Exhibit 10.26


 


THIS 2013 AMENDED AND RESTATED SENIOR SUBORDINATED NOTE
AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION
AND INTERCREDITOR AGREEMENT DATED OCTOBER 17, 2007, AS AMENDED THROUGH AND AS OF THE DATE HEREOF, BY AND AMONG LTN ACQUISITION,
LLC, THE MAKERS (AS DEFINED BELOW), THE PAYEE (AS DEFINED BELOW), BROOKSIDE PECKS CAPITAL PARTNERS, L.P., BROOKSIDE MEZZANINE FUND
L.P. AND FIFTH THIRD BANK (AS HEREAFTER MODIFIED, AMENDED, SUPPLEMENTED AND/OR RESTATED FROM TIME TO TIME, THE “SUBORDINATION
AGREEMENT”).


 


THE SECURITY REPRESENTED BY THIS SENIOR SUBORDINATED
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THIS SECURITY MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS
UNLESS PRIOR TO SUCH SALE, TRANSFER, PLEDGE OR DISPOSITION, MAKERS ARE FURNISHED WITH AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO MAKERS, THAT THE PROPOSED SALE, TRANSFER, PLEDGE OR DISPOSITION WILL BE EXEMPT FROM SUCH REGISTRATION.


 


2013 AMENDED AND RESTATED
SENIOR SUBORDINATED NOTE


 


	$4,696,101.09	May 28, 2013      


 


FOR
VALUE RECEIVED, LTN STAFFING, LLC, a Delaware limited liability company (“LTN
Staffing”), BG STAFFING, LLC, a Delaware limited liability
company (“BG Staffing”).
BG PERSONNEL SERVICES, LP, a Texas limited partnership (“BG
Personnel Services”), BG PERSONNEL, LP, a Texas limited partnership
(“BG
Personnel”), a Texas limited partnership, B
G STAFF SERVICES INC,, a Texas corporation (“B
G Staff Services;” together with LTN Staffing, BG Staffing,
BG Personnel Services and BG Personnel being each individually referred to herein as a “Maker”
and being collectively referred to herein as the “Makers”),
jointly and severally promise to pay to the order of LEGG
MASON SBIC MEZZANINE FUND, L.P., a Delaware limited partnership (the “Payee”),
at its address at 111 South Calvert Street, Suite 1800, Baltimore, Maryland 21202 or at such other place as
Payee may from time to time designate in writing, the principal sum of FOUR MILLION SIX HUNDRED NINETY-SIX THOUSAND ONE HUNDRED
ONE 09/100 DOLLARS ($4,696,101.09) with interest, on the terms and conditions described below. The actual amount due and owing
from time to time hereunder shall be evidenced by Payee’s records, which shall be prima
facie evidence of the unpaid balance thereof.


 


1.   Securities
Purchase Agreement. This 2013 Amended and Restated Senior Subordinated Note (this “Note”)
is the Calvert Senior Subordinated Note No. 1 issued to the Payee pursuant to the terms and subject to the conditions
of that certain Amended and Restated Securities Purchase Agreement dated the date hereof among LTN Acquisition, LLC, Makers, the
Payee, Brookside Mezzanine Fund II, L.P., and Brookside Pecks Capital Partners, L.P. (all future amendments, restatements, extensions
and substitutions therefor or thereof, the “Purchase Agreement”), and is entitled to all the benefits referred
to in the Purchase Agreement. The terms of the Purchase Agreement are incorporated by reference herein. All capitalized terms
used in this Note without definition which are defined in the Purchase Agreement shall have the meanings ascribed to such terms
therein.


 




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2.   Contract Interest
Rate; Cash Interest and PIK Interest Payments.  Subject to the provisions of Section 5 hereof, effective as
of April 1, 2013, interest shall accrue on the unpaid principal balance of this Note at the fixed annual rate of fourteen percent
(14%) (such per annum rate, the “Contract Rate”); provided,
however, that on the date of each scheduled payment of interest on the outstanding principal balance under this Note,
the Maker shall only pay in cash an amount of interest equal to twelve percent (12%) per annum (the “Cash Interest”)
on the outstanding principal balance under this Note. The payment of the remaining two percent (2%) per annum of the interest
accrued on the outstanding principal balance of this Note shall be deferred (the aggregate amount of such deferred payments of
interest, “PIK Interest”) until the Maturity Date. All PIK Interest shall: (i) be added to the unpaid
principal balance of this Note on the date the related Cash Interest payment is due and payable pursuant to the above proviso
and on the dates hereinafter set forth; (ii) be due and payable, together with all interest accrued thereon, in cash, on the Maturity
Date or acceleration of this Note pursuant to the terms hereof; and (iii) bear interest at a fixed rate per annum equal to the
Contract Rate or the Default Rate, as applicable. Accrued interest shall be payable quarterly in arrears commencing on the first
Business Day of July, 2013 and continuing on the first Business Day of every third month thereafter (i.e. the first Business Day
of October, January, April, July, etc.) until the principal amount of, and all accrued interest on, this Note, including, without
limitation, the PIK Interest, have been paid in full. Any interest that is not paid when due shall itself earn interest at the
rate provided herein until the same has been paid in full. Interest shall be calculated on the basis of a three hundred sixty
(360)-day year for actual number of days elapsed.


