Exhibit 10.25


 


AMENDED AND RESTATED SECURITIES PURCHASE
AGREEMENT


 


Dated: May 28, 2013


 


Among


 


LTN ACQUISITION, LLC, 

LTN STAFFING, LLC, 


BG STAFFING, LLC, 


BG PERSONNEL SERVICES, LP, 


BG PERSONNEL, LP, and 


B G STAFF SERVICES INC.

As Companies hereunder


 


and


 


LEGG MASON SBIC MEZZANINE, L.P., 


BROOKSIDE PECKS CAPITAL PARTNERS, L.P.,
and 


BROOKSIDE MEZZANINE FUND II, L.P. 

As Lenders hereunder


 




    	 



    	 



    

 


Table of Contents


 


	 	 	Page
	 	 	 
	SECTION 1.  DEFINITIONS	3
	 	 	 
	1.1	General Provisions	3
	1.2	Defined Terms	3
	1.3	Accounting Terms	27
	 	 
	SECTION 2.  AMOUNT AND TERMS OF SENIOR SUBORDINATED LOANS	27
	 	 	 
	2.1	Purchase of Securities by Brookside II	27
	2.2	Purchase of Securities by Calvert	28
	2.3	Purchase of Securities by Brookside	30
	2.4	Computation of Interest	30
	2.5	Maximum Legal Rate	31
	2.6	Payments	31
	2.7	Application of Payments; Recovery of Payments	31
	2.8	Optional and Mandatory Prepayments of Principal	32
	2.9	Taxes	33
	2.10	Closing Fees	33
	2.11	Replacement of Senior Subordinated Notes	34
	 	 
	SECTION 3.  REPRESENTATIONS AND WARRANTIES OF COMPANIES	34
	 	 	 
	3.1	Organization and Qualification	34
	3.2	Power and Authority	35
	3.3	Enforceability	35
	3.4	Conflict with Other Instruments	35
	3.5	Litigation	36
	3.6	Title to Assets; Leases	36
	3.7	Licenses; Intellectual Property	36
	3.8	Default	36
	3.9	Taxes	37
	3.10	Financial Condition; Capitalization	37
	3.11	ERISA	39
	3.12	Use of Proceeds	40
	3.13	Margin Stock	40
	3.14	Investment Company; Public Utility Holding Company	40
	3.15	No Notices; No Violations	40
	3.16	Labor Relations	40
	3.17	Material Agreements	41
	3.18	Transactions with Affiliates	41
	3.19	No Burdensome Agreements	41
	3.20	Environmental Matters	41
	3.21	Closing Fees; Broker’s Commissions	41
	3.22	Securities Laws	42
	3.23	Small Business Representations	42




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Table of Contents


(continued)


	 	 	Page
	 	 	 
	3.24	Foreign Assets Control Regulations; Anti-Money Laundering	42
	3.25	Completion of InStaff Purchase Transaction; InStaff Purchase Documents	43
	3.26	No Untrue Statement of Material Fact	43
	3.27	Schedules	43
	 	 	 
	SECTION 4.  REPRESENTATIONS AND WARRANTIES OF LENDERS	44
	 	 	 
	4.1	Investment Representation	44
	4.2	Registration	44
	4.3	Lender Qualifications	44
	4.4	Acknowledgment of Risk; Accredited Investor	44
	 	 	 
	SECTION 5.  CONDITIONS OF CLOSING AND PURCHASE	44
	 	 	 
	5.1	Conditions Precedent	44
	 	 	 
	SECTION 6.  AFFIRMATIVE COVENANTS	48
	 	 	 
	6.1	Financial Statements; Reports	48
	6.2	Liabilities	50
	6.3	ERISA	50
	6.4	Notices	51
	6.5	Law/Other Compliance; Environmental Matters	52
	6.6	Limited Liability Company Existence; Change in Locations; After-Acquired Assets	52
	6.7	Insurance	53
	6.8	Books and Records; SBA Inspection Right	53
	6.9	Location of Business	54
	6.10	Group Health Plans	54
	6.11	Joinder by Future Subsidiaries	54
	6.12	Delivery of Senior Loan Documents	54
	6.13	Financial Covenants	54
	6.14	Board Observation Rights; Frequency of Board Meetings	55
	6.15	Preemptive Rights; Additional Debt	55
	6.16	Right to Put SubDebt Units and Warrant Units	56
	6.17	Reservation of Parent Units	59
	6.18	Confidentiality and Related Agreements	59
	6.19	Communication with Accounting Firm	59
	6.20	Management	59
	6.21	SBA Covenants	59
	6.22	Post-Closing Covenants	60


 




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Table of Contents


(continued)


	 	 	Page
	 	 	 
	SECTION 7.  NEGATIVE COVENANTS.	60
	 	 	 
	7.1	Debt	60
	7.2	Liens	61
	7.3	Investments; Permitted Investments	62
	7.4	Restricted Payments; Acquisition or Issuance of Securities	62
	7.5	Mergers, Consolidations	63
	7.6	Disposition of Assets	63
	7.7	Board Fees	64
	7.8	Guaranty Obligations	64
	7.9	Sales and Lease-Backs	64
	7.10	Continuance of Business	64
	7.11	Voluntary Prepayments; Modification of Debt Instruments; Management Agreements	64
	7.12	Protection of Property	65
	7.13	Transactions with Affiliates	65
	7.14	Fiscal Year; Auditors	65
	7.15	OFAC	65
	7.16	Management Fees	66
	7.17	Earnout Payments	66
	7.18	Registration Rights	66
	 	 	 
	SECTION 8.  EVENTS OF DEFAULT, REMEDIES	66
	 	 	 
	8.1	Events of Default	66
	8.2	Acceleration.	69
	8.3	Right of Setoff	69
	8.4	No Marshalling, Etc., Required	69
	8.5	Remedies Cumulative	69
	8.6	Annulment of Defaults	70
	8.7	Right to Cause a Liquidity Event	70
	8.8	Appointment of Representative Under Loan Documents	70
	8.9	Distribution of Proceeds	73
	 	 	 
	SECTION 9.  MISCELLANEOUS.	73
	 	 	 
	9.1	No Waiver; Cumulative Remedies	73
	9.2	Notices	73
	9.3	Reimbursement of Lenders	74
	9.4	Payment of Expenses and Taxes	75
	9.5	Survival of Representations and Warranties	75
	9.6	Binding Effect; Assignment	75
	9.7	Construction	76
	9.8	Severability	76
	9.9	Indemnity	77


 




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Table of Contents


(continued)


	 	 	Page
	 	 	 
	9.10	Waiver of Trial by Jury; Jurisdiction	77
	9.11	Waiver of Automatic or Supplemental Stay	78
	9.12	Actions Against Lender; Release	78
	9.13	Press Releases and Related Matters	78
	9.14	Performance by Lenders	78
	9.15	Counterparts; Signature by Facsimile and E-mail Transmission	79
	9.16	Further Actions	79
	9.17	Entire Agreement	79
	9.18	Customer Identification - USA Patriot Act Notice; OFAC and Bank Secrecy Act	79
	9.19	Subordination by Companies	79


 




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AMENDED AND RESTATED SECURITIES PURCHASE
AGREEMENT


 


THIS AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT made and entered into May 28, 2013, by and among (i) LTN ACQUISITION, LLC, a Delaware
limited liability company (the “Parent”), LTN STAFFING, LLC, a Delaware limited liability company
formerly known as LTN Operating Co., LLC and wholly-owned subsidiary of the Parent (“LTN Staffing”),
BG STAFFING, LLC, a Delaware limited liability company and wholly-owned subsidiary of LTN Staffing (“BG Staffing”),
BG PERSONNEL SERVICES, LP, a Texas limited partnership and subsidiary of LTN Staffing (“BG Personnel Services”),
BG PERSONNEL, LP, a Texas limited partnership and subsidiary of LTN Staffing (“BG Personnel”),
and B G STAFF SERVICES INC., a Texas corporation and wholly-owned subsidiary of LTN Staffing (“B G Staff Services”;
and together with LTN Staffing, BG Staffing, BG Personnel Services and BG Personnel, collectively, “Borrowers”
and each a “Borrower”; and, together with the Parent and the Borrowers, collectively, the “Companies”
and each a “Company”), parties of the first part, and (ii) LEGG MASON SBIC MEZZANINE FUND, L.P.,
a Delaware limited partnership (“Calvert”), BROOKSIDE PECKS CAPITAL PARTNERS, L.P., a Delaware
limited partnership (“Brookside”; and, together with Calvert, collectively, the “2007 Lenders”)
and BROOKSIDE MEZZANINE FUND II, L.P., a Delaware limited partnership (“Brookside II”; and, together
with the 2007 Lenders, collectively, the “Lenders” and each a “Lender”).


 


BACKGROUND


 


WHEREAS, the 2007
Lenders have heretofore provided the Borrowers with two (2) senior subordinated loans in the aggregate amount of Nine Million Dollars
($9,000,000.00) (the “Existing Senior Subordinated Loans”), pursuant to the terms and conditions of that
certain Securities Purchase Agreement dated October 17, 2007 by and among the Companies and the 2007 Lenders, (as modified and
amended in accordance with the terms and conditions of (i) that certain First Amendment to Securities Purchase Agreement dated
September 29, 2008 by and among the Parent, LTN Staffing and the 2007 Lenders, (ii) that certain Second Amendment to Securities
Purchase Agreement dated October 7, 2009 by and among the Parent, LTN Staffing and the 2007 Lenders, (iii) that certain Third Amendment
to Securities Purchase Agreement dated March 12, 2010 by and among the Parent, LTN Staffing and the 2007 Lenders, (iv) that certain
Fourth Amendment to Securities Purchase Agreement dated May 24, 2010 by and among the Companies and the 2007 Lenders, (v) that
certain Fifth Amendment to Securities Purchase Agreement dated December 13, 2010 by and among the Companies and the 2007 Lenders,
(vi) that certain Sixth Amendment to Securities Purchase Agreement dated November 21, 2011 by and among the Companies and the 2007
Lenders and (vii) that certain Seventh Amendment to Securities Purchase Agreement dated December 3, 2012 by and among the Companies
and the 2007 Lenders, collectively, the “Existing Purchase Agreement”); and


 


WHEREAS, pursuant
to the Existing Purchase Agreement, as a condition to the 2007 Lenders’ agreement to make the Existing Senior Subordinated
Loans, the Parent agreed to issue certain Class A Units to each of the 2007 Lenders for no additional consideration; and


 




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WHEREAS, in connection
with the Existing Senior Subordinated Loans, the Borrowers have executed and delivered (i) the Existing Purchase Agreement,
(ii) that certain 2011 Restated Senior Subordinated Note dated November 21, 2011 executed by the Borrowers in favor of Brookside
(as modified through the date hereof, the “Brookside Existing Senior Subordinated Note”), (iii) that
certain 2011 Restated Senior Subordinated Note dated November 21, 2011 executed by the Borrowers in favor of Calvert (as modified
through the date hereof, the “Calvert Existing Senior Subordinated Note”; and, together with the Brookside
Existing Senior Subordinated Note, collectively, the “Existing Senior Subordinated Notes”) and (iii) 
that certain Amended and Restated Guaranty and Suretyship dated November 21, 2011 executed by the Parent in favor of the 2007 Lenders
(as modified through the date hereof, the “Existing Guaranty”; and, together with the Existing Purchase
Agreement, the Existing Senior Subordinated Notes and all other such documents executed in connection with the Existing Senior
Subordinated Loans, collectively, the “Existing Loan Documents”); and


 


WHEREAS, at the
request of the Borrowers, Brookside II and Calvert have agreed to make two (2) additional senior subordinated loans to the Borrowers
in the aggregate amount of Six Million Dollars ($6,000,000.00), with warrants under which Brookside II and Calvert shall have the
right to acquire additional Class A Units in the Parent, on the terms and subject to the conditions hereinafter set forth; and


 


WHEREAS, the proceeds
of such additional senior subordinated loans will be used by LTN Staffing to, among other things: (i) finance a portion of
the costs relating to its acquisition (the “InStaff Purchase Transaction”) of substantially all of the
assets of InStaff Holding Corporation, a Texas corporation (“InStaff Holding”) and InStaff Personnel,
LLC, a Texas limited liability company and a wholly-owned subsidiary of InStaff Holding (“InStaff Personnel”;
and, together with InStaff Holding, the “InStaff Sellers”); and (ii) pay certain transaction costs
and expenses of the Companies in connection with the InStaff Acquisition, the Redocumentation (as defined below) and related transactions;
and


 


WHEREAS, the InStaff
Acquisition will directly or indirectly benefit the business of the other Borrowers and, therefore, such other Borrowers are willing
to be co-borrowers with LTN Staffing with respect to the additional senior subordinated loans described above; and


 


WHEREAS, such
senior subordinated loans are to be made by Brookside II and Calvert to the Borrowers and such warrants are to be issued by the
Parent to Brookside II and Calvert, on the terms and subject to the conditions hereinafter; and


 


WHEREAS, in connection
with the making of such additional senior subordinated loans, the Lenders are requiring that the Borrowers enter into this Agreement
and all documents required hereby, under which, among other things, certain of the Existing Loan Documents and certain other documents
executed in connection with the Existing Senior Subordinated Loans shall be modified, amended and/or restated (collectively, the
“Redocumentation”).


 


NOW, THEREFORE,
in consideration of the promises and the agreements hereinafter set forth, and intending to be legally bound hereby, the parties
hereto have agreed as follows:


 




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SECTION
1. DEFINITIONS.


 


1.1 General
Provisions. Unless expressly provided otherwise in this Agreement or in the Loan Documents, or unless the context requires
otherwise:


 


(a) all terms used
herein and in the Loan Documents that are defined in the UCC, as amended from time to time, shall have the meanings set forth therein;


 


(b) all capitalized
terms defined in this Agreement shall have the defined meanings when used in the Loan Documents and in any other documents made
or delivered pursuant to this Agreement;


 


(c) the singular shall
include the plural, the plural shall include the singular, and the use of any gender shall include all genders;


 


(d) all references
to any particular party defined herein shall be deemed to refer to each and every person defined herein as such party individually,
and to all of them, collectively, jointly and severally, as though each were named wherever the applicable defined term is used;


 


(e) all references
to “Sections,” “Subsections,” “Paragraphs” and “Subparagraphs”
shall refer to provisions of this Agreement;


 


(f) all references
to time herein means Eastern Standard Time or Eastern Daylight Time, as then in effect; and


 


(g) all references
to sections, subsections, paragraphs or other provisions of statutes or regulations shall be deemed to include successor, amended,
renumbered and replacement provisions.


 


1.2 Defined
Terms. As used herein (including the Background provisions hereof) and in the heading of this Agreement, the following
terms have the meanings indicated, unless the context otherwise requires:


 


“Accounting
Firm” means the public accounting firm serving as the accountants to the Companies selected by the Parent and reasonably
satisfactory to the Lenders.


 


“Accumulated
Funding Deficiency” means any accumulated funding deficiency as defined in ERISA §302(a).


 


“Additional
Debt” has the meaning ascribed to it in Section 6.15(b).


 




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“Adjusted
EBITDA” means, for any applicable period, (i) EBITDA, plus (ii) fees or other compensation paid
by the Parent to members of the Board in consideration for their service as Board members which exceed the normal and customary
level of fees and compensation paid for similar services by other similarly situated companies, plus (iii) fees or
other compensation paid by any Subsidiary of the Parent to members of its board of directors, board of managers or similar governing
body in consideration for their service as members thereof which exceed the normal and customary level of fees and compensation
paid for similar services by other similarly situated companies plus (iv) compensation (including salary, bonus and
benefits) paid by the Parent and its Subsidiaries to their executive personnel which exceeds the normal and customary level of
compensation paid to executive personnel by similarly situated companies, it being understood that the determination regarding
excess compensation and fees under clauses (ii) through (iv) of this definition shall be made in good faith by the
Lenders based upon such data and information that the Lenders reasonably deem appropriate, all of the foregoing as determined by
reference to the consolidated audited and other financial statements of the Parent and its Subsidiaries required to be furnished
by the Parent to the Lenders under and pursuant to Section 6.1; provided, however, the Lenders shall have
the good faith right to have the determination of Adjusted EBITDA verified by the Accounting Firm, at the Parent’s expense,
in which event the Parent shall provide the Accounting Firm with such information as it reasonably requests in order to so verify
Adjusted EBITDA.


 


“Affiliate”
means, with respect to any applicable Person, any other Person that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. For purposes of this definition, (i) ”control”
of a Person means the power, directly or indirectly, either to (A) vote ten percent (10%) or more of the capital stock having
ordinary voting power for the election of directors of such Person (or similar ownership interests in voting power in the case
of control of a Person other than a corporation), or (B) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise, and (ii) each Company shall be deemed an Affiliate of each other Company.


 


“Agreement”
means this Amended and Restated Securities Purchase Agreement and any future amendments, restatements, modifications or supplements
hereof or hereto.


 


“API”
means American Partners, Inc., a Rhode Island corporation.


 


“API
Purchase Agreement” means that certain Asset Purchase Agreement dated as of December 3, 2012 by and among BG Staffing,
the Parent, API and the API Selling Persons


 


“API
Purchase Transaction” means the purchase by BG Staffing of certain of the assets of and the assumption by BG Staffing
of certain liabilities of API, pursuant to the terms of the API Purchase Agreement.


 


“API
Selling Persons” means, collectively, Thomas Leonard, Justin Franks and Ronald Wnek.


 


“Appraiser”
means an independent, nationally recognized investment bank or other qualified institution having experience valuing companies
in the business of providing temporary employees such as the Companies.


 




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“Authorized
Officer” means, collectively and with respect to any Company, the President, the Chief Financial Officer, or any
other officer of such Company designated as an Authorized Officer in writing to the Lenders by the President or Chief Financial
Officer of such Company with the approval of the Board.


 


“Bankruptcy
Code” means the United States Bankruptcy Code, Title 11 of the United States Code, as amended, or any successor
law thereto, and any rules promulgated in connection therewith.


 


“Bankruptcy
Event of Default” means, collectively, an Event of Default under Section 8.1(e) or Section 8.1(f).


 


“BG
Purchase Agreement” means that certain Purchase Agreement dated May 24, 2010 by and among BG Staffing, the BG Sellers,
the Sellers’ Agent (as defined therein), BG Personnel Services, BG Personnel and B G Staff Services.


 


“BG
Purchase Transaction” means the purchase by BG Staffing of all of the Capital Stock of BG Personnel Services, BG
Personnel and B G Staff Services, pursuant to the terms of the BG Purchase Agreement.


 


“BG
Sellers” means the “Sellers” as defined in the BG Purchase Agreement.


 


“BG
Staffing” has the meaning ascribed to it in the heading to this Agreement.


 


“BG
Personnel” has the meaning ascribed to it in the heading to this Agreement.


 


“BG
Personnel Services” has the meaning ascribed to it in the heading to this Agreement.


 


“B
G Staff Services” has the meaning ascribed to it in the heading to this Agreement.


 


“Board”
means the Board of Managers of the Parent, as comprised from time to time pursuant to Section 4.1 of the LLC Agreement.


 


“Borrower”
and “Borrowers” each has the meaning ascribed to it in the heading to this Agreement.


 


“Brookside”
has the meaning ascribed to it in the heading to this Agreement. Brookside is a small business investment company licensed by the
SBA pursuant to the SBIC Act.


 


“Brookside
Accrued PIK Interest Payment” has the meaning ascribed to it in Section 2.3(a).


