PROMISSORY
NOTE
$8,425,027.59
October 1, 2006
FOR VALUE RECEIVED, ELS Human Resource
Solutions, Inc., an Ohio corporation (“
Maker ”) promises to pay to the order
of The Barbara L. Heineman Year 2002 Revocable Trust dated August
16, 2002, Barbara L. Heineman, Trustee, or successor (“
Payee ”), in lawful money of the
United States of America, on or before September 30, 2021 (the
“ Maturity Date ”), the
principal sum of Eight Million Four Hundred Twenty-Five Thousand
Twenty-Seven and 59/100 Dollars ($8,425,027.59), together with
interest in arrears on the unpaid principal balance at an annual
rate equal to the Prime Rate (as hereafter defined), in the manner
provided below. Interest shall be calculated on the basis of a year
of 360 days and charged for the actual number of days
elapsed.
This Promissory Note (this “
Note ”) is one of the promissory
notes referenced in that certain Stock Purchase Agreement, dated of
even date herewith, as the same may be amended, restated,
supplemented, and/or renewed from time to time, to which Maker,
Payee, and William J. Walton (“
Walton ”), are parties (the “
Stock Purchase Agreement
”).
1.
PAYMENTS
1.1.
PRINCIPAL AND INTEREST
Maker shall make monthly payments of principal
and interest on this Note in accordance with the payment schedule
attached hereto as Exhibit A , with each such payment being
applied first to accrued interest and then to principal, commencing
on the 1 st day of November, 2006 and on the first day
of each month thereafter through and including the Maturity Date,
at which time the outstanding principal balance of and all interest
on this Note shall be due and payable in full.
For the purpose of calculating interest hereon,
the " Prime Rate " shall mean the Prime
Rate as published daily in the Wall Street Journal , which
Prime Rate may change as often as daily. The Prime Rate shall be
adjusted whenever necessary to reflect any change in the Prime
Rate. Such adjustment shall be effective on the same date the Prime
Rate changes and shall remain in effect until the next change in
the Prime Rate or until this Note is paid in full. A change in the
interest rate of this Note will change the amount of each scheduled
payment and the amount of the final payment due hereunder, and the
payment schedule set forth on Exhibit A shall be amended
accordingly.
1.2.
MANNER OF PAYMENT
All payments of principal and interest on this
Note shall be made at 3235 Omni Drive, Cincinnati, Ohio 45245, or
at such other place in the United States of America as Payee shall
designate to Maker in writing. If any payment of principal or
interest on this Note is due on a day that is not a Business Day,
such payment shall be due on the next succeeding Business Day, and
such extension of time shall be taken into account in calculating
the amount of interest payable under this Note. “
Business Day ” means any day other
than a Saturday, Sunday, or legal holiday in the State of
Ohio.
PREPAYMENT
Without premium or penalty, and at any time and
from time to time, Maker may prepay all or any portion of the
outstanding principal balance due under this Note. Any partial
prepayments on this Note shall be applied first toward accrued but
unpaid interest and next toward principal payments in the inverse
order of their maturity.
2.
DEFAULTS
2.1.
EVENTS OF DEFAULT
The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of
default under this Note (“ Event of
Default ”):
(a) If Maker fails to pay when due any payment of
principal or interest on this Note and such failure continues for
five (5) calendar days.
(b) If the employment of Ronald E. Heineman
(“ Heineman ”) as Chief
Executive Officer of Resolve Staffing, Inc. (“
Resolve ”) is terminated for any
reason other than for cause, as defined in that certain Employment
Agreement by and between Heineman and Resolve, dated of even date
herewith, or in the event of any breach or non-renewal of such
Employment Agreement by Maker.
(c) If Maker or Resolve causes, permits, or
suffers, directly or indirectly, any Change of Control. For
purposes of this Note, “ Change of
Control ” shall mean (a) any
“person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934),
other than Walton and Heineman, becomes the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of 10%, or more, of the outstanding capital
stock of Maker or Resolve having the right to vote for the election
of members of the Board of Directors or (b) Heineman and Walton are
no longer members of the Board of Directors of Resolve.
(d) If Maker or Resolve shall (i) enter into any
merger, consolidation, reorganization, or recapitalization, or
reclassify any of its outstanding capital stock; (ii) liquidate,
wind up, or dissolve (or suffer any liquidation or dissolution); or
(iii) convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or
any substantial part of its assets.
(e) If a default, Default, event of default or
Event of Default shall occur by Maker or any other obligor or
guarantor (or the failure by any of the foregoing to perform any of
its respective obligations) under (i) any other Promissory Note
made by Maker or Resolve in favor of Payee, Heineman, or Walton;
(ii) the Security Agreement by and among Payee, Heineman (in his
individual capacity and as agent for himself, Payee and Walton),
Walton, Maker, Resolve, Mandalay Services, Inc., Diversified
Support Systems, LLC, ELS Employer Services, Inc., and the
subsidiaries of Maker signatory thereto, dated of even date
herewith; (iii) the Guaranty given by Resolve in favor of Payee,
Heineman (in his individual capacity and as agent for himself,
Payee, and Walton), and Walton dated of even date herewith; (iv)
the Stock Pledge Agreement by and among Payee, Heineman (in his
individual capacity and as agent for himself, Payee, and
(f)
Walton), Walton, and Resolve as Pledgor, and the
Pledged Stock Issuers party thereto, dated of even date herewith;
(v) that certain Revolving Note made by and among Employee Leasing
Services, Inc., Rockmor Group, Inc., and Fifth Third Bank, dated
effective as of December 30, 2005, or any document providing
security for or guaranteeing the obligations of the borrowers
thereunder; (vi) that certain Revolving Note made by and among
Resolve and Fifth Third Bank, dated effective as of May 30, 2006,
or any document providing security for or guaranteein