 


3.   Accrued
PIK Interest Payment. The Calvert Accrued PIK Interest Payment in the aggregate amount of Sixty-Nine Thousand Five Hundred
Dollars ($69,500) required to be paid by the Makers pursuant to the provisions of Section 2.2(b) of the Purchase Agreement shall
be payable in two (2) equal installments of Thirty-Four Thousand Seven Hundred Fifty Dollars ($34,750.00) commencing on the first
Business Day of July, 2013 and ending on the first Business Day of October, 2013.


 


4.   Balloon
Principal Repayment; Maturity Date. Subject to the provisions of Section 9 hereof, the entire outstanding principal balance
of this Note, including all accrued unpaid interest, late charges, fees, and expenses hereunder shall be immediately due and payable
on the Maturity Date.


 


5.   Default
Rate. Notwithstanding the above, upon the occurrence of any Event of Default, this Note shall immediately and automatically
begin to bear interest at the Default Rate and shall continue thereafter to bear interest at the Default Rate until such Event
of Default is waived in writing by Payee.


 


6.   Post-Judgment
Interest. The interest rate or rates provided in this Note shall apply to the indebtedness evidenced hereby before, on,
and after the date or dates on which Payee enters judgment on this Note.


 


7.   Prepayments.
The prepayment of principal on this Note shall be governed by and subject to the provisions of Section 2.8 of the Purchase
Agreement, the provisions of which are incorporated herein by reference thereto as if fully set forth herein.


 


8.   Parent
Guaranty. This Note is secured by Second Amended and Restated Guaranty and Suretyship of LTN Acquisition, LLC, a Delaware
limited liability company (the “Parent”), dated the date hereof executed and delivered by the Parent
in favor of the Payee, Brookside Mezzanine Fund II, L.P. and Brookside Pecks Capital Partners, L.P.


 




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9.   Default:
Rights, Remedies. Upon the occurrence of any Event of Default, Payee may exercise any and all rights and remedies set
forth in the Loan Documents or otherwise available under applicable law.


 


10.   Extensions
of Maturity. All parties to this Note, whether maker, endorser, surety or guarantor, agree that the Maturity Date of this
Note, or any payment due hereunder, may only be extended at any time or from time to time following the written consent of the
Payee and such extension shall not release, discharge or affect the liability of any such party.


 


11.   Unconditional
Obligations. Maker’s obligations under this Note shall be the absolute and unconditional duty and obligation of
Maker and shall be independent of any rights of set-off, recoupment, or counterclaim which Maker might otherwise have against
Payee and Maker shall pay absolutely the payments of principal, interest, fees, charges and expenses required hereunder and under
the Purchase Agreement, free of any deductions and without abatement, diminution or set-off.


 


12.   Waivers.
Maker and all endorsers, guarantors and sureties of this Note waive presentment, demand, notice of dishonor, protest, and
notice of protest with regard to this Note.


 


13.   Binding
Effect. The provisions of this Note shall bind and inure to the benefit of Maker and Payee and their respective successors
and permitted assigns.


 


14.   Joint
and Several Obligations. All references herein to the “Maker” shall be deemed to refer to each
and every person defined herein as a “Maker” individually, and to all of them, collectively, jointly
and severally, as though each were named whenever the term “Maker” is used, and this Note shall be a
joint and several obligation of all of them.


 


15.   Waiver
of Jury Trial. Each Maker (by its execution of this Note) and Payee (by its acceptance of this Note) agree that any suit,
action, or proceeding, whether claim or counterclaim, brought or instituted by or against any Maker or Payee, or any successor
or assign of any Maker or Payee, on or with respect to this Note or which in any way relates, directly or indirectly, to the obligations
of any Maker to Payee under this Note or the Purchase Agreement, or the dealings of the parties with respect thereto, shall be
tried only by a court and not by a jury. EACH MAKER AND PAYEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION OR PROCEEDING.