 




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“Brookside
Existing Senior Subordinated Note” has the meaning ascribed to it in the Background provisions hereof.


 


“Brookside
Senior Subordinated Loan” means the loan evidenced by the Brookside Senior Subordinated Note.


 


“Brookside
Senior Subordinated Note” means the 2013 Amended and Restated 14% Senior Subordinated Note in the principal amount
of Four Million Six Hundred Ninety-Six Thousand One Hundred One 09/100 Dollars ($4,696,101.09) executed and delivered by the Borrowers
in favor of Brookside on the date hereof pursuant to Section 2.3(a)(i), and any future amendments, restatements, modifications
or supplements thereof or thereto.


 


“Brookside
SubDebt Units” means, collectively, the fifty-two thousand two hundred five and one-half (52,205.5) Class A Units
of the Parent currently held by Brookside, which Class A Units were issued by the Parent to Brookside in connection with the making
of the Brookside Senior Subordinated Loan pursuant to Section 2.2(a)(ii) of the Existing Purchase Agreement.


 


“Brookside
II” has the meaning ascribed to it in the heading to this Agreement. Brookside II is a small business investment
company licensed by the SBA pursuant to the SBIC Act.


 


“Brookside
II Facility Fee” has the meaning ascribed to it in Section 2.10(a).


 


“Brookside
II Senior Subordinated Loan” means the loan evidenced by the Brookside II Senior Subordinated Note.


 


“Brookside
II Senior Subordinated Note” means the 14% Senior Subordinated Note in the principal amount of Four Million Dollars
($4,000,000.00) executed and delivered by the Borrowers in favor of Brookside II on the date hereof pursuant to Section 2.1(a)(i),
and any future amendments, restatements, modifications or supplements thereof or thereto.


 


“Brookside
II Warrant” means the Warrant executed and delivered by the Parent in favor of Brookside II on the date hereof pursuant
to Section 2.1(a)(ii), under which Brookside II has the right to purchase Class A Units of the Parent described therein,
and any future amendments, restatements, modifications or supplements thereof or thereto.


 


“Brookside
II Warrant Units” means, collectively, Class A Units of the Parent required to be issued, or which has been issued
(as appropriate), upon exercise of the Brookside II Warrant.


 


“Business
Day” means a day other than a Saturday, Sunday or legal holiday under the laws of the State of Maryland or the State
of Connecticut.


 




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“Business
Plan” has the meaning ascribed to it in Section 3.10(c).


 


“Calvert”
has the meaning ascribed to it in the heading to this Agreement. Calvert is a small business investment company licensed by the
SBA pursuant to the SBIC Act.


 


“Calvert
Accrued PIK Interest Payment” has the meaning ascribed to it in Section 2.2(b).


 


“Calvert
Class A Purchased Units” means, collectively, the Fifty Thousand (50,000) Class A Units acquired by Calvert from
the Parent at a purchase price of Ten Dollars ($10.00) per unit in connection with the making of the Calvert Senior Subordinated
Loan No. 1 and the transactions contemplated by the Existing Purchase Agreement.


 


“Calvert
Existing Senior Subordinated Note” has the meaning ascribed to it in the Background provisions hereof.


 


“Calvert
Facility Fee” has the meaning ascribed to it in Section 2.10(b).


 


“Calvert
Senior Subordinated Loan No. 1” means the loan evidenced by the Calvert Senior Subordinated Note No. 1.


 


“Calvert
Senior Subordinated Loan No. 2” means the loan evidenced by the Calvert Senior Subordinated Note No. 2.


 


“Calvert
Senior Subordinated Loans” means, collectively, (i) the Calvert Senior Subordinated Loan No. 1 and (ii) the Calvert
Senior Subordinated Loan No. 2.


 


“Calvert
Senior Subordinated Note No. 1” means the 2013 Amended and Restated 14% Senior Subordinated Note in the principal
amount of Four Million Six Hundred Ninety-Six Thousand One Hundred One 09/100 Dollars ($4,696,101.09) executed and delivered by
the Borrowers in favor of Calvert on the date hereof pursuant to Section 2.2(b), and any future amendments, restatements,
modifications or supplements thereof or thereto.


 


“Calvert
Senior Subordinated Note No. 2” means the 14% Senior Subordinated Note in the principal amount of Two Million Dollars
($2,000,000.00) executed and delivered by the Borrowers in favor of Calvert on the date hereof pursuant to Section 2.2(a)(i),
and any future amendments, restatements, modifications or supplements thereof or thereto.


 


“Calvert
Senior Subordinated Notes” means, collectively, (i) the Calvert Senior Subordinated Note No. 1 and (ii) the Calvert
Senior Subordinated Note No. 2


 




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“Calvert
SubDebt Units” means, collectively, the fifty-two thousand two hundred five and one-half (52,205.5) Class A Units
of the Parent currently held by Calvert, which Class A Units were issued by the Parent to Calvert in connection with the making
of the Calvert Senior Subordinated Loan No. 1 pursuant to Section 2.1(a)(ii) of the Existing Purchase Agreement.


 


“Calvert
Warrant” means the Warrant executed and delivered by the Parent in favor of Calvert on the date hereof pursuant to
Section 2.2(a)(ii), under which Calvert has the right to purchase Class A Units of the Parent described therein, and any
future amendments, restatements, modifications or supplements thereof or thereto.


 


“Calvert
Warrant Units” means, collectively, Class A Units of the Parent required to be issued, or which has been issued (as
appropriate), upon exercise of the Calvert Warrant.


 


“Capital
Contribution Agreement” means that certain Capital Contribution Agreement dated the date hereof, by and among the
Sponsor, LTN Staffing, BG Staffing, BG Personnel Services, BG Personnel and B G Staff Services, and the Lenders, pursuant to which
the Sponsor has agreed following the occurrence of a Default or an Event of Default to make certain capital contributions into
LTN Staffing and/or BG Staffing, as appropriate, for the purpose of funding Earn-Out Payments due under the Purchase Agreements,
on the terms and conditions set forth therein.


 


“Capital
Expenditures” means, collectively and with respect to any Person and its Subsidiaries and for any applicable period,
the aggregate amount (whether paid in cash or accrued as a liability) that would, in accordance with GAAP, be included on the consolidated
statement of cash flows of such Person and its Subsidiaries for such period as additions to equipment, fixed assets, real property
or improvements or other capital assets (including without limitation Capitalized Lease Obligations).


 


“Capitalized
Lease Obligations” means, collectively with respect to any Person and its Subsidiaries and for any applicable period,
the obligations of such Person and its Subsidiaries to pay rent or other amounts under any lease of or other arrangement conveying
the right to use real or personal property, or a combination thereof, which obligations are required to be classified and accounted
for as capital leases on a consolidated balance sheet of such Person and its Subsidiaries pursuant to and accordance with GAAP,
and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.


 


“Capital
Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents
in capital stock (whether voting or nonvoting, and whether common or preferred) of such corporation, (ii) in the case of an association
or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital
stock, (iii) in the case of a partnership, Partnership Interests (whether general or limited), (iv) in the case of a limited liability
company, Membership Interests, (v) any other equity interest or participation in an issuing Person that confers on the holder thereof
the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, and (vi) any Capital
Stock described in the foregoing clauses (i) through (v) that is issuable upon the exercise of any warrant, option, convertible
security or otherwise having the characteristics of a Capital Stock equivalent, provided that Capital Stock shall not mean any
executive compensation or other similar benefit program whereby an organization provides bonuses or other compensation in cash
only to its executives and other employees.


 




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“Cash
Equivalents” means: (i) securities issued or unconditionally guaranteed by the United States of America or any
agency or instrumentality thereof, backed by the full faith and credit of the United States of America and maturing within ninety
(90) days from the date of acquisition; (ii) commercial paper issued by any Person organized under the laws of the United
States of America, maturing within ninety (90) days from the date of acquisition and, at the time of acquisition, having a rating
of at least A-1 or the equivalent thereof by Standard & Poor’s Ratings Services or at least P-1 or the equivalent
thereof by Moody’s Investors Service, Inc.; (iii) time deposits and certificates of deposit maturing within ninety (90) days
from the date of issuance and issued by a bank or trust company organized under the laws of the United States of America or any
state thereof that has combined capital and surplus of at least Two Hundred Fifty Million Dollars ($250,000,000.00) and that has
(or is a Subsidiary of a bank holding company that has) a long-term unsecured debt rating of at least A or the equivalent thereof
by Standard & Poor’s Ratings Services or at least A2 or the equivalent thereof by Moody’s Investors Service, Inc.;
(iv) repurchase obligations with a term not exceeding seven (7) days with respect to underlying securities of the types described
in clause (i) above entered into with any bank or trust company meeting the qualifications specified in clause (iii) above;
and (v) money market funds at least ninety-five percent (95%) of the assets of which are continuously invested in securities
of the type described in clause (i) above.


 


“Cash
Interest Expense” means, for any period, the aggregate amount of interest actually paid by the Borrowers during such
period in respect to Total Debt (including, without limitation, the interest portion, determined in accordance with GAAP, of all
lease payments accrued during such period in respect of all leases which should have been or must be, in accordance with GAAP,
recorded as capital leases).


 


“CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, as amended from time to time, and all rules and regulations promulgated in connection therewith.


 


“Change
of Control” means (i) if any Person or “group” (within the meaning of Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934) other than the members of the Parent on the Closing Date shall beneficially own
(A) Units having at least fifty percent (50%) of the Total Voting Power of the Parent, or (B) Units of the Parent having
at least fifty percent (50%) of the economic interests of the Parent, (ii) if the Sponsor at any time does not have the right
to appoint a majority of the Board members pursuant to Section 4.1(b)(i) of the LLC Agreement, (iii) if the Parent shall
own less than all of the Membership Interests of LTN Staffing, (iv) if LTN Staffing shall own less than all of the Membership Interests
of BG Staffing, (v) if LTN Staffing shall cease, directly or indirectly, to own and control legally 100% of the Capital Stock of
any of the other Borrowers or (vi) any other Company shall own less than all of the Capital Stock of a Subsidiary thereof,
whether now or hereafter in existence.


 




    	9



    	 



    

 


“Class
A Units” has the meaning ascribed to it in the LLC Agreement representing a class of Membership Interest in the Parent.


 


“Class
B Units” has the meaning ascribed to it in the LLC Agreement representing a class of Membership Interest in the Parent.


 


“Closing
Date” means the date on which all conditions precedent set forth in Section 5.1 have been satisfied.


 


“Closing
Fees” means, collectively, those fees due and payable by the Borrowers to Brookside II and Calvert pursuant to Section 2.10.


 


“COBRA
Continuation Coverage” means those provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
found in Code §4980B(f), which impose certain continuation coverage requirements upon group health plans in order for such
plans to retain certain tax advantages.


 


“Code”
means the Internal Revenue Code of 1986, as amended, or any successor law thereto, and any regulations promulgated thereunder.


 


“Company”
and “Companies” each has the meaning ascribed to it in the heading to this Agreement.


 


“Compliance
Certificate” means a certificate in the form of Exhibit ”A” attached hereto and made
a part hereof executed by an Authorized Officer of the Companies certifying as to the matters therein described.


 


“Contamination”
means the presence of any Hazardous Substance which may require Remedial Actions under applicable law.


 


“Controlled
Group Member” means:


 


(i) any
corporation included with any Company in a controlled group of corporations within the meaning of Code §414(b);


 


(a)  any
trade or business (whether or not incorporated) which is under common control with any Company within the meaning of Code §414(c);
and


 


(b)  any
member of an affiliated service group of which any Company is a member within the meaning of Code §414(m).


 




    	10



    	 



    

 


“Debt”
means, with respect to any Person at any applicable time (without duplication), (i) all obligations of such Person for borrowed
money (including, in the case of the Companies, the Senior Debt), (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments (including, in the case of the Companies, the indebtedness and other obligations of the
Companies in respect of the Earnout Payments), (iii) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary
reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (iv) all
obligations, other than intercompany items, of such Person issued or assumed as the deferred purchase price of property or services
purchased by such Person which would appear as liabilities on a balance sheet of such Person, (v) all Debt of others secured
by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable
out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (vi) all Guaranty Obligations of such Person, (vii)   the principal portion of all Capitalized
Lease Obligations, (viii) all obligations of such Person in respect of interest rate protection agreements, foreign currency
exchange agreements, or other interest or exchange rate or commodity price hedging agreements, (ix) the maximum amount of
all performance and standby letters of credit issued or bankers’ acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (x) all preferred stock or similar preferred
interests issued by such Person and required by the terms thereof to be redeemed, or for which mandatory sinking fund payments
are due, by a fixed date, and (xi) any other item of indebtedness or liability that would be reflected on the liabilities
side of a balance sheet of such Person in accordance with GAAP (other than accounts payable arising in the ordinary course of such
Person’s business). The Debt of any Person shall also include the Debt of any partnership or unincorporated joint venture
in which such Person is legally obligated or has a reasonable expectation of being liable with respect thereto.


 


“Debt
Service” means, for any period, the sum of (i) Cash Interest Expense for such period and the principal portion of
Borrowers’ Total Debt payable during such period (excluding payments required to be made pursuant to Section 2.2(d)
of the Senior Loan Agreement), determined in accordance with GAAP, plus (ii) the aggregate amount of Earn Out Payments paid
in cash by any Borrower for such period, plus the aggregate amount of Deferred Debt Payments paid in cash by any Borrower
for such period.


 


“Debt
Service Coverage Ratio” means the ratio of (a) EBITDA plus (i) all Earn Out Payments made by any Borrower
for such period to the extent treated as an expense, plus (ii) all Management Fees due to Taglich Brothers, Inc. and its
affiliates which the Borrowers have accrued but not paid, plus (iii) all other non-cash items, less (iv) all distributions
made to the members, shareholders or partners of the Borrowers (other than distributions to other Borrowers), less (v) federal
and state income taxes paid by the Borrowers for such period, less (vi) Capital Expenditures (other than Capital Expenditures
financed with the proceeds of purchase money Debt or capital leases to the extent permitted under this Agreement), to (b) consolidated
Debt Service.


 


“Default”
means any event specified in Section 8.1, whether or not any requirement for notice or lapse of time or any other condition
has been satisfied.


 




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“Default
Rate” means a rate per annum equal to seventeen percent (17%) or, if less, the highest rate permitted by applicable
law.


 


“Deferred
Debt Payables” means payments required to be made by Borrowers (or any one of them) on deferred Debt.


 


“Deferred
Debt Payments” means payments made by Borrowers (or any one of them) on deferred Debt.


 


“Earn
Out Payables” means, collectively, (i) those payments required to be made by LTN Staffing pursuant to Section
1.6 of the JNA Purchase Agreement, (ii) those payments required to be made by BG Staffing pursuant to Section 1.6 of the Extrinsic
Purchase Agreement, (iii) those payments required to be made by BG Staffing pursuant to Section 1.6 of the API Purchase Agreement,
and (iv) those payments required to be made by LTN Staffing pursuant to Section 1.6 of the InStaff Purchase Agreement.


 


“Earn
Out Payments” means, collectively, (i) those payments made or required to be made by LTN Staffing pursuant to
Section 1.6 of the JNA Purchase Agreement, (ii) those payments made or required to be made by BG Staffing pursuant to Section
1.6 of the Extrinsic Purchase Agreement, (iii) those payments made or required to be made by BG Staffing pursuant to Section 1.6
of the API Purchase Agreement and (iv) those payments made or required to be made by LTN Staffing pursuant to Section 1.6 of the
InStaff Purchase Agreement.


 


“EBITDA”
means for any period, the consolidated net income of Borrowers, determined in accordance with GAAP consistently applied, plus
(i) Interest Expense for such period, plus (ii) federal and state income taxes of Borrowers for such period, plus
(iii) all depreciation and amortization of capitalized costs for such period, plus (iv) actual closing costs in
an amount not to exceed Five Hundred Thousand Dollars ($500,000) incurred by Borrowers in connection with closing the Extrinsic
Purchase Transaction, provided that such closing costs are verified by Lenders and consented to by Lenders in their
sole discretion, plus (v) actual closing costs in an amount not to exceed Four Hundred Thousand Dollars ($400,000) incurred
by the Borrowers in connection with the closing of the API Purchase Transaction, provided that such closing costs
are verified by Lenders and consented to by Lenders in their sole discretion, plus (vi) actual closing costs in an amount
not to exceed Five Hundred Thousand Dollars ($500,000) incurred by the Borrowers in connection with the closing of the InStaff
Purchase Transaction, provided that such closing costs are verified by Lenders and consented to by Lenders in their
sole discretion.


 


“Employee
Pension Plan” means any employee pension benefit plan as defined in ERISA § 3(2) and which is (i) maintained
by any Company or any Controlled Group Member, and (ii) qualified under Code §401.


 




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“Environmental
Control Statutes” means, collectively, any federal, state, county, regional or local laws governing the control,
storage, removal, spill, release or discharge of Hazardous Substances including, without limitation, CERCLA, the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous Materials Transportation Act, the
Emergency Planning and Community Right to Know Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution Act
of 1990, any similar or implementing state law, and in each case including all amendments thereto and all rules and regulations
promulgated thereunder and permits issued in connection therewith.


 


“EPA”
means the United States Environmental Protection Agency, or any successor thereto.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and any regulations issued thereunder by the United States
Department of Labor or the PBGC.


 


“Event
of Default” means any event specified in Section 8.1, provided that any requirement for notice or lapse
of time or any other condition has been satisfied.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.


 


“Exercising
Lender” has the meaning ascribed to it in Section 6.16(a).


 


“Existing
Guaranty” has the meaning ascribed to it in the Background provisions hereof.


 


“Existing
Loan Documents” has the meaning ascribed to it in the Background provisions hereof.


 


“Existing
Purchase Agreement” has the meaning ascribed to it in the Background provisions hereof.


 


“Existing
Senior Subordinated Loans” has the meaning ascribed to it in the Background provisions hereof.


 


“Existing
Senior Subordinated Notes” has the meaning ascribed to it in the Background provisions hereof.


 


“Extrinsic”
means Extrinsic, LLC, a Delaware limited liability company.


 


“Extrinsic
Purchase Agreement” means that certain Asset Purchase Agreement dated as of November 21, 2011 by and among BG Staffing,
Extrinsic, Clarkston-Potomac Group, Inc. and Michael Lewis Miller.


 


“Extrinsic
Purchase Transaction” means the purchase by BG Staffing of certain of the assets of and the assumption by BG Staffing
of certain liabilities of Extrinsic, pursuant to the terms of the Extrinsic Purchase Agreement.


 




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“Fair
Market Value” means, as of any date of determination in connection with a Put (but subject to the provisions of Section
6.16(e)), the purchase price at which an informed and willing buyer, under no compulsion to purchase, would purchase, and an
informed and willing seller, under no compulsion to sell, would sell, all of the equity of the Parent as of the Put Date, taken
as a whole, (i) determined mutually and in good faith by the Exercising Lender and the Parent, or (ii) in the event that
the Exercising Lender and the Parent are unable to agree on the Fair Market Value within thirty (30) days after delivery of
any Put Notice determined in good faith and on a reasonable basis without regard to (A) any restrictions on transfer of such
equity under applicable securities laws or otherwise, (B) any agreement or document prohibiting or restricting the payment
of dividends or stock or option repurchases, (C) any preferences (liquidation or otherwise) between different classes of Membership
Interests or (D) any minority interest, illiquidity or similar discount, by an Appraiser selected by the Exercising Lender
within fifteen (15) Business Days after the expiration of such thirty (30) day period, which Appraiser shall be reasonably
acceptable to the Parent; in connection with which (1) the Appraiser shall have forty-five (45) Business Days following its engagement
in which to determine the Fair Market Value hereunder, and its determination will be final and binding on all parties concerned;
(2) all costs of determining the Fair Market Value (including the fees and charges of such Appraiser) shall be borne by the Company;
and (3) the Parent covenants and agrees to provide, or cause to be provided, to the Appraiser such data, information and documents
concerning the Parent and its Subsidiaries, and their businesses, as may be reasonably requested by the Appraiser in connection
with its determination of the Fair Market Value hereunder.


