	 
	 
	 	 	 	 	 	 
	 	 	$115,200.00 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brendan O'Neil	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Brendan O'Neil	 	 
	 

	 	 	 	Title: Principal & Portfolio Manager	 	 

[Signature
Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BUYERS: Pierce
Diversified Strategy Master Fund LLC
	 	 
	 
	 	 	 	 	 	 
	 	 	      
            $144,000.00 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brendan O'Neil	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Brendan O'Neil	 	 
	 

	 	 	 	Title: Principal & Portfolio Manager	 	 

[Signature
Page to Preferred Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS: Context Convertible Arbitrage Fund, LP

 	 
	 	By:  	/s/ William D. Fertig
 	 
	 	 	Name:  	William D. Fertig 	 
	 	 	Title:  	CIO & Co-Chairman

Context Capital Management LLC

General Partner 	 
	 

	 	 	 	 	 
	 	BUYERS: Context Convertible Arbitrage Offshore, Ltd

 	 
	 	By:  	/s/ William D. Fertig
 	 
	 	 	Name:  	William D. Fertig 	 
	 	 	Title:  	CIO & Co-Chairman

Context Capital Management LLC

Investment Adviser 	 
	 

	 	 	 	 	 
	 	BUYERS: Context Opportunistic Master Fund, LP

 	 
	 	By:  	/s/ William D. Fertig
 	 
	 	 	Name:  	William D. Fertig 	 
	 	 	Title:  	CIO & Co-Chairman

Context Capital Management LLC

Investment Adviser 	 
	 

[Signature Page to Preferred Stock Securities Purchase Agreement]

 

SCHEDULE OF BUYERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	Number	 	 	 	 	 	 	 	 
	 	 	 	 	of Shares of	 	 	 	 	 	 	 	 
	 	 	 	 	Series A	 	Number of	 	 	 	 	 	Legal Representative’s
	 	 	Address and	 	Preferred	 	Warrant	 	Purchase	 	Address and Facsimile
	Buyer	 	Facsimile Number	 	Stock	 	Shares	 	Price	 	Number
	 
	Amatis Limited

	 	c/o Amaranth Advisors L.L.C.

One American Lane

Greenwich, CT 06831

Attention: General Counsel

Facsimile: (203) 422-3540

Telephone: (203) 422-3340

Residence: Cayman Islands
	 	 	300.00	 	 	 	39,130.43	 	 	$	300,000.00	 	 	Schulte Roth &
Zabel LLP

919 Third Avenue

New York, New York
10022

Attention: Eleazer
Klein, Esq.

Facsimile: (212)
593-5955

Telephone: (212) 756-2376
	Radcliffe SPC, Ltd.
for and on behalf
of the Class A
Convertible
Crossover
Segregated
Portfolio

	 	c/o RG Capital Management,
 L.P.
3 Bala Plaza — East, Suite 501

Bala Cynwyd, PA 19004

Attention: Gerald Stahlecker

Facsimile: (610) 617-5900
Telephone: (610) 617-0570

Residence: Cayman Islands
	 	 	3,750.00	 	 	 	489,130.00	 	 	$	3,750,000.00	 	 	Drinker Biddle &

Reath LLP

One Logan Square

Philadelphia, PA

19103-6996

Facsimile: (215)

988-2757

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	Number	 	 	 	 	 	 	 	 
	 	 	 	 	of Shares of	 	 	 	 	 	 	 	 
	 	 	 	 	Series A	 	Number of	 	 	 	 	 	Legal Representative’s
	 	 	Address and	 	Preferred	 	Warrant	 	Purchase	 	Address and Facsimile
	Buyer	 	Facsimile Number	 	Stock	 	Shares	 	Price	 	Number
	 
	Magnetar Capital
Master Fund, Ltd.

	 	1603 Orrington Ave., #1300

Evanston, IL 60201

Telephone: (847) 905-4707
	 	 	3,000.00	 	 	 	391,304.35	 	 	$	3,000,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nite Capital, LP

	 	Nite Capital Management

100 E. Cook Avenue, Suite 201

Libertyville IL 60048

Telephone: (847) 716-0362
	 	 	150.00	 	 	 	19,565.22	 	 	$	150,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lakeview Fund, LP

	 	415 N. LaSalle

Suite 700B

Chicago, Illinois 60610

Telephone: (312) 245-2910
	 	 	600.00	 	 	 	78,260.87	 	 	$	600,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Diamond Opportunity

Fund, LLC

	 	500 Skokie Boulevard, Suite 310

Northbrook, IL 60062

Telephone: (847) 897-8129
	 	 	300.00	 	 	 	39,130.43	 	 	$	300,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Whitebox

Convertible

Arbitrage Partners,

LP

	 	3033 Excelsior Blvd., #300

Minneapolis, MN 55416

Telephone: (612) 253-6028
	 	 	1,180.00	 	 	 	153,913.04	 	 	$	1,180,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Guggenheim

Portfolio XXXI, LLC

	 	3033 Excelsior Blvd., #300

Minneapolis, MN 55416

Telephone: (612) 253-6028
	 	 	90.00	 	 	 	11,739.13	 	 	$	90,000.00	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	Number	 	 	 	 	 	 	 	 
	 	 	 	 	of Shares of	 	 	 	 	 	 	 	 
	 	 	 	 	Series A	 	Number of	 	 	 	 	 	Legal Representative’s
	 	 	Address and	 	Preferred	 	Warrant	 	Purchase	 	Address and Facsimile
	Buyer	 	Facsimile Number	 	Stock	 	Shares	 	Price	 	Number
	 
	Pandora
Select 
Partners, LP

	 	3033 Excelsior Blvd., #300

Minneapolis, MN 55416

Telephone: (612) 253-6028
	 	 	190.00	 	 	 	24,782.61	 	 	$	190,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Whitebox

Intermarket

Partners, LP

	 	3033 Excelsior Blvd., #300

Minneapolis, MN 55416

Telephone: (612) 253-6028
	 	 	190.00	 	 	 	24,782.61	 	 	$	190,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Noam J. Rubinstein

	 	Rodman & Renshaw, LLC

1270 Avenue of the Americas,

16th FL

NY, NY 10020

Telephone: (212) 356-0527
	 	 	15.00	 	 	 	1,956.52	 	 	$	15,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tariq Jawad

	 	Rodman & Renshaw, LLC

1270 Avenue of the Americas,

16th FL

NY, NY 10020

Telephone: (212) 356-0515
	 	 	25.00	 	 	 	3,260.87	 	 	$	25,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cranshire Capital,
L.P.

	 	666 Dundee Rd., #1901

Northbrook, IL 60062

Telephone: (847) 562-9030
	 	 	750.00	 	 	 	97,826.09	 	 	$	750,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Enable Growth

Partners LP

	 	One Ferry Bldg., #255

San Francisco, CA 94111

Telephone: (415) 677-1578
	 	 	700.80	 	 	 	91,408.70	 	 	$	700,800.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Enable Opportunity

Partners LP

	 	One Ferry Bldg., #255

San Francisco, CA 94111

Telephone: (415) 677-1578
	 	 	115.20	 	 	 	15,026.09	 	 	$	115,200.00	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	Number	 	 	 	 	 	 	 	 
	 	 	 	 	of Shares of	 	 	 	 	 	 	 	 
	 	 	 	 	Series A	 	Number of	 	 	 	 	 	Legal Representative’s
	 	 	Address and	 	Preferred	 	Warrant	 	Purchase	 	Address and Facsimile
	Buyer	 	Facsimile Number	 	Stock	 	Shares	 	Price	 	Number
	 
	Pierce Diversified

Strategy Master

Fund LLC

	 	One Ferry Bldg., #255

San Francisco, CA 94111

Telephone: (415) 677-1578
	 	 	144.00	 	 	 	18,782.61	 	 	$	144,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Context Convertible

Arbitrage Fund, LP

	 	289 Greenwich Avenue, 4th Floor
Greenwich CT 06830

Telephone: (203) 422-0197
	 	 	200.00	 	 	 	26,086.96	 	 	$	200,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Context Convertible
Arbitrage Offshore,
Ltd.

	 	289 Greenwich Avenue, 4th Floor
Greenwich CT 06830

Telephone: (203) 422-0197
	 	 	800.00	 	 	 	104,347.83	 	 	$	800,000.00	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Context
Opportunistic
Master Fund, L.P.

	 	289 Greenwich Avenue, 4th Floor
Greenwich CT 06830

Telephone: (203) 422-0197
	 	 	250.00	 	 	 	32,608.70	 	 	$	250,000.00	 	 	 

 

 

DISCLOSURE SCHEDULE

Global Employment Solutions, Inc. (the “Company”) delivers these schedules (the
“Schedules”) in connection with the following agreements:

	 	•	 	Notes Securities Purchase Agreement, dated as of March 31, 2006, by and among the
Company and various buyers (the “Notes SPA”)
	 
	 	•	 	Preferred Stock Securities Purchase Agreement, dated as of March 31, 2006, by and among
the Company and various buyers (the “Preferred SPA”)
	 
	 	•	 	Common Stock Securities Purchase Agreement, dated as of March 31, 2006, by and among the
Company and various buyers (the “Common SPA”)

The Notes SPA, the Preferred SPA and the Common SPA are collectively referred to as the
“Agreements.” These Schedules are an integral part of the Agreements, are incorporated
therein by reference and are not intended to be an independent document. Disclosure of any item
herein shall not constitute an admission that such item is required to be disclosed, and the
information contained herein is disclosed solely for the purposes of the Agreements. Nothing
contained herein shall be deemed to be an admission by any party hereto to any third party of any
matter whatsoever, including, without limitation, any violation of law or breach of agreement. The
schedule numbers in these Schedules correspond to the section numbers in the Agreements.
References to any document do not purport to be complete and are qualified in their entirety by the
document itself. Capitalized terms used but not defined herein shall have the same meanings given
them in the Agreements.

 

 

Schedule 3(a)

Subsidiaries

     The table below sets forth all subsidiaries of Global Employment Holdings, Inc. and the state
or other jurisdiction of incorporation or organization of each subsidiary.

	 	 	 
	 	 	State of
	Subsidiary	 	Incorporation
	Global Merger Corp(1)
	 	CO
	Global Employment Solutions, Inc.(2)
	 	CO
	Excell Personnel Services, Inc.(3)
	 	IL
	PD Quick Temps Inc.(4) (inactive)
	 	PA
	Friendly Advanced Software Technology, Inc.(3)
	 	NY
	Main Line Personnel Service, Inc.(3)
	 	PA
	Southeastern Personnel Management, Inc.(3)
	 	FL
	Southeastern Staffing, Inc.(3)
	 	FL
	Bay HR, Inc.(5)
	 	FL
	Placer Staffing, Inc.(5) (inactive)
	 	CA
	Southeastern Georgia HR, Inc.(5)
	 	GA
	Southeastern Staffing II, Inc.(5)
	 	FL
	Southeastern Staffing III, Inc.(5)
	 	FL
	Southeastern Staffing IV, Inc.(5)
	 	FL
	Southeastern Staffing V, Inc.(5)
	 	FL
	Southeastern Staffing VI, Inc.(5)
	 	FL
	Temporary Placement Service, Inc.(3)
	 	GA

 

			
	(1)	 	Wholly-owned subsidiary of Global Employment Holdings, Inc.
	 
	(2)	 	Majority-owned subsidiary of Global Merger Corp
	 
	(3)	 	Wholly-owned subsidiary of Global Employment Solutions, Inc.
	 
	(4)	 	Wholly-owned subsidiary of Excell Personnel Services, Inc.
	 
	(5)	 	Wholly-owned subsidiary of Southeastern Staffing, Inc.

 

 

Schedule 3(m)

Transactions with Affiliates

The Company leases office space in Dalton, Georgia from MPS Partnership in which Stephen
Pennington, one of its executive officers, is a partner. For the fiscal years ended 2005, 2004 and
2003, the Company paid rent to MPS Partnership in the amounts of approximately $74,000, $74,250 and
$59,900, respectively. The Company expects to continue renting office space from Mr. Pennington
for the foreseeable future.

The Company is party to a management consulting agreement with KRG Colorado, LLC (“KRG”), a
company controlled by some of the Company’s shareholders. The agreement will be terminated upon
the closing of the transaction contemplated by the Agreements. Under the agreement, the Company
receives management, advisory and corporate structure services from KRG for an annual fee. KRG is
eligible for a bonus fee, based on performance thresholds, for each fiscal year, and fees related
to acquisitions and divestitures. On November 15, 2001, KRG agreed to waive and forgive amounts
accrued as of that date. During the fiscal years ended January 1, 2006 and January 2, 2005, the
Company paid $180,000 and $90,000, respectively, in consulting fees, and such amounts were included
in operating expenses in the statements of income. The Company did not pay KRG under the agreement
during the fiscal year ended December 28, 2003.

The Company will cause PubCo to issue KRG 50,000 shares of PubCo common stock, valued at $5 per
share, upon the consummation of the transaction contemplated by the Agreements in consideration for
financial advisory services rendered by KRG during the transaction.

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 debt on the closing of
the transaction contemplated by the Agreements through a payment partly in cash, partly in PubCo
common stock.

In 2001, as part of a recapitalization, certain of the management and debt and equity holders of
the Company formed a limited liability company named Global Investment I, LLC (the “LLC”)
for the purpose of purchasing at a discount certain senior debt of the Company. The Company then
issued its Series C preferred stock to the LLC to retire the senior debt and related accrued
interest. It is expected that the LLC will participate in the Recapitalization and thereby
exchange its shares of the Company’s Series C preferred stock for PubCo Common Stock. Furthermore,
it is expected that the LLC will dissolve and distribute to its members all its assets, including
any PubCo Common Stock held, shortly after the Closing.

 

 

Schedule 3(n)

Outstanding Securities

542,166 warrants are exercisable into 542,166 shares of common stock at $.01 per share, at any time
prior to the earlier of March 13, 2008 or six years after the Company’s senior subordinated notes
are paid in full. The warrants provide the holders the right to require the Company to redeem them
for fair value at any time after July 29, 2003. Pursuant to Section 5.1(d) of the Share Purchase
Agreement, dated March 31, 2006, among GES, PubCo and GES shareholders signatory thereto, the
warrants are forfeited to GES and cancelled, without any further action required, in consideration
of the warrant holders’ receiving PubCo Common Stock and the Special Dividend upon consummation of
the transaction contemplated by the Agreements.

2,000,000 shares of GES common stock are issued under the Company’s Restricted Stock Plan; all of
these shares will be repurchased for the amount set forth on Schedule 3(aa)(ii) to the Notes SPA
and Schedule 3(y)(ii) to the Preferred SPA and the Common SPA.

 

 

Schedule 3(o)

Indebtedness and Other Contracts

Senior Indebtedness

Effective in March 2002 and as subsequently amended in June 2003, August 2004, January 2005 and May
2005, the Company and its subsidiaries executed a Credit and Security Agreement (the “Credit
Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”) for revolving
credit borrowings and letters of credit collateralized by the Company’s accounts receivable.
Maximum available borrowings of up to $10.0 million ($7.5 million prior to August 30, 2004) are
limited to 85% of eligible billed receivables and 70% of unbilled receivables. Interest was
payable at Wells Fargo’s prime rate plus 1% per annum through August 29, 2004, and effective August
30, 2004, interest is payable at Wells Fargo’s prime rate (7% at January 1, 2006), subject to a
minimum of $7,500 per month. A fee of 0.25% per annum is payable on the unused portion of the
commitment. The term of the Credit Agreement expires on July 31, 2006. There were no outstanding
borrowings at January 1, 2006 and January 2, 2005. The Credit Agreement requires certain customer
payments to be paid directly to blocked lockbox accounts controlled by Wells Fargo, and the Credit
Agreement contains a provision that allows the lender to call the outstanding balance of the line
of credit if any material adverse change in the business or financial condition of the Company
occurs. As of the date hereof and prior to giving effect to the transaction contemplated by the
Agreements, there is an aggregate of $235,085 outstanding under the Credit Agreement, consisting of
two outstanding letters of credit with Wells Fargo, both of which will remain outstanding after the
closing of the transaction contemplated by the Agreements until they expire on December 31, 2006.

Concurrently with the Closing, the Credit Agreement will be further amended pursuant to a Fifth
Amendment to the Credit Agreement that will effect the following changes to the credit facilities
provided by Wells Fargo: (i) the maximum amount of revolving credit borrowings (including letters
of credit) will be increased to $15.0 million and the maturity date for the revolving portion of
the credit facility will be extended to January 31, 2009, (ii) Wells Fargo will provide a term loan
to the borrowers under the Credit Agreement in the amount of $5.0 million, with interest thereon to
accrue at Wells Fargo’s prime rate plus 2.75% per annum, and payable based on a 36-month
amortization with a balloon payment at maturity on April 1, 2008, (iii) 25% of excess cash flow of
the borrowers will be applied to make principal payments in respect of the term loan on an annual
basis, (iv) advance rates will change to 90% for eligible billed accounts receivable and 75% for
eligible unbilled accounts receivable (reducing to 85% and 70%, respectively, upon payment of the
term loan), (v) the borrowers will pay an amendment fee of $175,000 to Wells Fargo concurrently
with the Closing, (vi) the requirement for minimum average availability under the revolving portion
of the credit facility will be increased to $2.0 million, and (vii) certain changes will be made to
the financial covenants imposed by the Credit Agreement.

 

 

Subordinated Indebtedness

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.

	 	Wells 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.

	 	Wells Fargo Business

Credit, Inc
	 	Financing

Statement
	 	 200407033031 
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Excell Personnel

Service

Corporation

	 	Wells Fargo Business

Credit, Inc
	 	Financing 
Statement

(and 1 
amendment)
	 	 4465054000 
 4807456  
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Friendly Advanced

Software

Technology, Inc.

	 	Wells Fargo Business

Credit, Inc
	 	Financing

Statement

(and 3

amendments)
	 	 228104 
 040570 
 040572 

 070535  
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Main Line

Personnel

Services, Inc.

	 	Wells 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.

	 	Wells Fargo Business
Credit, Inc.
	 	Financing

Statement
	 	 060-2004-006974 
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Southeastern

Personnel

Management, Inc.

	 	Wells Fargo Business
Credit, Inc.
	 	Financing

Statement
	 	 200202990026 
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Southeastern 

Staffing, Inc.

	 	Wells 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.

	 	Irwin Business

Finance

Corporation
	 	Financing

Statement
	 	 200304744067 
	 	Equipment lease
	 
	 	 	 	 	 	 	 	 
	Southeastern 

Staffing, Inc.

	 	Irwin 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
	 	 007-2005-018588 
	 	Equipment lease
	 
	 	 	 	 	 	 	 	 
	Temporary 

Placement Service,

Inc.

	 	Wells Fargo Business
Credit, Inc.
	 	Financing

Statement

(and 4

amendments)
	 	 060-2001-018586 
 060-2002-002811 
 060-2002-004508 
 060-2002-012053 

 060-2004-006845  
	 	Personal property

 

			
	(1)	 	See Section 4(v) in the Notes SPA.

 

 

Schedule 3(o)(i)

Permitted Indebtedness

Senior Indebtedness

Permitted Liens to secure Senior Indebtedness

Permitted Liens securing the Company’s obligations under the Notes

We have capitalized lease obligations for office furniture and equipment in the aggregate amount of
$135,546 as of January 1, 2006. We also have other leases that would qualify as capitalized
leases, for example copier leases, but we account for them as operating leases because of the
immateriality of such leases.

 

 

Schedule 3(v)

Subsidiary Rights

Senior Indebtedness restricts, but does not preclude altogether, payment of dividends by the
Company and its subsidiaries.

 

 

Schedule 3(w)

Tax Status

The Company and two of its subsidiaries, Southeastern Staffing, Inc. (including all of Southeastern
Staffing, Inc.’s subsidiaries) and Southeastern Personnel Management, Inc., have a tax sharing
agreement. Southeastern Staffing, Inc. (including all of its subsidiaries) and Southeastern
Personnel Management file a consolidated tax return with the Company, and the income tax provision
(benefit) is allocated based on the separate return method.