 


16.   Governing
Law; Jurisdiction and Venue. This Note and all issues relating to this Note and the rights and obligations of Payee and
Maker, as appropriate (including, without limitation, the validity, construction, interpretation, and enforceability of this Note
and its various provisions and consequences and legal effect of all transactions and events which resulted in the issuance of
this Note or which occurred or were to occur as a direct or indirect result of this Note having been executed) shall be governed
by and construed in accordance with the domestic internal laws of the State of Delaware without regard to its rules pertaining
to conflict of laws. Any action which is based, directly or indirectly, on this Note or any matter in or related to this Note,
shall be brought only in the courts of the State of Delaware, Each of the Payee and the Maker irrevocably waives any objection
which it may now or hereinafter have to the laying of the venue of any suit, action or proceeding brought in such court and any
claim that such suit, action or proceeding brought in such a court has been brought in an inconvenient forum.


 




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17.   Amended
and Restated Note, Each Maker acknowledges that this Note amends and restates, and supersedes and replaces, in its entirety,
that certain 2011 Restated Senior Subordinated Note dated November 21, 2011, in the original principal amount of Four Million
Five Hundred Thousand Dollars ($4,500,000.00) executed by the Makers in favor of the Payee, as the same may have been amended
from time to time (the “Prior Note”), but no novation of the indebtedness outstanding under the Prior
Note shall be deemed to have occurred by virtue of the amendment and restatement of the Prior Note, and none is intended or implied.
By its execution hereof, each Maker hereby confirms and reaffirms its liability or continuing liability, as the case may be, with
respect to such indebtedness under the Prior Note.


 


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left blank].


 




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IN
WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed as an instrument under seal
by its authorized officer the day and year first above written.


 


	 	LTN STAFFING, LLC, a Delaware limited liability company
	 	 	 
	 	By:	/s/ L. Allen Baker, Jr.
	 	Name:	L. Allen Baker, Jr.
	 	Title:	President and Chief Executive Officer


 


	 	BG STAFFING, LLC, a Delaware limited liability company
	 	 	 	 
	 	By:	LTN Staffing, LLC, a Delaware limited liability company
	 	Its:	Sole Member
	 	 	 	 
	 	 	By:	/s/ L. Allen Baker, Jr.
	 	 	Name:	L. Allen Baker, Jr.
	 	 	Title:	President and Chief Executive Officer


 


	 	BG PERSONNEL SERVICES, LP, a Texas limited partnership
	 	 	 	 	 
	 	By:	BG Staffing, LLC, a Delaware limited liability company
	 	Its:	General Partner
	 	 	 	 	 
	 	 	By:	LTN Staffing, LLC, a Delaware limited liability company
	 	 	Its:	Sole Member
	 	 	 	 	 
	 	 	 	By:	/s/ L. Allen Baker, Jr.
	 	 	 	Name:	L. Allen Baker, Jr.
	 	 	 	Title:	President and Chief Executive Officer


 


Signature Page to 2013 Amended and Restated
Calvert Subordinated Note


 




    	 



    	 



    

 


	 	BG PERSONNEL, LP, a Texas limited partnership
	 	 	 	 	 
	 	By:	BG Staffing, LLC, a Delaware limited liability company
	 	Its:	General Partner
	 	 	 	 	 
	 	 	By:	LTN Staffing, LLC, a Delaware limited liability company
	 	 	Its:	Sole Member
	 	 	 	 	 
	 	 	 	By:	/s/ L. Allen Baker, Jr.
	 	 	 	Name:	L. Allen Baker, Jr.
	 	 	 	Title:	President and Chief Executive Officer


 


	 	B G STAFF SERVICES INC., a Texas corporation
	 	 	 
	 	By:	/s/ L. Allen Baker, Jr.
	 	Name:	L. Allen Baker, Jr.
	 	Title:	President and Chief Executive Officer
	 	 	 
	 	(“Makers”)


 


	 	ACCEPTED BY:
	 	 
	 	LEGG MASON SBIC MEZZANINE FUND, L.P.
	 	 	 
	 	By:	Legg Mason SBIC Mezzanine Fund Management, LLC, its sole General Partner
	 	 	 
	 	By:	/s/ Joseph W. Hasse
	 	 	Name: Joseph W. Hasse
	 	 	Title: Member
	 	 	 
	 	(“Payee”)


 


Signature Page to 2013 Amended and Restated
Calvert Subordinated Note