 


“Financial
Covenants” means, collectively, the financial covenants set forth on Schedule “A”
attached hereto and incorporated herein by reference, as such financial covenants may be supplemented pursuant to Section 6.13.


 


“Fiscal
Quarter” of the Companies means the thirteen (13) week fiscal quarter of the Companies as in effect on the date hereof.


 


“Fiscal
Year” of the Companies means the historical twelve (12) month fiscal year of the Companies as in effect on the date
hereof.


 


“Fully-Diluted
Basis” means, as at any applicable time, the aggregate number of Units outstanding at such time, assuming the exercise,
conversion or exchange of all Parent Securities then exercisable, convertible or exchanged into Units, or which will become exercisable
upon the completion of a contemplated transaction and the exercise of all outstanding warrants, options or other rights to subscribe
for or purchase any Parent Securities including (without limitation) the Warrants.


 


“Fully-Diluted
Membership Percentage Interest” means, with respect to any applicable member of the Parent at any applicable time,
the percentage obtained by reference to a fraction, (i) the numerator of which is the number of outstanding Units held by
a member of the Parent, whether vested or not, and (ii) the denominator of which is the total number of Units outstanding,
whether vested or not.


 




    	14



    	 



    

 


“Funded
Debt” means, collectively for the Companies and their Subsidiaries as at any applicable time (and without duplication),
(i) all Debt for borrowed money (including the Senior Debt which, for purposes hereof, shall include, but not be limited to,
outstanding letters of credit issued in respect thereof and the Senior Subordinated Loans, but excluding any Debt evidenced by
the Earnout Payments) plus (ii) Capitalized Lease Obligations.


 


“Future
Subsidiary” has the meaning ascribed to it in Section 6.11.


 


“GAAP”
means, at any particular time, generally accepted accounting principles as in effect at such time, provided, however,
that, if employment of more than one principle shall be permissible at such time in respect of a particular accounting matter,
“GAAP” shall refer to the principle which is then employed by the Parent and its Subsidiaries with the
agreement of their independent certified public accountants.


 


“Guaranty
Obligations” means, as at any applicable time and for any Person, without duplication, any obligations (other than
endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to
guarantee any Debt of any other Person in any manner, whether direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Debt or other obligation or any property constituting security therefor,
(ii) to advance or provide funds or other support for the payment or purchase of such Debt or obligation or to maintain working
capital, solvency or other balance sheet condition of such other Person (including, without limitation, maintenance agreements,
comfort letters, take or pay arrangements, put agreements or similar agreements or arrangements) for the benefit of the holder
of Debt of such other Person, (iii) to lease or purchase property, securities or services primarily for the purpose of assuring
the owner of such Debt, or (iv) to otherwise assure or hold harmless the owner of such Debt or obligation against loss in
respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed
to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Debt in respect of which
such Guaranty Obligation is made.


 


“Hazardous
Substance” means, collectively, petroleum products and items defined in the Environmental Control Statutes as “hazardous
substances,” “hazardous wastes,” “pollutants” or “contaminants”
and any other toxic, reactive, corrosive, carcinogenic, flammable or hazardous substance or other pollutant.


 


“Initial
Public Offering” means the first firm commitment underwritten public offering of the common stock of the Parent (or
successor thereto formed to effect such offering) registered under the Securities Act.


 


“InStaff
Purchase Agreement” means the Asset Purchase Agreement dated the date hereof by and among LTN Staffing, the InStaff
Sellers and InStaff Selling Parties, pursuant to which LTN Staffing purchased, and the InStaff Sellers sold, substantially all
of the assets of the InStaff Sellers, on the terms and conditions set forth therein, and all agreements, documents and instruments
required to be executed and delivered by the parties pursuant thereto.


 




    	15



    	 



    

 


“InStaff
Purchase Documents” means, collectively, all agreements, documents and instruments relating and pertaining to the
InStaff Purchase Transaction including, without limitation, the InStaff Purchase Agreement and any bill of sale, assignment and
assumption (or similar) agreement, escrow agreement, non-competition agreement, confidentiality agreement, non-solicitation agreement,
closing certificates and other agreements, documents and instruments required to be delivered by the parties thereto at closing
thereunder.


 


“InStaff
Holding” has the meaning ascribed to it in the Background provisions hereof.


 


“InStaff
Personnel” has the meaning ascribed to it in the Background provisions hereof.


 


“InStaff
Purchase Transaction” has the meaning ascribed to it in the Background provisions hereof.


 


“InStaff
Sellers” has the meaning ascribed to it in the Background provisions hereof.


 


“InStaff
Selling Parties” means, collectively, (i) North Texas Opportunity Fund, L.P., a Texas limited partnership, (ii) Randy
Burkhart, an individual resident of the State of Texas, (iii) Beth Garvey, an individual resident of the State of Texas, (iv) Arthur
W. Hollingsworth, an individual resident of the State of Texas, and (v) John Lewis, an individual resident of the State of Texas.


 


“Interest
Expense” means, for any period, the aggregate amount of interest expense of the Borrowers during such period, determined
in accordance with GAAP.


 


“Investment”
in any Person means, collectively, (i) the acquisition (whether for cash, property, services, assumption of Debt, securities
or otherwise) of assets, shares of capital stock, bonds, notes, debentures, partnership, joint ventures or other ownership interests
or other securities of such other Person, (ii) any deposit with, or advance, loan or other extension of credit to, such Person
(other than deposits made in connection with the purchase of equipment or other assets in the ordinary course of business), or
(iii) any other capital contribution to or investment in such Person, including, without limitation, any Guaranty Obligation
(including any support for a letter of credit issued on behalf of such Person) incurred for the benefit of such Person or the formation
of a Subsidiary.


 


“JNA”
means JNA Staffing, Inc., a Wisconsin corporation.


 


“JNA
Purchase Agreement” means that certain Asset Purchase Agreement dated as of December 13, 2010 by and between LTN
Staffing and JNA.


 




    	16



    	 



    

 


“JNA
Purchase Transaction” means the purchase by LTN Staffing of certain of the assets of and the assumption by LTN Staffing
of certain liabilities of JNA, pursuant to the terms of the JNA Purchase Agreement.


 


“Knowledge
of the Companies,” “Knowledge of any Company” or similar phrases means the knowledge of
or known to any of the officers, directors or managers of any Company or what could have reasonably be expected to be known to
any of such officers, directors or managers of any Company upon reasonable inquiry and investigation (taking into account their
respective position and level of responsibility with such Company).


 


“Lender”
and “Lenders” each has the meaning ascribed to it in the heading to this Agreement.


 


“Letter
of Credit Obligations” has the meaning ascribed to it in the Senior Loan Agreement.


 


“Lender
Indemnitees” has the meaning ascribed to it in Section 9.9.


 


“Lien”
means, collectively, any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien
(statutory or otherwise), preference, priority or charge of any kind, including, without limitation, any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof.


 


“Liquidity
Event” means, collectively, (i) an Initial Public Offering or any other public offering, provided that
(A) either (y) the Senior Debt is repaid in connection therewith or (z) the Senior Lender has elected not to be repaid in connection
therewith and (B) the gross proceeds thereof exceed Ten Million Dollars ($10,000,000.00), or (ii) any (A) merger, consolidation
or other corporate or similar reorganization or combination in which the Parent is not the non-surviving party, (B) except in connection
with any transaction permitted under Section 7.5, any merger, consolidation, share exchange or other corporate or
similar reorganization or combination involving any Borrower in which such Borrower is not the surviving party, (C) the Companies
shall sell, lease, license, transfer, convey or otherwise dispose of, in a single transaction or a series of related transactions,
more than twenty-five percent (25%) of their combined assets, or any other asset(s) which could reasonably be expected to have
a Material Adverse Effect on the remaining part of the Companies’ combined business after such sale, lease, license, transfer,
conveyance or other disposition, (D) the occurrence of any Change of Control, (E) the directors, members or managers
of any Company, as the case may be, authorize the taking of any action which, if completed, would result in any of the events set
forth in the foregoing clauses (A), (B), or (C) or (E) the cessation of the active operation of the business of any Company
(whether or not such Company liquidates, dissolves or winds up its affairs).


 


“LLC
Agreement” means the Amended and Restated Limited Liability Company Agreement of the Parent by and among the Parent’s
members, including the Lenders, as in effect on the Closing Date.


 




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“Loan
Account” means, collectively, the account or accounts of the Borrowers on the books of the Lenders in which are recorded
the payments of principal and interest made by the Borrowers to the Lenders in respect of the Senior Subordinated Notes.


 


“Loan
Documents” means, collectively, (i) this Agreement, (ii) the Senior Subordinated Notes, (iii) the Suretyship,
(iv) the Warrants, (v) the Management Fee Subordination Agreement, (iv) the Senior Lender Subordination Agreement, and
(v) all other documents executed and delivered to the Lender by or on behalf of any Company or any Subsidiary in connection
therewith, and any modifications, amendments, restatements, substitutions and replacements of or for any of the foregoing.


 


“Management
Agreement” means the Management Services Agreement dated October 17, 2007 between the Parent, LTN Staffing and the
Sponsor, pursuant to which Sponsor agreed to provide certain management, advisory and related services to the Companies for the
Management Fees described therein, as amended by that certain Letter Agreement dated October 5, 2009 by and among the Parent, LTN
Staffing and the Sponsor, as further amended by that certain Letter Agreement dated May 11, 2010 by and among the Parent, LTN Staffing
and the Sponsor, as further amended by that certain Letter Agreement dated November 21, 2011 by and among the Parent, LTN Staffing,
and the Sponsor.


 


“Management
Fee Addback” means all management fees due by Borrowers to Taglich Brothers, Inc. and its affiliates, whether paid
or accrued, in an amount not to exceed $175,000 in the aggregate in any fiscal year.


 


“Management
Fees” means, collectively, management, financial advisory, consulting, investment banking, broker’s, and similar
fees, together with costs, expenses and charges relating or pertaining thereto, paid to or accrued in favor of any Person.


 


“Management
Fee Subordination Agreement” means the Amended and Restated Subordination Agreement dated the date hereof among the
Company, Sponsor and the Lenders, pursuant to which the Management Fees payable under the Management Agreement are subordinated
to the prior payment and satisfaction of the Obligations, on the terms and subject to the conditions (and exceptions) set forth
therein, and any future amendments, restatements, modifications or supplements thereof or thereto.


 


“Material
Adverse Change” means, collectively or individually, any material adverse change in the business, financial condition,
operations, liabilities (fixed or contingent), assets, properties or prospects of the Companies taken as a whole.


 




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“Material
Adverse Effect” means, collectively and with respect to any event, occurrence, or condition of any kind or nature,
a material adverse effect on (i) the assets, liabilities, operations, profits, financial condition, business or prospects
of the Companies taken as a whole, (ii) the ability of any Company to perform its respective obligations under this Agreement
or any of the Loan Documents to which it is a party, or (iii) the validity or enforceability of this Agreement, any of the
other Loan Documents, or any of the rights and remedies of the Lenders hereunder or thereunder.


 


“Material
Agreements” has the meaning ascribed to it in Section 3.17.


 


“Maturity
Date” means May 31, 2015.


 


“Membership
Interest” means, collectively and in the context of a limited liability company, a member’s entire interest
in a limited liability company including, without limitation, such member’s right to share in income, gains, losses, deductions,
credits and similar items of, and to receive distributions from, such limited liability company pursuant to applicable law or the
applicable operating agreement or limited liability company agreement, as appropriate, and the right to vote or participate in
the management and operation and receive information pursuant to applicable law or the applicable operating agreement or limited
liability company agreement, as appropriate.


 


“Multiemployer
Plan” means a multiemployer pension plan as defined in ERISA §3(37) to which any Company or any Controlled Group
Member is or has been required to contribute subsequent to September 25, 1980.


 


“Non-Bankruptcy
Event of Default” means, collectively, any Event of Default other than a Bankruptcy Event of Default.


 


“OFAC”
has the meaning ascribed to it in Section 3.24(a).


 


“Obligations”
means, collectively, all liabilities, duties and obligations of the Companies to the Lenders with respect to any covenants, representations
or warranties herein or in the Senior Subordinated Notes and other Loan Documents, with respect to the principal of and interest
on the Senior Subordinated Loans, and all other present and future fixed and/or contingent obligations of the Companies to the
Lender hereunder and under the Loan Documents, including, without limitation, (i) obligations with respect to interest accruing
(or which would accrue but for §502 of the Bankruptcy Code) after the date of any filing by any Company of any petition in
bankruptcy or the commencement of any bankruptcy, insolvency or similar proceedings with respect to any Company, (ii) all fees,
expenses, indemnification obligations, and other amounts of whatever nature now or hereafter payable by the Companies (including,
without limitation, any amounts which accrue after the commencement of any bankruptcy, insolvency or similar proceedings with respect
to any Company, whether or not allowed or allowable as a claim under the Bankruptcy Code or an any other applicable debtor relief
law) pursuant to this Agreement or any other Loan Document, and (iii) all expenses of the Lender to which it has a right to
reimbursement under Section 9.3.


 


“Observation
Right” has the meaning ascribed to it in Section 6.14(a).


 




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“Opening-Day
Balance Sheet” means the pro-forma balance sheet required to be furnished by the Parent to the Lender pursuant to
Section 5.1(m).


 


“Organizational
Documents” means, collectively and with respect to any applicable Person, the articles of incorporation, the certificate
of incorporation, the by-laws, the certificate of formation, the certificate of organization, the limited liability company agreement,
the operating agreement, the certificate of partnership, the partnership agreement, or any other similar organizational and related
document of such Person.


 


“Parent”
has the meaning ascribed to it in the heading to this Agreement.


 


“Parent
Securities” means, collectively, any Units, securities convertible or exchangeable for Units or options, warrants
or other rights to acquire Units including, without limitation the Class A Units and the Class B Units.


 


“Partnership
Interests” means, collectively and in the context of a limited partnership, a partner’s entire interest in
a limited partnership (whether general or limited) including, without limitation, such partner’s right to share in income,
gains, losses, deductions, credits and similar items of, and to receive distributions from, such limited partnership pursuant to
applicable law or the applicable limited partnership agreement and the right to vote or participate in the management and operation
and receive information pursuant to applicable law or the applicable limited partnership agreement.


 


“Participant”
has the meaning ascribed to it in Section 9.6.


 


“PATRIOT
Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT Act of 2001), as amended from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.


 


“PBGC”
means the Pension Benefit Guaranty Corporation.


 


“Permitted
Debt” means, collectively, any and all Debt permitted under Section 7.1.


 


“Permitted
Encumbrances” means, collectively, (i) those Liens listed on Schedule 3.6, and (ii) those
Liens expressly permitted pursuant to Section 7.2.


 


“Permitted
Investments” means, collectively, (i) Investments in Cash Equivalents, (ii) the Investment evidenced by
the Purchase Transactions, (iii) the Investment by the Parent in the Membership Interests of LTN Staffing, (iv) the Investment
by LTN Staffing in the Membership Interests of BG Staffing, (v) the Investment by LTN Staffing and BG Staffing in the Capital Stock
of BG Personnel Services and BG Personnel, (v) the Investment by LTN in the Capital Stock of B G Staff Services and (vi) Cash Equivalent
Investments (as defined in the Senior Loan Agreement as in effect on the Closing Date).


 




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“Permitted
Payments” means, collectively, regularly scheduled payments of interest due and owing under the Senior Subordinated
Notes.


 


“Person”
means, collectively, an individual, a corporation, a partnership, a limited liability company, a joint venture, a trust or unincorporated
organization, a joint stock company or other similar organization, a government or any political subdivision thereof, or any other
legal entity.


 


“Prepayment
Premium Percentage” has the meaning ascribed to it in Section 2.8(b).


 


“Premises”
means, collectively, any real estate, improvements, and buildings in which any Company or any Subsidiary has any right, title,
or interest (whether as owner, lessee, or otherwise).


 


“Prime
Rate” means the prime rate of interest, as announced from time to time in the eastern edition of The Wall Street
Journal (or any successor publication or other reputable source of interest rate information if such publication ceases).


 


“Proposed
LTN Reorganization” means either (a) the merger of the Parent with and into LTN Staffing and the subsequent conversion
of LTN Staffing into a Reorganized Entity or (b) the conversion of LTN Staffing into a Reorganized Entity and the subsequent merger
of the Parent with and into such Reorganized Entity.


 


“Proposed
Registered Offering” means any registered offering of common stock by the stockholders of a Reorganized Entity resulting
from the Proposed LTN Reorganization.


 


“Purchase
Agreements” means, collectively, (i) the API Purchase Agreement, (ii) the BG Purchase Agreement, (iii) the Extrinsic
Purchase Agreement, (iv) the InStaff Purchase Agreement and (v) the JNA Purchase Agreement.


 


“Purchase
Transactions” means, collectively, (i) the API Purchase Transaction, (ii) the BG Purchase Transaction, (iii) the
Extrinsic Purchase Transaction, (iv) the InStaff Purchase Transaction and (v) the JNA Purchase Transaction.


 


“Put”
means the put rights of each Lender under Section 6.16.


 


“Put
Date” means the date on which a Put Notice is received by the Parent from an Exercising Lender pursuant hereto.


 


“Put
Notice” has the meaning ascribed to it in Section 6.16(a).


 




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“Put
Period” means the time period during which a Put can be exercised, which shall include each of the following time
periods: (i) simultaneously with the occurrence of a Change of Control or at any time within six (6) months following a Change
of Control; (ii) simultaneously with the occurrence of a Liquidity Event; (iii) upon the occurrence of an Event of Default
that gives rise to an acceleration of the Senior Subordinated Notes hereunder and at any time thereafter; (iv) upon the acceleration
of the Senior Debt and at any time thereafter; (v) with respect to the SubDebt Units, on or at any time after the sixth (6th) anniversary
of the closing of the Existing Senior Subordinated Loans under and pursuant to the Existing Purchase Agreement and (v) with
respect to the Warrants, on or at any time within six (6) month following the Maturity Date.


 


“Put
Price” has the meaning ascribed to it in Section 6.16(a).


 


“Put
Securities” has the meaning ascribed to it in Section 6.16(a).


 


“Redocumentation”
has the meaning ascribed to it in the Background provisions hereof.


 


“Release”
means, collectively, any spill, leak, emission, discharge or the pumping, pouring, emptying, disposing, injecting, escaping, leaching
or dumping of a Hazardous Substance.


 


“Remedial
Actions” means:


 


(a)      clean-up
or removal of Hazardous Substances;


 


(b)      such
actions as may be necessary to monitor, assess, or evaluate the Release or threatened Release of Hazardous Substances;


 


(c)      proper
disposal or removal of Hazardous Substances;


 


(d)      the
taking of such other actions as may be necessary to prevent, minimize, or mitigate the damages caused by a Release or threatened
Release of Hazardous Substances to the public health or welfare or to the environment; and


 


(e)      the
providing of emergency assistance after a Release.