 

 

Schedule 3(y)(i) to Preferred Stock Securities Purchase Agreement and 

     Common Stock Securities Purchase Agreement — Required Repayments

Schedule 3(aa)(i) to Notes Securities Purchase Agreements — Required Repayments

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Sub Debt	 	 	 	 	 	 	 
	 	 	Principal	 	 	Cash	 	 	 	 
	 	 	Invested	 	 	Distribution	 	 	# of Shares ($5.00)	 
	Parties to the Note
Purchase Agreement,
Dated March 13, 1998,
as amended:
	 	 	 	 	 	 	 	 	 	 	 	 
	Seacoast Capital
	 	$	4,300,000.00	 	 	$	4,184,998.64	 	 	 	23,000.272	 
	Pacific Mezzanine
	 	 	2,866,000.00	 	 	 	2,789,350.26	 	 	 	15,329.949	 
	Stratford Capital
	 	 	4,050,000.00	 	 	 	3,941,684.77	 	 	 	21,663.047	 
	Rocky Mountain Capital
	 	 	2,750,000.00	 	 	 	2,676,452.62	 	 	 	14,709.476	 
	 
	 	 	 	 	 	 	 	 	 
	Subtotal
	 	$	13,966,000.00	 	 	$	13,592,486.28	 	 	 	74,702.744	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Party to the
Promissory Note dated
November 15, 2001:
	 	 	 	 	 	 	 	 	 	 	 	 
	KRG Colorado, LLC
	 	 	1,500,000.00	 	 	$	1,459,883.25	 	 	 	8,023.351	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Parties to the
Subordinated
Promissory Note
Agreement, Dated July
29, 1988:
	 	 	 	 	 	 	 	 	 	 	 	 
	George Conley
	 	 	457,965.06	 	 	$	445,717.01	 	 	 	2,449.610	 
	Greg Bachrach
	 	 	25,944.36	 	 	 	25,250.49	 	 	 	138.774	 
	 
	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	$	483,909.42	 	 	$	470,967.50	 	 	 	2,588.384	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	15,949,909.42	 	 	$	15,523,337.03	 	 	 	85,314.479	 

 

 

Schedule 3(y)(ii) to Prefered Stock Securities Purchase Agreement and 

     Common Stock Securities Purchase Agreement — Management Payments

Schedule 3(aa)(ii) to Notes Securities Purchase Agreement — Management Payments

GES

Restricted Stock Plan Distributions

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Distributed at Close of Reverse Merger
	 	 	Restricted Stock	 	Cash	 	 
	 	 	Allocated Shares	 	Consideration	 	# of Shares ($5.00)
	Investor Payouts
	 	 	 	 	 	 	 	 	 	 	 	 
	Howard Brill
	 	 	716,432.04	 	 	$	3,993,817.33	 	 	 	723,538.15	 
	Robert Pennington
	 	 	240,968.95	 	 	 	1,343,304.02	 	 	 	243,359.06	 
	Robert Larkin
	 	 	207,530.79	 	 	 	1,156,899.83	 	 	 	209,589.24	 
	Lee Elkinson
	 	 	51,768.67	 	 	 	288,589.28	 	 	 	52,282.15	 
	Kenneth Michaels
	 	 	149,838.40	 	 	 	835,288.20	 	 	 	151,324.61	 
	Terry Koch
	 	 	121,090.50	 	 	 	675,030.36	 	 	 	122,291.57	 
	Clinton Burgess
	 	 	82,108.83	 	 	 	457,723.38	 	 	 	82,923.25	 
	Gregory D’Ambrosio
	 	 	77,830.58	 	 	 	433,873.85	 	 	 	78,602.56	 
	Fred Viarrial
	 	 	68,081.52	 	 	 	379,526.80	 	 	 	68,756.80	 
	Daniel Hollenbach
	 	 	48,285.15	 	 	 	269,170.08	 	 	 	48,764.08	 
	Thomas Kennedy
	 	 	20,000.00	 	 	 	111,491.87	 	 	 	20,198.38	 
	Michael Lazrus
	 	 	18,354.05	 	 	 	102,316.35	 	 	 	18,536.10	 
	Derek Golenski
	 	 	11,810.54	 	 	 	65,838.99	 	 	 	11,927.69	 
	John Zaleski
	 	 	11,810.54	 	 	 	65,838.99	 	 	 	11,927.69	 
	Michael Sizemore
	 	 	11,250.00	 	 	 	62,714.18	 	 	 	11,361.59	 
	John Rudakas
	 	 	10,938.00	 	 	 	60,974.90	 	 	 	11,046.49	 
	Stephen Wallach
	 	 	10,000.00	 	 	 	55,745.94	 	 	 	10,099.19	 
	Craig Kasper
	 	 	6,613.91	 	 	 	36,869.83	 	 	 	6,679.51	 
	Sharvani Srinivas
	 	 	6,000.00	 	 	 	33,447.56	 	 	 	6,059.51	 
	Sarah Bullard
	 	 	5,886.00	 	 	 	32,812.06	 	 	 	5,944.38	 
	William Nagel
	 	 	5,463.00	 	 	 	30,454.01	 	 	 	5,517.19	 
	Bill Kilgour
	 	 	5,000.00	 	 	 	27,872.97	 	 	 	5,049.59	 
	Wendell Ellis
	 	 	4,750.00	 	 	 	26,479.32	 	 	 	4,797.11	 
	Barbara Stocks
	 	 	4,724.22	 	 	 	26,335.59	 	 	 	4,771.08	 
	Kimberly LePre
	 	 	4,724.22	 	 	 	26,335.59	 	 	 	4,771.08	 
	Zachary Schnell
	 	 	4,724.22	 	 	 	26,335.59	 	 	 	4,771.08	 
	Deborah Reynolds
	 	 	3,779.37	 	 	 	40,152.78	 	 	 	—	 
	Norma Nunez
	 	 	3,779.37	 	 	 	40,152.78	 	 	 	—	 
	W. Newmaster
	 	 	3,560.00	 	 	 	37,822.11	 	 	 	—	 
	Susan Primrose
	 	 	3,401.44	 	 	 	36,137.50	 	 	 	—	 
	Ralph Moseley
	 	 	3,115.00	 	 	 	33,094.35	 	 	 	—	 
	Srinivas Manepalli
	 	 	2,912.00	 	 	 	30,937.63	 	 	 	—	 
	Ashley Notthoff
	 	 	2,834.53	 	 	 	30,114.59	 	 	 	—	 
	Denyse Robinson
	 	 	2,834.53	 	 	 	30,114.59	 	 	 	—	 
	Susan Brewster
	 	 	2,834.53	 	 	 	30,114.59	 	 	 	—	 
	Monty Shapiro
	 	 	2,694.00	 	 	 	28,621.56	 	 	 	—	 
	Lisa Stanford
	 	 	2,362.11	 	 	 	25,095.49	 	 	 	—	 
	Arnold Tomasello
	 	 	2,301.00	 	 	 	24,446.26	 	 	 	—	 
	Michael DeVlieger
	 	 	1,987.00	 	 	 	21,110.27	 	 	 	—	 
	Douglas Graham
	 	 	2,362.11	 	 	 	25,095.49	 	 	 	—	 
	Elizabeth Matson
	 	 	1,889.69	 	 	 	20,076.39	 	 	 	—	 
	Jennifer Wolochow
	 	 	2,087.42	 	 	 	22,177.11	 	 	 	—	 
	Joel Caballero
	 	 	1,889.69	 	 	 	20,076.39	 	 	 	—	 
	Russell Abramson
	 	 	2,362.11	 	 	 	25,095.49	 	 	 	—	 
	Daniel Gallagher
	 	 	1,742.00	 	 	 	18,507.33	 	 	 	—	 
	Boyd Kelly
	 	 	1,655.00	 	 	 	17,583.04	 	 	 	—	 
	Kevin McCarthy
	 	 	1,655.00	 	 	 	17,583.04	 	 	 	—	 
	Ivette Alon-Kaptzan
	 	 	1,526.00	 	 	 	16,212.51	 	 	 	—	 
	Belia Duke
	 	 	750.00	 	 	 	7,968.14	 	 	 	—	 
	Catherine Byars
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Diane Green
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Rhonda Davis
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Rhonda Wright
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Susan Hudson
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Marilyn Davie
	 	 	1,100.00	 	 	 	11,686.61	 	 	 	—	 
	Patrick Keenan
	 	 	1,079.00	 	 	 	11,463.50	 	 	 	—	 
	Edward Berry
	 	 	1,019.00	 	 	 	10,826.05	 	 	 	—	 
	Rosalie Saraco
	 	 	1,012.00	 	 	 	10,751.68	 	 	 	—	 
	David Lobato
	 	 	1,000.00	 	 	 	10,624.19	 	 	 	—	 
	Stephanie Buongiorno
	 	 	966.00	 	 	 	10,262.97	 	 	 	—	 
	April Loudermilk
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Jeff Goffinet
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Jodi Gomberg
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Lauri Cook
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Mary Dasher
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Phil Preston
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Pollette Jenkins
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Julie Heath
	 	 	615.00	 	 	 	6,533.88	 	 	 	—	 
	Shashi Sethi
	 	 	600.00	 	 	 	6,374.51	 	 	 	—	 
	Charles LaBenski
	 	 	552.00	 	 	 	5,864.55	 	 	 	—	 
	George Lapworth
	 	 	548.00	 	 	 	5,822.05	 	 	 	—	 
	Mattie Anderson
	 	 	537.00	 	 	 	5,705.19	 	 	 	—	 
	Abigayle Dunn
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Judith Bates
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Nicholas Mervosh
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Rajagopal Vedanthachari
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Veska Tsenkova
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Debbie Underkoffler
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Gavin Meacham
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Hans Van Ravensberg
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Kevin Kelly
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Ron Ellison
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Tim Dasher
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Terry Humphrey, Jr.
	 	 	448.00	 	 	 	4,759.64	 	 	 	—	 
	Jai Gulati
	 	 	405.00	 	 	 	4,302.80	 	 	 	—	 
	Ann Thornton
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Dana Morgan
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Debra Ponder
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Joann Johnson
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Karen Buttram
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Linda Duckett
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Phyllis Norman
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Pilar Holder
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Shaun Abernathy
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Wanda McGarity
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Peggy Sokol
	 	 	236.21	 	 	 	2,509.55	 	 	 	—	 
	Sandy Sanderson
	 	 	236.21	 	 	 	2,509.55	 	 	 	—	 
	Aarthi Krishnaswami
	 	 	209.00	 	 	 	2,220.46	 	 	 	—	 
	Kimberly Warner
	 	 	200.00	 	 	 	2,124.84	 	 	 	—	 
	Pranesh Hanumantha Rao
	 	 	168.00	 	 	 	1,784.86	 	 	 	—	 

 

 

GES

Restricted Stock Plan Distributions

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Distributed at Close of Reverse Merger
	 	 	Restricted Stock	 	Cash	 	 
	 	 	Allocated Shares	 	Consideration	 	# of Shares ($5.00)
	Investor Payouts
	 	 	 	 	 	 	 	 	 	 	 	 
	Preethi Krishnaswami
	 	 	151.00	 	 	 	1,604.26	 	 	 	—	 
	Nitin Raut
	 	 	109.00	 	 	 	1,158.04	 	 	 	—	 
	Albert Barbuzza
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Amy Alderman
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Catherine Angove
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Daniel Reid
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Darryl James
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jaganathan Venkatachalam
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jalime Vargas
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jenny Lazo
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jill McCarthy
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jo Anne McCann
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Karol Wiser
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Kathleen Martinez
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Keri Kremer
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Kevin Dodson
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Lori Peterson
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Lucille Sheppard
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Mary Isla
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Mindy McLeod
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Nashira Soto
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Norma Ramos
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Paul Young
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Robert Bacharach
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Ruth Ricchezza
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Sharon Semple
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Simmonette Roxas
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Susan Barr
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Teresa Clark
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Angela Butler
	 	 	73.00	 	 	 	775.57	 	 	 	—	 
	Gail Blanco
	 	 	73.00	 	 	 	775.57	 	 	 	—	 
	Eileen Wagner
	 	 	59.00	 	 	 	626.83	 	 	 	—	 
	Jamie Burton
	 	 	59.00	 	 	 	626.83	 	 	 	—	 
	Padmini Vijayan
	 	 	48.00	 	 	 	509.96	 	 	 	—	 
	Patricia Shanks
	 	 	48.00	 	 	 	509.96	 	 	 	—	 
	Sofia Trbovic
	 	 	45.00	 	 	 	478.09	 	 	 	—	 
	Anand Bhat
	 	 	42.00	 	 	 	446.22	 	 	 	—	 
	Kevin Licciardello
	 	 	42.00	 	 	 	446.22	 	 	 	—	 
	Catherine Taber
	 	 	36.00	 	 	 	382.47	 	 	 	—	 
	Tom Shaginaw
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Lauren Korchinski
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	MaryKate Berry
	 	 	94.48	 	 	 	1,003.82	 	 	 	—	 
	Jennier Lester
	 	 	94.48	 	 	 	1,003.82	 	 	 	—	 
	Casey Chism
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	2,000,000.00	 	 	$	11,623,929.27	 	 	 	1,924,889.11	 
	 	 	 	 	 	 	 

 

 

EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Certificate of Designation
	Exhibit B

	 	Form of Warrants
	Exhibit C

	 	Registration Rights Agreement
	Exhibit D

	 	Notes Securities Purchase Agreement
	Exhibit E

	 	Form of Senior Secured Convertible Notes
	Exhibit F

	 	Irrevocable Transfer Agent Instructions
	Exhibit G

	 	Form of Brownstein Hyatt & Farber, P.C. Opinion
	Exhibit H

	 	Form of Secretary’s Certificate
	Exhibit I

	 	Form of Officer’s Certificate
	Exhibit J

	 	Wells Fargo Term Sheet
	Exhibit K

	 	Share Purchase Agreement
	Exhibit L

	 	Pro Forma Capitalization and Contingent Liabilities
	Exhibit M

	 	Form of Non-Competition and Non-Solicitation Agreements
	Exhibit N

	 	Common Stock Securities Purchase Agreement
	Exhibit O

	 	Form of Joinder to Agreement
	Exhibit P

	 	Forms of Pay-Off Letters

 

 

 

Exhibit A

Form of Certificate of Designation

[See Exhibit 3.2 to this Form 8-K]

 

 

Exhibit B

Form of Warrants

[See Exhibit 4.2 to this Form 8-K]

 

 

Exhibit C

Registration Rights Agreement

[See Exhibit 4.5 to this Form 8-K]

 

 

Exhibit D

Notes Securities Purchase Agreement

[See Exhibit 10.2 to this Form 8-K]

 

 

Exhibit E

Form of Senior Secured Convertible Notes

[See Exhibit 10.4 to this Form 8-K]

 

 

Exhibit F

Irrevocable Transfer Agent Instructions

(see attached)

 

 

TRANSFER AGENT INSTRUCTIONS

GLOBAL EMPLOYMENT HOLDINGS, INC.

March 31, 2006

Corporate Stock Transfer

3200 Cherry Creek Drive, Suite 430

Denver, CO 80209

Facsimile:     (303) 282-5800

Attention:     Carylyn Bell

Ladies and Gentlemen:

          Reference is made to that certain Securities Purchase Agreement, dated as of March 31, 2006
(the “Agreement”), by and among Global Employment Solutions, Inc., a Colorado corporation, and the
investors named on the Schedule of Buyers attached thereto (collectively, the “Holders”), pursuant
to which Global Employment Holdings, Inc., a Delaware corporation (the “Company”), (x) is issuing
to the Holders (i) shares of Series A Convertible Preferred Stock of the Company (the “Preferred
Shares”), which are convertible into shares of the common stock of the Company, par value $0.001
per share (the “Common Stock”), and (ii) warrants (the “Warrants”), which are exercisable to
purchase shares of Common Stock.

          This letter shall serve as our authorization and direction to you (provided that you are the
transfer agent of the Company at such time), subject to any stop transfer instructions that we may
issue to you from time to time, if at all:

          (i) to issue shares of Common Stock upon conversion of the Preferred Shares (the “Conversion
Shares") to or upon the order of a Holder from time to time upon delivery to you of a properly
completed and duly executed Conversion Notice, in the form attached hereto as Exhibit I,
which has been acknowledged by the Company as indicated by the signature of a duly authorized
officer of the Company thereon;

          (ii) to issue shares of Common Stock upon exercise of the Warrants (the “Warrant Shares") to
or upon the order of a Holder from time to time upon delivery to you of a properly completed and
duly executed Exercise Notice, in the form attached hereto as Exhibit II, which has been
acknowledged by the Company as indicated by the signature of a duly authorized officer of the
Company thereon.

          You acknowledge and agree that so long as you have previously received (a) written
confirmation from the General Counsel of the Company (or its outside legal counsel) that either (i)
a registration statement covering resales of the Conversion Shares or the Warrant Shares has been
declared effective by the Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “1933 Act”), or (ii) that sales of the Conversion Shares and the Warrant
Shares may be made in conformity with Rule 144 under the
1933 Act, and (b) if applicable, a copy of such registration statement, then, within three (3)
business days after your receipt of a Conversion Notice or Exercise Notice, you shall issue the

 

 

certificates representing the Conversion Shares and/or the Warrant Shares, as applicable, and such
certificates shall not bear any legend restricting transfer of the Conversion Shares or the Warrant
Shares thereby and should not be subject to any stop-transfer restriction; provided,
however, that if such Conversion Shares and Warrant Shares are not registered for resale
under the 1933 Act or able to be sold under Rule 144, then the certificates for such Conversion
Shares and/or Warrant Shares shall bear the following legend:

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER AND
REASONABLY ACCEPTABLE TO THE ISSUER, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

          A form of written confirmation from the General Counsel of the Company or the Company’s
outside legal counsel that a registration statement covering resales of the Conversion Shares and
the Warrant Shares has been declared effective by the SEC under the 1933 Act is attached hereto as
Exhibit III.

 

 

          Please execute this letter in the space indicated to acknowledge your agreement to act in
accordance with these instructions. Should you have any questions concerning this matter, please
contact me at (303) 282-4800.

	 	 	 	 	 
	 	Very truly yours,

GLOBAL EMPLOYMENT HOLDINGS, INC.

 	 
	 	By:  	   /s/ Howard Brill
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

THE FOREGOING INSTRUCTIONS ARE

ACKNOWLEDGED AND AGREED TO

this 31st day of March, 2006

CORPORATE STOCK TRANSFER, INC.

	 	 	 	 	 
	By:

	 	   /s/ Carylyn K. Bell
 

Name: Carylyn K. Bell
	 	 
	 

	 	Title: President	 	 

Enclosures

cc:          Radcliffe SPC, Ltd.

 

 

EXHIBIT I

GLOBAL EMPLOYMENT HOLDINGS, INC.

CONVERSION NOTICE

Reference is made to the shares of Series A Convertible Preferred Stock (the “Preferred Shares”)
issued to the undersigned by Global Employment Holdings, Inc. (the “Company”). In accordance with
and pursuant to the terms of the Company’s Certificate of Designations, Preferences and Rights of
the Series A Convertible Preferred Stock, the undersigned hereby elects to convert the number of
Preferred Shares indicated below into shares of Common Stock, $0.001 par value per share (the
"Common Stock”), as of the date specified below.

	 	 	 	 	 
	 

	 	Date of Conversion:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Aggregate Number of Shares to be converted:	 	 
	 

	 	 	 	 

Please confirm the following information:

	 	 	 	 	 
	 

	 	Conversion Price:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Number of shares of Common Stock to be issued:	 	 
	 

	 	 	 	 

Please issue the Common Stock into which the Preferred Shares are being
converted in the following name and to the following address:

	 	 	 	 	 
	 

	 	Issue to:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Facsimile Number:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Authorization:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

	 	 	 
	Dated:
	 	 
	 

	 	 

	 	 	 	 	 
	 

	 	Account Number:	 	 
	 

	 	 	 	 
	 	 	  (if electronic book entry transfer)

	 	 	 	 	 
	 

	 	Transaction Code Number:	 	 
	 

	 	 	 	 
	 	 	(if electronic book entry transfer)

 

 

ACKNOWLEDGMENT

          The Company hereby acknowledges this Conversion Notice and hereby directs Corporate Stock
Transfer to issue the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated                     , 2006 from the Company and acknowledged and agreed
to by Corporate Stock Transfer.

	 	 	 	 	 
	 	GLOBAL EMPLOYMENT HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT II

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

GLOBAL EMPLOYMENT HOLDINGS, INC.

     The undersigned holder hereby exercises the right to purchase                                          of the shares
of Common Stock (“Warrant Shares”) of Global Employment Holdings, Inc., a Delaware corporation (the
"Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

     1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	a “Cash Exercise” with respect to
	 	 	 	Warrant Shares; and/or
	 

	 	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	a “Cashless Exercise” with respect to
	 	 	 	Warrant Shares.
	 

	 	 

	 	 	 	 

	 	 

     2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                                         to the Company in accordance with the
terms of the Warrant.

     3. Delivery of Warrant Shares. The Company shall deliver to the holder                      Warrant
Shares in accordance with the terms of the Warrant.

Date:                                         ,                     

	 	 	 
	 

     Name of Registered Holder

	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

ACKNOWLEDGMENT

     The Company hereby acknowledges this Exercise Notice and hereby directs Corporate Stock
Transfer to issue the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated                     , 2006 from the Company and acknowledged and agreed to
by Corporate Stock Transfer.

	 	 	 	 	 
	 	

GLOBAL EMPLOYMENT HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT III

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

[Transfer Agent]

[Address]

Attention:

Re: Global Employment Holdings, Inc.

Ladies and Gentlemen:

          [We are][I am] counsel to Global Employment Holdings, Inc., a Delaware corporation (the
"Company”), and have represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase Agreement”) entered into by and among the Global Employment
Solutions, Inc., a Colorado corporation, and the buyers named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders shares of Series A Convertible Preferred Stock
(the “Preferred Stock”) convertible into the Company’s common stock, par value $0.001 per share
(the “Common Stock”) and three series of warrants exercisable for shares of Common Stock (the
"Warrants”). Pursuant to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the Registrable Securities (as defined in
the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion
of the Preferred Shares and the shares of Common Stock issuable upon exercise of the Warrants,
under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s
obligations under the Registration Rights Agreement, on                      ___, 200_, the Company filed a
Registration Statement on Form S-1 (File No. 333-                    ) (the “Registration Statement”) with
the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.

          In connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has
advised [us][me] by telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF
EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s
staff, that any stop order suspending its effectiveness has been issued or that any proceedings for
that purpose are pending before, or threatened by, the SEC and the Registrable Securities are
available for resale under the 1933 Act pursuant to the Registration Statement.

 

 

          This letter shall serve as our standing instruction to you that the shares of Common Stock are
freely transferable by the Holders pursuant to the Registration Statement. You need not require
further letters from us to effect any future legend-free issuance or reissuance of shares of Common
Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
[                    ], 2006.

	 	 	 	 	 
	 	

Very truly yours,

[ISSUER’S COUNSEL]

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 

CC:     [LIST NAMES OF HOLDERS]

 

 

Exhibit G

Form of Brownstein Hyatt & Farber, P.C. Opinion

(see attached)

 

 

March 31, 2006

The Buyers Listed on the Schedule of Buyers

Attached to the Securities Purchase Agreement (as defined below)

	 	 	 
	RE:

	 	Preferred Stock Securities Purchase
Agreement, dated as of March 31, 2006,
by and among Global Employment
Solutions, Inc., a Colorado
corporation (“Global”), and the
Investors listed on the Schedule of
Buyers attached thereto (the
“Securities Purchase Agreement”)

Ladies and Gentlemen:

We have acted as counsel to Global Employment Holdings, Inc. (“Holdings”), Global and
the Subsidiaries in connection with the Securities Purchase Agreement. This opinion is delivered
pursuant to Section 7(c) of the Securities Purchase Agreement. Capitalized terms used and not
defined herein have the meanings given such terms in the Securities Purchase Agreement.