 


Remedial Actions include, but
are not limited to, such actions at the location of a Release as: storage; confinement; perimeter protection using dikes, trenches,
or ditches; clay cover; neutralization; clean-up of Hazardous Substances or contaminated materials; recycling or reuse; diversion;
destruction; segregation of reactive wastes; dredging or excavations; repair or replacement of leaking containers; collection of
leachate and runoff; onsite treatment or incineration; providing alternative water supplies; and any monitoring reasonably required
to assure that such actions protect the public health and welfare and the environment.


 


“Reorganization”
means reorganization as defined in ERISA §4241(a).


 


“Reorganized
Entity” means a Delaware corporation incorporated by the Parent and LTN Staffing in connection with a Proposed LTN
Reorganization and/or a Proposed Registered Offering.


 




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“Replacement
Senior Debt” has the meaning ascribed to it in Section 7.1(c).


 


“Replacement
Senior Lender” has the meaning ascribed to it in Section 7.1(c).


 


“Replacement
Senior Loan Documents” has the meaning ascribed to it in Section 7.1(c).


 


“Reportable
Event” means with respect to any Employee Pension Plan, an event described in ERISA §4043(b).


 


“Representative”
has the meaning ascribed to it in Section 8.8(a).


 


“Required
Lenders” has the meaning ascribed to it in Section 8.8(d).


 


“Restricted
Payment” means, with respect to any applicable Person, any dividend or other distribution (whether in cash, securities
or other property) with respect to any class of Membership Interest or Capital Stock of a Person, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, repurchase,
retirement, acquisition, cancellation or termination of any Membership Interest or Capital Stock of a Person or any option, warrant
or other right to acquire any Membership Interest (or Capital Stock) of a Person.


 


“Sanctioned
Country” means a country subject to a sanctions program identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/-sanctions/index/html, or as otherwise published from time to time.


 


“Sanctioned
Person” means (i) a Person named on the list of Specially Designated Nationals or Blocked Persons maintained
by OFAC available at http://www.treas.gov/offices/-eotffc/ofac/sdn/index/html, or as otherwise published from time to time, or
(ii) (A) an agency of the government of a Sanctioned Country, (B) an organization controlled by a Sanctioned Country,
or (C) a Person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.


 


“SBA”
means the United States Small Business Administration, and any successor agency.


 


“SBA
Forms” means, collectively, SBA Forms 480 (Size Status Declaration), 652 (Assurance of Compliance), 1031 (Part A
and Part B) (Portfolio Finance Report), and any other forms required to be obtained by the Lenders under the SBIC Act, as
in effect on the Closing Date and to the extent applicable to the Transactions.


 


“SBIC
Act” means the Small Business Investment Act of 1958, as amended, and the regulations promulgated thereunder, including
13 C.F.R. Section 107.


 




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“Securities”
has the meaning ascribed to it in Section 4.1.


 


“Securities
Act” means the Securities Exchange Act of 1933, as amended, and all rules and regulations promulgated thereunder.


 


“Sellers”
means, individually and collectively, as appropriate, (i) API, (ii) BG Sellers, (iii) Extrinsic, (iv) InStaff Sellers, and (v)
JNA.


 


“Senior
Debt” means, collectively, all Debt of the Companies to the Senior Lender evidenced by the Senior Loan Documents.


 


“Senior
Debt Service” means, for any applicable period, the sum of (i) the aggregate amount of interest accrued by the Companies
during such period in respect of the Senior Debt and (ii) the principal portion of the Senior Debt payable during such period,
determined in accordance with GAAP.


 


“Senior
Funded Indebtedness” means all Debt of the Borrowers other than the Senior Subordinated Loans and any other Debt
which is subordinated to the Senior Debt.


 


“Senior
Funded Indebtedness to EBITDA Ratio” means the ratio of (a) consolidated Senior Funded Indebtedness (including, without
limitation, Earn Out Payables, Deferred Debt Payables and Letter of Credit Obligations), to (b) consolidated EBITDA plus the Management
Fee Addback.


 


“Senior
Lender” means Fifth Third Bank, an Ohio banking corporation and successor by merger to Fifth Third Bank, a Michigan
banking corporation.


 


“Senior
Lender Loan Document Default” has the meaning ascribed to it in Section 8.1(i).


 


“Senior
Lender Subordination Agreement” means the Subordination and Intercreditor Agreement dated October 17, 2007 by and
among the Companies, the Lenders, and the Senior Lender, pursuant to which the payment of the Senior Subordinated Loans is subordinated
to the prior payment of the Senior Debt, on the terms and conditions set forth therein, as modified and amended through the date
hereof, including, without limitation, as modified and amended pursuant to the terms and conditions of the Senior Loan Fifth Amendment
to Subordination Agreement, and any amendments, restatements, modifications or supplements thereof or thereto.


 


“Senior
Loan Agreement” means the Loan and Security Agreement dated May 24, 2010 between the Companies and the Senior Lender,
as modified and amended through the date hereof, including, without limitation, as modified and amended pursuant to the terms and
conditions of the Senior Loan Seventh Amendment, and any future amendments, restatements, modifications or supplements thereof
or thereto permitted hereunder.


 




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“Senior
Loan Documents” means, collectively, any and all agreements, documents, and instruments evidencing, relating and
pertaining to the Senior Debt described on Schedule “B” attached hereto, and any future amendments, restatements,
modifications or supplements thereof or thereto permitted hereunder.


 


“Senior
Loan Fifth Amendment to Subordination Agreement” means the Fifth Amendment to Subordination and Intercreditor Agreement
dated the date hereof among the Companies, the Lenders and the Senior Lender, pursuant to which the Companies, the Lenders and
the Senior Lender shall agree to modify and amend certain of the terms of the Senior Loan Subordination Agreement.


 


“Senior
Loan Seventh Amendment” means the Seventh Amendment to Loan and Security Agreement and Other Loan Documents dated
the date hereof between the Companies and the Senior Lender, pursuant to which the Companies and the Senior Lender shall agree
to modify and amend certain of the terms of the Senior Loan Agreement.


 


“Senior
Subordinated Loans” means, collectively, the Debt evidenced by the Senior Subordinated Notes.


 


“Senior
Subordinated Notes” and “Senior Subordinated Note” means, collectively or individually,
as appropriate, (i) the Brookside Senior Subordinated Note, (ii) the Brookside II Senior Subordinated Note and (iii) the
Calvert Senior Subordinated Notes.


 


“Solvent”
means, as at any applicable time and for any Person, that at such time (i) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the normal course of business, (ii) such Person
does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as
such debts and liabilities mature in their ordinary course, (iii) such Person is not engaged in a business or a transaction,
and is not about to engage in a business or a transaction, for which such Person’s assets would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage,
(iv) the fair value of the assets of such Person is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, and (v) the present fair saleable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured.
In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected
to become an actual or matured liability.


 


“Sponsor”
means Taglich Private Equity, LLC, a Delaware limited liability company.


 


“SubDebt
Units” means, collectively, (i) the Brookside SubDebt Units and (ii) the Calvert SubDebt Units.


 




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“Subsidiary”
means, with respect to any Person, any corporation or other Person of which more than fifty percent (50%) of the outstanding capital
stock (or other securities) having ordinary voting power to elect a majority of the board of directors, board of managers or other
governing body of such Person, is at the time, directly or indirectly, owned or controlled by such Person and one or more of its
other Subsidiaries or a combination thereof (irrespective of whether, at the time, securities of any other class or classes of
any such corporation or other Person shall or might have voting power by reason of the happening of any contingency). When used
without reference to a parent entity, the term “Subsidiary” shall be deemed to refer to a Subsidiary
of the Company.


 


“Suretyship”
means the Second Amended and Restated Guaranty and Suretyship dated the date hereof executed and delivered by the Parent in favor
of the Lenders, pursuant to which the Parent guaranteed and became surety for the prompt payment and performance of the Obligations,
and any future amendments, restatements, modifications or supplements thereof or thereto.


 


“Taglich
Members” has the meaning ascribed to it in the LLC Agreement.


 


“Taxes”
has the meaning ascribed to it in Section 2.9(a).


 


“Tax
Distributions” means distributions authorized by the Board and that are made pursuant to the provisions of Section
7.1(a) of the LLC Agreement as in effect on the Closing Date. 


 


“Termination
Date” means May __, 2013.


 


“Total
Debt” means, as of any time, the aggregate of all liabilities, reserves and any other items howsoever arising, whether
primary, secondary, direct, contingent, fixed or otherwise, which would be listed as a liability on a balance sheet of the Companies
in accordance with GAAP as now in effect, and in any event including the Liabilities, all indebtedness or liabilities of any other
person which the Companies may guaranty or otherwise be responsible or liable for (other than any liability arising out of the
endorsement of commercial paper for deposit or collection in the ordinary course of business), all indebtedness and liabilities
secured by any lien or any security interest on any property or assets of the Companies, whether or not the same would be classified
as a liability on a balance sheet, the liability of the Companies in respect of banker's acceptances and the aggregate over the
remaining unexpired term of all leases which should have been or must be, in accordance with GAAP, recorded as capital leases in
respect of which a Company is liable as a lessee.


 


“Total
Voting Power” means, with respect to any Person, the total number of votes that may be cast in the election of directors
(or similar governing body, such as the Board in the case of the Parent) of such Person at any meeting of stockholders, members
or similar security holders of such Person if all securities entitled to vote in the election of directors (or similar governing
body) of such Person (on a Fully-Diluted Basis) were present and voted at such meeting (other than votes that may be cast only
upon the happening of a contingency).


 




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“Transactions”
means, collectively, the loan and related transactions described herein or contemplated hereby (including the InStaff Purchase
Transaction, the Redocumentation and the amendments and modifications to the Senior Loan Documents).


 


“UCC”
means the Uniform Commercial Code, as modified, amended, revised, supplemented and restated from time to time.


 


“Units”
means a Membership Interest in the Parent, as set forth in the LLC Agreement, consisting only of Class A Units and Class B Units.


 


“Warrant”
and “Warrants” means, collectively or individually, as appropriate, (i) the Brookside II Warrant
and (ii) the Calvert Warrant.


 


“Warrant
Units” means, collectively, (i) the Brookside II Warrant Units and (ii) the Calvert Warrant Units.


 


“Withdrawal
Liability” means any withdrawal liability as defined in ERISA §4201.


 


1.3 Accounting
Terms. Except as specifically provided otherwise in this Agreement, all accounting terms used herein that have meanings
given to them under GAAP and are not specifically defined herein shall have the meanings customarily given them under GAAP. Notwithstanding
anything to the contrary in this Agreement, for purposes of calculating the Financial Covenants, all accounting determinations
and computations hereunder shall be made in accordance with GAAP as in effect as of the date of this Agreement applied on a basis
consistent with the application used in preparing the most recent consolidated financial statements of the Parent and its Subsidiaries.
In the event that any changes in GAAP after such date are required to be applied to the Parent and its Subsidiaries and would affect
the computation of the Financial Covenants, such changes shall be followed only from and after the date this Agreement shall have
been amended to take into account any such changes and the parties shall in such instance negotiate in good faith an amendment
to this Agreement to reflect such changes in GAAP and the computation of the Financial Covenants consistent with the original intent,
objective and purpose of the Financial Covenants as in effect on the Closing Date.


 


SECTION
2. AMOUNT AND TERMS OF SENIOR SUBORDINATED LOANS.


 


2.1 Purchase
of Securities by Brookside II.


 


(a) Agreement
to Purchase and Sell Brookside II Senior Subordinated Note and Brookside II Warrant. Subject to the terms and conditions
of this Agreement, on the Closing Date, Brookside II agrees to purchase and accept delivery of (i) a Senior Subordinated Note
in the principal amount of Four Million Dollars ($4,000,000.00) from the Borrowers in the form of Schedule 2.1(a)(i)
and (ii) a Warrant from the Parent in the form of Schedule 2.1(a)(ii).


 




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(b) Funding
Procedure. Funding of the Brookside II Senior Subordinated Loan by Brookside II under Section 2.1(a)(i) shall
be made by wire transfer of immediately available funds to such account(s) as may be designated in writing by the Borrowers to
Brookside II on or prior to the Closing Date.


 


(c) Use of Proceeds.
Proceeds of the Brookside II Senior Subordinated Loan shall be used by the Borrowers for the following purposes: (i) completing
the InStaff Acquisition; (ii) working capital; and (iii) transaction costs arising in connection with the Transactions;
provided, that no proceeds of the Brookside II Senior Subordinated Loan shall be used by the Borrowers to repay any Debt of any
Company without the prior written consent of the Lenders.


 


(d) Repayment
of Senior Subordinated Loan. The Brookside II Senior Subordinated Loan shall bear interest (including at the Default Rate
after the occurrence of an Event of Default, as more fully provided in the Brookside II Senior Subordinated Note), be repayable
as to interest and principal, mature and be subject to such other terms and conditions as are set forth in the Brookside II Senior
Subordinated Note, the provisions of which are incorporated herein by reference thereto as if fully set forth herein, and in this
Section 2.


 


(e) Allocation
of Purchase Price; Original Issue Discount. Having considered all facts relevant to the determination of the value of the
Brookside II Senior Subordinated Note and the Brookside II Warrant, including (among other things) the leveraged nature of the
Companies’ capitalization and the nature of their business, the Companies and Brookside II have concluded and hereby agree
and covenant to allocate the purchase price of the Brookside II Senior Subordinated Note and the purchase price of the Brookside
II Warrant between the Brookside II Senior Subordinated Note and the Brookside II Warrant in the manner set forth in Schedule 2.1(e)
for purposes of Section 1273(c)(2) of the Code and Section 1.1273-2(h)(2) of the Treasury Regulations promulgated thereunder.
The Companies and Brookside II agree that this Section 2.1(e) constitutes the provision of relevant information to
Brookside II by the Companies in a reasonable manner for the purposes of Section 1.1275-2(e) of the Treasury Regulations.
In the event that the Brookside II Warrant is adjusted in accordance with the provisions thereof such that it is appropriate to
recalculate the amount of original issue discount with respect to the Brookside II Senior Subordinated Note, Brookside II and the
Companies shall negotiate in good faith to agree upon such recalculated amount of original issue discount. Neither the Companies
nor Brookside II will take any position in its tax return that is inconsistent with the foregoing. The Companies will provide Brookside
II with any information necessary for it to report its income from this transaction in accordance herewith.


 


2.2 Purchase
of Securities by Calvert.


 


(a) Agreement
to Purchase and Sell Calvert Senior Subordinated Note and Calvert Warrant. Subject to the terms and conditions of this
Agreement, on the Closing Date, Calvert agrees to purchase and accept delivery of (i) a Senior Subordinated Note in the principal
amount of Two Million Dollars ($2,000,000.00) from the Borrowers in the form of Schedule 2.2(a)(i) and (ii)
a Warrant from the Parent in the form of Schedule 2.2(a)(ii).


 




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(b) Calvert
Senior Subordinated Note No. 1; Calvert Accrued PIK Interest Payment. In connection with the Redocumentation and the
other Transactions, the Borrowers hereby agree to (i) execute and deliver a Senior Subordinated Note in the principal amount of
Four Million Six Hundred Ninety-Six Thousand One Hundred One 09/100 Dollars ($4,696,101.09) in the form of Schedule 2.2(b),
which shall amend, restate, supersede and replace the Calvert Existing Senior Subordinated Note and evidence the Calvert Senior
Subordinated Loan No. 1, and (ii) repay a portion of the PIK Interest in an aggregate amount equal to Sixty-Nine Thousand Five
Hundred Dollars ($69,500.00) that has accrued under and pursuant to the Calvert Existing Senior Subordinated Note No. 1 since January
1, 2013 (the “Calvert Accrued PIK Interest Payment”), which Calvert Accrued PIK Interest Payment shall
be due and payable by the Borrowers in two (2) equal payments of Thirty-Four Thousand Seven Hundred Fifty Dollars ($34,750.00)
on July 1, 2013 and October 1, 2013 in accordance with the provisions of the Calvert Senior Subordinated Note No. 1. The Borrowers
acknowledge and agree that the execution of the Calvert Senior Subordinated Note No. 1 shall not relieve the Borrowers from any
duties, obligations or liabilities which have accrued under the Calvert Existing Senior Subordinated Note. Upon execution and delivery
of the Calvert Senior Subordinated Note No. 1 pursuant hereto, Calvert agrees to return the original Calvert Existing Senior
Subordinated Note to the Borrowers.


 


(c) Funding
Procedure. Funding of the Calvert Senior Subordinated Loan No. 2 by Calvert under Section 2.2(a)(i) shall
be made by wire transfer of immediately available funds to such account(s) as may be designated in writing by the Borrowers to
Calvert on or prior to the Closing Date.


 


(d) Use of Proceeds.
Proceeds of the Calvert Senior Subordinated Loan No. 2 shall be used by the Borrowers for the following purposes:
(i) completing the InStaff Acquisition; (ii) working capital; and (iii) transaction costs arising in connection
with the Transactions; provided, that no proceeds of the Calvert Senior Subordinated Loan No. 2 shall be used by the Borrowers
to repay any Debt of any Company without the prior written consent of the Lenders.


 


(e) Repayment
of Calvert Senior Subordinated Loans. The Calvert Senior Subordinated Loans shall bear interest (including at the Default
Rate after the occurrence of an Event of Default, as more fully provided in the Calvert Senior Subordinated Notes), be repayable
as to interest and principal, mature and be subject to such other terms and conditions as are set forth in the Calvert Senior Subordinated
Notes, the provisions of which are incorporated herein by reference thereto as if fully set forth herein, and in this Section
2.


 




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(f) Allocation
of Purchase Price; Original Issue Discount. Having considered all facts relevant to the determination of the value of the
Calvert Senior Subordinated Note No. 2 and the Calvert Warrant, including (among other things) the leveraged nature of the Companies’
capitalization and the nature of their business, the Companies and Calvert have concluded and hereby agree and covenant to allocate
the purchase price of the Calvert Senior Subordinated Note No. 2 and the purchase price of the Calvert Warrant between the Calvert
Senior Subordinated Note No. 2 and the Calvert Warrant in the manner set forth in Schedule 2.2(f) for purposes
of Section 1273(c)(2) of the Code and Section 1.1273-2(h)(2) of the Treasury Regulations promulgated thereunder. The
Companies and Calvert agree that this Section 2.2(f) constitutes the provision of relevant information to Calvert by
the Companies in a reasonable manner for the purposes of Section 1.1275-2(e) of the Treasury Regulations. In the event that
the Calvert Warrant is adjusted in accordance with the provisions thereof such that it is appropriate to recalculate the amount
of original issue discount with respect to the Calvert Senior Subordinated Note No. 2, Calvert and the Companies shall negotiate
in good faith to agree upon such recalculated amount of original issue discount. Neither the Companies nor Calvert will take any
position in its tax return that is inconsistent with the foregoing. The Companies will provide Calvert with any information necessary
for it to report its income from this transaction in accordance herewith.


 


2.3 Purchase
of Securities by Brookside.


 


(a) Brookside
Senior Subordinated Note; Brookside Accrued PIK Interest Payment. In connection with the Redocumentation and the other
Transactions, the Borrowers hereby agree to (i) execute and deliver a Senior Subordinated Note in the principal amount of Four
Million Six Hundred Ninety-Six Thousand One Hundred One 09/100 Dollars ($4,696,101.09) in the form of Schedule 2.3(a),
which shall amend, restate, supersede and replace the Brookside Existing Senior Subordinated Note and evidence the Brookside Senior
Subordinated Loan, and (ii) repay a portion of the PIK Interest in an aggregate amount equal to Sixty-Nine Thousand Five Hundred
Dollars ($69,500.00) that has accrued under and pursuant to the Brookside Existing Senior Subordinated Note since January 1, 2013
(the “Brookside Accrued PIK Interest Payment”), which Brookside Accrued PIK Interest Payment shall be
due and payable by the Borrowers in two (2) equal payments of Thirty-Four Thousand Seven Hundred Fifty Dollars ($34,750.00) on
July 1, 2013 and October 1, 2013 in accordance with the provisions of the Brookside Senior Subordinated Note. The Borrowers acknowledge
and agree that the execution of the Brookside Senior Subordinated Note shall not relieve the Borrowers from any duties, obligations
or liabilities which have accrued under the Brookside Existing Senior Subordinated Note. Upon execution and delivery of the Brookside
Senior Subordinated Note pursuant hereto, Brookside agrees to return the original Brookside Existing Senior Subordinated Note to
the Borrowers.


 


(b) Repayment
of Brookside Senior Subordinated Loans. The Brookside Senior Subordinated Loan shall bear interest (including at the Default
Rate after the occurrence of an Event of Default, as more fully provided in the Brookside Senior Subordinated Note), be repayable
as to interest and principal, mature and be subject to such other terms and conditions as are set forth in the Brookside Senior
Subordinated Note, the provisions of which are incorporated herein by reference thereto as if fully set forth herein, and in this
Section 2.


 


2.4 Computation
of Interest. Interest on the Senior Subordinated Notes and other Obligations shall be calculated and paid based upon a
three hundred sixty (360)-day year and the actual number of days elapsed.


 




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2.5 Maximum
Legal Rate. Notwithstanding anything contained herein or in any other Loan Documents, the Borrowers shall not be obligated
to pay and the Lenders shall not collect interest on any Obligation at a rate in excess of the maximum permitted by law or the
maximum rate that will not subject the Lenders to any civil or criminal penalties. If, because of the acceleration of maturity,
the payment of interest in advance or any other reason, the Borrowers are required, under the provisions of any Loan Document or
otherwise, to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately
and automatically be reduced to such maximum rate, and any payment made in excess of such maximum rate, together with interest
thereon at the rate provided herein from the date of such payment, shall be immediately and automatically applied to the reduction
of the outstanding balance of the Obligations as of the date on which such excess payment was made. If the amount to be so applied
to reduction of the outstanding balance of the Obligations exceeds the outstanding balance thereof, the amount of such excess shall
be refunded to the Borrowers by the Lender receiving the excess payment.


 


2.6 Payments.


 


(a) All payments (including
prepayments) by the Borrowers hereunder shall be made to each Lender at its address set forth in Section 9.2, or such
other place or places as such Lender may direct, prior to 10:00 A.M. on the date of payment, in lawful money of the United
States of America, and in immediately available funds.


 


(b) Whenever any payment
to be made hereunder shall be stated to be due on a day other than a Business Day, such payment may be made on the next succeeding
Business Day, provided however that such extension of time shall be included in the computation of interest due in conjunction
with such payment or other fees due hereunder, as the case may be.


 


2.7 Application
of Payments; Recovery of Payments.


 


(a) All payments in
respect of the Obligations shall be applied (i) first to the payment in full of any costs incurred by the Representative
and the Lenders in the collection of any Obligation, including (without limitation) reasonable attorneys’ fees, (ii) then
to the payment in full of accrued, unpaid interest on the Senior Subordinated Notes, (iii) then to the reduction of
the unpaid principal balance on the Senior Subordinated Notes and (iv) finally to the reduction of the outstanding
balance of any other Obligation.


 


(b) Each Company agrees
that to the extent it makes a payment or payments to or for the account of any Lender, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver
or any other party under any bankruptcy, insolvency or similar state or federal law, common law or equitable cause, then, to the
extent of such payment or repayment, the Obligations intended to be satisfied shall be revived and continued in full force and
effect as if such payment had not been received.


 






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2.8 Optional
and Mandatory Prepayments of Principal.  


 


(a) Subject in all
respects to the provisions of Sections 2.8(b) and 2.8(c), the Borrowers at any time and from time to time may
voluntarily prepay the Senior Subordinated Loans, in whole or in part, upon at least five (5) Business Days’ advance written
notice to the Lender of such prepayment and not later than 2:00 P.M. on the date of prepayment. Prepayments of principal under
the Senior Subordinated Loans shall be in a minimum amount of Two Hundred Fifty Thousand Dollars ($250,000.00) and accompanied
by accrued and unpaid interest on the prepaid amount and applied. Subject to the provisions of Section 8.9, each prepayment
of the Senior Subordinated Loans pursuant to the this Section 2.8(a) shall be applied against scheduled payments
of principal in the inverse order of maturity and shall not postpone or reduce any regularly scheduled payment of principal or
interest thereon as follows: first, to the remaining principal installments of the Brookside Senior Subordinated Note and
the Calvert Senior Subordinated Note No. 1, on a pro-rata basis between the Brookside Senior Subordinated Loan and the Calvert
Senior Subordinated Loan No. 1 and second, to the remaining principal installments of the Brookside II Senior Subordinated
Note and the Calvert Senior Subordinated Note No. 2, on a pro-rata basis between the Brookside II Senior Subordinated Loan and
the Calvert Senior Subordinated Loan No. 2.


 


(b) As a condition
to any prepayment of principal under the Brookside II Senior Subordinated Loan and the Calvert Senior Subordinated Loan No. 2,
whether such prepayment is voluntary or involuntary (including a prepayment resulting from a Liquidity Event or the occurrence
of an Event of Default and an acceleration of the Obligations, as provided in Section 8), the Borrowers shall pay to
Brookside II and Calvert a prepayment privilege fee equal to a percentage of the principal amount prepaid (the “Prepayment
Premium Percentage”), determined by reference to the table set forth below:


 


	Year (12 Months)
 Following
 Closing Date	 	Prepayment
 Premium
 Percentage	 
	 	 	 	 
	First Year	 	 	1	%
	Second Year	 	 	0.5	%
	Third Year (and thereafter)	 	 	0	%



 


(c) Notwithstanding
anything contained herein to the contrary, the entire unpaid principal balance, all accrued and unpaid interest and other sums
in respect of the Senior Subordinated Loans shall, at the option of the Lenders, immediately become due and payable upon the occurrence
of a Liquidity Event.


 


(d) Notwithstanding
anything contained herein to the contrary, (y) a prepayment privilege fee shall not be required to be paid under Section 2.8(b)
and (z) the Lenders shall sell and assign all of their right, title and interest in and to the Warrants and any Warrant Units issuable
thereunder for a sum of One Dollar ($1.00), upon the full and indefeasible repayment of the Senior Subordinated Loans and all other
Obligations (including, without limitation, the Obligations relating to the Put set forth in Section 6.16(a))
if, and only to the extent, such repayment of the Senior Subordinated Loans and the other Obligations results from the Companies’
decision to repay all such Obligations due to the unreasonably withholding of the Lenders’ consent to either a Proposed LTN
Reorganization or a Proposed Registered Offering within twelve (12) months following the Closing Date, provided that,
it shall not be unreasonable for the Lenders to withhold their consent to either a Proposed LTN Reorganization or a Proposed Registered
Offering, if (i) a Default or Event of Default has occurred or is continuing hereunder, (ii) such Proposed LTN Reorganization and/or
Proposed Registered Offering is not approved by the Senior Lender or any Replacement Senior Lender, (iii) the effect of such Proposed
LTN Reorganization and/or Proposed Registered Offering results in the Lenders holding a percentage of Capital Stock (on a fully-diluted
basis) in the Reorganized Entity in an amount less than the percentage of Parent Securities (on a Fully-Diluted Basis) currently
held by the Lenders on the date hereof, (iv) the Organizational Documents of the Reorganized Entity does not contain similar board
rights, tag-along rights, put rights and/or preemptive rights currently provided to the Lenders in the LLC Agreement; and (v) the
Reorganized Entity fails to become a party to this Agreement, the Senior Subordinated Notes and other Loan Documents (by joinder
hereto and thereto) immediately upon such Proposed LTN Reorganization in order to cause such Reorganized Entity to jointly and
severally become liable, with the Companies for the Obligations as if such Reorganized Entity was an original Company hereunder.


 




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2.9 Taxes.


 


(a) All payments of
principal and interest on the Senior Subordinated Notes and all other amounts payable hereunder shall be made free and clear of
and without deduction for any present or future income, excise, stamp, documentary, property or franchise taxes and other taxes,
fees, duties, levies, withholdings or other charges of any nature whatsoever imposed by any taxing authority, excluding (i) taxes
imposed on or measured by a Lender’s net income by the United States of America or by the jurisdiction under which a Lender
is organized or conducts business, and (ii) any branch profits taxes imposed on a Lender by the United States of America or
by any jurisdiction described in clause (i) (all non-excluded items being called “Taxes”).
If any withholding or deduction from any payment to be made by the Borrowers hereunder to the Lenders is required in respect of
any Taxes pursuant to any applicable law, then the Borrowers shall: (i) pay directly to the relevant authority the full amount
required to be so withheld or deducted; (ii) promptly forward to the Lenders a copy of an official receipt or other documentation
satisfactory to the Lenders evidencing such payment to such authority; and (iii) pay to the Lenders for the account of the
Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by the Lenders shall
equal the full amount the Lenders would have received had no such withholding or deduction been required. If any Taxes are directly
asserted against the Lenders with respect to any payment received by the Lender hereunder, the Lenders may pay such Taxes and the
Borrowers shall promptly pay within five (5) days of receipt of notice from the Lenders, accompanied by documentation evidencing
payment, such additional amounts (including any penalty, interest or expense) as is necessary in order that the net amount received
by the Lenders after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Lender
would have received had such Taxes not been asserted.


 


(b) If any Borrower
fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Lenders the required receipts or other
required documentary evidence, the Borrowers shall indemnify the Lenders for any incremental Taxes, interest or penalties that
may become payable by the Lenders as a result of any such failure.


 


2.10 Closing
Fees.


 


(a) For and in consideration
of the Brookside II Senior Subordinated Loan, the Borrowers shall pay a non-refundable closing fee to Brookside II in the amount
of Eighty Thousand Dollars ($80,000.00) (the “Brookside II Facility Fee”), which Brookside II Facility
Fee shall be due and payable by the Borrower within thirty (30) days following the Closing Date.


 




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(b) For and in consideration
of the Calvert Senior Subordinated Loan No. 2, the Borrowers shall pay a non-refundable closing fee to Calvert in the amount of
Forty Thousand Dollars ($40,000.00) (the “Calvert Facility Fee”), which Calvert Facility Fee shall be
due and payable by the Borrower within thirty (30) days following the Closing Date.


 


2.11 Replacement
of Senior Subordinated Notes. Upon receipt of evidence satisfactory to the Borrowers of the loss, theft, destruction or
mutilation of a Senior Subordinated Note and, if requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the Borrowers, or, in the case of any such mutilation,
upon surrender and cancellation of such Senior Subordinated Note, the Borrowers will issue a new Senior Subordinated Note, of like
tenor and amount and dated the date to which interest has been paid, in lieu of such lost, stolen, destroyed or mutilated Senior
Subordinated Note; provided, however, if the Senior Subordinated Note of which any Lender or any “qualified
institutional buyer” as defined in Rule 144A under the Securities Act, or any other institutional investor of similar
standing is the holder is lost, stolen or destroyed, the affidavit of an authorized partner or officer of such holder setting forth
the circumstances with respect to such loss, theft or destruction shall be accepted as satisfactory evidence thereof, and no indemnification
bond or other security shall be required as a condition to the execution and delivery by the Borrowers of a new Senior Subordinated
Note in replacement of such lost, stolen or destroyed Senior Subordinated Note other than the holder’s written agreement
to indemnify the Borrowers as aforesaid. Any and all references herein and in the other Loan Documents to the Senior Subordinated
Notes shall include any Senior Subordinated Note issued pursuant hereto in replacement thereof.


 


SECTION
3. REPRESENTATIONS AND WARRANTIES OF COMPANIES.


 


To induce the Lenders
to enter into this Agreement and complete the Transactions, the Companies jointly and severally represent and warrant, as to themselves
and their Subsidiaries (as appropriate), to the Lenders that (as of the Closing Date and after giving effect to the InStaff Purchase
Transaction, but subject to the information set forth on the Schedules hereto):


 


3.1 Organization
and Qualification.


 


(a) Each of the Parent,
LTN Staffing, and BG Staffing is a limited liability company duly formed, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified as a foreign limited liability company and in good standing under the laws of each
other jurisdiction in which the conduct of its business or the ownership of its assets requires such qualification and in which
the failure to qualify could reasonably be expected to have a Material Adverse Effect.


 




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(b) Each of BG Personnel
Services and BG Personnel is a limited partnership duly formed, validly existing and in good standing under the laws of the State
of Texas, and is duly qualified as a foreign limited partnership and in good standing under the laws of each jurisdiction in which
the conduct of its business or the ownership of its assets requires such qualification and in which the failure to qualify could
reasonably be expected to have a Material Adverse Effect.


 


(c) B G Staff Services
is a corporation duly incorporated validly existing and in good standing under the laws of the State of Texas, and is duly qualified
as a foreign corporation and in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership
of its assets requires such qualification and in which the failure to qualify could reasonably be expected to have a Material Adverse
Effect.


 


(d) Parent does not
and will not have any Subsidiaries other than the Borrowers and any Future Subsidiaries subject to the Companies compliance with
the provisions of Section 6.11.


 


(e) LTN Staffing does
not and will not have any Subsidiaries other than BG Staffing.


 


(f) BG Staffing does
not and will not have any Subsidiaries other than BG Personnel Services, BG Personnel and B G Staff Services.


 


(g) The sole and exclusive
purpose of the Parent is to serve as a holding company for all of the Membership Interests of LTN Staffing.


 


3.2 Power and
Authority. Each Company has the limited liability company, the limited partnership or the corporate power, as appropriate,
to execute, deliver and perform under, the Loan Documents to which it is a party, to borrow under this Agreement and grant the
Liens required hereby and has taken all necessary corporate, limited liability company or partnership action, as appropriate, to
authorize (i) the Transactions on the terms and conditions of this Agreement, (ii) the issuance of the Senior Subordinated
Notes and the Warrants and (iii) the execution and delivery of, and performance under, the Loan Documents. No consent of any
other party (including members, partners and/or stockholders of any Company, as appropriate) and no consent, license, approval
or authorization of, or registration or declaration with, any governmental authority, bureau or agency is required in connection
with the execution, delivery, performance, validity or enforceability of the Loan Documents or completion of the Transactions,
which has not been obtained on or prior to the Closing Date.


 


3.3 Enforceability.
The Loan Documents to which each Company is a party, when executed and delivered to Lenders pursuant to the provisions of this
Agreement, will constitute valid obligations of such Company which is a party thereto legally binding upon it and enforceable in
accordance with their respective terms, except as enforceability of the foregoing may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting the enforcement of creditors’ rights.


 


3.4 Conflict
with Other Instruments. The execution and delivery of, and performance under, the Loan Documents to which each Company
is a party will not violate or contravene any provision of any existing law or regulation or decree of any court, governmental
authority, bureau or agency having jurisdiction over any Company or any Subsidiary, or any properties or Organizational Documents
(including the LLC Agreement) of any Company or any Subsidiary, or of any mortgage, indenture, security agreement, contract, undertaking
or other agreement to which any Company or any Subsidiary is a party or will be a party by reason of the completion of the Transactions
or which purports to be binding upon them or any of their respective properties or assets, and will not result in the creation
or imposition of any Lien on or in any of their respective properties or assets pursuant to the provisions of any such mortgage,
indenture, security agreement, contract, undertaking or other agreement.


 






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3.5 Litigation.
Except as set forth on Schedule 3.5, no actions, suits or proceedings before any court or governmental department
or agency (whether or not purportedly on behalf of any Company or any Subsidiary) are pending or, to the knowledge of any Company,
threatened (a) with respect to any of the Transactions or (b) against or affecting the InStaff Sellers or the InStaff
Selling Parties, the assets acquired from the InStaff Sellers in connection with the InStaff Acquisition, any Company or any Subsidiary
or any of their respective properties.


 


3.6 Title to
Assets; Leases. Each Company and Subsidiary has good and marketable title in, fee to, or valid, enforceable leases of,
the Premises and all other property owned, leased, or otherwise used by such Company and Subsidiary, and good and marketable title
to all of its other assets now carried on its books, or used by it, including those reflected in the most recent consolidated balance
sheet of such Company delivered to the Lenders or acquired since the date of such balance sheet (except personal property disposed
of since such date in the ordinary course of business), free of any Liens, except for those Liens indicated in Schedule 3.6
and those Permitted Encumbrances expressly permitted pursuant to Section 7.2. Each Company and Subsidiary enjoys peaceful
and undisturbed possession under all leases under which they are operating, and all such leases are valid, subsisting and in full
force and effect and are summarized in Schedule 3.6.


 


3.7 Licenses;
Intellectual Property. Each Company and any Subsidiary owns or has a valid right to use the patents, patent rights, permits,
licenses, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions,
and intellectual property rights being used to conduct its business as now operated and as now contemplated to be operated (a complete
list of which rights is attached hereto as Schedule 3.7); and the conduct of the business of each Company and
Subsidiary as now operated and as now proposed to be operated does not and will not conflict with valid patents, patent rights,
permits, licenses, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions,
and intellectual property rights of others. No claim is pending or, to the best of each Company’s knowledge, threatened to
the effect that any such intellectual property owned or licensed by any Company or Subsidiary or which such Company or Subsidiary
otherwise has the right to use, is invalid or unenforceable by such Company or any Subsidiary, as the case may be. Except as set
forth on Schedule 3.7, no Company or Subsidiary has any obligation to compensate any Person for the use of any
such patents or rights, and no Person has been granted any license or other rights to use in any manner any of the patents or rights
of any Company or Subsidiary, whether requiring the payment of royalties or not.


 


3.8 Default.
No Company or any Subsidiary is in default under any material existing agreement, and no Default or Event of Default hereunder
has occurred and is continuing.


 






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3.9 Taxes.
Each Company and Subsidiary (and any predecessor thereto or other Person responsible for the filing of tax returns on behalf of
such Company or Subsidiary) has filed, or caused to be filed, all tax returns (including, without limitation, those relating to
federal and state income taxes) required to be filed and has paid all taxes shown to be due and payable on said returns or on any
assessments made against it (other than those being contested in good faith by appropriate proceedings for which adequate reserves
have been provided on its books). No tax Liens have been filed against any of the Premises or any other assets of any Company or
any Subsidiary, and no claims are being asserted with respect to such taxes.


 


3.10 Financial
Condition; Capitalization.


 


(a) All consolidated
and consolidating balance sheets, profit and loss statements, and other financial statements of the Companies which have heretofore
been delivered to the Lenders, and all financial statements and data of the Companies which will hereafter be furnished to the
Lenders (including the Opening-Day Balance Sheet), are or will be (when furnished) true and correct and do or will (when furnished)
present fairly, accurately and completely, in all material respects, the consolidated financial position of the Companies and their
Subsidiaries prior to and following the consummation of the InStaff Acquisition and the results of their operations as of the dates
and for the periods for which the same are furnished. Except as set forth on Schedule 3.10(a), all such financial
statements have been prepared in accordance with GAAP applied on a consistent basis. No Company or any Subsidiary possesses any
“loss contingency” (as that term is defined in Financial Accounting Standards Board, Statement of Financial
Accounting Standards No. 5 - “FASB 5”) which is not accrued, reflected, or reserved against in
its balance sheet or disclosed in the footnotes to such balance sheet. There has been no Material Adverse Change since each Company
was formed. No event has occurred that could reasonably be expected to interfere substantially with the normal business operations
of the Companies following the Closing Date.