In addition to the Securities Purchase Agreement, we have reviewed the following documents, each
dated as of the date hereof:

	1.	 	the Certificate of Designation;
	 
	2.	 	the Warrants;
	 
	3.	 	the Registration Rights Agreement; and
	 
	4.	 	the Joinder Agreement.

The Securities Purchase Agreement and the documents referred to in paragraphs 1-3 above are
referred to as the “Transaction Documents.”

We have also examined originals or copies of the certificate or articles of incorporation and
bylaws of Holdings, Global and each of the Subsidiaries, resolutions of the boards of directors of
Holdings, Global and each of the Subsidiaries, and certificates of public officials concerning the
legal existence, qualification or good standing of Holdings, Global and each of the Subsidiaries in
various jurisdictions. As to all factual matters material to the opinions set forth herein, we have
(with your permission and without any investigation or independent

 

 

March 31, 2006

Page 2

confirmation) relied upon, and
assumed the accuracy of, such certificates, corporate records, searches and other documents
(including
certificates of responsible officers of Holdings, Global and the Subsidiaries as to matters of
fact) with respect to the facts stated therein.

Whenever our opinion with respect to the existence or absence of facts is indicated to be based on
our knowledge or awareness, we are referring to the actual knowledge of Jeffrey Knetsch, Adam
Agron, Michael Harper and Rikard Lundberg, the only Brownstein Hyatt & Farber, P.C. attorneys who
have given substantive attention to matters concerning the Transaction Documents during the course
of such representation, which knowledge has been obtained by such attorneys in their capacity as
such. We are not generally familiar with the business, records, transactions or activities of
Holdings, Global or the Subsidiaries, Our knowledge of the business, records, transactions and
activities of Holdings, Global and the Subsidiaries is limited to the information which has been
brought to our attention by officers of Holdings, Global and the Subsidiaries in connection with
this opinion letter or by those corporate records and agreements that were revealed to us by
Holdings, Global and the Subsidiaries in response to our inquiries. While nothing has come to our
attention which has led us to conclude that such information, taken as a whole, is materially
inaccurate, we make no representation concerning the scope or adequacy of such review or such
inquiries or concerning the accuracy or completeness of the responses to such inquiries. Without
limiting the foregoing, we have relied, as to factual matters, without investigation, on the
certificates of officers of Holdings, Global and the Subsidiaries delivered to the Buyers pursuant
to Transaction Documents, and the Certificate of Officers of Holdings, Global and the Subsidiaries
attached as Schedule A (the “Certificate”).

In rendering the opinions expressed below, we have assumed, with your permission and without
independent verification, that:

     (a) the signatures of persons signing all documents in connection with which this opinion is
rendered are genuine and authorized (other than those of Holdings, Global and the Subsidiaries on
the Transaction Documents);

     (b) all documents submitted to us as originals or duplicate originals are authentic;

     (c) all documents submitted to us as copies, whether certified or not, conform to authentic
original documents;

     (d) all parties to the documents reviewed by us (other than Holdings and Global) have full
power and authority to execute, to deliver and to perform
their obligations under such documents and under the documents required or permitted to be
delivered and performed thereunder, and all such documents have been duly authorized by all
necessary action by the parties thereto (other than Holdings and

 

 

March 31, 2006

Page 3

Global as aforesaid), have been
duly executed and delivered by such other parties, and are valid, binding and enforceable
obligations of such other parties; and

     (e) all of the conditions precedent to the closing of the transactions
contemplated in the Transaction Documents have been satisfied in full or waived by the
Buyers.

Based upon the foregoing and subject to the qualifications stated herein, we are of the opinion
that, as of the date hereof:

     1. Each of Holdings, Global and each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation. Holdings and
Global each has the requisite corporate power to own, lease and operate its properties and to
conduct its business as presently conducted. Each of Holdings, Global and each Subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in each jurisdiction in
which such qualification is necessary to conduct its business.

     2. Each of Holdings and Global has the requisite corporate power and authority to execute,
deliver and perform all of its obligations under the Transaction Documents to which it is a party,
including the issuance of the Preferred Shares, the Conversion Shares, the Warrants and the Warrant
Shares in accordance with the terms thereof. The execution and delivery of the Transaction
Documents by Holdings and Global and the consummation of the transactions contemplated therein
(including without limitation, the issuance and sale of the Preferred Shares and Warrants) have
been duly authorized by the Board of Directors of Holdings and Global, and no further consent or
authorization of Holdings, Global, either of their Boards of Directors or either of their
stockholders is required therefore. The Transaction Documents to which it is a party have been
duly executed and delivered by each of Holdings and Global. The Transaction Documents to which it
is a party constitute valid and binding obligations of Holdings, Global, or each Subsidiary, as
the case may be, enforceable against Holdings, Global or each Subsidiary, as the case may be, in
accordance with their respective terms.

     3. The execution, delivery and performance by each of Holdings, Global and each of the
Subsidiaries of the Transaction Documents to which it is
a party, including without limitation, the issuance of the Preferred Shares and the Warrants, the
Conversion Shares and the Warrant Shares, and the consummation by Holdings and Global of the
transactions contemplated by the Transaction Documents and the compliance by Holdings and Global
with the terms thereof do not and will not violate, conflict with or constitute a default (or an
event which, with the giving of notice or lapse of time or both, constitutes or would constitute a
default) under, give rise to any right of termination, cancellation or acceleration under, and do
not and will not result in or require the creation of any lien, security interest or other charge
or encumbrance (other than pursuant to the Transactions Documents) upon or with

 

 

March 31, 2006

Page 4

respect to any of
its respective properties, (a) the Certificate of Incorporation or By-laws of Holdings or Global;
(b) any agreement, note, lease, mortgage, deed or other instrument listed on Annex I to
Schedule A attached hereto to which Holdings or Global is a party or by which either Holdings
or Global is bound or affected and that Holdings and Global have informed us are the only material
contracts of Holdings, Global and the Subsidiaries and will be filed on a Form 8-K filed by
Holdings with the Securities and Exchange Commission within two business days of the date hereof
(the “Publicly Filed Documents”); or (c) any statute, law, rule or regulation of the United States,
the State of Colorado, the State of Delaware or the State of New York applicable to Holdings or
Global or any order, writ, injunction or decree known to us.

     4. The Preferred Shares and Warrants, when issued pursuant to the Securities Purchase
Agreement, the Conversion Shares when issued pursuant to the Preferred Shares and the Warrant
Shares when issued pursuant to the Warrants will be duly authorized and validly issued, fully paid
and nonassessable, and free of any all liens and charges and preemptive or similar rights contained
in Holdings’s Certificate of Incorporation or Bylaws or any agreement, note, lease, publicly filed
mortgage deed or other instrument to which Holdings is a party or by which Holdings is bound that
is a Publicly Filed Document. The Conversion Shares and the Warrant Shares have been duly and
validly authorized and reserved for issuance by all proper corporate action.

     5. As of the date hereof and before giving effect to the issuance of the securities
contemplated by the Transaction Documents, the authorized capital stock of Holdings consists of
75,000,000 shares of Common Stock, par value $0.0001 per share, of which as of the date hereof,
180,927.835 are issued and outstanding, and 10,000,000 shares of preferred stock, par value $0.0001
per share, of which as of the date hereof, none are issued and outstanding. None of such Common
Stock is subject to preemptive rights or other rights of the stockholders of the Company pursuant
to the Certificate of Incorporation or the
By-laws or under the Delaware General Corporation Law or pursuant to any agreement, note, lease,
mortgage deed or other instrument to which the Company is a party or by which the Company is bound
that is a Publicly Filed Document. Neither Holdings’s Certificate of Incorporation or Bylaws, nor
any Publicly Filed Documents, contain anti-dilution or similar provisions that will be triggered by
the issuance of the Preferred Shares, the Conversion Shares, the Warrants or the Warrant Shares.
To our knowledge, there are no other securities or instruments of the Company containing
anti-dilution or similar provisions that will be triggered by the issuance of the Preferred Shares,
the Conversion Shares, the Warrants or the Warrant Shares.

     6. Assuming the accuracy of the representations of the Buyers in Article 2 of the Securities
Purchase Agreement, the offer and sale of the Preferred Shares and the Warrants in accordance with
the Securities Purchase Agreement is exempt from the registration requirements of the Securities
Act of 1933, as amended (the

 

 

March 31, 2006

Page 5

“Securities Act”). Assuming the accuracy of the
representations of the Buyers in Article 2 of the Securities Purchase Agreement and no change in
applicable Federal or state securities laws from those in effect on the date hereof, the issuance
of the Conversion Shares and the Warrant Shares in accordance with the Transaction Documents will
be exempt from the registration requirements of the Securities Act, provided, we give no opinion
with respect to circumstances where the issuance of the Conversion Shares or the Warrant Shares
could be integrated with any future offering of Holdings’s securities.

     7. No authorization, approval, consent, filing, or other order of any federal or state
governmental body, regulatory agency, self-regulatory organization or stock exchange or market, or
the stockholders of Holdings or Global, or any court, or to our knowledge, any third party is
required to be obtained by Holdings or Global to enter into and perform its obligations under the
Transaction Documents or for the issuance and sale of the Preferred Shares, the Conversion Shares,
the Warrants or the Warrant Shares in accordance with the Transaction Documents, or for the
exercise of any rights and remedies under any Transaction Documents except (i) the filing of a Form
D under Regulation D of the Securities Act of 1933, as amended, (ii) the filing of a Form 8-K
pursuant to the Securities Exchange Act of 1934, as amended, and (iii) the registration statement
and related state securities law filings required by the Registration Rights Agreement.

     8. To our knowledge, no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body or any governmental
agency or self-regulatory organization is pending or threatened against Holdings or Global or any
of the Subsidiaries or any of the properties or assets of Holdings, Global or any Subsidiary.

     9. Holdings and its Board of Directors have taken all necessary action, if any, to render
inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation or provisions of the Delaware General Corporation Law applicable to
the Buyers and their affiliates as a result of the Buyers and Holdings fulfilling their obligations
or exercising their rights under the Transaction Documents, including without limitation,
Holdings’s issuance of the Preferred Shares and the Warrants on the date hereof (and the shares of
Common Stock issuable upon conversion or exercise thereof).

     10. Holdings is not an “investment company” or an entity controlled by an “investment
company,” as such term is defined in the Investment Company Act of 1940, as amended.

Our opinions are subject to the following further qualifications:

 

 

March 31, 2006

Page 6

     (a) Our opinions are subject to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or other similar laws.

     (b) The binding effect and enforceability of the Transaction Documents and the availability of
injunctive relief or other equitable remedies thereunder are subject to the effect of general
principles of equity (regardless of whether enforcement is considered in proceedings at law or in
equity).

     (c) The binding effect and the enforceability of the Transaction Documents are subject to the
effect of laws and judicial decisions which have imposed duties and standards of conduct
(including, without limitation, obligations of good faith, fair dealing and reasonableness and any
obligation to demonstrate that enforcement of provisions that are burdensome on a debtor is
reasonably necessary for the protection of the creditor) upon creditors or secured creditors.

     (d) In addition, certain other of the remedial, waiver and other provisions of the Transaction
Documents may not be enforceable, in whole or part, but the inclusion of such provisions does not
affect the validity of the
Transaction Documents, taken as a whole, and such Transaction Documents together with the Credit
Agreement, taken as a whole and together with remedies available under applicable law, contain (in
our experience) customary provisions for the practical realization of the benefits of the security
created thereby.

     (e) Notwithstanding certain language of the Transaction Documents, you may be limited to
recovering only reasonable expenses with respect to the taking, holding, preparing, selling,
leasing and the like of collateral, only reasonable attorneys’ fees and legal expenses and
compensation only for actual funding losses, increased costs or yield protection.

     (f) We express no opinion as to, or the effect or applicability of, any state securities or
“blue sky” laws or any laws other than the laws of the State of Colorado, the laws of the State of
New York, the Delaware General Corporation Law and the federal laws of the United States of
America.

     (g) Our opinions are limited to the specific issues addressed and are limited in
all respects to laws and facts existing on the date hereof by rendering our opinions,
we do not undertake to advise you of any changes in such laws or facts which may occur
after the date hereof.

This letter is furnished to you pursuant to the Amendment in connection with the

 

 

March 31, 2006

Page 7

transactions contemplated by the Transaction Documents and is not to be used, circulated, quoted or
otherwise relied upon by any other person or entity or for any other purpose without our prior
written consent.

Very truly yours,

 

 

Schedule A

CERTIFICATE

     The undersigned, being the Chief Executive Officer and President of each of Global Employment
Holdings, Inc., a Delaware corporation (“Holdings”), Global Employment Solutions, Inc., a
Colorado corporation (the “Company”), and each of their subsidiaries, does hereby certify
for purposes of opinions to be rendered by Brownstein Hyatt & Farber, P.C. in connection with the
Preferred Stock Securities Purchase Agreement, dated as of March 31, 2006, by and among the Company
and the Investors listed on the Schedule of Buyers attached thereto (the “Securities Purchase
Agreement”) Capitalized terms used herein have the meanings specified in the Securities
Purchase Agreement:

     1. The execution, delivery and performance by each of Holdings, Global and each of the
Subsidiaries of the Transaction Documents to which it is a party, including without limitation, the
issuance of the Preferred Stock and the Warrants, the Conversion Shares and the Warrant Shares, and
the consummation by Holdings and the Company of the transactions contemplated by the Transaction
Documents and the compliance by Holdings and the Company with the terms thereof do not and will not
result in or require the creation of any lien, security interest or other charge or encumbrance
(other than pursuant to the Transactions Documents) upon or with respect to any of its respective
properties.

     2. Annex I hereto contains a list of all agreements, notes, leases, mortgages, deeds or other
instruments to which Holdings or the Company is a party or by which either Holdings or the Company
is bound or affected that are the only material contracts of Holdings, Global and the Subsidiaries
and that will be filed on a Form 8-K filed by Holdings with the Securities and Exchange Commission
within two business days of the date hereof.

     3. As of the date hereof and before giving effect to the issuance of the securities
contemplated by the Transaction Documents, there are 180,927.835 shares of Common Stock outstanding
and no shares of Preferred Stock outstanding. There are no other securities or instruments of the
Company containing anti-dilution or similar provisions that will be triggered by the issuance of
the Preferred Shares, the Conversion Shares, the Warrants or the Warrant Shares.

     4. No authorization, approval, consent, filing, or other order of any third party is required
to be obtained by Holdings or the Company to enter into and perform its obligations under the
Transaction Documents or for the issuance and sale of the Preferred Shares, the Conversion Shares,
the Warrants or the Warrant Shares in accordance with the Transaction Documents, or for the
exercise of any rights and remedies under any Transaction Documents.

     5. No action, suit, proceeding, inquiry or investigation before or by any court, public board
or body or any governmental agency or self-regulatory

 

 

organization is pending or threatened against Holdings or the Company or any of the Subsidiaries or any of the properties or
assets of Holdings, the Company or any Subsidiary.

	 	 	 
	Dated: March 31, 2006
	 	 
	 
	 	 
	

	 

	 	 
	 

	 	Howard Brill, CEO of Global
	 

	 	Employment Holdings, Inc., Global
	 

	 	Employment Solutions, Inc. and each of
	 

	 	the Subsidiaries
	

 

 

Annex I

Subordinated Promissory Note Agreement, dated as of July 29, 1988

Warrant Purchase Agreement, dated as of March 13, 1998, as amended, among Global Personnel
Services, Inc., KRG Capital Partners, LLC, KRG Capital Investments IV, LLC, Seacoast Capital
Partners Limited Partnership and Pacific Mezzanine Fund, L.P.

Note Purchase Agreement, dated as of March 13, 1998, among Seacoast Capital Partners Limited
Partnership, Pacific Mezzanine Fund, L.P., Temporary Placement Service, Inc., Excell Personnel
Services Corporation and Global Personnel Services, Inc.

Master Investment Agreement, dates as of November 15, 2001, as amended, among GES, GES’
subsidiaries, Global Investment I, LLC, members of Global Investment I, LLC, and listed individuals
and institutions

2002 Restricted Stock Plan, accompanied by individual 2002 Restricted Stock Purchase Agreements
between GES and named purchasers

Credit and Security Agreement, dated as of March 7, 2002, as amended, between GES and Wells Fargo
Bank, National Association, as successor in interest to Wells Fargo Business Credit, Inc.

Management Agreement with KRG Capital, LLC and affiliates

 

 

Exhibit H

Form of Secretary’s Certificate

[See Exhibit I to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit I

Form of Officer’s Certificate

[See Exhibit J to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit J

Wells Fargo Term Sheet

[See Exhibit K to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit K

Share Purchase Agreement

[See Exhibit 10.1 to this Form 8-K]

 

 

Exhibit L

Pro Forma Capitalization and Contingent Liabilities

[See Exhibit N to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit M

Form of Non-Competition and Non-Solicitation Agreements

[See Exhibit 10.14 to this Form 8-K]

 

 

Exhibit N

Common Stock Securities Purchase Agreement

[See Exhibit 10.11 to this Form 8-K]

 

 

Exhibit O

Form of Joinder Agreement

[See Exhibit 10.10 to this Form 8-K]

 

 

Exhibit P

Forms of Pay-Off Letters

[See Exhibit S to Exhibit 10.2 to this Form 8-K]exv10w11

 

Exhibit 10.11

COMMON STOCK SECURITIES PURCHASE AGREEMENT

     COMMON STOCK SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of March 31, 2006, by
and among Global Employment Solutions, Inc., a Colorado corporation, with headquarters located at
9090 Ridgeline Boulevard, Suite 205, Littleton, Colorado 80129 (the “Company”), and the investors
listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the
“Buyers”).

     WHEREAS:

     The Company and each Buyer is executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as
amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.

     Each Buyer wishes to purchase, and the Company wishes PubCo to sell, upon the terms and
conditions stated in this Agreement, (i) that number of shares of PubCo’s Common Stock, par value
$0.0001 per share (the “Common Stock”), set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers (the “Shares”), with an aggregate purchase price for all Buyers of $4,250,000,
and (ii) warrants, in the form attached hereto as Exhibit A (the “Warrants”), to acquire up
to that number of additional shares of Common Stock set forth opposite such Buyer’s name in column
(4) of the Schedule of Buyers (as exercised, collectively, the “Warrant Shares”).

     Contemporaneously with the Closing, the Buyers and PubCo will execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit B (as amended or
modified from time to time, the “Registration Rights Agreement”), pursuant to which the Company
agrees to cause PubCo to provide certain registration rights with respect to the Shares and the
Warrant Shares under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

     The Shares, the Warrants and the Warrant Shares collectively are referred to herein as the
“Securities.”

     NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

     1. PURCHASE AND SALE OF SHARES AND WARRANTS.

          (a) Purchase of Shares and Warrants. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall cause PubCo to issue and sell to
each Buyer, and each Buyer severally, but not jointly, agrees to purchase from PubCo on the Closing
Date (as defined below), (x) that number of Shares as is set forth opposite such Buyer’s name in
column (3) on the Schedule of Buyers and (y) Warrants to acquire up to that number of Warrant
Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (the
“Closing”).

 

 

          (b) Closing. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York City time, on a date mutually agreed to by the Company and Buyers holding the right
to purchase not less than 66-2/3% of the Shares to be sold hereunder, such Closing Date to be as
soon as practicable following satisfaction (or waiver) of the conditions to the Closing set forth
in Sections 6 and 7 below at the offices of Drinker Biddle & Reath LLP, One Logan Square,
Philadelphia, PA 19103-6996.

          (c) Purchase Price. The aggregate purchase price for the Shares and the Warrants to
be purchased by each Buyer at the Closing (the “Purchase Price”) shall be the amount set forth
opposite such Buyer’s name in column (5) of the Schedule of Buyers. Each Buyer shall pay $5.00 for
each Share and related Warrants to be purchased by such Buyer at the Closing.

          (d) Form of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase Price
to PubCo for the Shares and the Warrants to be issued and sold to such Buyer at the Closing, by
wire transfer of immediately available funds in accordance with the Company’s or PubCo’s written
wire instructions, and (ii) the Company shall cause PubCo to deliver to each Buyer (A) the Shares
which such Buyer is then purchasing and (B) the Warrants (in the amounts as such Buyer shall
request) which such Buyer is purchasing, in each case duly executed on behalf of PubCo and
registered in the name of such Buyer or its designee.

     2. BUYER’S REPRESENTATIONS AND WARRANTIES.

          Each Buyer represents and warrants with respect to only itself that:

          (a) No Public Sale or Distribution. Such Buyer is (i) acquiring the Shares and the
Warrants and (ii) upon exercise of the Warrants will acquire the Warrant Shares (less any Warrant
Shares forfeited upon a Cashless Exercise (as defined in the Warrants)), in each case, for its own
account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does not
agree to hold any of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the
ordinary course of its business. Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the Securities.

          (b) Accredited Investor Status. Such Buyer is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D.

          (c) Reliance on Exemptions. Such Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

2

 

          (d) Information. Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained herein. Such Buyer understands that its
investment in the Securities involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.

          (e) No Governmental Review. Such Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

          (f) Transfer or Resale. Such Buyer understands that except as will be provided in the
Registration Rights Agreement: (i) the Securities have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to
PubCo an opinion, in generally acceptable form, of counsel selected by the Buyer and reasonably
satisfactory to PubCo, to the effect that such Securities to be sold, assigned or transferred may
be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer
provides PubCo with reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto)
(collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the Person (as defined in
Section 3(o)) through whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) none of the Company, PubCo or any other
Person is under any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption thereunder.