 


(b) No Company or
any Subsidiary has any material obligation or liability (whether accrued, absolute, contingent, unliquidated or otherwise, whether
or not known to any Company, whether due or to become due) arising out of transactions entered into at or prior to the Closing
Date, or any action or inaction at or prior to the Closing Date, or any state of facts existing at or prior to the Closing Date,
other than: (i) liabilities set forth on the most recent financial statements of the Companies which have heretofore been
delivered to the Lenders; (ii) liabilities and obligations which have arisen since the date of such financial statements in
the ordinary course of business (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement,
claim or lawsuit); (iii) liabilities of the InStaff Sellers expressly assumed by the Borrower under the InStaff Purchase Agreement;
(iv) any Earnout Payments due to Sellers under and pursuant to any Purchase Agreement and (v) other liabilities and obligations
expressly disclosed in other Schedules hereto.


 


(c) Parent has previously
presented and delivered to the Lenders the financial projections and related financial information attached hereto as Schedule
3.10(c) (the “Business Plan”), which Business Plan (i) has been relied upon by the Lenders
in connection with its decision to enter into this Agreement and purchase the Securities, and (ii) was prepared by or on behalf
of the Parent on assumptions of fact and opinion as to future events which the Parent and its management at the time of preparation
and as of the Closing Date, believed and continue to believe to be reasonable in all material respects; provided, however,
(y) nothing contained in clause (ii) of this Section 3.10(c) shall be deemed a guarantee that the financial
projections contained in the Business Plan will be achieved and (z) the fact that the actual financial results of the Companies
differ from the financial projections contained in the Business Plan shall not, in and of itself, constitute an Event of Default.
As of the date hereof, no facts have come to the attention of any Company which would, in its opinion, require them to revise,
clarify, or modify in any material respect the assumptions underlying such financial projections, or the conclusions or estimates
derived therefrom.


 






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(d) As of the Closing
Date, each Company is Solvent and, after taking into account the completion of the Transactions, will be Solvent.


 


(e) As of the Closing
Date and after giving effect to the completion of the Transactions, the authorized capital of the Parent (including the type and
class of each capital, and the number of shares, interests or units (as appropriate) that are issued and outstanding) is as set
forth on Schedule 3.10(e). All Units that are issued and outstanding as of the Closing Date, including the SubDebt
Units and the Calvert Class A Purchased Units, are validly issued, fully paid and nonassessable and there are no options, calls,
warrants, or any other securities, rights or common stock equivalents outstanding, which are convertible into, exercisable for
or relate to, any Units other than the Warrants.


 


(f) The authorized
capital of LTN Staffing (including the type and class of each capital, and the number of shares, interests or units (as appropriate)
that are issued and outstanding) is as set forth on Schedule 3.10(f), and all issued and outstanding Membership Interests
of LTN Staffing is owned by the Parent. All such Membership Interests of LTN Staffing that are issued and outstanding are validly
issued, fully paid and non-assessable and there are no options, calls, warrants, or any securities, rights or common stock equivalents
outstanding, which are convertible into, exercisable for or relate to, any of the Membership Interests of LTN Staffing.


 


(g) The authorized
capital of BG Staffing (including the type and class of each capital, and the number of shares, interests or units (as appropriate)
that are issued and outstanding) is as set forth on Schedule 3.10(g), and all issued and outstanding Membership Interests
of BG Staffing is owned by LTN Staffing. All such Membership Interests of BG Staffing that are issued and outstanding are validly
issued, fully paid and non-assessable and there are no options, calls, warrants, or any securities, rights or common stock equivalents
outstanding, which are convertible into, exercisable for or relate to, any of the Membership Interests of BG Staffing.


 


(h) The authorized
capital of BG Personnel (including the type and class of each capital, and the number of shares, interests or units (as appropriate)
that are issued and outstanding) is as set forth on Schedule 3.10(h), and all issued and outstanding Capital Stock
of BG Personnel is owned by BG Staffing and LTN Staffing. All such Partnership Interests of BG Personnel that are issued and outstanding
are validly issued, fully paid and non-assessable and there are no options, calls, warrants, or any securities, rights or common
stock equivalents outstanding, which are convertible into, exercisable for or relate to, any of the Partnership Interests of BG
Personnel.


 




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(i) The authorized
capital of BG Personnel Services (including the type and class of each capital, and the number of shares, interests or units (as
appropriate) that are issued and outstanding) is as set forth on Schedule 3.10(i), and all issued and outstanding
Capital Stock of BG Personnel Services is owned by BG Staffing and LTN Staffing. All such Partnership Interests of BG Personnel
Services that are issued and outstanding are validly issued, fully paid and non-assessable and there are no options, calls, warrants,
or any securities, rights or common stock equivalents outstanding, which are convertible into, exercisable for or relate to, any
of the Partnership Interests of BG Personnel Services.


 


(j) The authorized
capital of B G Staff Services (including the type and class of each capital, and the number of shares, interests or units (as appropriate)
that are issued and outstanding) is as set forth on Schedule 3.10(j), and all issued and outstanding Capital Stock
of B G Staff Services is owned by BG Staffing. All such Capital Stock of B G Staff Services that are issued and outstanding are
validly issued, fully paid and non-assessable and there are no options, calls, warrants, or any securities, rights or common stock
equivalents outstanding, which are convertible into, exercisable for or relate to, any of the Capital Stock of B G Staff Services.


 


3.11 ERISA.


 


(a) Except as specifically
disclosed to the Lender in writing prior to the Closing Date:


 


(i) there
is no Accumulated Funding Deficiency with respect to any Employee Pension Plan;


 


(ii) no
Reportable Event has occurred with respect to any Employee Pension Plan;


 


(iii) no
violations of the Code have occurred that could potentially cause the loss of the tax qualified status of any Employee Pension
Plan;


 


(iv) no
Company or any Controlled Group Member has incurred Withdrawal Liability with respect to any Multiemployer Plan; and


 


(v) no Multiemployer
Plan is in Reorganization.


 


(b) No liability (whether
or not such liability is being litigated) has been asserted against any Company or any Controlled Group Member in connection with
any Employee Pension Plan or any Multiemployer Plan by the PBGC, by the trustee of a trust established pursuant to ERISA §4049,
by a trustee appointed pursuant to ERISA §4042(b) or (c), or by a sponsor or an agent of a sponsor of a Multiemployer Plan,
and no Lien has been attached and no Person has threatened to attach a Lien on any Company’s or its Controlled Group Members’
property as a result of failure to comply with ERISA or as a result of the termination of any Employee Pension Plan.


 


(c) Each Employee
Pension Plan, as most recently amended, including amendments to any trust agreement, group annuity or insurance contract, or other
governing instrument, is the subject of a favorable determination letter by the Internal Revenue Service with respect to its qualifications
under Code §401(a) and such Employee Pension Plan’s related trusts are exempt from taxation under Code §501(a).
The Companies have furnished the Lenders with a copy of the most recent actuarial report for each Employee Pension Plan which is
a defined benefit pension plan and each such report is accurate in all material respects. No Company or any Controlled Group Member
has an unfulfilled obligation to contribute to any Multiemployer Plan.


 






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3.12 Use of
Proceeds. The proceeds of the Brookside II Senior Subordinated Loan and the Calvert Senior Subordinated Loan No. 2 shall
be used solely for the purposes set forth in Sections 2.1(c) and 2.2(d).


 


3.13 Margin
Stock. No Company or any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of
the proceeds of the Senior Subordinated Loans will be used to purchase or carry any margin stock or to reduce or retire any Debt
incurred for such purpose or to extend credit to others for such purpose.


 


3.14 Investment
Company; Public Utility Holding Company. No Company or any Subsidiary is an “investment company” or
a company “controlled” by an “investment company,” within the meaning of the Investment Company
Act of 1940, as amended.


 


3.15 No Notices;
No Violations. Except as set forth on Schedule 3.15, no Company or any Subsidiary has received any notice
from any federal, state or local authority or any insurance or inspection body to the effect that any of its properties, facilities,
equipment or business procedures or practices fail to comply with any applicable law, ordinance, regulation, building or zoning
law, judicial or administrative determination, or any other requirements of any such authority or body, and the Companies and all
Subsidiaries, and all such properties, facilities, equipment, procedures and practices, are in compliance, in all material respects,
with all such laws, ordinances, determinations, regulations and requirements.


 


3.16 Labor Relations.
No Company or any Subsidiary is engaged in any unfair labor practice within the meaning of the National Labor Relations Act of
1947, as amended. Except as set forth on Schedule 3.16, there is (i) no unfair labor practice complaint before
the National Labor Relations Board, or grievance or arbitration proceeding arising out of or under any collective bargaining agreement,
pending or, to the knowledge of any Company, threatened, against any Company or any Subsidiary, (ii) no strike, lock-out,
slowdown, stoppage, walkout or other labor dispute pending or, to the knowledge of the Companies, threatened, against any Company
or any Subsidiary, (iii) to the knowledge of the Companies, no petition for certification or union election or union organizing
activities taking place with respect to any Company or any Subsidiary, and (iv) to the knowledge of the Companies, no key
executive employee who plans to terminate his, her or its employment with any Company or any Subsidiary.


 




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3.17 Material
Agreements. Except for those contracts, agreements and instruments set forth on Schedule 3.17, following
completion of the Transactions and as of the Closing Date, no Company or any Subsidiary will be a party to any: (a) material
distributorship, sales representative, marketing, license or warranty agreements; (b) lease agreement concerning any real
property or any personal property; or (c) contract, lease, agreement, plan, arrangement, obligation or commitment (i) evidencing
Debt which will be outstanding after the Closing Date, other than Permitted Debt, (ii) relating to the subordination of any
Debt, other than as contemplated herein, (iii) under which any Company or any Subsidiary is obligated to pay any Management
Fees, other than under the Management Agreement and as permitted hereunder, or (iv) that is reasonably likely to cause a Material
Adverse Change. The Companies have heretofore made available to the Lenders true, correct and complete copies of all contracts,
agreements and instruments referred to in this Section 3.17 (collectively, “Material Agreements”),
which Material Agreements are valid and in full force and effect, and no material breach or default, or event which, with notice
or lapse of time or both, would constitute any such material breach or default by any Company or any Subsidiary exists with respect
thereto. No Company or any Subsidiary has received any notice of cancellation or non-renewal of any of the Material Agreements.
The Material Agreements are sufficient to conduct the businesses of the Companies, and constitute all material contracts, agreements,
leases, licenses and other commitments necessary for the conduct of the businesses of the Companies and their Subsidiaries as heretofore
conducted and none of the Material Agreements nor any rights thereunder will be impaired by reason of the completion of the Transactions.


 


3.18 Transactions
with Affiliates. Except as disclosed on Schedule 3.18 or as otherwise permitted by Section 6.15,
there are no loans, leases, royalty agreements or other agreements, arrangements or other transactions between (a) any Company
or any Subsidiary and (i) any Affiliate of any Company which is either a customer or supplier of such Company, or (ii) any
other Affiliate of any Company (including the Sponsor).


 


3.19 No Burdensome
Agreements. No Company or any Subsidiary is a party to or bound by any agreement or instrument or subject to any limited
liability company, corporate or other restriction the performance or observance of which now has or, as far as any Company can
reasonably foresee, may have a Material Adverse Effect.


 


3.20 Environmental
Matters. Except as disclosed on Schedule 3.20:


 


(a) Each Company (i) has
received all permits and filed all notifications required by the Environmental Control Statutes to carry on its business; and (ii) is
in compliance, in all material respects, with all Environmental Control Statutes.


 


(b) No Company has
given any written or oral notice to the EPA or any state or local agency with regard to any actual or imminently threatened Release
of Hazardous Substances on properties owned, leased or operated by it or used in connection with the conduct of its business and
operations which could reasonably be expected to have a Material Adverse Effect.


 


(c) No Company has
received any written notice that it is potentially responsible for clean-up, Remediation, costs of clean-up or Remediation, fines
or penalties with respect to any actual or imminently threatened Release of Hazardous Substances pursuant to any Environmental
Control Statute.


 


3.21 Closing
Fees; Broker’s Commissions. Except as set forth on Schedule 3.21, no brokerage commission, investment
banking fee or similar compensation is due or will become due to any Person by reason of the making of any of the credit facilities
described herein or completion of any of the Transactions, other than the Closing Fees. Schedule 3.21 also identifies
the manner in which any commission, fee or other compensation set forth thereon will be paid and the financial resources deployed
in connection therewith and in satisfaction thereof.


 






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3.22 Securities
Laws. Assuming that the representations and warranties of the Lenders set forth in Section 4 are true and correct,
the issuance of the Securities are all exempt from the registration and prospectus requirements of the Securities Act and of the
Blue Sky Laws of any applicable state or states.


 


3.23 Small Business
Representations. Each Company acknowledges that the Lender is an SBIC and, accordingly, makes the following representations
to the Lenders:


 


(a) Each Company,
together with its “affiliates” (as that term is defined in Title 13, Code of Federal Regulations, §121.103),
is a “small business concern” as defined in the SBIC Act because it meets the small business size standards
applicable to the SBIC program under Title 13, Code of Federal Regulations, §121.301(c).


 


(b) The Companies
have approximately one hundred ten (110) employees and engage primarily in business operations that are classified under NAIC Code
561320.


 


(c) Parent’s
federal employer tax identification number is 26-0656684. LTN Staffing’s federal tax identification number is 26-0829796.
BG Staffing’s federal tax identification number is 27-2394025. BG Personnel’s federal tax identification number is
75-2556325. BG Personnel Services’ federal tax identification number is 75-2191728. B G Staff Services’ federal tax
identification number is 75-2570347.


 


(d) The information
set forth in the SBA Forms delivered by each Company to the Lenders hereunder is or will be (when furnished) true, accurate and
complete.


 


(e) No Company or
any Subsidiary is presently engaged in any activities for which an SBIC is prohibited from providing funds by the SBIC Act and
no portion of the proceeds of the Senior Subordinated Loans will be used for any prohibited purpose within the meaning of 13 C.F.R.
§107.720.


 


(f) Without limiting
the generality of the foregoing, the proceeds from the Senior Subordinated Loans will not be used substantially for a foreign operation;
and as of the Closing Date or within one (1) year thereafter, no more than forty-nine percent (49%) of the employees or the tangible
assets of the Companies and their Subsidiaries will be located outside of the United States.


 


3.24 Foreign
Assets Control Regulations; Anti-Money Laundering.


 


(a) Neither the issuance
of the Senior Subordinated Notes by the Borrowers, nor the purchase of the Senior Subordinated Notes by the Lenders, nor the use
of the proceeds thereof, shall cause the Lenders to violate the U.S. Bank Secrecy Act, as amended, and any applicable regulations
thereunder or any of the sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets
Control (“OFAC”) of the United States Department of Treasury, any regulations promulgated thereunder
by OFAC or under any affiliated or successor governmental or quasi-governmental office, bureau or agency and any enabling legislation
or executive order relating thereto. Without limiting the foregoing, no Company or any Subsidiary (i) is a Person whose property
or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or
is otherwise associated with any such Person in any manner violative of Section 2, and (iii) is a Person on the list
of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC regulation
or executive order.


 






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(b) Each Company and
its Subsidiaries is in compliance, in all material respects, with the Strengthening of America by Providing the Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001. No part of the proceeds of the Senior Subordinated Notes shall
be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.


 


3.25 Completion
of InStaff Purchase Transaction; InStaff Purchase Documents.


 


(a) The InStaff Purchase
Transaction will be completed on the Closing Date pursuant to and in accordance with all applicable laws, rules, and regulations
and all consents, approvals, certifications, and authorizations from any and all governmental or quasi-governmental departments,
agencies, or authorities required in connection therewith have been obtained.


 


(b) To the best of
the Companies’ knowledge, after diligent investigation with respect thereto, the representations and warranties of the InStaff
Sellers and InStaff Selling Parties contained in the InStaff Purchase Documents are true, correct, and complete.


 


3.26 No Untrue
Statement of Material Fact.


 


(a) Neither this Agreement,
the Schedules hereto, the Loan Documents, nor any other documents delivered by the Companies to the Lenders in connection herewith
contains or will contain any untrue statement of material fact or omits or will omit to state a material fact required to be stated
in order to make such statement, document, or other instrument not misleading in any material respect.


 


(b) The Companies
have disclosed to the Lenders in writing any and all facts that materially and adversely affect or may affect, the business, operations,
or condition, financial or otherwise, of the Companies or their ability to timely perform the Obligations.


 


(c) Copies of all
documents furnished by or on behalf of the Companies to the Lenders are complete and accurate in all respects.


 


3.27 Schedules.
The Schedules referred to herein are an integral part of this Agreement and are incorporated herein by reference thereto.


 



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SECTION
4. REPRESENTATIONS AND WARRANTIES OF LENDERS.


 


In connection with the
Transactions, each Lender severally (and not jointly and severally) represents and warrants to the Companies that:


 


4.1 Investment
Representation. It is acquiring the applicable Senior Subordinated Note and Warrants (collectively, the “Securities”)
for investment and not with a view to the distribution thereof within the meaning of the Securities Act or the applicable securities
laws of any State.


 


4.2 Registration.
(i) It understands that the Securities acquired by it have not been registered or qualified under the Securities Act or any
state securities laws, by reason of their issuance and sale in transactions exempt from the registration or qualification requirements
of the Securities Act and applicable state securities laws; (ii) it acknowledges that reliance on such exemptions is predicated
in part on the accuracy of its representations and warranties herein; and (iii) it acknowledges and agrees that the Securities
being acquired by it hereunder must be held by it purchasing the same indefinitely unless a subsequent disposition thereof is registered
or qualified under the Securities Act and applicable state securities laws or is exempt from registration and that the Companies
are not required so to register or qualify the Securities or to take any action to make such an exemption available; and (iv) it
acknowledges that (A) there may be no public market for the Securities, (B) there can be no assurance that any such market
will ever develop, and (C) there can be no assurance that it will be able to liquidate its investment in the Companies described
herein.


 


4.3 Lender Qualifications.
It represents and warrants to the Companies that (i) it has such knowledge and experience in financial and business matters
as is necessary to enable it to evaluate the merits and risks of an investment in the Companies and is not utilizing any other
Person to be its purchaser representative in connection with evaluating such merits and risk, and (ii) it has no present need
for liquidity in its investment in the Companies and is able to bear the risk of that investment for an indefinite period and to
afford a complete loss thereof.


 


4.4 Acknowledgment
of Risk; Accredited Investor. (i) It acknowledges that investment in the Companies is speculative and involves a
high degree of risk and it may lose its entire investment; and (ii) it is an “accredited investor” within
the meaning of Regulation D of the Securities Act and has not been organized for the specific purpose of acquiring the Securities. 


 


SECTION
5. CONDITIONS OF CLOSING AND PURCHASE.


 


5.1 Conditions
Precedent. As a condition precedent to each Lender’s obligation to make the Senior Subordinated Loans contemplated
hereunder, the following conditions shall all be satisfied by no later than the Termination Date:


 


(a) Loan Documents.
The Companies shall have delivered or caused to be delivered to the Lender duly executed copies of each of the Loan Documents to
which they are a party.


 


(b) Intentionally
omitted.


 


(c) Companies’
Authorizations; Companies’ Organizational Documents.


 



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(i) Each
Company shall have delivered to the Lenders:


 


(A) a copy,
certified by its Manager, Secretary, or General Partner, as appropriate, of the resolutions of its board of managers and/or board
of directors, as appropriate, authorizing and approving the execution and delivery of and performance under this Agreement and
the other Loan Documents to which it is a party, the borrowings provided for hereunder, and completion of the Transactions;


 


(B) true,
correct, complete and certified (to the extent applicable) of its Organizational Documents (and, in the case of certified copies,
certified on a date satisfactory to the Lenders);


 


(C) a good
standing certificate with respect to such Company certified by the Secretary of State of the State of
such Company’s jurisdiction of formation and/or incorporation, as appropriate, issued on a date satisfactory to the Lenders;
and


 


(D) a good
standing certificate with respect to such Company certified by the Secretary of State of each of the States in which it is qualified
to conduct business as a foreign limited liability company, corporation or limited partnership, as appropriate, issued
on a date satisfactory to the Lenders.


 


(ii) The
managers and/or the officers, as appropriate of each Company shall have duly executed and delivered to the Lender certificates
of incumbency, in form and substance satisfactory to the Lender.


 


(d) Intentionally
Omitted.


 


(e) Representations.
The representations and warranties contained in Section 3 hereof shall be true and correct on and as of the Closing Date and
no Event of Default or Default shall be in existence on the date of the making of the Senior Subordinated Loans described herein
or shall occur as a result thereof.


 


(f) Due Diligence.
The Lenders shall have completed their due diligence review and examination of the Companies and the InStaff Sellers and their
respective businesses (including those reviews and examinations relating to third party insurance and workers compensation, I-9
compliance, third party market research, environmental matters and background checks), and the results of such review and examination
shall be satisfactory to the Lenders.


 


(g) Maximum
Leverage Ratio. The ratio of total Debt of the Companies (after giving effect to the Transactions) to the trailing pro-forma
twelve (12) month (TTM) EBITDA of the Companies shall not exceed 3.60:1.00 and the Lenders shall have received on the Closing Date
reasonably satisfactory evidence that the Companies will be in compliance with this covenant, which evidence shall include a calculation
of the leverage ratio described in this Section 5.1(g).


 






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(h) Minimum
Pro-Forma Adjusted EBITDA. The Companies shall have furnished to the Lenders reasonably satisfactory evidence that the
Companies will have a pro-forma Adjusted EBITDA(after giving effect to the Transactions), as calculated by the Lender of at least
Nine Million Seven Hundred Fifty Thousand Dollars ($9,750,000.00) for the most recent trailing twelve month period.


 


(i) No Material
Adverse Change. No Material Adverse Change in the Companies, the InStaff Sellers or the businesses being acquired by the
Borrower under the InStaff Purchase Agreement shall have occurred since April 30, 2013, which is the date of the most recent financial
information delivered to the Lenders.


 


(j) Lien Searches.
The Lenders shall have received such secured transaction, real estate, judgment, tax, bankruptcy and docket searches with respect
to the Companies, the InStaff Sellers and their predecessors in interest as they deem appropriate, which searches shall be satisfactory
to the Lenders.


 


(k) Evidence
of Insurance. The Lenders shall have received certificates or policies evidencing the insurance required to be in place
as of the date hereof under Section 6.7.


 


(l) No Violation.
The completion of the Transactions shall not contravene, violate or conflict with, nor involve any Lender in violation of, any
law, rule, or regulation applicable to any of them.


 


(m) Pro-Forma
Opening-Day Balance Sheet; Senior Debt Excess Availability; Sources and Uses of Funds Statement. Parent shall have furnished
to the Lenders: (i) a pro-forma opening-day consolidated balance sheet of the Parent and its Subsidiaries (taking into account
(A) the completion of the Transactions on the Closing Date, (B) the incurrence of any Senior Debt by the Companies, and
(C) such other transactions relating or pertaining hereto as may be reasonably requested by the Lenders), all in reasonable detail,
prepared by an Authorized Officer of the Parent in accordance with GAAP applied on a consistent basis and certified by an Authorized
Officer of the Parent, and which shall be reasonably satisfactory, in form and substance, to the Lenders; (ii) evidence reasonably
satisfactory to the Lenders that the Companies have (after giving effect to the Transactions and any advances under the Senior
Debt in connection therewith) excess credit availability under the Senior Loan Agreement of at least Two Million Dollars ($2,000,000)
as of the Closing Date; (iii) a sources and uses of funds statement, in form and substance reasonably satisfactory to the
Lenders, indicating the sources and uses of funds received by the Companies in connection with the Transactions; and (iv) a
capitalization table of the Parent after giving effect to the Transactions showing the ownership of all Class A Units and Class
B Units on a Fully-Diluted Basis (including the SubDebt Units, Class A Units of Calvert and the Warrants being acquired by Brookside
II and Calvert in connection herewith).


 


(n) SBA Forms.
The Companies shall have filled out, executed and delivered the SBA Forms to the Lenders, which shall be satisfactory to the Lenders.


 


(o) Equity Documents;
Warrants.


 


(i) The
Parent shall have executed and delivered the Brookside II Warrant to Brookside II and the Calvert Warrant to Calvert.


 






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(ii) The
LLC Agreement shall have been amended in a manner satisfactory to the Lenders to provide to Brookside II and Calvert, among other
things, tag-along rights, pre-emptive rights, co-sale rights, and other rights in connection with the issuance of the Warrants.


 


(p) InStaff
Purchase Transaction; InStaff Purchase Documents. The InStaff Purchase Transaction shall have been completed and the Companies
shall have furnished to the Lenders all agreements, documents, and instruments relating thereto (including the InStaff Purchase
Documents pertaining thereto) (all of which shall be reasonably satisfactory to the Lenders) and shall have furnished, in connection
therewith, satisfactory evidence that (i) the total cash paid by the Companies in connection with the InStaff Purchase Transaction
(including transaction expenses) does not exceed Nine Million Dollars ($9,000,000), exclusive of post-closing cash earnout payments
which do not exceed One Million Dollars ($1,000,000) and are subject to performance criteria approved by the Lenders (evidenced
by the Earnout Payments as defined herein) and (ii) all conditions precedent set forth in the InStaff Purchase Documents have
been duly satisfied.


 


(q) Securities
Law Compliance. Parent shall have furnished the Lenders with satisfactory evidence that the Parent has complied with all
applicable state and federal securities laws, rules, and regulations in connection with the issuance of its Units (including the
Warrants).


 


(r) Amendment
to the Senior Lender Subordination Agreement; Senior Lender Loan Agreement and Senior Lender Loan Documents. (i) The Senior
Lender Subordination Agreement shall have been amended pursuant to the Senior Loan Fifth Amendment to Subordination Agreement to,
among other things, increase the maximum amount of Senior Debt under and as defined therein from Twenty-Two Million Dollars ($22,000,000.00)
to Thirty Million Dollars ($30,000,000.00), which Senior Loan Fifth Amendment to Subordination Agreement shall be satisfactory,
in form and substance, to the Lenders; and (ii) all terms and conditions of the Senior Loan Agreement and the Senior Loan Documents
shall remain unchanged and unmodified, except as otherwise set forth in the Senior Loan Seventh Amendment, which Senior Loan Seventh
Amendment shall be satisfactory, in form and substance, to the Lenders.


 


(s) Management
Fee Subordination Agreement. The Management Fee Subordination Agreement shall have been executed and delivered by all of
the parties thereto.


 


(t) Capital
Contribution Agreement The Capital Contribution Agreement shall have been executed and delivered by all of the parties
thereto.


 


(u) Reimbursement
of Lenders’ Expenses. The Companies shall have reimbursed the Lenders for all expenses accrued through the Closing
Date and for which reimbursement is proper under Section 9.3.


 






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(v) Closing
Date Compliance Certificate. The Companies shall have delivered to the Lenders a duly executed Compliance Certificate,
in form and substance satisfactory to the Lenders.


 


(w) Legal Matters.
All legal matters incident to the Transactions shall be satisfactory to Stevens & Lee, counsel for the Lender.


 


(x) Termination
Date. The conditions precedent set forth herein shall have been satisfied by no later than the Termination Date and if
such conditions precedents are not so satisfied then the Lender shall have no duty or obligation, express or implied, to make any
of the investments described herein and shall be released from all liabilities hereunder.


 


SECTION
6. AFFIRMATIVE COVENANTS.


 


Subject to the provisions
of Section 6.16(i), the Companies covenant and agree that from and after the Closing Date and so long as any of the Obligations
remain outstanding and unpaid, in whole or in part, the Companies will observe the following covenants, unless the Required Lenders
shall otherwise consent in writing:


 


6.1 Financial
Statements; Reports. The Companies will furnish, or cause to be furnished, to Lenders:


 


(a) Annual Reports;
Economic Impact Information: as soon as available, but in any event not later than one hundred twenty (120) days after
the close of each Fiscal Year of the Companies, (i) the annual audit report of the Parent containing consolidated and, if
required by the Lenders, consolidating balance sheets of the Parent and its Subsidiaries, as at the end of such Fiscal Year, and
related consolidated and, if required by the Lenders, consolidating statements of income, members’ capital accounts and cash
flows of the Parent and its Subsidiaries, for such Fiscal Year, setting forth in each case in comparative form the corresponding
figures for the preceding Fiscal Year, all in reasonable detail, prepared in accordance with GAAP applied on a consistent basis
and certified without exception or qualification by the Accounting Firm, together with a copy of the management letter prepared
by the Accounting Firm in connection with such audit (which management letter may be furnished at any time within thirty (30) days
from the delivery of the audit and shall only be required to the extent prepared by the Accounting Firm), which audit report shall
not be qualified as to going concern or scope of audit and shall include a statement of the Accounting Firm performing such audit
that the financial statements present fairly, in all respects, the financial position of the Parent and its Subsidiaries as of
the end of such Fiscal Year and the results of operations of the Parent and its Subsidiaries and the cash flows of the Parent and
its Subsidiaries for the Fiscal Year then ended in conformity with GAAP; and (ii) if required by the Lenders in connection
with the informational and other requirements of the SBIC Act, a written assessment of the economic impact of their investment
in the Companies, specifying the full-time equivalent jobs created or retained in connection with the investment made by the Lenders
hereunder, the impact of the Lenders’ financing on the revenues and profits of the Parent and its Subsidiaries and on taxes
paid by the Companies and their employees;


 




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(b) Quarterly
Compliance Certificate: as soon as available, but in any event within thirty (30) days after the close of each Fiscal Quarter
(including the Fiscal Quarter during which the Fiscal Year of the Parent ends, subject only to normal year-end accounting adjustments),
a duly executed Compliance Certificate;


 


(c) Monthly
Reports; Borrowing Base Certificate, Etc.: as soon as available, but in any event within thirty (30) days after the close
of each calendar month (including the month during which the Fiscal Year of the Parent ends, subject only to normal year-end accounting
adjustments), (i) consolidated and, if required by the Lenders, consolidating financial statements of the Parent and its Subsidiaries
for such calendar month (and for the same calendar month of the immediately preceding Fiscal Year), including the balance sheet
as of and the profit and loss statement, with supporting schedules, statement of cash flow, and a comparison against monthly operating
and capital expenditures budgets, all in form and content reasonably acceptable to the Lenders and prepared and certified by the
Chief Financial Officer of the Parent in accordance with GAAP applied on a consistent basis (subject to normal year-end adjustments),
(ii) the borrowing base certificate provided by the Borrower to the Senior Lender with those monthly financial statements
and related information furnished pursuant to Section 6.9(a) of the Senior Loan Agreement and (iii) if required by the Lenders,
a management’s discussion and analysis of the financial information provided hereby, in form and substance reasonably satisfactory
to the Lenders;


 


(d) SBA Use
of Proceeds Report; SBA Information: If required by any Lender, (i) as soon as available, but in any event within
ninety (90) days after the Closing Date, a written report, certified as true, correct, and complete by an Authorized Officer, verifying
the purposes and amounts for which proceeds from the Senior Subordinated Loans have been disbursed, together with such additional
data, documents, and information as each Lender reasonably requests with respect to determining and verifying the manner in which
the Senior Subordinated Loans were used, which report shall also be furnished (A) with the annual financial statements delivered
pursuant to Section 6.1(a) and (B) at such other times as any Lender may request; and (ii) upon the request
of any Lender, any and all information reasonably requested by the Lenders in order for it to prepare and file SBA Form 468
and any other information reasonably requested or required by any governmental agency asserting jurisdiction over such Person;


 


(e) Reports
to Senior Lender and Other Lenders: promptly after the sending or making available or filing the same, copies of all reports
and financial statements required to be or actually delivered or sent by or on behalf of the Parent and its Subsidiaries to the
Senior Lender, any other lender of the Companies, or the members or prospective lender(s) of the Companies;


  


(f) Budgets,
etc.: as soon as available and in any event before the beginning of each Fiscal Year of the Parent, monthly operating budgets
(including financial projections) for the forthcoming Fiscal Year of the Parent and its Subsidiaries and a schedule showing the
aggregate amount of Capital Expenditures to be made in such year by the Parent and its Subsidiaries and describing in detail each
proposed Capital Expenditure in excess of Twenty-Five Thousand Dollars ($25,000.00), which operating budgets (and accompanying
financial projections) shall be reasonably satisfactory to the Lenders;


 






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(g) Securities
Filings: promptly upon sending, making available, or filing the same, such reports and financial statements as the Parent
or any Subsidiary shall file with the Securities and Exchange Commission or any state securities agencies;


 


(h) Tax Returns:
if required by the Lenders, as soon as available and in any event within fifteen (15) days after the filing thereof (taking into
account any extensions granted by the applicable taxing authority with respect thereto), copies of all federal and state tax returns
of each Company (with schedules and exhibits thereto), together with copies of any request or application for an extension of time
to file any such return (such copies of any request or application required to be provided within fifteen (15) days after the submission
thereof to the appropriate taxing authority);


 


(i) Payroll
Taxes: as soon as possible and in any event within sixty (60) days after the end of each Fiscal Quarter, commencing with
calendar quarter ending June 30, 2013, deliver to Lenders a copy of the Companies’ quarterly federal tax return Form 941
filed for such quarter, together with such other proof of payment of the Companies’ payroll taxes, in form and substance
acceptable to Lenders; and


 


(j) Other Information:
from time to time, such additional financial and other information as the Lenders may reasonably request (including, without limitation,
any and all information which the Lenders are required to obtain from any Company or any Subsidiary in satisfaction of any laws,
rules, and regulations applicable to the Lenders as an SBIC under the SBIC Act or otherwise).


 


6.2 Liabilities.
Each Company and its Subsidiaries will pay and discharge, at or before their maturity, all their respective obligations and liabilities
(including, without limitation, tax liabilities and all employee wages as provided in the Fair Labor Standards Act, 29 U.S.C.
§§206-207 and any successor statute), except those which may be contested in good faith, and maintain adequate reserves
for any of the same in accordance with GAAP.


 


6.3 ERISA.


 


(a) Each Company will
furnish to the Lenders (i) within thirty (30) days after they have reason to know that it or any Controlled Group Member has
incurred Withdrawal Liability, or that any Multiemployer Plan is in Reorganization or that any Reportable Event has occurred with
respect to any Employee Pension Plan or that the PBGC has instituted or will institute proceedings under Title IV of ERISA
to terminate any Employee Pension Plan or to appoint a trustee to administer any Employee Pension Plan, a statement setting forth
the details as to such Withdrawal Liability, Reorganization, Reportable Event, termination or appointment proceedings and the action
which they (or the Multiemployer Plan sponsor or Employee Pension Plan sponsor other than the Companies) propose to take with respect
thereto, together with a copy of any notice of Withdrawal Liability or Reorganization given to any Company or any Controlled Group
Member and a copy of the notice of such Reportable Event given to PBGC if a copy of such notice is available to such Company or
any of its Controlled Group Members; and (ii) promptly after receipt thereof, a copy of any notice the Companies or any of
their Controlled Group Members or the sponsor of any Employee Pension Plan received from PBGC or the Internal Revenue Service which
sets forth or proposes any action or determination with respect to such Employee Pension Plan.


 






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(b) Each Company will
notify the Lenders of (i) any excise taxes which have been assessed or which the Companies or any of their Controlled Group
Members have reason to believe may be assessed against the Companies or any of their Controlled Group Members by the Internal Revenue
Service with respect to any Employee Pension Plan or Multiemployer Plan or (ii) any revocation of qualification under Code
§401 which has occurred or which the Companies or any of their Controlled Group Members have reason to believe may occur with
respect to any Employee Pension Plan or Multiemployer Plan.


 


6.4 Notices.
Each Company will promptly give notice in writing to the Lenders of the occurrence of any of the following:


 


(a) the occurrence
of any Default or Event of Default, together with a reasonably detailed description thereof;


 


(b) any notice received
by any Company or any Subsidiary from the Senior Lender relating to a breach or potential breach of the Senior Loan Documents or
any amendment, modification, restatement, assignment, waiver or change to any Senior Loan Documents;


 


(c) any strike, lock-out,
boycott or any other labor trouble involving any Company or Subsidiary, which could reasonably be expected to have a Material Adverse
Effect;


 


(d) the commencement
of any litigation, proceeding or dispute affecting any Company or Subsidiary, or any dispute between any Company or Subsidiary,
and any Person, which litigation, proceeding or dispute, if resolved other than in the favor of such Company or any Subsidiary,
could reasonably be expected to have a Material Adverse Effect;


 


(e) (i) any claim
for indemnification made by or on behalf of any Borrower or in connection with any Purchase Transaction and any Purchase Agreement,
together with a reasonably detailed description thereof and (ii) if applicable, any request for a release of funds escrowed
under and pursuant to any Purchase Agreement or any related document;


 


(f) at least ten (10)
days’ prior to the making of any Earnout Payment and any supporting calculation with respect thereto;


 


(g) at least ten (10)
days’ prior written notice of any Future Subsidiary and the circumstances giving rise thereto;


 


(h) the taking of
any action by the Board, the Parent’s members or any board of managers and/or directors of any Borrower in consideration
of or approving a transaction or series of transactions that would constitute a Liquidity Event upon completion thereof;


 


(i) any Material Adverse
Change; or


 






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(j) any changes in
the personnel holding executive management positions with the Parent as at the Closing Date, including but not limited to, the
President, Chief Financial Officer, or any other Authorized Officer of the Parent.


 


6.5 Law/Other
Compliance; Environmental Matters.


 


(a) Each Company,
and its Subsidiaries, shall comply, and cause all properties, assets, and operations owned or used by such Company and its Subsidiaries
to comply, with (i) all applicable federal, state, local and other environmental, zoning, occupational safety, health, employment,
discrimination, labor and other laws and regulations (including, without limitation, all Environmental Control Statutes), (ii) the
provisions and requirements of all franchises, licenses, permits and certificates of compliance and approvals issued by regulatory
authorities and with other like grants of authority held by the Companies and their Subsidiaries in connection with its business,
(iii) all Material Agreements, and (iv) all applicable material decrees, orders and judgments.


 


(b) Each Company shall
promptly notify the Lenders in reasonable detail once it is aware of any failure by any Company or its Subsidiaries to comply with
or perform or any material breach or material violation by any Company or its Subsidiaries in respect of any of the matters compliance
with which is required under Section 6.5(a).