          (g) Legends. Such Buyer understands that the certificates or other instruments
representing the Shares and Warrants and, until such time as the resale of the Shares and the
Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Warrant Shares, except as set forth below, shall
bear any legend that is required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed against transfer of such
stock certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE]
HAVE

3

 

BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER AND REASONABLY
ACCEPTABLE TO THE ISSUER, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and PubCo shall issue a certificate without such legend
to the holder of the Securities upon which it is stamped, if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer, such holder provides PubCo with an opinion of
counsel reasonably acceptable to PubCo, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration under the
applicable requirements of the 1933 Act, or (iii) such holder provides PubCo with reasonable
assurances of the holder’s belief that the Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A.

          (h) Validity; Enforcement. This Agreement has been, and when the other Transaction
Documents (as defined below) to which such Buyer is a party are executed and delivered in
accordance with the terms and conditions contemplated hereby and thereby, such documents shall have
been, duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in
accordance with their respective terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.

          (i) Residency. Such Buyer is a resident of the jurisdiction specified below its
address on the Schedule of Buyers.

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 

          The Company represents and warrants to each of the Buyers that:

          (a) Organization and Qualification. The Company and its “Subsidiaries” (which for
purposes of this Agreement means any entity in which the Company and/or after the

4

 

Closing, PubCo, directly or indirectly, owns capital stock or holds an equity or similar
interest) are entities duly organized and validly existing in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and authority to own their
properties and to carry on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties,
assets, operations, results of operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby and the
other Transaction Documents (as defined below) or by the agreements and instruments to be entered
into in connection herewith or therewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents to which it is a party. The Company has no
Subsidiaries except as set forth on Schedule 3(a).

          (b) Authorization; Enforcement; Validity. The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement and each of the other
agreements entered into by the parties hereto in connection with the transactions contemplated by
this Agreement to which the Company is a party (such documents, and together with the Warrants, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions, and each of the other
agreements to be entered into in connection with the transactions contemplated by this Agreement,
collectively, the “Transaction Documents”). The execution and delivery of the Transaction
Documents to which the Company is a party and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly authorized by the Company’s Board of Directors and
no further filing, consent, or authorization is required by the Company, its Board of Directors or
its stockholders. This Agreement and the other Transaction Documents to which the Company is a
party have been duly executed and delivered by the Company, and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, liquidation
or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

          (c) Offer of Securities. The offer by the Company of the Securities is exempt from
registration under the 1933 Act.

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which the Company is a party and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) result in a violation of any certificate of
incorporation, certificate of formation, any certificate of designations or other constituent
documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its
Subsidiaries, or the bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its

5

 

Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.

          (e) Consents. The Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental agency or any regulatory
or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of
its obligations under or contemplated by the Transaction Documents to which it is a party, in each
case in accordance with the terms hereof or thereof, other than the current report on Form 8-K
required to be filed after Closing by PubCo pursuant to Section 4(h) of this Agreement, the Form D
filing required to be made following the Closing by PubCo with the SEC and the registration
statement and related state securities law filings required by the Registration Rights Agreement.

          (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges
and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby and thereby and that
no Buyer is (i) an officer or director of the Company, (ii) an “affiliate” of the Company (as
defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of more than
10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange
Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect
to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each Buyer that the decision of the
Company and each of the Subsidiaries to enter into the Transaction Documents, as applicable, has
been based solely on the independent evaluation by the Company, its Subsidiaries and their
representatives.

          (g) No General Solicitation; Placement Agent’s Fees. None of the Company, any of its
affiliates, or any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim. The Company acknowledges that it has engaged Rodman & Renshaw, LLC
as placement agent (the “Agent”) in connection with the sale of the Securities. The Company will
also pay a fee of up to $810,000 to Ewing Bemiss & Co. (“Bemiss”) contemporaneously with the
Closing. Other than the Agent and Bemiss, the Company has not engaged any placement agent or other
agent in connection with the sale of the Securities.

6

 

          (h) No Integrated Offering. None of the Company, its Subsidiaries, any of their
affiliates, or any Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that would
require registration of any of the Securities under the 1933 Act or cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the securities of the
Company are listed or designated.

          (i) Financial Statements. The financial statements of the Company have been prepared
in accordance with United States generally accepted accounting principles consistently applied
(“GAAP”), during the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except for liabilities and obligations incurred
in the ordinary course of business and consistent with past practice, liabilities and obligations
reflected on or reserved against in the January 1, 2006 audited balance sheet prepared in
accordance with GAAP delivered pursuant to Section 7(o) (the “Balance Sheet”) and as otherwise
disclosed herein or in the disclosure schedules to this Agreement, since January 2, 2006, inclusive
of such date, the Company has not incurred any liabilities or obligations that would be required to
be reflected or reserved against in a balance sheet of the Company prepared in accordance with the
principles used in preparation of the Balance Sheet.

          (j) Absence of Certain Changes. Since January 1, 2006, there has been no change or
development in the business, properties, operations, condition (financial or otherwise), results of
operations or prospects of the Company or its Subsidiaries that has had or could reasonably be
expected to have a Material Adverse Effect. Since January 1, 2006, the Company has not (i)
declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess
of $100,000 outside of the ordinary course of business, (iii) had capital expenditures,
individually or in the aggregate, in excess of $500,000 or (iv) waived any material rights with
respect to any Indebtedness or other rights in excess of $100,000 owed to it. The Company has not
taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company is not as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing will not be, Insolvent (as defined below). For purposes of this
Section 3(j), “Insolvent” means (i) the present fair saleable value of the Company’s assets is less
than the amount required to pay the Company’s total Indebtedness (as defined in Section 3(o)), (ii)
the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as such debts mature or
(iv) the Company has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.

7

 

          (k) Conduct of Business; Regulatory Permits. Neither the Company nor its Subsidiaries
is in violation of any term of or in default under its certificate of incorporation, certificate of
formation, any certificate of designations or other constituent documents or its bylaws. Neither
the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries, except for
possible violations which would not, individually or in the aggregate, have a Material Adverse
Effect. The Company and its Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit.

          (l) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor
any director, officer, agent, employee or other Person acting on behalf of the Company or any of
its Subsidiaries has, in the course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.

          (m) Transactions With Affiliates. Except as set forth in Schedule 3(m)
hereto, other than the issuance of restricted stock disclosed on Schedule 3(n), none of the
officers, directors or employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any such officer, director,
or employee has a substantial interest or is an officer, director, trustee or partner.

          (n) Equity Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of common stock, $.01 par value, 2,693,370 of which are
issued and outstanding and (ii) 50,000,000 shares of preferred stock, $.01 par value, of which
7,000,000 shares have been designated as Series C Preferred Stock, 6,825,780 of which are issued
and outstanding, and 30,000,000 have been designated as Series D Preferred Stock, 21,841,930.34 of
which are issued and outstanding. All of such outstanding shares have been, or upon issuance will
be, validly issued and are fully paid and nonassessable. Except as disclosed in Schedule
3(n) or Schedule 3(o): (i) none of the Company’s share capital is subject to
preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any share capital of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company

8

 

or any of its Subsidiaries is or may become bound to issue additional share capital of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any share capital of the Company or any of its Subsidiaries; (iii)
there are no outstanding debt securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing Indebtedness (as defined in Section 3(o) hereof) of
the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) there are no financing statements securing obligations in any material amounts,
either singly or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the Registration Rights
Agreement); (vi) there are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no
securities or instruments containing anti-dilution or similar provisions that will be triggered by
the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement; (ix) all of the Company’s
outstanding options and warrants shall be cancelled at Closing; and (x) no securities of the
Company or PubCo are listed or quoted on any stock exchange or automated quotation system.
Immediately after giving effect to the Merger and the Share Exchange (as such terms are defined in
Section 7(n) hereof), (i) all of the Company’s issued and outstanding stock shall be owned by PubCo
and (ii) all other securities issued by the Company (including, without limitation, the Series C
Preferred Stock, the Series D Preferred Stock and any securities disclosed in Schedule
3(n)) shall have been exchanged for shares of PubCo’s Class A Common Stock (the “Class A Common
Stock”), PubCo’s Class B Common Stock (the “Class B Common Stock”), or PubCo’s Common Stock, as
applicable. The Company has furnished to the Buyer true, correct and complete copies of the
Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the
“Certificate of Incorporation”), the Company’s Bylaws, as amended and as in effect on the date
hereof (the “Bylaws”), and all agreements relating to securities convertible into, or exercisable
or exchangeable for, shares of Common Stock and the material rights of the holders thereof in
respect thereto.

          (o) Indebtedness and Other Contracts. Except as disclosed in Schedule 3(o),
neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined
below), (ii) is a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or instrument would result
in a Material Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv)
is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse
Effect. Schedule 3(o) provides a detailed description of the material terms of any such
outstanding Indebtedness. Immediately after giving effect to the Merger and the Share Exchange (as
such terms are defined in Section 7(n) hereof), neither the Company nor PubCo shall have any
outstanding Indebtedness, other than the Senior Secured Convertible Notes to be issued pursuant

9

 

to the terms of the Notes Securities Purchase Agreement in the form attached hereto as
Exhibit C (the “Notes”) (which Notes shall be in the form attached hereto as Exhibit
D), the Senior Indebtedness (as such term is defined in the Notes) and the Permitted
Indebtedness (as such term is defined in the Notes) set forth on Schedule 3(o)(i). For
purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services including, without limitation, “capital leases” in
accordance with U.S. GAAP (other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with U.S. GAAP, consistently applied for the periods covered
thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or
other encumbrance upon or in any property or assets (including accounts and contract rights) owned
by any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above;
(y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent
or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation
of another Person if the primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof.

          (p) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation that is material, individually or in the aggregate, before or by, any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of the Company’s
Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors.

          (q) Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance

10

 

coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse
Effect.

          (r) Employee Relations.

                    (i) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company and its Subsidiaries believe that their
relations with their employees are good. None of Howard Brill, Dan Hollenbach, Robert Larkin,
Steve Pennington or any officer in the capacity of President-Professional Staffing or any other
person holding a similar office or holding an office at a similar level as the foregoing (the
“Executive Officers”) have notified the Company that such officer intends to leave the Company or
otherwise terminate such officer’s employment with the Company. No Executive Officer of the
Company, to the knowledge of the Company, is, or is expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each Executive Officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters.

                    (ii) The Company and its Subsidiaries are in compliance with all federal, state, local and
foreign laws and regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to be in compliance
would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

          (s) Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each case free and clear
of all liens, encumbrances and defects except for the blanket lien securing the Senior Indebtedness
(as defined in the Notes) and such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.

          (t) Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, service marks, and all applications and
registrations therefor, trade names, patents, patent rights, copyrights, original works of
authorship, inventions, licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective
businesses as now conducted. None of the Company’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened,

11

 

against the Company or its Subsidiaries regarding its Intellectual Property Rights. The
Company is unaware of any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights.

          (u) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with
any and all applicable Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit,
license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse
Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder.

          (v) Subsidiary Rights. Except as set forth in Schedule 3(v), the Company or
one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or each Subsidiary.

          (w) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all
foreign, federal and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. No liens have been filed and no claims are being
asserted by or against the Company or any of its Subsidiaries with respect to any taxes (other than
liens for taxes not yet due and payable). Neither the Company nor it Subsidiaries has received
notice of assessment or proposed assessment of any taxes claimed to be owed by it or any other
Person on its behalf. Except as disclosed on Schedule 3(w), neither the Company nor any
Subsidiary is a party to any tax sharing or tax indemnity agreement or any other agreement of a
similar nature that remains in effect. Each of the Company and its Subsidiaries has complied in
all material respects with all applicable legal requirements relating to the payment and
withholding of taxes and, within the time and in the manner prescribed by law, has withheld from
wages, fees and other payments and paid over to the proper governmental or regulatory authorities
all amounts required.

12

 

          (x) Internal Accounting Controls. The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with U.S. GAAP and to maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action is taken with
respect to any difference.

          (y) Upon the payment of cash and shares of Common Stock in the amounts set forth on
Schedule 3(y)(i) (the “Required Repayments”) to the holders of the Indebtedness identified
as “Subordinated Indebtedness” on Schedule 3(o), the Company shall have fulfilled any and
all of its obligations to the holders of the Indebtedness identified as “Subordinated Indebtedness”
on Schedule 3(o) arising from, under or with respect to the Master Investment Agreement,
dated as of November 15, 2001, by and among the Company, Global Investment I, LLC and the other
parties identified therein, as currently in effect (the “Master Investment Agreement”). Upon the
payment of the cash and shares of Common Stock to the parties and in the amounts set forth on
Schedule 3(y)(ii) (collectively, the “Management Payments”), the Company shall have
fulfilled any and all of its obligations to such parties arising from, under or with respect to (i)
the Certificate of Incorporation, (ii) the Company’s Series C Preferred Stock, (iii) the Company’s
Series D Preferred Stock, (iv) the Company’s Restricted Stock Plan, as currently in effect, and (v)
the Master Investment Agreement, as applicable.

          (z) Disclosure. All disclosure, oral or written, provided to the Buyers regarding the
Company, its business and the transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on behalf of the Company, taken as a whole, is true and correct and does
not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading.

     4. COVENANTS.

          (a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the
conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

          (b) Form D and Blue Sky. The Company agrees to cause PubCo to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such
action, or cause PubCo to take such action, as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities for sale to the Buyers at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of
the United States (or to obtain an exemption from such qualification), and shall provide evidence
of any such action so taken to the Buyers on or prior to the Closing Date.

          (c) Reporting Status. Until the date on which the Investors (as defined in the
Registration Rights Agreement) shall have sold all the Shares and Warrant Shares and none of

13

 

the Warrants is outstanding (the “Reporting Period”), the Company shall cause PubCo to use
every reasonable effort to timely file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not permit PubCo to terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.

          (d) Financial Information. (i) The Company agrees to cause PubCo to send the
following to each Investor during the Reporting Period unless the following are filed with the SEC
through EDGAR and are available to the public through the EDGAR system, within one Business Day
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K or 10-KSB, any
interim reports or any consolidated balance sheets, income statements, stockholders’ equity
statements and/or cash flow statements for any period other than annual, any Current Reports on
Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act, (ii) on the same day as the release thereof, facsimile copies of all press releases
issued by PubCo, the Company or any of its Subsidiaries, and (iii) copies of any notices and other
information made available or given to the stockholders of PubCo or the Company generally,
contemporaneously with the making available or giving thereof to the stockholders.

          (e) Until the Closing, the Company agrees to promptly deliver to each Buyer a copy of all
financial statements prepared by the Company for distribution to any of the Company’s shareholders,
lenders or its board of directors.

          (f) Fees. The Company and PubCo shall reimburse Radcliffe SPC, Ltd. for and on behalf
of the Class A Convertible Crossover Segregated Portfolio (“Radcliffe”), or its designee(s), for
all reasonable costs and expenses (in addition to any amounts previously paid) incurred in
connection with the transactions contemplated by the Transaction Documents (including all
reasonable legal fees and disbursements in connection therewith, documentation and implementation
of the transactions contemplated by the Transaction Documents and due diligence in connection
therewith), which amount may be, at the sole option of Radcliffe, after application of the $15,000
advance toward such fees and expenses previously paid by the Company to Radcliffe, withheld by such
Buyer from its Purchase Price at the Closing. The Company and PubCo, as applicable, shall be
responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s
commissions (other than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby, including, without limitation, any fees or commissions payable to
the Agent. The Company shall pay, or cause PubCo to pay, and hold, or cause PubCo to hold, each
Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable
attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each party to this
Agreement shall bear its own expenses in connection with the sale of the Securities to the Buyers.

          (g) Pledge of Securities. The Company, on behalf of itself and PubCo, acknowledges
and agrees that the Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Investor effecting

14

 

a pledge of Securities shall be required to provide the Company or PubCo with any notice
thereof or otherwise make any delivery to the Company or PubCo pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(f) hereof; provided that an
Investor and its pledgee shall be required to comply with the provisions of Section 2(f) hereof in
order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby
agrees to execute and deliver, and to cause PubCo to execute and deliver, such documentation as a
pledgee of the Securities may reasonably request in connection with a pledge of the Securities to
such pledgee by an Investor.

          (h) Disclosure of Transactions and Other Material Information. On or before 8:30
a.m., New York Time, on the first Business Day following the Closing Date, the Company shall cause
PubCo to file a press release (the “Press Release”) describing the material terms of the
transactions contemplated by the Transaction Documents. On or before 8:30 a.m., New York Time, on
the second Business Day following the Closing Date, the Company shall cause PubCo to file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this Agreement), the form of
Warrant and the Registration Rights Agreement) as exhibits to such filing (including all
attachments, the “8-K Filing”). From and after the issuance of the Press Release, no Buyer shall
be in possession of any material, nonpublic information received from the Company, PubCo, any of
its Subsidiaries or any of their respective officers, directors, employees or agents, that is not
disclosed in the Press Release. The Company shall not, and shall cause PubCo and each of their
Subsidiaries and their and each of their respective officers, directors, employees and agents, not
to, provide any Buyer with any material, nonpublic information regarding the Company, PubCo or any
of their Subsidiaries from and after the issuance of the Press Release without the express written
consent of such Buyer. In the event of a breach of the foregoing covenant by the Company, any of
their Subsidiaries, or any of their respective officers, directors, employees and agents, in
addition to any other remedy provided herein or in the Transaction Documents, a Buyer shall have
the right to make a public disclosure, in the form of a press release, public advertisement or
otherwise, of such material, nonpublic information without the prior approval by the Company, their
Subsidiaries, or any of their respective officers, directors, employees or agents. No Buyer shall
have any liability to the Company, PubCo, its Subsidiaries, or any of their respective officers,
directors, employees, stockholders or agents for any such disclosure. Subject to the foregoing,
neither the Company, PubCo, nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided, however,
that PubCo shall be entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (i) in substantial conformity with the
8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) the holders of 66-2/3% of the Shares purchased
hereunder shall be consulted by PubCo in connection with and given an opportunity to review and
comment on any such press release or other public disclosure prior to its release).
Notwithstanding the foregoing, neither PubCo nor the Company shall publicly disclose the name of
any Buyer, or include the name of any Buyer in any filing with the SEC or any regulatory agency or
the National Association of Securities Dealers, Inc.’s OTC Bulletin Board (the “Principal Market”)
or the stock exchange or automated quotation system upon which PubCo’s shares of Common Stock are
traded, including, without limitation, any and all discounted issuance rules, if applicable,
without

15

 

the prior written consent of such Buyer, except (i) for disclosure thereof in the 8-K Filing
or Registration Statement or (ii) as required by law or Principal Market regulations, the
regulations of the stock exchange or automatic quotation system upon which PubCo’s shares of Common
Stock are then traded or any order of any court or other governmental agency, in which case PubCo
shall provide such Buyer with prior notice of such disclosure and the opportunity to review and
comment on such disclosure.

          (i) Special Dividend. Immediately after giving effect to the Merger and the Share
Exchange (as such terms are defined in Section 7(n) hereof), PubCo shall declare and pay an
aggregate cash dividend of not more than $25.58528 per share on its outstanding Class A Common
Stock (the “Class A Dividend”) and an aggregate cash dividend of not more than $3.21374 per share
on its outstanding Class B Common Stock (the “Class B Dividend,” and collectively with the Class A
Dividend, the “Special Dividend”). Immediately following the payment of the Special Dividend, each
share of Class A Common Stock and each share of Class B Common Stock shall, automatically and
without further action by the Company, PubCo or any other party, convert into one share of Common
Stock (such conversions, the “Required Conversions”).

          (j) Variable Securities; Dilutive Issuances. For so long as any Buyer beneficially
owns any Securities, the Company shall cause PubCo not to, in any manner, issue or sell any rights,
warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible
into or exchangeable or exercisable for Common Stock at a price which varies or may vary with the
market price of the Common Stock, including by way of one or more reset(s) to any fixed price
unless the conversion, exchange or exercise price of any such security cannot be less than the then
applicable Exercise Price (as defined in the Warrants) with respect to the Common Stock into which
any Warrant is exercisable. For so long as any Warrants remain outstanding, the Company shall
cause PubCo not to, in any manner, enter into or affect any Dilutive Issuance (as defined in the
Warrants) if the effect of such Dilutive Issuance is to cause PubCo to be required to issue upon
exercise of any Warrant any shares of Common Stock in excess of that number of shares of Common
Stock which PubCo may issue upon exercise of the Warrants without breaching PubCo’s obligations
under the rules or regulations of the Principal Market or the stock exchange or automated quotation
system upon which PubCo’s shares of Common Stock are traded, including, without limitation, any and
all discounted issuance rules, if applicable.

          (k) Corporate Existence. So long as any Buyer beneficially owns any Securities, the
Company shall cause PubCo not to be party to any Fundamental Transaction (as defined in the
Warrants) unless PubCo is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Warrants.

          (l) Reservation of Shares. The Company shall cause PubCo to take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, after the Closing Date,
130% of the number of shares of Common Stock issuable upon exercise of the Warrants.

          (m) Conduct of Business. The business of PubCo, the Company and their Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of any

16

 

governmental entity, except where such violations would not result, either individually or in
the aggregate, in a Material Adverse Effect.

          (n) Additional Issuances of Securities.

               (i) For purposes of this Section 4(n), the following definitions shall apply.

          (A) “Convertible Securities” means any stock or securities (other than Options) convertible
into or exercisable or exchangeable for shares of Common Stock.

          (B) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

          (C) “Common Stock Equivalents” means, collectively, Options and Convertible Securities.

               (ii) From the date hereof until the date that is 180 Trading Days (as defined in the)
following the Effective Date (as defined in the Registration Rights Agreement), as such date may be
extended by one Trading Day for each Trading Day following the Effective Date on which the
Registration Statement required to be filed by PubCo pursuant to the Registration Rights Agreement
cannot be utilized by the holders of Shares for the resale of all of the Registrable Securities (as
defined in the Registration Rights Agreement) (the “Trigger Date”), neither PubCo nor the Company
will, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other disposition of) any of its
or its Subsidiaries’ equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common
Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a
“Subsequent Placement”) without the prior written approval of the holders of 66-2/3% of the Shares
issued hereunder.

               (iii) From the Trigger Date until the two year anniversary of the Closing Date, the Company
shall cause PubCo not to, directly or indirectly, effect any Subsequent Placement unless PubCo
shall have first complied with this Section 4(n)(iii).

          (A) PubCo shall deliver to each Buyer a written notice (the “Offer Notice”) of any proposed or
intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered
Securities”) in a Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold
or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged,
(y) identify the persons or entities (if known) to which or with which the Offered Securities are
to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such
Buyers a pro rata portion of 50% of the Offered Securities (a) based on such Buyer’s pro rata
portion of the Shares purchased hereunder (the “Basic Amount”), and (b) with respect to each Buyer
that elects to purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers as such

17

 

Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less
than their Basic Amounts (the “Undersubscription Amount”).

          (B) To accept an Offer, in whole or in part, such Buyer must deliver a written notice to PubCo
prior to the end of the 10th Business Day after such Buyer’s receipt of the Offer Notice
(the “Offer Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects
to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice
of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the total of all
of the Basic Amounts, then each Buyer who has set forth an Undersubscription Amount in its Notice
of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Buyer
who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion
of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total
Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding
by PubCo to the extent its deems reasonably necessary, which process shall be repeated until the
Buyers shall have had the opportunity to subscribe for any remaining Undersubscription Amount.

          (C) PubCo shall have 10 Business Days from the expiration of the Offer Period above to offer,
issue, sell or exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Buyers (the “Refused Securities”), but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not more favorable to the
acquiring person or persons or less favorable to PubCo than those set forth in the Offer Notice.

          (D) In the event PubCo shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 4(n)(iii) above), then each Buyer
may, at its sole option and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not less than the
number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section
4(n)(iii)(2) above multiplied by a fraction, (i) the numerator of which shall be the number or
amount of Offered Securities PubCo actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section 4(n)(iii) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Buyer so elects to reduce the number or amount of Offered
Securities specified in its Notice of Acceptance, PubCo may not issue, sell or exchange more than
the reduced number or amount of the Offered Securities unless and until such securities have again
been offered to the Buyers in accordance with Section 4(n)(iii) above.

          (E) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Buyers shall acquire from PubCo, and PubCo shall issue to the Buyers, the number or
amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section
4(n)(iii) above if the Buyers have so elected, upon the terms and

18

 

conditions specified in the Offer. The purchase by the Buyers of any Offered Securities is
subject in all cases to the preparation, execution and delivery by PubCo and the Buyers of a
purchase agreement relating to such Offered Securities reasonably satisfactory in form and
substance to the Buyers and their respective counsel.

          (F) Any Offered Securities not acquired by the Buyers or other persons in accordance with
Section 4(n)(iii) above may not be issued, sold or exchanged until they are again offered to the
Buyers under the procedures specified in this Agreement.

               (iv) The restrictions contained in subsections (ii) and (iii) of this Section 4(n) shall not
apply in connection with any Excluded Issuance (as defined in the Warrants) or any bona fide firm
commitment underwritten public offering with a nationally recognized underwriter pursuant to an
effective registration statement under the 1933 Act that generates net proceeds to the Company or
PubCo, as applicable, of at least $30 million (other than an “at-the-market offering” as defined in
Rule 415(a)(4) under the 1933 Act and “equity lines”).

          (o) Integration. None of PubCo, the Company, their Subsidiaries, their affiliates and
any Person acting on their behalf will take any action or steps referred to in Section 3(h) that
would require registration of any of the Securities under the 1933 Act or cause the offering of the
Securities to be integrated with other offerings.

          (p) Holding Period. For the purposes of Rule 144, the Company acknowledges, on behalf
of itself and PubCo, based on current securities laws, that the holding period of the Warrant
Shares may be tacked onto the holding period of the Warrants (in the case of Cashless Exercise (as
defined in the Warrants)) and the Company, on behalf of itself and PubCo, agrees not to take a
position contrary to this Section 4(p).

          (q) OTC Bulletin Board. The Company shall cause PubCo to use best efforts and to
cooperate in Rodman & Renshaw, LLC’s application to cause the Common Stock to become designated for
quotation on the Principal Market as soon as practicable following the Closing Date and thereafter
to comply with the rules of the Principal Market. If the Common Stock is not designated for
quotation on the Principal Market by the 10th Business Day after the earlier to occur of
the Effective Date (as defined in the Registration Rights Agreement) or the applicable
Effectiveness Deadline (as defined in the Registration Rights Agreement) (such date, the “OTC
Deadline”), then, as partial relief for the damages to any holder by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which remedy shall not
be exclusive of any other remedies available at law or in equity), the Company shall pay to each
Investor (as such term is defined in the Registration Rights Agreement) an amount in cash equal to
(i) one percent of the aggregate Purchase Price of such Investor’s Shares on the day of the OTC
Deadline and (ii) two percent of the aggregate Purchase Price of such Investor’s Shares on every
30th day after the day of the OTC Deadline (pro rated for periods totaling less than 30
days) until the Common Stock is designated for quotation on the Principal Market. The payments to
which an Investor shall be entitled pursuant to this Section 4(q) are referred to herein as “OTC
Delay Payments.” OTC Delay Payments shall be paid on the earlier of (x) the dates set forth above
and (y) the third Business Day after the first day that the Common Stock is designated for
quotation on the Principal Market. In the event the Company fails to make OTC

19

 

Delay Payments in a timely manner, such OTC Delay Payments shall bear interest at the rate of
two percent per month (prorated for partial months) until paid in full. Notwithstanding anything
herein or in the Registration Rights Agreement to the contrary, (i) no OTC Delay Payments shall be
due and payable with respect to the Warrants or the Warrant Shares and (ii) in no event shall the
aggregate amount of OTC Delay Payments payable to any Investor, together with any Registration
Delay Payments (as defined in the Registration Rights Agreement) payable to such Investor, in each
case that are outside of the control of the Company or PubCo, exceed, in the aggregate, 10% of the
aggregate Purchase Price of such Investor’s Shares.

          (r) Required Repayments; Management Payments. Contemporaneously with the Closing, the
Company or its agent shall make the Required Repayments and the Management Payments; provided,
however, (i) that prior to making any Required Repayment, the Company shall have received from the
holders of the Indebtedness identified as “Subordinated Indebtedness” on Schedule 3(o) a
written statement acknowledging that upon payment by the Company of the Required Repayments, all of
such Indebtedness shall be satisfied and cancelled; and (ii) that prior to making any Management
Payment, the Company or its agent shall have received a letter of transmittal from each intended
recipient of such Management Payment acknowledging that such Management Payment satisfies all of
the Company’s obligations to such recipient under (A) the Certificate of Incorporation, (B) the
Company’s Series C Preferred Stock, (C) the Company’s Series D Preferred Stock, (D) the Company’s
Restricted Stock Plan, as in effect on the date hereof, and (E) the Master Investment Agreement,
and, in each case, releasing the Company from any and all further obligations arising from, under
or with respect thereto.

     5. REGISTER; TRANSFER AGENT INSTRUCTIONS.

          (a) Register. The Company shall cause PubCo to maintain at its principal executive
offices (or such other office or agency of PubCo as it may designate by notice to each holder of
Securities), a register for the Common Stock and the Warrants, in which PubCo shall record the name
and address of the Person in whose name the Shares and the Warrants and have been issued (including
the name and address of each transferee), the number of Shares held by such Person and the number
of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall
cause PubCo to keep the register open and available at all times during business hours for
inspection of any Buyer or its legal representatives.

          (b) Transfer Agent Instructions. The Company shall cause PubCo to issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, which legend removal
instructions shall be consistent with Section 2(g) hereof and shall instruct such transfer agent to
issue certificates or credit shares to the applicable balance accounts at The Depository Trust
Company (“DTC”), registered in the name of each Buyer or its respective nominee(s), for the Shares
and the Warrant Shares issued at the Closing or upon exercise of the Warrants in such amounts as
specified from time to time by each Buyer to PubCo upon exercise of the Warrants in the form of
Exhibit E attached hereto (the “Irrevocable Transfer Agent Instructions”). If a Buyer
effects a sale, assignment or transfer of the Securities in accordance with Section 2(f) hereof,
the Company shall cause PubCo to permit the transfer and shall promptly instruct its transfer agent
to issue one or more certificates or credit shares to the applicable balance accounts at DTC in
such name and in such denominations as specified by such Buyer to effect such sale, transfer or
assignment. The Company acknowledges, on behalf of itself and PubCo, that a

20

 

breach by it of its obligations hereunder will cause irreparable harm to a Buyer.
Accordingly, the Company acknowledges, on behalf of itself and PubCo, that the remedy at law for a
breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a
breach or threatened breach by the Company or PubCo of the provisions of this Section 5(b), that a
Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.

     6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

          The obligation of the Company and PubCo hereunder to issue and sell the Shares and the related
Warrants to each Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are for the Company’s and
PubCo’s benefit and may be waived by the Company or PubCo at any time in their discretion by
providing each Buyer with prior written notice thereof:

          (a) Such Buyer shall have executed each of the Transaction Documents to which it is a party
and delivered the same to the Company.

          (b) Such Buyer and each other Buyer shall have delivered to the Company the Purchase Price for
the Shares (less, in the case of Radcliffe, the amounts withheld pursuant to Section 4(f) of this
Agreement) and the related Warrants being purchased by such Buyer at the Closing by wire transfer
of immediately available funds pursuant to the wire instructions provided by the Company.

          (c) The representations and warranties of such Buyer shall be true and correct, and such Buyer
shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by
such Buyer at or prior to the Closing Date.

     7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

          The obligation of each Buyer hereunder to purchase the Shares and the related Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer’s sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company or PubCo with prior written
notice thereof:

          (a) Each of the Company, PubCo and each of their Subsidiaries, to the extent each is a party
thereto, shall have executed and delivered to such Buyer (i) each of the Transaction Documents,
(ii) certificates evidencing the number of Shares being purchased by such Buyer at the Closing
pursuant to this Agreement and (iii) the Warrants (in such amounts as such Buyer shall request)
being purchased by such Buyer at the Closing pursuant to this Agreement.

          (b) PubCo shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent
Instructions, in the form of Exhibit E attached hereto, which instructions shall have been
delivered to and acknowledged in writing by the Company’s transfer agent.

21

 

          (c) Such Buyer shall have received the opinion of Brownstein Hyatt & Farber, P.C. (“BHF”),
PubCo’s and the Company’s outside counsel, dated as of the Closing Date, in the form of Exhibit
F attached hereto.

          (d) The Company and PubCo shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company, PubCo and each of their Subsidiaries in such entity’s
jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within 10 days of the Closing Date.

          (e) The Company and PubCo shall have delivered to such Buyer a certificate evidencing the
Company’s and PubCo’s qualification as a foreign corporation and good standing issued by the
Secretary of State (or comparable office) of each jurisdiction in which the Company and PubCo,
conducts business, as of a date within 10 days of the Closing Date.

          (f) PubCo shall have filed the Certificate of Designations, Preferences and Rights of
PubCo’s Series A Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary
of State of the State of Delaware and such Certificate of Designation shall continue to be in full
force and effect as of the Closing Date. The Company and PubCo shall have delivered to such
Buyer a certified copy of the Certificate of Incorporation and the certificate of incorporation of
PubCo, as amended by the Certificate of Designation, as certified by the Secretary of State of the
State of Colorado and Delaware, respectively, within 10 days of the Closing Date.

          (g) The Company shall have delivered to such Buyer a certificate, executed by the Secretary of
the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section
3(b) hereof as adopted by the Company’s Board of Directors in a form reasonably acceptable to such
Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the
Closing, in the form attached hereto as Exhibit G.

          (h) The representations and warranties of the Company shall be true and correct, and the
Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by
the Company at or prior to the Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to the other matters set forth in the form attached hereto as Exhibit
H.

          (i) PubCo shall have delivered to such Buyer a letter from PubCo’s transfer agent certifying
the number of shares of Common Stock outstanding as of the Closing Date before giving effect to the
transactions contemplated hereby.

          (j) The Company and PubCo shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities.

          (k) Wells Fargo Bank National Association, acting through its Wells Fargo Business Credit
operating division, the Company and certain of the Company’s Subsidiaries party to the Credit
Facility (as defined in the Notes) shall have entered into amendments to the documents related to
the Senior Indebtedness (as defined in the Notes) on the terms set forth on Exhibit I.

22

 

          (l) Not less than 90% of the Company’s equity shall be acquired in a manner and for
consideration described in the Share Purchase Agreement attached as Exhibit J hereto (the
“Share Purchase”) by Global Employment Holdings, Inc., a Delaware corporation (referred to herein
as “PubCo”), which entity shall be incorporated and in good standing in the State of Delaware, and
the terms of which shall otherwise be satisfactory to Radcliffe in its sole discretion.

          (m) The Company shall have (i) received pay-off letters (as provided in Section 4(r) hereof
and in the form attached hereto as Exhibit O) from the holders of the Indebtedness
identified as “Subordinated Indebtedness” on Schedule 3(o) providing for the satisfaction
and cancellation of such Indebtedness upon the payment by the Company of the Required Repayments,
(ii) satisfied the Company’s obligations under a management bonus pool plan of the Company (the
“Restricted Stock Plan”) by making the Management Payments, and the Company’s obligations under the
Series C Preferred Stock and the Series D Preferred Stock upon the payment of the cash and shares
of Common Stock to the persons and in the amounts set forth on Schedule 3(y)(ii) and (iii)
paid in full and retired all other Indebtedness of the Company and PubCo (other than the Permitted
Indebtedness and the Senior Indebtedness).

          (n) The Company or PubCo shall have filed a Certificate of Merger with the Colorado Secretary
of State pursuant to Section 7-111-104 of the Colorado Business Corporations Act whereby a
wholly-owned subsidiary of PubCo will be merged with and into the Company (the “Merger”), pursuant
to which each share of the remaining equity securities of the Company not acquired by PubCo in the
Share Purchase will be converted into the same number of shares of Common Stock as in the Share
Purchase (the “Share Exchange”), and after giving effect to the Merger, the Required Repayments and
the Management Payments, the shareholders of the Company, management and the holders of
Indebtedness identified as “Subordinated Indebtedness” on Schedule 3(o) immediately prior
to the Share Purchase, the Merger, the Required Repayments and the Management Payments will own, on
a fully-diluted basis following completion of the Share Purchase, the Merger, the Required
Repayments and the Management Payments but before giving effect to the Other Financing (as defined
in Section 7(t) hereof), not less than 97% of PubCo’s common equity.

          (o) The Company shall have delivered to each Buyer audited financial statements of the Company
prepared in accordance with GAAP for the periods ended December 28, 2003, January 2, 2005 and
January 1, 2006, audited by Mayer Hoffman McCann P.C. or another auditing firm of regionally
recognized standing acceptable to Radcliffe in its sole discretion, which financial statements (i)
shall contain an opinion of such auditor prepared in accordance with generally accepted auditing
standards (which opinion shall be without (x) a “going concern” or like qualification or exception,
or (y) any qualification or exception as to the scope of such audit), (ii) shall fulfill the
financial statement requirements for inclusion in both the Current Report on Form 8-K and
registration statement on Form S-1 that PubCo will be obligated to file following the Closing,
(iii) shall be materially in conformity with the financial statements of the Company (audited by
Grant Thornton) for the periods ended December 28, 2003 and January 2, 2005 previously provided to
the Buyers (other than any non-material change in the balance of the accrued liability related to
the worker’s compensation insurance program in place prior to August 2002, as more fully explained
in notes A and N to the 2004 annual report (the “Worker’s Compensation Adjustment”)), and (iv)
shall reflect earnings before interest,

23

 

taxes, depreciation and amortization (EBITDA) (after adjustment for (A) the Worker’s
Compensation Adjustment, (B) the annual management fee to KRG Capital Partners, LLC, (C) charges
related to employee terminations in the first quarter of 2005, (D) fees and expenses related to the
Share Purchase, the Required Repayments, the Management Payments and the transactions contemplated
hereby and (E) accounting treatment of the Share Purchase, the Merger, the Required Repayments, the
Management Payments and the transactions contemplated hereby with respect to outstanding management
equity plan shares and preferred shares of the Company prior to giving effect to the transactions
contemplated hereby) for the fiscal year ended January 1, 2006 of at least $10,500,000.

          (p) Assuming the payment of the Special Dividend, the Required Repayments and the Management
Payments, PubCo’s capitalization and contingent liabilities shall be substantially identical to
that set forth on Exhibit K hereto, after giving effect to the Share Purchase, the Merger,
the Special Dividend, the Required Repayments, the Management Payments, the increase in the Senior
Indebtedness contemplated in Exhibit I hereto and the Other Financing (as defined below),
and Mayer Hoffman McCann P.C. (or the other auditing firm referred to in clause (o) above) shall
have delivered to such Buyer a statement that such firm has reviewed the pro forma capitalization
and contingent liabilities, such statement to be in substantially similar form to a customary
comfort letter issued to an underwriter in connection with a registration statement on Form S-1.

          (q) Each Executive Officer and officer of PubCo who assumes the duties of any such Executive
Officer after the date hereof shall have entered into non-competition and non-solicitation
agreements with the Company and PubCo in the form of Exhibit L and in substance
satisfactory to Radcliffe in its sole discretion, together with agreements between each such member
of management and PubCo providing that (i) PubCo shall not grant demand or piggyback registration
rights to any such individual or otherwise agree to register any securities held by any such
individual for resale, for a period of one year, and (ii) no such individual shall sell any
securities of PubCo owned of record or beneficially by such individual for one year from Closing
and no such individual shall sell more than one-third of his or her securities owned of record or
beneficially at the Closing for a period of within two years from the Closing Date.

          (r) There shall not have developed, occurred, or come into effect or existence after the date
hereof any change, or any development involving a prospective change, in or affecting the position
of the Company or PubCo, financial or otherwise, that has had, or would be expected to have, a
Material Adverse Effect on the Company’s or PubCo’s general affairs, management, financial
condition, shareholders’ equity, results of operations or prospects, as determined by Radcliffe in
its sole discretion.

          (s) There shall not have developed, occurred or come into effect or existence (A) any
suspension or material limitation in trading in securities generally or of PubCo’s shares, (B) a
moratorium on commercial banking activities by either federal or New York State authorities, or (C)
any event, action, state, condition or major financial occurrence of national or international
consequence, including any outbreak or escalation or hostilities, acts of terrorism, war, national
or international emergency, calamity or crisis or like event, or any governmental action, law,
regulation, inquiry or other occurrence of any nature which, in the case of any event specified in
this clause (C), in the sole opinion of Radcliffe, materially adversely affects or may

24

 

materially affect the financial markets or the business, operations, affairs or prospects of
the Company or PubCo.

          (t) The Company shall have, concurrently with the Closing, consummated the transactions
contemplated by the purchase agreements attached hereto as Exhibit C and Exhibit M
securing the financing of $30,000,000 of Notes and at least $12.75 million of Series A Convertible
Preferred Stock, respectively (collectively the “Other Financing”).

          (u) The Company shall have, concurrently with the Closing, paid in full and retired all other
Indebtedness of the Company and PubCo (other than the Permitted Indebtedness and the Senior
Indebtedness set forth on Schedule 3(o)).

          (v) PubCo shall have executed and delivered a Joinder to this Agreement (in the form attached
hereto as Exhibit N), dated as of the Closing Date, to the effect that upon the Closing (i)
each of the representations and warranties made by the Company set forth in Section 3 hereof,
mutatis mutundis, shall be true and correct as if each reference to the Company in such
representations and warranties was a reference to PubCo, (ii) PubCo assumes all covenants and
obligations of PubCo set forth herein and (iii) PubCo assumes all obligations and covenants of the
Company set forth herein (including, without limitation, all indemnification obligations) as if
each obligation of the Company and each reference thereto contained elsewhere herein was an
obligation of and a reference to PubCo.

          (w) Such Buyer shall have been satisfied, in its sole discretion, as to its due diligence
investigation of PubCo, including without limitation, the audited annual financial statements of
PubCo.

          (x) All equity securities and derivative securities convertible or exercisable into equity
securities of PubCo or the Company shall have been, concurrently with the Closing, cancelled or
terminated.

          (y) The Company shall have delivered to such Buyer such other customary documents relating to
the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably
request.

     8. TERMINATION. In the event that the Closing shall not have occurred with respect to
a Buyer on or before March 31, 2006 due to the Company’s or such Buyer’s failure to satisfy the
conditions set forth in Sections 6 and 7 above (and a nonbreaching party’s failure to waive such
unsatisfied condition(s)), any such nonbreaching party shall have the option to terminate Sections
1, 5, 6 and 7 of this Agreement with respect to such breaching party at the close of business on
such date without liability of any party to any other party, except as set forth below; provided,
however, if the foregoing Sections of this Agreement are terminated pursuant to this Section 8, the
Company shall remain obligated to reimburse the non-breaching Buyers for the amounts described in
Section 4(f) above.

     9. MISCELLANEOUS.

          (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the

25

 

internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          (b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.

          (c) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

          (d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.

          (e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyers, the Company, their affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the holders of at least 66-2/3% of the Shares issued hereunder, and any
amendment to this Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities, as applicable. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom enforcement is sought. No
such amendment shall be effective to the extent that it

26

 

applies to less than all of the holders of the applicable Securities then outstanding. No
consideration shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the same consideration
also is offered to all of the parties to the Transaction Documents, holders of Shares, or holders
of the Warrants, as the case may be. The Company has not, directly or indirectly, made any
agreements with any Buyers relating to the terms or conditions of the transactions contemplated by
the Transaction Documents except as set forth in the Transaction Documents.

          (f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

If to the Company:

Global Employment Solutions, Inc.

9090 Ridgeline Boulevard, Suite 205

Littleton, Colorado 80129

Telephone:       (303) 216-9500

Facsimile:         (303) 216-9533

Attention:         Chief Executive Officer

Copy to:

Brownstein Hyatt & Farber, P.C.

410 17th Street

Denver, CO 80202

Telephone:       (303) 223-1160

Facsimile:         (303) 223-1111

Attention:         Jeff Knetsch

          If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with
copies to such Buyer’s representatives as set forth on the Schedule of Buyers,

Copy (for informational purposes only) to:

Drinker Biddle & Reath LLP

One Logan Square

Philadelphia, PA 19103-6996

Telephone:       (215) 988-2880

Facsimile:         (215) 988-2757

Attention:         Stephen T. Burdumy, Esq.

27

 

or to such other address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party five days prior to
the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

          (g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including any purchasers of the
Shares or the Warrants. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the holders of at least 66-2/3% of the aggregate
number of Shares issued hereunder, including by way of a Fundamental Transaction (unless the
Company is in compliance with the applicable provisions governing Fundamental Transactions set
forth in the Warrants). A Buyer may assign some or all of its rights hereunder without the consent
of the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect
to such assigned rights.

          (h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except to the extent set forth
in Section 9(k) below.

          (i) Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in Sections 2 and 3 and the
agreements and covenants set forth in Sections 4, 5, 8 and 9 shall survive the Closing. Each Buyer
shall be responsible only for its own representations, warranties, agreements and covenants
hereunder.

          (j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

          (k) Indemnification. In consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company, on behalf of itself and
PubCo, shall defend, protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, partners, members, officers, directors, employees and
direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to the

28

 

action for which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of,
or arising out of, or relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company or PubCo in any Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company or PubCo contained in any Transaction Documents or (c) any
cause of action, suit or claim brought or made against such Indemnitee by a third party (including
for these purposes a derivative action brought on behalf of the Company or PubCo) and arising out
of or resulting from (i) the execution, delivery, performance or enforcement of any Transaction
Documents, (ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such
Buyer pursuant to Section 4(h) hereof, or (iv) the status of such Buyer or holder of the Securities
as an investor in the Company or PubCo pursuant to the transactions contemplated by the Transaction
Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and obligations under this
Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

          (l) No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

          (m) Remedies. Each Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes, on behalf of itself and PubCo,
that in the event that it fails to perform, observe, or discharge any or all of its obligations
under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers.
The Company therefore agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual damages and without
posting a bond or other security.

          (n) Payment Set Aside. To the extent that the Company or PubCo makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction Documents or the
Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required
to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.

29

 

          (o) Independent Nature of Buyers’ Obligations and Rights. The obligations of each
Buyer under any Transaction Document are several and not joint with the obligations of any other
Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any
other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity
or group, or create a presumption that the Buyers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Buyer confirms that it has independently participated in the negotiation of the transaction
contemplated by this Agreement and the Transaction Documents with the advice of its own counsel and
advisors, that it has independently determined to enter into the transactions contemplated hereby
and thereby, that it is not relying on any advice from or evaluation by any other Buyer, and that
it is not acting in concert with any other Buyer in making its purchase of Securities hereunder or
in monitoring its investment in PubCo. The Buyers and, to its knowledge, the Company agree that no
action taken by any Buyer pursuant hereto or to the other Transaction Documents shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity
or group, or create a presumption that the Buyers are in any way acting in concert or would deem
such Buyers to be members of a “group” for purposes of Section 13(d) of the 1934 Act. The Buyers
have not agreed to act together for the purpose of acquiring, holding, voting or disposing of
equity securities of PubCo. The Company has elected to provide all Buyers with the same terms and
Transaction Documents for the convenience of the Company and not because it was required or
requested to do so by any of the Buyers. The Company acknowledges that such procedure with respect
to the Transaction Documents in no way creates a presumption that the Buyers are in any way acting
in concert or as a “group” for purposes of Section 13(d) of the 1934 Act with respect to the
Transaction Documents or the transactions contemplated hereby or thereby. Each Buyer shall be
entitled to independently protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any proceeding for such
purpose.

[Signature Page Follows]

30

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	GLOBAL EMPLOYMENT SOLUTIONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Howard Brill	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Howard Brill	 	 
	 

	 	 	 	Chief Executive Officer	 	 

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	BUYERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	RADCLIFFE SPC, LTD.	 	 
	 	 	for and on behalf of the Class A Convertible Crossover Segregated Portfolio	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	RG Capital Management, L.P.	 	 
	 	 	 	 	By: RGC Management Company, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Gerald F. Stahlecker	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	Gerald F. Stahlecker
	 	 	 	 	Title:	 	Managing Director

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BUYERS:
	 
	 	 	 	 	 	 
	 	 	AMATIS LIMITED
	 

	 	 	 	By:
	 	Amaranth Advisors L.L.C.,
	 

	 	 	 	 	 	Its Trading Advisor
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ KARL J. WACHTER               SVC
	 	 	 	 	 
	 	 	 	 	Name:   Karl J. Wachter
	 	 	 	 	Title:    Authorized Signatory

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	MAGNETAR CAPITAL MASTER
	 	 	FUND, LTD
	 
	 	 	 	 
	 	 	By: Magnetar Financial LLC
	 	 	Its: Investment Manager
	 
	 	 	 	 
	 

	 	By:
	 	/s/ PAUL SMITH
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	Name: Paul Smith
	 	 	Title: General Counsel

It is expressly understood and agreed that any closing condition requiring the execution and delivery of any agreement containing a “lock-up” (including, without limitation, as set forth in Section 7(q)) shall not be applicable to the purchase by, or for the benefit of, Magnetar Capital Master Fund, Ltd. notwithstanding anything contained in this Agreement or in any such agreement.

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS: Nite Capital LP
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ KEITH A. GOODMAN
	 

	 	 	 	 
	 

	 	 	 	Name:  Keith A. Goodman
	 

	 	 	 	Title: Manager of the General Partner

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	 	BUYERS: Lakeview Fund L.P.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ ARI LEVY
	 

	 	 	 	 
	 

	 	 	 	Name: Ari Levy
	 

	 	 	 	Title: Chief Investment Officer

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS:

Diamond Opportunity Fund, LLC

 	 
	 	By:  	/s/ Richard Marks
 	 
	 	 	Name:  	Richard Marks 	 
	 	 	Title:  	Managing Director 	 
	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS: Noam J. Rubinstein

 	 
	 	By:  	/s/ Noam J. Rubinstein
 	 
	 	 	Name:  	Noam J. Rubinstein 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS:

Tariq Jawad

 	 
	 	By:  	/s/ Tariq Jawad
 	 
	 	 	Name:  	Tariq Jawad 	 
	 	 	Title:  	Director 	 
	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be
duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS:	 
	 	  	 	 
	 	By:  	/s/
WALTER D. GOLLER	 
	 	 	Name:  	Walter D. Goller	 
	 	 	Title:  	COO, Downsview Capital, Inc., the General
Partner of Cranshire Capital, LP	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN
WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be
duly executed as of the date first written above.

	 	 	 	 	 
	 	BUYERS: Enable Growth Partners
LP

$394,200.00	 
	 	  	 	 
	 	By:  	/s/
BRENDAN O’NEIL	 
	 	 	Name:  	Brendan O’Neil	 
	 	 	Title:  	Principal & Portfolio Manager
	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BUYERS: Enable
Opportunity Partners LP	 	 
	 
	 	 	 	 	 	 
	 	 	$64,800.00 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brendan O'Neil	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Brendan O'Neil	 	 
	 

	 	 	 	Title: Principal & Portfolio Manager	 	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

     IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to
this Securities Purchase Agreement to be duly executed as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BUYERS: Pierce
Diversified Strategy Master Fund LLC
	 	 
	 
	 	 	 	 	 	 
	 	 	      
            $81,000.00 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brendan O'Neil	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Brendan O'Neil	 	 
	 

	 	 	 	Title: Principal & Portfolio Manager	 	 

[Signature Page to Common Stock Securities Purchase Agreement]

 

 

Global Employment Solutions

     IN WITNESS WHEREOF, each buyer and the Company have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date first
written above.

	 	 	 	 	 	 	 
	 	 	BUYERS: Context Convertible Arbitrage
Fund, LP
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ William D. Fertig
	 	 	 	 	 
	 

	 	 	 	Name:
	 	William D. Fertig
	 

	 	 	 	Title:
	 	CIO & Co-Chairman

Context Capital Management LLC

General Partner
	 
	 	 	 	 	 	 
	 	 	BUYERS: Context Convertible Arbitrage
Offshore, Ltd
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ William D. Fertig
	 	 	 	 	 
	 

	 	 	 	Name:
	 	William D. Fertig
	 

	 	 	 	Title:
	 	CIO & Co-Chairman

Context Capital Management LLC

Investment Adviser
	 
	 	 	 	 	 	 
	 	 	BUYERS: Context
Opportunistic Master
Fund, LP
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ William D. Fertig
	 	 	 	 	 
	 

	 	 	 	Name:
	 	William D. Fertig
	 

	 	 	 	Title:
	 	CIO & Co-Chairman

Context Capital Management LLC

Investment Adviser

[Signature Page to Common Stock Securities Purchase Agreement]

 

SCHEDULE OF BUYERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	Number	 	 	 	 	 	Legal
	 	 	 	 	 	 	 	 	of	 	 	 	 	 	Representative’s
	 	 	Address and	 	Number of	 	Warrant	 	Purchase	 	Address and
	Buyer	 	Facsimile Number	 	Shares	 	Shares	 	Price	 	Facsimile Number
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Drinker Biddle & Reath
	Radcliffe SPC, Ltd.
	 	c/o RG Capital Management,	 	 	250,000.00	 	 	 	250,000.00	 	 	$	1,250,000.00	 	 	LLP
	for and on behalf of
	 	L.P.	 	 	 	 	 	 	 	 	 	 	 	 	 	One Logan Square
	the Class A
	 	3 Bala Plaza — East, Suite 501	 	 	 	 	 	 	 	 	 	 	 	 	 	Philadelphia, PA 19103-
	Convertible
	 	Bala Cynwyd, PA  19004	 	 	 	 	 	 	 	 	 	 	 	 	 	6996
	Crossover Segregated
	 	Attention:  Gerald Stahlecker	 	 	 	 	 	 	 	 	 	 	 	 	 	Facsimile: (215) 988-
	Portfolio
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2757
	 
	 	Facsimile: (610) 617-5900	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (610) 617-0570	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Residence:  Cayman Islands	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Amatis Limited
	 	c/o Amaranth Advisors L.L.C.	 	 	40,000.00	 	 	 	40,000.00	 	 	$	200,000.00	 	 	Schulte Roth & Zabel LLP
	 
	 	One American Lane	 	 	 	 	 	 	 	 	 	 	 	 	 	919 Third Avenue
	 
	 	Greenwich, CT 06831	 	 	 	 	 	 	 	 	 	 	 	 	 	New York, New York
	 
	 	Attention:  General Counsel	 	 	 	 	 	 	 	 	 	 	 	 	 	10022
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Attention:  Eleazer Klein,
	 
	 	Facsimile:  (203) 422-3540	 	 	 	 	 	 	 	 	 	 	 	 	 	Esq.
	 
	 	Telephone: (203) 422-3340	 	 	 	 	 	 	 	 	 	 	 	 	 	Facsimile: (212) 593-5955
	 
	 	Residence:  Cayman Islands	 	 	 	 	 	 	 	 	 	 	 	 	 	Telephone:  (212) 756-2376

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	Number	 	 	 	 	 	Legal
	 	 	 	 	 	 	 	 	of	 	 	 	 	 	Representative’s
	 	 	Address and	 	Number of	 	Warrant	 	Purchase	 	Address and
	Buyer   	 	Facsimile Number	 	Shares	 	Shares	 	Price	 	Facsimile Number
	Magnetar Capital
	 	1603 Orrington Ave., #1300	 	 	200,000.00	 	 	 	200,000.00	 	 	$	1,000,000.00	 	 	 
	Master Fund, Ltd.
	 	Evanston, IL 60201	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
Telephone: (847) 905-4707	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Nite Capital Management	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Nite Capital, LP
	 	100 E. Cook Avenue, Suite 201	 	 	10,000.00	 	 	 	10,000.00	 	 	$	50,000.00	 	 	 
	 
	 	Libertyville IL 60048
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
Telephone:  (847) 716-0362	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	415 N. LaSalle	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lakeview Fund, LP
	 	Suite 700B	 	 	50,000.00	 	 	 	50,000.00	 	 	$	250,000.00	 	 	 
	 
	 	Chicago, Illinois 60610	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (312) 245-2910	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	500 Skokie Boulevard,	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Diamond Opportunity
	 	Suite 310	 	 	40,000.00	 	 	 	40,000.00	 	 	$	200,000.00	 	 	 
	Fund, LLC
	 	Northbrook, IL 60062	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (847) 897-8129	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Rodman & Renshaw, LLC	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Noam J. Rubinstein
	 	1270 Avenue of the Americas, 16th FL	 	 	3,000.00	 	 	 	3,000.00	 	 	$	15,000.00	 	 	 
	 
	 	NY, NY 10020	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (212) 356-0527	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	Number	 	 	 	 	 	Legal
	 	 	 	 	 	 	 	 	of	 	 	 	 	 	Representative’s
	 	 	Address and	 	Number of	 	Warrant	 	Purchase	 	Address and
	Buyer	 	Facsimile Number	 	Shares	 	Shares	 	Price	 	Facsimile Number
	 
	 	Rodman & Renshaw, LLC	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tariq Jawad
	 	1270 Avenue of the Americas, 16th FL	 	 	15,000.00	 	 	 	15,000.00	 	 	$	75,000.00	 	 	 
	 
	 	NY, NY 10020	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (212) 356-0515	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	666 Dundee Rd., #1901	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cranshire Capital,
	 	Northbrook, IL 60062	 	 	50,000.00	 	 	 	50,000.00	 	 	$	250,000.00	 	 	 
	L.P.

	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (847) 562-9030	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	One Ferry Bldg., #255	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Enable Growth
	 	San Francisco, CA 94111	 	 	78,840.00	 	 	 	78,840.00	 	 	$	394,200.00	 	 	 
	Partners LP
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (415) 677-1578	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	One Ferry Bldg., #255	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Enable Opportunity
	 	San Francisco, CA 94111	 	 	12,960.00	 	 	 	12,960.00	 	 	$	64,800.00	 	 	 
	Partners LP
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (415) 677-1578	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	One Ferry Bldg., #255	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pierce Diversified
	 	San Francisco, CA 94111	 	 	16,200.00	 	 	 	16,200.00	 	 	$	81,000.00	 	 	 
	Strategy Master Fund
LLC

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone:  (415) 677-1578	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Context Convertible
	 	289 Greenwich Avenue, 4th 	 	 	13,874.00	 	 	 	13,874.00	 	 	$	69,370.00	 	 	 
	Arbitrage Fund, LP
	 	Floor Greenwich CT 06830	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone: (203) 422-0197	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Context Convertible
	 	289 Greenwich Avenue, 4th 	 	 	53,326.00	 	 	 	53,326.00	 	 	$	266,630.00	 	 	 
	Arbitrage Offshore,
	 	Floor Greenwich CT 06830	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ltd.

	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone: (203) 422-0197	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	Number	 	 	 	 	 	Legal
	 	 	 	 	 	 	 	 	of	 	 	 	 	 	Representative’s
	 	 	Address and	 	Number of	 	Warrant	 	Purchase	 	Address and
	Buyer	 	Facsimile Number	 	Shares	 	Shares	 	Price	 	Facsimile Number
	Context Opportunistic
	 	289 Greenwich Avenue, 4th	 	 	16,800.00	 	 	 	16,800.00	 	 	$	84,000.00	 	 	 
	Master Fund, L.P.
	 	Floor  Greenwich CT 06830	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Telephone: (203) 422-0197	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

DISCLOSURE SCHEDULE

Global Employment Solutions, Inc. (the “Company”) delivers these schedules (the
“Schedules”) in connection with the following agreements:

	 	•	 	Notes Securities Purchase Agreement, dated as of March 31, 2006, by and among the
Company and various buyers (the “Notes SPA”)
	 
	 	•	 	Preferred Stock Securities Purchase Agreement, dated as of March 31, 2006, by and among
the Company and various buyers (the “Preferred SPA”)
	 
	 	•	 	Common Stock Securities Purchase Agreement, dated as of March 31, 2006, by and among the
Company and various buyers (the “Common SPA”)

The Notes SPA, the Preferred SPA and the Common SPA are collectively referred to as the
“Agreements.” These Schedules are an integral part of the Agreements, are incorporated
therein by reference and are not intended to be an independent document. Disclosure of any item
herein shall not constitute an admission that such item is required to be disclosed, and the
information contained herein is disclosed solely for the purposes of the Agreements. Nothing
contained herein shall be deemed to be an admission by any party hereto to any third party of any
matter whatsoever, including, without limitation, any violation of law or breach of agreement. The
schedule numbers in these Schedules correspond to the section numbers in the Agreements.
References to any document do not purport to be complete and are qualified in their entirety by the
document itself. Capitalized terms used but not defined herein shall have the same meanings given
them in the Agreements.

 

 

Schedule 3(a)

Subsidiaries

     The table below sets forth all subsidiaries of Global Employment Holdings, Inc. and the state
or other jurisdiction of incorporation or organization of each subsidiary.

	 	 	 
	 	 	State of
	Subsidiary	 	Incorporation
	Global Merger Corp(1)
	 	CO
	Global Employment Solutions, Inc.(2)
	 	CO
	Excell Personnel Services, Inc.(3)
	 	IL
	PD Quick Temps Inc.(4) (inactive)
	 	PA
	Friendly Advanced Software Technology, Inc.(3)
	 	NY
	Main Line Personnel Service, Inc.(3)
	 	PA
	Southeastern Personnel Management, Inc.(3)
	 	FL
	Southeastern Staffing, Inc.(3)
	 	FL
	Bay HR, Inc.(5)
	 	FL
	Placer Staffing, Inc.(5) (inactive)
	 	CA
	Southeastern Georgia HR, Inc.(5)
	 	GA
	Southeastern Staffing II, Inc.(5)
	 	FL
	Southeastern Staffing III, Inc.(5)
	 	FL
	Southeastern Staffing IV, Inc.(5)
	 	FL
	Southeastern Staffing V, Inc.(5)
	 	FL
	Southeastern Staffing VI, Inc.(5)
	 	FL
	Temporary Placement Service, Inc.(3)
	 	GA

 

			
	(1)	 	Wholly-owned subsidiary of Global Employment Holdings, Inc.
	 
	(2)	 	Majority-owned subsidiary of Global Merger Corp
	 
	(3)	 	Wholly-owned subsidiary of Global Employment Solutions, Inc.
	 
	(4)	 	Wholly-owned subsidiary of Excell Personnel Services, Inc.
	 
	(5)	 	Wholly-owned subsidiary of Southeastern Staffing, Inc.

 

 

Schedule 3(m)

Transactions with Affiliates

The Company leases office space in Dalton, Georgia from MPS Partnership in which Stephen
Pennington, one of its executive officers, is a partner. For the fiscal years ended 2005, 2004 and
2003, the Company paid rent to MPS Partnership in the amounts of approximately $74,000, $74,250 and
$59,900, respectively. The Company expects to continue renting office space from Mr. Pennington
for the foreseeable future.

The Company is party to a management consulting agreement with KRG Colorado, LLC (“KRG”), a
company controlled by some of the Company’s shareholders. The agreement will be terminated upon
the closing of the transaction contemplated by the Agreements. Under the agreement, the Company
receives management, advisory and corporate structure services from KRG for an annual fee. KRG is
eligible for a bonus fee, based on performance thresholds, for each fiscal year, and fees related
to acquisitions and divestitures. On November 15, 2001, KRG agreed to waive and forgive amounts
accrued as of that date. During the fiscal years ended January 1, 2006 and January 2, 2005, the
Company paid $180,000 and $90,000, respectively, in consulting fees, and such amounts were included
in operating expenses in the statements of income. The Company did not pay KRG under the agreement
during the fiscal year ended December 28, 2003.

The Company will cause PubCo to issue KRG 50,000 shares of PubCo common stock, valued at $5 per
share, upon the consummation of the transaction contemplated by the Agreements in consideration for
financial advisory services rendered by KRG during the transaction.

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 debt on the closing of
the transaction contemplated by the Agreements through a payment partly in cash, partly in PubCo
common stock.

In 2001, as part of a recapitalization, certain of the management and debt and equity holders of
the Company formed a limited liability company named Global Investment I, LLC (the “LLC”)
for the purpose of purchasing at a discount certain senior debt of the Company. The Company then
issued its Series C preferred stock to the LLC to retire the senior debt and related accrued
interest. It is expected that the LLC will participate in the Recapitalization and thereby
exchange its shares of the Company’s Series C preferred stock for PubCo Common Stock. Furthermore,
it is expected that the LLC will dissolve and distribute to its members all its assets, including
any PubCo Common Stock held, shortly after the Closing.

 

 

Schedule 3(n)

Outstanding Securities

542,166 warrants are exercisable into 542,166 shares of common stock at $.01 per share, at any time
prior to the earlier of March 13, 2008 or six years after the Company’s senior subordinated notes
are paid in full. The warrants provide the holders the right to require the Company to redeem them
for fair value at any time after July 29, 2003. Pursuant to Section 5.1(d) of the Share Purchase
Agreement, dated March 31, 2006, among GES, PubCo and GES shareholders signatory thereto, the
warrants are forfeited to GES and cancelled, without any further action required, in consideration
of the warrant holders’ receiving PubCo Common Stock and the Special Dividend upon consummation of
the transaction contemplated by the Agreements.

2,000,000 shares of GES common stock are issued under the Company’s Restricted Stock Plan; all of
these shares will be repurchased for the amount set forth on Schedule 3(aa)(ii) to the Notes SPA
and Schedule 3(y)(ii) to the Preferred SPA and the Common SPA.

 

 

Schedule 3(o)

Indebtedness and Other Contracts

Senior Indebtedness

Effective in March 2002 and as subsequently amended in June 2003, August 2004, January 2005 and May
2005, the Company and its subsidiaries executed a Credit and Security Agreement (the “Credit
Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”) for revolving
credit borrowings and letters of credit collateralized by the Company’s accounts receivable.
Maximum available borrowings of up to $10.0 million ($7.5 million prior to August 30, 2004) are
limited to 85% of eligible billed receivables and 70% of unbilled receivables. Interest was
payable at Wells Fargo’s prime rate plus 1% per annum through August 29, 2004, and effective August
30, 2004, interest is payable at Wells Fargo’s prime rate (7% at January 1, 2006), subject to a
minimum of $7,500 per month. A fee of 0.25% per annum is payable on the unused portion of the
commitment. The term of the Credit Agreement expires on July 31, 2006. There were no outstanding
borrowings at January 1, 2006 and January 2, 2005. The Credit Agreement requires certain customer
payments to be paid directly to blocked lockbox accounts controlled by Wells Fargo, and the Credit
Agreement contains a provision that allows the lender to call the outstanding balance of the line
of credit if any material adverse change in the business or financial condition of the Company
occurs. As of the date hereof and prior to giving effect to the transaction contemplated by the
Agreements, there is an aggregate of $235,085 outstanding under the Credit Agreement, consisting of
two outstanding letters of credit with Wells Fargo, both of which will remain outstanding after the
closing of the transaction contemplated by the Agreements until they expire on December 31, 2006.

Concurrently with the Closing, the Credit Agreement will be further amended pursuant to a Fifth
Amendment to the Credit Agreement that will effect the following changes to the credit facilities
provided by Wells Fargo: (i) the maximum amount of revolving credit borrowings (including letters
of credit) will be increased to $15.0 million and the maturity date for the revolving portion of
the credit facility will be extended to January 31, 2009, (ii) Wells Fargo will provide a term loan
to the borrowers under the Credit Agreement in the amount of $5.0 million, with interest thereon to
accrue at Wells Fargo’s prime rate plus 2.75% per annum, and payable based on a 36-month
amortization with a balloon payment at maturity on April 1, 2008, (iii) 25% of excess cash flow of
the borrowers will be applied to make principal payments in respect of the term loan on an annual
basis, (iv) advance rates will change to 90% for eligible billed accounts receivable and 75% for
eligible unbilled accounts receivable (reducing to 85% and 70%, respectively, upon payment of the
term loan), (v) the borrowers will pay an amendment fee of $175,000 to Wells Fargo concurrently
with the Closing, (vi) the requirement for minimum average availability under the revolving portion
of the credit facility will be increased to $2.0 million, and (vii) certain changes will be made to
the financial covenants imposed by the Credit Agreement.

 

 

Subordinated Indebtedness

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.

	 	Wells 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.

	 	Wells Fargo Business

Credit, Inc
	 	Financing

Statement
	 	 200407033031 
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Excell Personnel

Service

Corporation

	 	Wells Fargo Business

Credit, Inc
	 	Financing 
Statement

(and 1 
amendment)
	 	 4465054000 
 4807456  
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Friendly Advanced

Software

Technology, Inc.

	 	Wells Fargo Business

Credit, Inc
	 	Financing

Statement

(and 3

amendments)
	 	 228104 
 040570 
 040572 

 070535  
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Main Line

Personnel

Services, Inc.

	 	Wells 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.

	 	Wells Fargo Business
Credit, Inc.
	 	Financing

Statement
	 	 060-2004-006974 
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Southeastern

Personnel

Management, Inc.

	 	Wells Fargo Business
Credit, Inc.
	 	Financing

Statement
	 	 200202990026 
	 	Personal property
	 
	 	 	 	 	 	 	 	 
	Southeastern 

Staffing, Inc.

	 	Wells 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.

	 	Irwin Business

Finance

Corporation
	 	Financing

Statement
	 	 200304744067 
	 	Equipment lease
	 
	 	 	 	 	 	 	 	 
	Southeastern 

Staffing, Inc.

	 	Irwin 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
	 	 007-2005-018588 
	 	Equipment lease
	 
	 	 	 	 	 	 	 	 
	Temporary 

Placement Service,

Inc.

	 	Wells Fargo Business
Credit, Inc.
	 	Financing

Statement

(and 4

amendments)
	 	 060-2001-018586 
 060-2002-002811 
 060-2002-004508 
 060-2002-012053 

 060-2004-006845  
	 	Personal property

 

			
	(1)	 	See Section 4(v) in the Notes SPA.

 

 

Schedule 3(o)(i)

Permitted Indebtedness

Senior Indebtedness

Permitted Liens to secure Senior Indebtedness

Permitted Liens securing the Company’s obligations under the Notes

We have capitalized lease obligations for office furniture and equipment in the aggregate amount of
$135,546 as of January 1, 2006. We also have other leases that would qualify as capitalized
leases, for example copier leases, but we account for them as operating leases because of the
immateriality of such leases.

 

 

Schedule 3(v)

Subsidiary Rights

Senior Indebtedness restricts, but does not preclude altogether, payment of dividends by the
Company and its subsidiaries.

 

 

Schedule 3(w)

Tax Status

The Company and two of its subsidiaries, Southeastern Staffing, Inc. (including all of Southeastern
Staffing, Inc.’s subsidiaries) and Southeastern Personnel Management, Inc., have a tax sharing
agreement. Southeastern Staffing, Inc. (including all of its subsidiaries) and Southeastern
Personnel Management file a consolidated tax return with the Company, and the income tax provision
(benefit) is allocated based on the separate return method.

 

 

Schedule 3(y)(i) to Preferred Stock Securities Purchase Agreement and 

     Common Stock Securities Purchase Agreement — Required Repayments

Schedule 3(aa)(i) to Notes Securities Purchase Agreements — Required Repayments

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Sub Debt	 	 	 	 	 	 	 
	 	 	Principal	 	 	Cash	 	 	 	 
	 	 	Invested	 	 	Distribution	 	 	# of Shares ($5.00)	 
	Parties to the Note
Purchase Agreement,
Dated March 13, 1998,
as amended:
	 	 	 	 	 	 	 	 	 	 	 	 
	Seacoast Capital
	 	$	4,300,000.00	 	 	$	4,184,998.64	 	 	 	23,000.272	 
	Pacific Mezzanine
	 	 	2,866,000.00	 	 	 	2,789,350.26	 	 	 	15,329.949	 
	Stratford Capital
	 	 	4,050,000.00	 	 	 	3,941,684.77	 	 	 	21,663.047	 
	Rocky Mountain Capital
	 	 	2,750,000.00	 	 	 	2,676,452.62	 	 	 	14,709.476	 
	 
	 	 	 	 	 	 	 	 	 
	Subtotal
	 	$	13,966,000.00	 	 	$	13,592,486.28	 	 	 	74,702.744	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Party to the
Promissory Note dated
November 15, 2001:
	 	 	 	 	 	 	 	 	 	 	 	 
	KRG Colorado, LLC
	 	 	1,500,000.00	 	 	$	1,459,883.25	 	 	 	8,023.351	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Parties to the
Subordinated
Promissory Note
Agreement, Dated July
29, 1988:
	 	 	 	 	 	 	 	 	 	 	 	 
	George Conley
	 	 	457,965.06	 	 	$	445,717.01	 	 	 	2,449.610	 
	Greg Bachrach
	 	 	25,944.36	 	 	 	25,250.49	 	 	 	138.774	 
	 
	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	$	483,909.42	 	 	$	470,967.50	 	 	 	2,588.384	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	15,949,909.42	 	 	$	15,523,337.03	 	 	 	85,314.479	 

 

 

Schedule 3(y)(ii) to Prefered Stock Securities Purchase Agreement and 

     Common Stock Securities Purchase Agreement — Management Payments

Schedule 3(aa)(ii) to Notes Securities Purchase Agreement — Management Payments

GES

Restricted Stock Plan Distributions

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Distributed at Close of Reverse Merger
	 	 	Restricted Stock	 	Cash	 	 
	 	 	Allocated Shares	 	Consideration	 	# of Shares ($5.00)
	Investor Payouts
	 	 	 	 	 	 	 	 	 	 	 	 
	Howard Brill
	 	 	716,432.04	 	 	$	3,993,817.33	 	 	 	723,538.15	 
	Robert Pennington
	 	 	240,968.95	 	 	 	1,343,304.02	 	 	 	243,359.06	 
	Robert Larkin
	 	 	207,530.79	 	 	 	1,156,899.83	 	 	 	209,589.24	 
	Lee Elkinson
	 	 	51,768.67	 	 	 	288,589.28	 	 	 	52,282.15	 
	Kenneth Michaels
	 	 	149,838.40	 	 	 	835,288.20	 	 	 	151,324.61	 
	Terry Koch
	 	 	121,090.50	 	 	 	675,030.36	 	 	 	122,291.57	 
	Clinton Burgess
	 	 	82,108.83	 	 	 	457,723.38	 	 	 	82,923.25	 
	Gregory D’Ambrosio
	 	 	77,830.58	 	 	 	433,873.85	 	 	 	78,602.56	 
	Fred Viarrial
	 	 	68,081.52	 	 	 	379,526.80	 	 	 	68,756.80	 
	Daniel Hollenbach
	 	 	48,285.15	 	 	 	269,170.08	 	 	 	48,764.08	 
	Thomas Kennedy
	 	 	20,000.00	 	 	 	111,491.87	 	 	 	20,198.38	 
	Michael Lazrus
	 	 	18,354.05	 	 	 	102,316.35	 	 	 	18,536.10	 
	Derek Golenski
	 	 	11,810.54	 	 	 	65,838.99	 	 	 	11,927.69	 
	John Zaleski
	 	 	11,810.54	 	 	 	65,838.99	 	 	 	11,927.69	 
	Michael Sizemore
	 	 	11,250.00	 	 	 	62,714.18	 	 	 	11,361.59	 
	John Rudakas
	 	 	10,938.00	 	 	 	60,974.90	 	 	 	11,046.49	 
	Stephen Wallach
	 	 	10,000.00	 	 	 	55,745.94	 	 	 	10,099.19	 
	Craig Kasper
	 	 	6,613.91	 	 	 	36,869.83	 	 	 	6,679.51	 
	Sharvani Srinivas
	 	 	6,000.00	 	 	 	33,447.56	 	 	 	6,059.51	 
	Sarah Bullard
	 	 	5,886.00	 	 	 	32,812.06	 	 	 	5,944.38	 
	William Nagel
	 	 	5,463.00	 	 	 	30,454.01	 	 	 	5,517.19	 
	Bill Kilgour
	 	 	5,000.00	 	 	 	27,872.97	 	 	 	5,049.59	 
	Wendell Ellis
	 	 	4,750.00	 	 	 	26,479.32	 	 	 	4,797.11	 
	Barbara Stocks
	 	 	4,724.22	 	 	 	26,335.59	 	 	 	4,771.08	 
	Kimberly LePre
	 	 	4,724.22	 	 	 	26,335.59	 	 	 	4,771.08	 
	Zachary Schnell
	 	 	4,724.22	 	 	 	26,335.59	 	 	 	4,771.08	 
	Deborah Reynolds
	 	 	3,779.37	 	 	 	40,152.78	 	 	 	—	 
	Norma Nunez
	 	 	3,779.37	 	 	 	40,152.78	 	 	 	—	 
	W. Newmaster
	 	 	3,560.00	 	 	 	37,822.11	 	 	 	—	 
	Susan Primrose
	 	 	3,401.44	 	 	 	36,137.50	 	 	 	—	 
	Ralph Moseley
	 	 	3,115.00	 	 	 	33,094.35	 	 	 	—	 
	Srinivas Manepalli
	 	 	2,912.00	 	 	 	30,937.63	 	 	 	—	 
	Ashley Notthoff
	 	 	2,834.53	 	 	 	30,114.59	 	 	 	—	 
	Denyse Robinson
	 	 	2,834.53	 	 	 	30,114.59	 	 	 	—	 
	Susan Brewster
	 	 	2,834.53	 	 	 	30,114.59	 	 	 	—	 
	Monty Shapiro
	 	 	2,694.00	 	 	 	28,621.56	 	 	 	—	 
	Lisa Stanford
	 	 	2,362.11	 	 	 	25,095.49	 	 	 	—	 
	Arnold Tomasello
	 	 	2,301.00	 	 	 	24,446.26	 	 	 	—	 
	Michael DeVlieger
	 	 	1,987.00	 	 	 	21,110.27	 	 	 	—	 
	Douglas Graham
	 	 	2,362.11	 	 	 	25,095.49	 	 	 	—	 
	Elizabeth Matson
	 	 	1,889.69	 	 	 	20,076.39	 	 	 	—	 
	Jennifer Wolochow
	 	 	2,087.42	 	 	 	22,177.11	 	 	 	—	 
	Joel Caballero
	 	 	1,889.69	 	 	 	20,076.39	 	 	 	—	 
	Russell Abramson
	 	 	2,362.11	 	 	 	25,095.49	 	 	 	—	 
	Daniel Gallagher
	 	 	1,742.00	 	 	 	18,507.33	 	 	 	—	 
	Boyd Kelly
	 	 	1,655.00	 	 	 	17,583.04	 	 	 	—	 
	Kevin McCarthy
	 	 	1,655.00	 	 	 	17,583.04	 	 	 	—	 
	Ivette Alon-Kaptzan
	 	 	1,526.00	 	 	 	16,212.51	 	 	 	—	 
	Belia Duke
	 	 	750.00	 	 	 	7,968.14	 	 	 	—	 
	Catherine Byars
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Diane Green
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Rhonda Davis
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Rhonda Wright
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Susan Hudson
	 	 	1,417.27	 	 	 	15,057.29	 	 	 	—	 
	Marilyn Davie
	 	 	1,100.00	 	 	 	11,686.61	 	 	 	—	 
	Patrick Keenan
	 	 	1,079.00	 	 	 	11,463.50	 	 	 	—	 
	Edward Berry
	 	 	1,019.00	 	 	 	10,826.05	 	 	 	—	 
	Rosalie Saraco
	 	 	1,012.00	 	 	 	10,751.68	 	 	 	—	 
	David Lobato
	 	 	1,000.00	 	 	 	10,624.19	 	 	 	—	 
	Stephanie Buongiorno
	 	 	966.00	 	 	 	10,262.97	 	 	 	—	 
	April Loudermilk
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Jeff Goffinet
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Jodi Gomberg
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Lauri Cook
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Mary Dasher
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Phil Preston
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Pollette Jenkins
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Julie Heath
	 	 	615.00	 	 	 	6,533.88	 	 	 	—	 
	Shashi Sethi
	 	 	600.00	 	 	 	6,374.51	 	 	 	—	 
	Charles LaBenski
	 	 	552.00	 	 	 	5,864.55	 	 	 	—	 
	George Lapworth
	 	 	548.00	 	 	 	5,822.05	 	 	 	—	 
	Mattie Anderson
	 	 	537.00	 	 	 	5,705.19	 	 	 	—	 
	Abigayle Dunn
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Judith Bates
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Nicholas Mervosh
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Rajagopal Vedanthachari
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Veska Tsenkova
	 	 	500.00	 	 	 	5,312.09	 	 	 	—	 
	Debbie Underkoffler
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Gavin Meacham
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Hans Van Ravensberg
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Kevin Kelly
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Ron Ellison
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Tim Dasher
	 	 	944.84	 	 	 	10,038.19	 	 	 	—	 
	Terry Humphrey, Jr.
	 	 	448.00	 	 	 	4,759.64	 	 	 	—	 
	Jai Gulati
	 	 	405.00	 	 	 	4,302.80	 	 	 	—	 
	Ann Thornton
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Dana Morgan
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Debra Ponder
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Joann Johnson
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Karen Buttram
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Linda Duckett
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Phyllis Norman
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Pilar Holder
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Shaun Abernathy
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Wanda McGarity
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	Peggy Sokol
	 	 	236.21	 	 	 	2,509.55	 	 	 	—	 
	Sandy Sanderson
	 	 	236.21	 	 	 	2,509.55	 	 	 	—	 
	Aarthi Krishnaswami
	 	 	209.00	 	 	 	2,220.46	 	 	 	—	 
	Kimberly Warner
	 	 	200.00	 	 	 	2,124.84	 	 	 	—	 
	Pranesh Hanumantha Rao
	 	 	168.00	 	 	 	1,784.86	 	 	 	—	 

 

 

GES

Restricted Stock Plan Distributions

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Distributed at Close of Reverse Merger
	 	 	Restricted Stock	 	Cash	 	 
	 	 	Allocated Shares	 	Consideration	 	# of Shares ($5.00)
	Investor Payouts
	 	 	 	 	 	 	 	 	 	 	 	 
	Preethi Krishnaswami
	 	 	151.00	 	 	 	1,604.26	 	 	 	—	 
	Nitin Raut
	 	 	109.00	 	 	 	1,158.04	 	 	 	—	 
	Albert Barbuzza
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Amy Alderman
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Catherine Angove
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Daniel Reid
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Darryl James
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jaganathan Venkatachalam
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jalime Vargas
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jenny Lazo
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jill McCarthy
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Jo Anne McCann
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Karol Wiser
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Kathleen Martinez
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Keri Kremer
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Kevin Dodson
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Lori Peterson
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Lucille Sheppard
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Mary Isla
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Mindy McLeod
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Nashira Soto
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Norma Ramos
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Paul Young
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Robert Bacharach
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Ruth Ricchezza
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Sharon Semple
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Simmonette Roxas
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Susan Barr
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Teresa Clark
	 	 	100.00	 	 	 	1,062.42	 	 	 	—	 
	Angela Butler
	 	 	73.00	 	 	 	775.57	 	 	 	—	 
	Gail Blanco
	 	 	73.00	 	 	 	775.57	 	 	 	—	 
	Eileen Wagner
	 	 	59.00	 	 	 	626.83	 	 	 	—	 
	Jamie Burton
	 	 	59.00	 	 	 	626.83	 	 	 	—	 
	Padmini Vijayan
	 	 	48.00	 	 	 	509.96	 	 	 	—	 
	Patricia Shanks
	 	 	48.00	 	 	 	509.96	 	 	 	—	 
	Sofia Trbovic
	 	 	45.00	 	 	 	478.09	 	 	 	—	 
	Anand Bhat
	 	 	42.00	 	 	 	446.22	 	 	 	—	 
	Kevin Licciardello
	 	 	42.00	 	 	 	446.22	 	 	 	—	 
	Catherine Taber
	 	 	36.00	 	 	 	382.47	 	 	 	—	 
	Tom Shaginaw
	 	 	472.42	 	 	 	5,019.10	 	 	 	—	 
	Lauren Korchinski
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	MaryKate Berry
	 	 	94.48	 	 	 	1,003.82	 	 	 	—	 
	Jennier Lester
	 	 	94.48	 	 	 	1,003.82	 	 	 	—	 
	Casey Chism
	 	 	283.45	 	 	 	3,011.46	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	2,000,000.00	 	 	$	11,623,929.27	 	 	 	1,924,889.11	 
	 	 	 	 	 	 	 

 

 

 

EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Warrants
	Exhibit B

	 	Registration Rights Agreement
	Exhibit C

	 	Notes Securities Purchase Agreement
	Exhibit D

	 	Form of Senior Secured Convertible Notes
	Exhibit E

	 	Irrevocable Transfer Agent Instructions
	Exhibit F

	 	Form of Brownstein Hyatt & Farber, P.C. Opinion
	Exhibit G

	 	Form of Secretary’s Certificate
	Exhibit H

	 	Form of Officer’s Certificate
	Exhibit I

	 	Wells Fargo Term Sheet
	Exhibit J

	 	Share Purchase Agreement
	Exhibit K

	 	Pro Forma Capitalization and Contingent Liabilities
	Exhibit L

	 	Form of Non-Competition and Non-Solicitation Agreements
	Exhibit M

	 	Preferred Stock Securities Purchase Agreement
	Exhibit N

	 	Form of Joinder to Agreement
	Exhibit O

	 	Forms of Pay-Off Letters

 

 

Exhibit A

Form of Warrants

[See Exhibit 4.3 to this Form 8-K]

 

 

Exhibit B

Registration Rights Agreement

[See Exhibit 4.6 to this Form 8-K]

 

 

Exhibit C

Notes Securities Purchase Agreement

[See Exhibit 10.2 to this Form 8-K]

 

 

Exhibit D

Form of Senior Secured Convertible Notes

[See Exhibit 10.4 to this Form 8-K]

 

 

Exhibit E

Irrevocable Transfer Agent Instructions

(see attached)

 

 

TRANSFER AGENT INSTRUCTIONS

GLOBAL EMPLOYMENT HOLDINGS, INC.

March 31, 2006

Corporate Stock Transfer

3200 Cherry Creek Drive, Suite 430

Denver, CO 80209

Facsimile:          (303) 282-5800

Attention:          Carylyn Bell

Ladies and Gentlemen:

          Reference is made to that certain Securities Purchase Agreement, dated as of March 31, 2006
(the “Agreement”), by and among Global Employment Solutions, Inc., a Colorado corporation, and the
investors named on the Schedule of Buyers attached thereto (collectively, the “Holders”), pursuant
to which Global Employment Holdings, Inc., a Delaware corporation (the “Company”), (x) is issuing
to the Holders (i) shares of the common stock of the Company, par value $0.001 per share (the
"Common Stock”), and (ii) warrants (the “Warrants”), which are exercisable to purchase shares of
Common Stock.

          This letter shall serve as our authorization and direction to you (provided that you are the
transfer agent of the Company at such time), subject to any stop transfer instructions that we may
issue to you from time to time, if at all to issue shares of Common Stock upon exercise of the
Warrants (the “Warrant Shares") to or upon the order of a Holder from time to time upon delivery to
you of a properly completed and duly executed Exercise Notice, in the form attached hereto as
Exhibit I, which has been acknowledged by the Company as indicated by the signature of a
duly authorized officer of the Company thereon.

          You acknowledge and agree that so long as you have previously received (a) written
confirmation from the General Counsel of the Company (or its outside legal counsel) that either (i)
a registration statement covering resales of the Warrant Shares has been declared effective by the
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the
"1933 Act”), or (ii) that sales of the Warrant Shares may be made in conformity with Rule 144 under
the 1933 Act, and (b) if applicable, a copy of such registration statement, then, within three (3)
business days after your receipt of an Exercise Notice, you shall issue the certificates
representing the Warrant Shares, and such certificates shall not bear any legend restricting
transfer of the Warrant Shares thereby and should not be subject to any stop-transfer restriction;
provided, however, that if such Warrant Shares are not registered for resale under
the 1933 Act or able to be sold under Rule 144, then the certificates for such Warrant Shares shall
bear the following legend:

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE

 

 

[EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER AND
REASONABLY ACCEPTABLE TO THE ISSUER, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

          A form of written confirmation from the General Counsel of the Company or the Company’s
outside legal counsel that a registration statement covering resales of the Warrant Shares has been
declared effective by the SEC under the 1933 Act is attached hereto as Exhibit II.

 

 

          Please execute this letter in the space indicated to acknowledge your agreement to act in
accordance with these instructions. Should you have any questions concerning this matter, please
contact me at (303) 282-4800.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	GLOBAL EMPLOYMENT HOLDINGS, INC.

 	 
	 	By:  	/s/ Howard Brill
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	THE FOREGOING INSTRUCTIONS ARE	 	 
	ACKNOWLEDGED AND AGREED TO	 	 
	 
	 	 	 	 
	this 31st day of March, 2006	 	 
	 
	 	 	 	 
	CORPORATE STOCK TRANSFER, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Carylyn K. Bell	 	 
	 

	 	 	 	 
	 

	 	Name: Carylyn K. Bell	 	 
	 

	 	Title: President	 	 
	 
	 	 	 	 
	Enclosures	 	 
	 
	 	 	 	 
	cc:

	 	Radcliffe SPC, Ltd.	 	 

 

 

EXHIBIT I

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

GLOBAL EMPLOYMENT HOLDINGS, INC.

     The undersigned holder hereby exercises the right to purchase                      of the shares
of Common Stock (“Warrant Shares”) of Global Employment Holdings, Inc., a Delaware corporation (the
"Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

     1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as:

                               a “Cash Exercise” with respect to                      Warrant Shares;

                               and/or

                               a “Cashless Exercise” with respect to                      Warrant Shares.

     2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                     to the Company in accordance with the
terms of the Warrant.

     3. Delivery of Warrant Shares. The Company shall deliver to the holder                      Warrant
Shares in accordance with the terms of the Warrant.

Date:                         ,          

	 	 	 	 	 
	 	 	 
	   Name of Registered Holder	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

ACKNOWLEDGMENT

     The Company hereby acknowledges this Exercise Notice and hereby directs Corporate Stock
Transfer to issue the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated                            , 2006 from the Company and acknowledged and agreed to
by Corporate Stock Transfer.

	 	 	 	 	 
	 	GLOBAL EMPLOYMENT HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT II

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

[Transfer Agent]

[Address]

Attention:

          Re:      Global Employment Holdings, Inc.

Ladies and Gentlemen:

          [We are][I am] counsel to Global Employment Holdings, Inc., a Delaware corporation (the
"Company”), and have represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase Agreement”) entered into by and among the Global Employment
Solutions, Inc., a Colorado corporation, and the buyers named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”) and three series of warrants exercisable for shares of Common
Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement, the Company also has entered
into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the Registrable Securities
(as defined in the Registration Rights Agreement), including the shares of Common Stock issuable
upon exercise of the Warrants, under the Securities Act of 1933, as amended (the “1933 Act”). In
connection with the Company’s obligations under the Registration Rights Agreement, on                            , 200   , the Company filed a Registration Statement on Form S-1 (File No. 333-                    ) (the
"Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names each of the Holders as a selling stockholder thereunder.

          In connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has
advised [us][me] by telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF
EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s
staff, that any stop order suspending its effectiveness has been issued or that any proceedings for
that purpose are pending before, or threatened by, the SEC and the Registrable Securities are
available for resale under the 1933 Act pursuant to the Registration Statement.

 

 

     This letter shall serve as our standing instruction to you that the shares of Common Stock are
freely transferable by the Holders pursuant to the Registration Statement. You need not require
further letters from us to effect any future legend-free issuance or reissuance of shares of Common
Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
[                           ], 2006.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	[ISSUER’S COUNSEL]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	CC:     [LIST NAMES OF HOLDERS]
	 	 	 	 	 	 

 

 

Exhibit F

Form of Brownstein Hyatt & Farber, P.C. Opinion

(see attached)

 

 

March 31, 2006

The Buyers Listed on the Schedule of Buyers

Attached to the Securities Purchase Agreement (as defined below)

			
	RE:	 	Common Stock Securities Purchase
Agreement, dated as of March 31, 2006, by
and among Global Employment Solutions,
Inc., a Colorado corporation (“Global”),
and the Investors listed on the Schedule
of Buyers attached thereto (the
“Securities Purchase Agreement”)

Ladies and Gentlemen:

We have acted as counsel to Global Employment Holdings, Inc. (“Holdings”), Global and the
Subsidiaries in connection with the Securities Purchase Agreement. This opinion is delivered
pursuant to Section 7(c) of the Securities Purchase Agreement. Capitalized terms used and not
defined herein have the meanings given such terms in the Securities Purchase Agreement.

In addition to the Securities Purchase Agreement, we have reviewed the following documents, each
dated as of the date hereof:

	1.	 	the Warrants;
	 
	2.	 	the Registration Rights Agreement; and
	 
	3.	 	the Joinder Agreement.

The Securities Purchase Agreement and the documents referred to in paragraphs 1-3 above are
referred to as the “Transaction Documents.”

We have also examined originals or copies of the certificate or articles of incorporation and
bylaws of Holdings, Global and each of the Subsidiaries, resolutions of the boards of directors of
Holdings, Global and each of the Subsidiaries, and certificates of public officials concerning the
legal existence, qualification or good standing of Holdings, Global and each of the Subsidiaries in
various jurisdictions. As to all factual matters material to the opinions set forth herein, we have
(with your permission and without any investigation or independent confirmation) relied upon, and
assumed the accuracy of, such certificates, corporate records, searches and other documents
(including certificates of responsible officers

 

 

March 31, 2006

Page 2

of Holdings, Global and the Subsidiaries as to matters of fact) with respect to the facts stated
therein.

Whenever our opinion with respect to the existence or absence of facts is indicated to be based on
our knowledge or awareness, we are referring to the actual knowledge of Jeffrey Knetsch, Adam
Agron, Michael Harper and Rikard Lundberg, the only Brownstein Hyatt & Farber, P.C. attorneys who
have given substantive attention to matters concerning the Transaction Documents during the course
of such representation, which knowledge has been obtained by such attorneys in their capacity as
such. We are not generally familiar with the business, records, transactions or activities of
Holdings, Global or the Subsidiaries, Our knowledge of the business, records, transactions and
activities of Holdings, Global and the Subsidiaries is limited to the information which has been
brought to our attention by officers of Holdings, Global and the Subsidiaries in connection with
this opinion letter or by those corporate records and agreements that were revealed to us by
Holdings, Global and the Subsidiaries in response to our inquiries. While nothing has come to our
attention which has led us to conclude that such information, taken as a whole, is materially
inaccurate, we make no representation concerning the scope or adequacy of such review or such
inquiries or concerning the accuracy or completeness of the responses to such inquiries. Without
limiting the foregoing, we have relied, as to factual matters, without investigation, on the
certificates of officers of Holdings, Global and the Subsidiaries delivered to the Buyers pursuant
to Transaction Documents, and the Certificate of Officers of Holdings, Global and the Subsidiaries
attached as Schedule A (the “Certificate”).

In rendering the opinions expressed below, we have assumed, with your permission and without
independent verification, that:

     (a) the signatures of persons signing all documents in connection with which this opinion is
rendered are genuine and authorized (other than those of Holdings, Global and the Subsidiaries on
the Transaction Documents);

     (b) all documents submitted to us as originals or duplicate originals are authentic;

     (c) all documents submitted to us as copies, whether certified or not, conform to authentic
original documents;

     (d) all parties to the documents reviewed by us (other than Holdings and Global) have full
power and authority to execute, to deliver and to perform their obligations under such documents
and under the documents required or permitted to be delivered and performed thereunder, and all
such documents have been duly authorized by all necessary action by the parties thereto (other than
Holdings and Global as aforesaid), have been duly executed and delivered by such other parties, and
are valid, binding and enforceable obligations of such other parties; and

 

 

March 31, 2006

Page 3

     (e) all of the conditions precedent to the closing of the transactions contemplated in the
Transaction Documents have been satisfied in full or waived by the Buyers.

Based upon the foregoing and subject to the qualifications stated herein, we are of the opinion
that, as of the date hereof:

     1. Each of Holdings, Global and each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation. Holdings and
Global each has the requisite corporate power to own, lease and operate its properties and to
conduct its business as presently conducted. Each of Holdings, Global and each Subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in each jurisdiction in
which such qualification is necessary to conduct its business.

     2. Each of Holdings and Global has the requisite corporate power and authority to execute,
deliver and perform all of its obligations under the Transaction Documents to which it is a party,
including the issuance of the Shares, the Warrants and the Warrant Shares in accordance with the
terms thereof. The execution and delivery of the Transaction Documents by Holdings and Global and
the consummation of the transactions contemplated therein (including without limitation, the
issuance and sale of the Shares and Warrants) have been duly authorized by the Board of Directors
of Holdings and Global, and no further consent or authorization of Holdings, Global, either of
their Boards of Directors or either of their stockholders is required therefore. The Transaction
Documents to which it is a party have been duly executed and delivered by each of Holdings and
Global. The Transaction Documents to which it is a party constitute valid and binding obligations
of Holdings, Global, or each Subsidiary, as the case may be, enforceable against Holdings, Global
or each Subsidiary, as the case may be, in accordance with their respective terms.

     3. The execution, delivery and performance by each of Holdings, Global and each of the
Subsidiaries of the Transaction Documents to which it is a party, including without limitation, the
issuance of the Shares, the Warrants and the Warrant Shares, and the consummation by Holdings and
Global of the transactions contemplated by the Transaction Documents and the compliance by Holdings
and Global with the terms thereof do not and will not violate, conflict with or constitute a
default (or an event which, with the giving of notice or lapse of time or both, constitutes or
would constitute a default) under, give rise to any right of termination, cancellation or
acceleration under, and do not and will not result in or require the creation of any lien, security
interest or other charge or encumbrance (other than pursuant to the Transactions Documents) upon or
with respect to any of its respective properties, (a) the Certificate of Incorporation or By-laws
of Holdings or Global; (b) any agreement, note, lease, mortgage, deed or other instrument listed on
Annex I to Schedule A attached hereto to which Holdings or Global is a party or by

 

 

March 31, 2006

Page 4

which either Holdings or Global is bound or affected and that Holdings and Global have informed us
are the only material contracts of Holdings, Global and the Subsidiaries and will be filed on a
Form 8-K filed by Holdings with the Securities and Exchange Commission within two business days of
the date hereof (the “Publicly Filed Documents”); or (c) any statute, law, rule or regulation of
the United States, the State of Colorado, the State of Delaware or the State of New York applicable
to Holdings or Global or any order, writ, injunction or decree known to us.

     4. The Shares and Warrants, when issued pursuant to the Securities Purchase Agreement and the
Warrant Shares when issued pursuant to the Warrants will be duly authorized and validly issued,
fully paid and nonassessable, and free of any all liens and charges and preemptive or similar
rights contained in Holdings’s Certificate of Incorporation or Bylaws or any agreement, note,
lease, publicly filed mortgage deed or other instrument to which Holdings is a party or by which
Holdings is bound that is a Publicly Filed Document. The Warrant Shares have been duly and validly
authorized and reserved for issuance by all proper corporate action.

     5. As of the date hereof and before giving effect to the issuance of the securities
contemplated by the Transaction Documents, the authorized capital stock of Holdings consists of
75,000,000 shares of Common Stock, par value $0.0001 per share, of which as of the date hereof,
180,927.835 are issued and outstanding, and 10,000,000 shares of preferred stock, par value $0.0001
per share, of which as of the date hereof, none are issued and outstanding. None of such Common
Stock is subject to preemptive rights or other rights of the stockholders of the Company pursuant
to the Certificate of Incorporation or the By-laws or under the Delaware General Corporation Law or
pursuant to any agreement, note, lease, mortgage deed or other instrument to which the Company is a
party or by which the Company is bound that is a Publicly Filed Document. Neither Holdings’s
Certificate of Incorporation or Bylaws, nor any Publicly Filed Documents, contain anti-dilution or
similar provisions that will be triggered by the issuance of the Shares, the Warrants or the
Warrant Shares. To our knowledge, there are no other securities or instruments of the Company
containing anti-dilution or similar provisions that will be triggered by the issuance of the
Shares, the Warrants or the Warrant Shares.

     6. Assuming the accuracy of the representations of the Buyers in Article 2 of the Securities
Purchase Agreement, the offer and sale of the Shares and the Warrants in accordance with the
Securities Purchase Agreement is exempt from the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”). Assuming the accuracy of the representations of
the Buyers in Article 2 of the Securities Purchase Agreement and no change in applicable Federal or
state securities laws from those in effect on the date hereof, the issuance of the Warrant Shares
in accordance with the Transaction Documents will be exempt from the registration requirements of
the Securities Act, provided, we give no opinion with

 

 

March 31, 2006

Page 5

respect to circumstances where the issuance of the Warrant Shares could be integrated with any
future offering of Holdings’s securities.

     7. No authorization, approval, consent, filing, or other order of any federal or state
governmental body, regulatory agency, self-regulatory organization or stock exchange or market, or
the stockholders of Holdings or Global, or any court, or to our knowledge, any third party is
required to be obtained by Holdings or Global to enter into and perform its obligations under the
Transaction Documents or for the issuance and sale of the Shares, the Warrants or the Warrant
Shares in accordance with the Transaction Documents, or for the exercise of any rights and remedies
under any Transaction Documents except (i) the filing of a Form D under Regulation D of the
Securities Act of 1933, as amended, (ii) the filing of a Form 8-K pursuant to the Securities
Exchange Act of 1934, as amended, and (iii) the registration statement and related state securities
law filings required by the Registration Rights Agreement.

     8. To our knowledge, no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body or any governmental agency or self-regulatory organization is pending
or threatened against Holdings or Global or any of the Subsidiaries or any of the properties or
assets of Holdings, Global or any Subsidiary.

     9. Holdings and its Board of Directors have taken all necessary action, if any, to render
inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation or provisions of the Delaware General Corporation Law applicable to
the Buyers and their affiliates as a result of the Buyers and Holdings fulfilling their obligations
or exercising their rights under the Transaction Documents, including without limitation,
Holdings’s issuance of the Shares and the Warrants on the date hereof (and the shares of Common
Stock issuable upon exercise thereof).

     10. Holdings is not an “investment company” or an entity controlled by an “investment
company,” as such term is defined in the Investment Company Act of 1940, as amended.

Our opinions are subject to the following further qualifications:

     (a) Our opinions are subject to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance or other similar laws.

     (b) The binding effect and enforceability of the Transaction Documents and the availability of
injunctive relief or other equitable remedies thereunder are

 

 

March 31, 2006

Page 6

subject to the effect of general principles of equity (regardless of whether enforcement is
considered in proceedings at law or in equity).

     (c) The binding effect and the enforceability of the Transaction Documents are subject to the
effect of laws and judicial decisions which have imposed duties and standards of conduct
(including, without limitation, obligations of good faith, fair dealing and reasonableness and any
obligation to demonstrate that enforcement of provisions that are burdensome on a debtor is
reasonably necessary for the protection of the creditor) upon creditors or secured creditors.

     (d) In addition, certain other of the remedial, waiver and other provisions of the Transaction
Documents may not be enforceable, in whole or part, but the inclusion of such provisions does not
affect the validity of the Transaction Documents, taken as a whole, and such Transaction Documents
together with the Credit Agreement, taken as a whole and together with remedies available under
applicable law, contain (in our experience) customary provisions for the practical realization of
the benefits of the security created thereby.

     (e) Notwithstanding certain language of the Transaction Documents, you may be limited to
recovering only reasonable expenses with respect to the taking, holding, preparing, selling,
leasing and the like of collateral, only reasonable attorneys’ fees and legal expenses and
compensation only for actual funding losses, increased costs or yield protection.

     (f) We express no opinion as to, or the effect or applicability of, any state securities or
“blue sky” laws or any laws other than the laws of the State of Colorado, the laws of the State of
New York, the Delaware General Corporation Law and the federal laws of the United States of
America.

     (g) Our opinions are limited to the specific issues addressed and are limited in all
respects to laws and facts existing on the date hereof by rendering our opinions, we do not
undertake to advise you of any changes in such laws or facts which may occur after the date hereof.

     This letter is furnished to you pursuant to the Amendment in connection with the transactions
contemplated by the Transaction Documents and is not to be used, circulated, quoted or otherwise
relied upon by any other person or entity or for any other purpose without our prior written
consent.

Very truly yours,

 

 

Schedule A

CERTIFICATE

     The undersigned, being the Chief Executive Officer and President of each of Global Employment
Holdings, Inc., a Delaware corporation (“Holdings”), Global Employment Solutions, Inc., a
Colorado corporation (the “Company”), and each of their subsidiaries, does hereby certify
for purposes of opinions to be rendered by Brownstein Hyatt & Farber, P.C. in connection with the
Common Stock Securities Purchase Agreement, dated as of March 31, 2006, by and among the Company
and the Investors listed on the Schedule of Buyers attached thereto (the “Securities Purchase
Agreement”) Capitalized terms used herein have the meanings specified in the Securities
Purchase Agreement:

     1. The execution, delivery and performance by each of Holdings, Global and each of the
Subsidiaries of the Transaction Documents to which it is a party, including without limitation, the
issuance of the Notes and the Warrants, the Conversion Shares and the Warrant Shares, and the
consummation by Holdings and the Company of the transactions contemplated by the Transaction
Documents and the compliance by Holdings and the Company with the terms thereof do not and will not
result in or require the creation of any lien, security interest or other charge or encumbrance
(other than pursuant to the Transactions Documents) upon or with respect to any of its respective
properties.

     2. Annex I hereto contains a list of all agreements, notes, leases, mortgages, deeds or other
instruments to which Holdings or the Company is a party or by which either Holdings or the Company
is bound or affected that are the only material contracts of Holdings, Global and the Subsidiaries
and that will be filed on a Form 8-K filed by Holdings with the Securities and Exchange Commission
within two business days of the date hereof.

     3. As of the date hereof and before giving effect to the issuance of the securities
contemplated by the Transaction Documents, there are 180,927.835 shares of Common Stock outstanding
and no shares of Preferred Stock outstanding. There are no other securities or instruments of the
Company containing anti-dilution or similar provisions that will be triggered by the issuance of
the Notes, the Conversion Shares, the Warrants or the Warrant Shares.

     4. No authorization, approval, consent, filing, or other order of any third party is required
to be obtained by Holdings or the Company to enter into and perform its obligations under the
Transaction Documents or for the issuance and sale of the Notes, the Conversion Shares, the
Warrants or the Warrant Shares in accordance with the Transaction Documents, or for the exercise of
any rights and remedies under any Transaction Documents.

     5. No action, suit, proceeding, inquiry or investigation before or by any court, public board
or body or any governmental agency or self-regulatory organization is pending or threatened against
Holdings or the Company or any of

 

 

the Subsidiaries or any of the properties or assets of Holdings, the Company or any Subsidiary.

	 	 	 	 	 
	Dated: March 31, 2006

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Howard Brill, CEO of Global
Employment Holdings, Inc., Global
Employment Solutions, Inc. and each of
the Subsidiaries

 

 

Annex I

Subordinated Promissory Note Agreement, dated as of July 29, 1988

Warrant Purchase Agreement, dated as of March 13, 1998, as amended, among Global Personnel
Services, Inc., KRG Capital Partners, LLC, KRG Capital Investments IV, LLC, Seacoast Capital
Partners Limited Partnership and Pacific Mezzanine Fund, L.P.

Note Purchase Agreement, dated as of March 13, 1998, among Seacoast Capital Partners Limited
Partnership, Pacific Mezzanine Fund, L.P., Temporary Placement Service, Inc., Excell Personnel
Services Corporation and Global Personnel Services, Inc.

Master Investment Agreement, dates as of November 15, 2001, as amended, among GES, GES’
subsidiaries, Global Investment I, LLC, members of Global Investment I, LLC, and listed individuals
and institutions

2002 Restricted Stock Plan, accompanied by individual 2002 Restricted Stock Purchase Agreements
between GES and named purchasers

Credit and Security Agreement, dated as of March 7, 2002, as amended, between GES and Wells Fargo
Bank, National Association, as successor in interest to Wells Fargo Business Credit, Inc.

Management Agreement with KRG Capital, LLC and affiliates

 

 

Exhibit G

Form of Secretary’s Certificate

[See Exhibit I to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit H

Form of Officer’s Certificate

[See Exhibit J to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit I

Wells Fargo Term Sheet

[See Exhibit K to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit J

Share Purchase Agreement

[See Exhibit 10.1 to this Form 8-K]

 

 

Exhibit K

Pro Forma Capitalization and Contingent Liabilities

[See Exhibit N to Exhibit 10.2 to this Form 8-K]

 

 

Exhibit L

Form of Non-Competition and Non-Solicitation Agreements

[See Exhibit 10.14 to this Form 8-K]

 

 

Exhibit M

Preferred Stock Securities Purchase Agreement

[See Exhibit 10.9 to this Form 8-K]

 

 

Exhibit N

Form of Joinder to Agreement

[See Exhibit 10.12 to this Form 8-K]

 

 

Exhibit O

Forms of Pay-Off Letters

[See Exhibit S to Exhibit 10.2 to this Form 8-K]

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