 


(c) Each Company shall
also (i) promptly notify the Lenders when, in connection with the operation of the business of such Company or its Subsidiaries,
any Person (including, without limitation, the EPA or any state or local agency) provides verbal or written notification to such
Company or its Subsidiaries or any Company or its Subsidiaries becomes aware of a condition with regard to an actual or imminently
threatened Release of Hazardous Substances in material violation of any Environmental Control Statute and (ii) promptly notify
the Lenders in detail upon the receipt by any Company or its Subsidiaries of an assertion of material liability under the Environmental
Control Statutes or any actual or alleged failure to comply with, failure to perform, breach, violation or default under any such
statutes or regulations which could reasonably be expected to have a Material Adverse Effect or of the occurrence or existence
of any facts, events or circumstances which with the passage of time, the giving of notice, or both, could create such a failure
to comply with, failure to perform, breach, violation or default.


 


(d) If any Lender
acquires equitable or legal title to any of the Premises hereunder or under the Loan Documents, the Lender does not accept and
shall not bear (nor shall any assignee or transferee of the Lender accept or bear) any responsibility for any Hazardous Substances
in or about the Premises or for the actual or threatened Release thereof from the Premises. No provisions of the Loan Documents
shall be interpreted to absolve or release either Company or any Subsidiary from any liability or responsibility which they may
have to any Person, under any local, state or federal statute or regulation, for Remedial Actions with respect to any such Hazardous
Substances or for the actual or threatened Release of any such Hazardous Substances


 


6.6 Limited
Liability Company Existence; Change in Locations; After-Acquired Assets. Each Company will notify the Lenders at least
thirty (30) days before any change of its name or the name of any Subsidiary and will maintain, and cause each Subsidiary, if any,
to maintain:


 






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(a) its limited liability
company existence and its qualification to do business where the failure to be so qualified could reasonably be expected to have
a Material Adverse Effect;


 


(b) all licenses,
permits and other authorizations necessary for the ownership and operation of its properties and businesses; and


 


(c) its assets and
properties in good repair, working order and condition, normal wear and tear excepted, and to make all necessary or appropriate
repairs, renewals, replacements and substitutions, so that the value and efficiency of all such assets and properties shall at
all times be properly preserved and maintained, normal wear and tear excepted.


 


6.7 Insurance.
Each Company and Subsidiary shall carry at all times, in coverage, form and amount satisfactory to the Lenders, hazard insurance
(with fire, extended and vandalism and malicious mischief coverage and coverage against such other hazards as are customarily insured
against by companies in the same or similar business), commercial general liability insurance, worker’s compensation insurance,
comprehensive automobile liability insurance, business interruption insurance, and such other insurance as the Lenders may from
time to time reasonably require, and pay all premiums on the policies for such insurance when and as they become due and do all
other things necessary to maintain such policies in full force and effect. Each Company shall from time to time, upon request by
the Lenders, promptly furnish or cause to be furnished to the Lenders evidence, in form and substance satisfactory to the Lenders,
of the maintenance of all insurance required to be maintained by this Section 6.7 including, but not limited to, such
originals or copies, as the Lenders may request, of policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments. All insurance maintained by each Company and Subsidiary provide that the Lenders
shall be notified thirty (30) days prior to any termination, cancellation or material change in any such insurance, all of
which shall be set forth in an insurance certificate satisfactory, in form and substance, to the Lenders.


 


6.8 Books and
Records; SBA Inspection Right. Each Company will maintain, and will cause each Subsidiary to maintain, accurate and complete
records and books of account with respect to all its operations, and will permit, and will cause each Subsidiary to permit, officers
or representatives of the Lenders and of the SBA to examine and make excerpts from such books and records and upon reasonable notice
(unless an Event of Default has occurred and is continuing, in which case no such notice shall be required) to visit and inspect
its properties, both real and personal, at all reasonable times and, with respect to the SBA, to verify (i) the use of the
proceeds of the Senior Subordinated Loans, (ii) the certifications made by the Companies in the SBA Forms and (iii) that
the principal business activity of the Companies and their Subsidiaries continues to constitute an eligible business activity (within
the meaning of SBIC Act regulations). The Companies shall reimburse the Lenders for any costs and expenses incurred by it in connection
with performing any inspection and examination of the books, records and properties of the Companies pursuant to this Section 6.8.


 






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6.9 Location
of Business. The Companies will notify the Lenders in writing at least thirty (30) days prior to any change in the location
of any place of business of any Company or Subsidiary, whether the establishment of a new place of business or the discontinuance
of a present place of business.


 


6.10 Group Health
Plans. Each Company will comply, and cause each Subsidiary to comply, in all material respects with the group health plan
COBRA Continuation Coverage requirements of Code §4980B(f), with all provisions of §1862(b)(1) of the Social Security
Act and the provisions of the Health Insurance Portability and Accountability Act of 1996. The Companies will furnish to the Lenders,
as soon as possible and in any event within thirty (30) days after it knows or has reason to know, notice that any Company or Subsidiary
is not in compliance with any provision of Code §4980B(f) or §1862(b)(1) of the Social Security Act.


 


6.11 Joinder
by Future Subsidiaries. The Companies covenant and agree to cause any future Subsidiary of the Parent or other Company
(a “Future Subsidiary”) to execute and deliver and become a party to this Agreement and other Loan Documents
(by joinder hereto and thereto) immediately upon formation or acquisition thereof (as appropriate) and, upon the execution and
delivery of such joinder, (i) such Subsidiary shall be jointly and severally liable, with the Companies for the Obligations
as if such Subsidiary was an original Company hereunder and (ii) such Subsidiary shall become a co-maker under the Senior
Subordinated Notes. Nothing contained in this Section 6.11 shall permit any Company to form a Subsidiary unless otherwise
permitted under this Agreement.


 


6.12 Delivery
of Senior Loan Documents. Within fifteen (15) days after the execution thereof and closing thereunder, the Companies shall
deliver to counsel to each Lender two (2) separate copies of the final executed Senior Loan Seventh Amendment, the Senior Loan
Fifth Amendment to Subordination Agreement and any other amendment and or restatement of the Senior Loan Documents in connection
with the Transactions (including schedules, exhibits, searches, certificates, opinions, and related documents).


 


6.13 Financial
Covenants. The Companies will comply with the Financial Covenants. The Financial Covenants may (at the election of the
Lenders) be supplemented to include any of the financial covenants contained in the Senior Lenders Loan Documents which are not
then part of the Financial Covenants (subject to a variance [i.e. a “cushion”], but for the avoidance of doubt, not
more restrictive than financial covenants contained in the Senior Loan Documents, therefrom reasonably determined by the Lenders).
If the Financial Covenants are supplemented in accordance with the foregoing, the Companies agree to enter into an amendment to
this Agreement under which Schedule “A” would be modified to reflect such changes in the Financial Covenants,
which amendment shall be reasonably satisfactory to the Lenders.


 




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6.14 Board Observation
Rights; Frequency of Board Meetings.


 


(a) Each Lender shall
have the right to designate and appoint one (1) representative to attend all special and regular meetings of the Board of
the Parent solely for the purpose of observing the proceedings thereof (the “Observation Right”). In
furtherance of the Observation Right, (i) Parent shall give each Lender not less than the same prior notice of the time and place
of all meetings of a Board (or any committee thereof) as is given to such Board members (or such committee members, as appropriate);
provided, however, notwithstanding the foregoing, (i) in no event shall any Lender receive less than (A) ten
(10) days’ advance written notice of regular Board meetings, and (B) the advance written notice of special Board
meetings that the Parent is required to deliver to its members under and pursuant to the LLC Agreement, (ii) Parent shall
furnish each Lender with all materials (including any distribution of unsigned unanimous written consents for execution) furnished
to a Board at the same time it provides such materials to such Board and shall promptly (A) furnish each Lender with copies
of the minutes of all meetings of a Board and copies of all unanimous consents in writing adopted by the members of a Board, and
(B) reimburse each Lender for its reasonable costs and expenses in attending a Board and committee meetings as an observer
pursuant hereto. Any individual designated and appointed to participate as an observer pursuant to an Observation Right may, at
any time and from time to time, be removed with or without cause, by (and only by) such Lender and replaced by another designee
and appointee of any Lender by (and only by) such Lender by written notice to the Borrowers and a Board.


 


(b) All confidential
materials and information furnished by any Company to any Lender and its designated representative in connection with the Observation
Right shall be kept confidential.


 


(c) Parent will duly
call and hold meetings of the Board (and its executive, audit and compensation committees, if applicable) not less frequently than
quarterly during each Fiscal Year.


 


(d) The Lenders shall
also have an Observation Right for and with respect to meetings of the board of directors (or any committee thereof) of any Subsidiary
of any Company, on the same terms and conditions as are otherwise set forth in Sections 6.14(a) through (c), as if
such provisions were set forth in their entirety in this Section 6.12(d).


 


6.15 Preemptive
Rights; Additional Debt.


 


(a) Each Lender, as
a member of the Parent, shall have those rights to participate in the future sale of Units on the terms and subject to the conditions
set forth in Section 6.2 of the LLC Agreement (as in effect on the date hereof and as may be amended from time to time in the manner
permitted thereby and hereby), the provisions of which are incorporated herein by reference thereto as if fully set forth herein.


 


(b) In addition to
the rights of the Lenders referred to in Section 6.15(a), the Companies shall provide the Lenders with at least thirty (30)
days’ advance written notice of its desire to incur Debt for borrowed money or issue any Debt securities (other than Permitted
Debt) (“Additional Debt”) while any of the Obligations are outstanding and provide the Lenders with the
first and prior right to provide such Additional Debt on such terms and conditions as are mutually acceptable to both the Lenders
and the Companies. In furtherance thereof, if the Lenders desire to provide the Additional Debt, then the Lenders and the Companies
shall in good faith negotiate the terms and conditions thereof, provided that the Companies shall be permitted to obtain such Additional
Debt from a third party in the event that the Companies and the Lenders are unable to mutually agree upon the terms and conditions
on which the Additional Debt will be provided by the Lenders.


 






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6.16 Right to
Put SubDebt Units and Warrant Units.


 


(a) Put Right.
At any time during the Put Period, each Lender shall have the right, upon written notice to the Parent (the “Put Notice”),
to put to the Parent (i.e. to sell and require the Parent to purchase) (an “Exercising Lender”) (x) all
and not less than all of the SubDebt Units held by such Lender, (y) all and not less than all of the Warrant Units acquired by
such Lender under the Warrants and/or (z) all and not less than all of the Warrant Units issuable upon exercise of the Warrants
held by such Lender (collectively, the “Put Securities”) for an amount, payable by wire transfer of immediately
available funds, equal to (i) the greater of (A) five and one-half (5.5) times Adjusted EBITDA for the
most recent trailing twelve (12) (TTM) month period immediately preceding the Put Date minus the aggregate amount of Funded
Debt of the Parent and its Subsidiaries outstanding as of the Put Date plus cash, Cash Equivalents, financial instruments,
and marketable securities of the Parent and its Subsidiaries as of the Put Date, or (B) the Fair Market Value, multiplied
by (ii) percentage representing the Fully-Diluted Membership Percentage Interest of the Put Securities being put by the
Exercising Lender hereunder (the amount required to be paid by the Parent to an Exercising Lender in connection with any Put exercised
under this Section 6.16(a) being referred to herein as the “Put Price”).


 


(b) Calculation
of Put Price. In connection with the foregoing, as soon as possible following the Put Date, but in any event not later
than thirty (30) days following the Put Date, the Parent shall furnish, or cause to be furnished, to the Exercising Lender its
calculation of the Put Price under clause (i)(A) of Section 6.16(a), which shall be certified as true, correct and complete
by the Parent’s Chief Financial Officer and which shall be accompanied by those financial and related statements, data and
information used by the Parent in connection with such calculation. The Parent shall also furnish the Exercising Lender with such
additional information that the Exercising Lender may reasonably request in connection with the Parent’s calculation of the
Put Price. The Exercising Lender shall have the right to cause the Accounting Firm to review and verify the calculation of the
Put Price, and the Parent shall provide such party with all documents and information necessary for such review and calculation.
The reasonable fees and expenses of the Accounting Firm in connection with such review shall be paid by the Parent.


 


(c) Payment
of Put Price. Payment of the Put Price payable upon the exercise of any Put shall be made by the Parent to the Exercising
Lender in the manner required by Section 6.16(a) within fifteen (15) days after the Put Price has been determined,
unless the Put Price is determined in connection with the occurrence of a Liquidity Event (in which case the Put Price shall be
payable concurrently with the occurrence of the Liquidity Event). Each Borrower hereby, jointly and severally, guarantees and becomes
surety for the prompt payment and satisfaction of the Put Price hereunder.


 


(d) Revocation
Right. The Exercising Lender shall have the right at any time prior to receiving the Put Price to revoke, in writing, the
Put to which it relates (and in such case the Exercising Lender shall pay the reasonable out-of-pocket costs incurred by the Parent
in connection with any determination of Fair Market Value and the Accounting Firm resulting from such Put), in which case the provisions
of this Section 6.16 and the Exercising Lender’s right to exercise a Put thereafter shall continue unaffected.


 






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(e) Fair Market
Value; Liquidity Event. The parties recognize, acknowledge and agree that the amount of consideration payable in respect
of the Put Securities in connection with a Liquidity Event is indicative of the fair market value of such Put Securities at the
time of such Liquidity Event. As a result, notwithstanding anything contained herein to the contrary, in the event that the Put
is being executed in connection with a Liquidity Event that has been or is being completed or at any time within six (6) months
after a Liquidity Event has been completed, and the Liquidity Event involves the sale of more than fifty percent (51%) of the issued
and outstanding Units or liquidation of Parent following a sale of all or substantially all of Parent’s assets, then Fair
Market Value shall be determined by reference to the consideration due and payable (or that would have been due and payable) to
the Exercising Lender in respect of its Put Securities at the closing of such Liquidity Event.


 


(f) Notice to
Other Lender. The Exercising Lender shall deliver a copy of the Put Notice to the other Lender simultaneously with its
delivery thereof to the Parent, unless the Put Notice has been delivered jointly by the Lenders as Exercising Lenders hereunder.
It is understood that a Lender shall have the right to deliver a Put Notice and become an Exercising Lender at any time and, if
so delivered after a Put Notice has been delivered by the other Lender but closing with respect thereto has not yet occurred, then
the Parent shall be required to simultaneously purchase all Put Securities pursuant hereto at the closing of the Put Securities
of the Exercising Lender that first exercised its put hereunder.


 


(g) Put Closing;
Deferred Closing. Upon the exercise by an Exercising Lender of the Put, the Parent covenants and agrees that it shall set
aside in trust for the benefit of each Exercising Lender all funds necessary to purchase the Put Securities subject to the Put,
which funds shall be used to pay the Put Price payable to such Exercising Lender, upon the surrender of the certificates, if any,
representing the Put Securities subject to the Put to the Parent for purchase (or such affidavits, indemnity and undertakings as
would be reasonably necessary to replace any certificate claimed to have been lost, stolen or destroyed). In the event that the
Parent does have sufficient funds on hand to pay the Put Price, then Parent shall, and cause its Subsidiaries to, use any and all
commercially reasonable efforts to obtain funds in the form of debt and/or equity financing sufficient to pay the Put Price in
cash to each Exercising Lender. Further, if legally available funds under the limited liability company law of the State of Delaware
are insufficient to pay the entire Put Price for the Put Securities required to be purchased in connection with the Put (as reasonably
and in good faith determined by the Board and supported by an opinion of counsel to the Parent that is reasonably satisfactory
to the Exercising Lender) and the Parent is unable to obtain financing in an amount sufficient to pay the entire Put Price for
the Put Securities required to be purchased in connection with the Put as contemplated by the provisions of the immediately preceding
sentence, then each Exercising Lender may elect pursuant to written notice to the Parent:


 




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(i) Deferred
Purchase Date. To allow the Put rights exercised by the Exercising Lender hereunder to remain exercised and defer the closing
date until any of the first five (5) Business Days after there are sufficient legally available funds under the limited liability
company law of the State of Delaware to effect the purchase at which time the Put Price shall be recalculated to be an amount equal
to the greater of the original Put Price or the Put Price as of the date of payment of such Put Price, provided that,
as and to the extent that there are sufficient legally available funds under applicable law to effect the purchase, the Parent
and its Subsidiaries jointly and severally shall promptly make partial payments of the Put Price, together with accrued interest
thereon at the Default Rate, to each Exercising Lender (with such payments to be allocated between the Exercising Lenders on a
pro rata basis based on the total amount of the Put Price payable to each such Exercising Lender) and the Parent shall use commercially
reasonable efforts to remove the restriction preventing it from paying the entire Put Price;


 


(ii) Issuance
of Promissory Note. To cause the Parent and its Subsidiaries to issue their joint and several senior subordinated promissory
note to the order of each Exercising Lender in the amount of the Put Price for the Put Securities held by such Exercising Lender
and subject to the Put, calculated as of the date of the issuance of such promissory note, in form and substance reasonably satisfactory
to the Exercising Lender, with a maturity date of twelve (12) months from the date of the Put Notice delivered by the Exercising
Lender and an interest rate equal to the Default Rate; or


 


(iii) Rescission
of Put. To rescind the exercise by such Exercising Lender of the Put pursuant to this Section 6.16 in whole or in
part at the option of the Exercising Lender with the result that the Exercising Lender may require the Parent to purchase its Put
Securities at any time thereafter in accordance with the provisions of this Section 6.16; provided, that nothing
contained in this Section 6.16(g) (including, without limitation, the provisions of clauses (i), (ii) and (iii) above)
shall limit the rights and remedies available to the Exercising Lenders for any failure to purchase the Put Securities as required
pursuant to this Section 6.16 (it being understood and agreed that any such failure to purchase shall constitute a material
breach of this Agreement by the Parent).


 


(h) Reinstatement;
Continuation of Rights Upon Default. In the event that the Parent shall default in the payment of any portion of the Put
Price, then, in addition to any other rights and remedies of the Exercising Lender which may be available herein or in any of the
other Loan Documents (or at law or in equity), the Put Securities subject to the put shall remain vested with the Exercising Lender
and the Exercising Lender shall continue to have the rights of a holder of Class A Units hereunder and under the LLC Agreement.


 


(i) Surviving
Affirmative and Negative Covenants. Notwithstanding anything contained in this Agreement or any other Loan Document to
the contrary, so long as any Lender holds any Put Securities hereunder, Parent has any obligations under this Section 6.16 and
notwithstanding any prior repayment in full of the Senior Subordinated Notes thereunder, the Companies covenant and agree that
they will continue to comply, and cause their Subsidiaries to continue to comply, with the following covenants contained in this
Agreement notwithstanding the repayment in full of the Senior Subordinated Notes: Section 6.1, Section 6.5, Section 6.6(a),
Section 6.8, Section 6.14, Section 6.15, Section 7.1, Section 7.2, Section 7.4, Section
7.6, Section 7.7, Section 7.13 and Section 7.15. By way of clarification, upon repayment in full of the
Senior Subordinated Notes, the Companies and their Subsidiaries shall only be required to comply with those affirmative and negative
covenants identified in the immediately preceding sentence.


 






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6.17 Reservation
of Parent Units. On or prior to the Closing Date, Parent will, to the extent applicable, reserve and thereafter keep reserved,
at all times sufficient Class A Units of the Parent for issuance to Brookside II and Calvert upon exercise of the Warrants, which
reserved Class A Units, when issued and delivered upon exercise of the Warrants, shall be validly issued, fully-paid, non-assessable
and free and clear of Liens.


 


6.18 Confidentiality
and Related Agreements. Each Company shall cause all employees, officers and consultants of the Companies hired or engaged
on or after the Closing Date and who are either involved in the management of the Companies or are reasonably expected to have
access to confidential information, proprietary information or trade secrets of the Companies to, concurrently with their hiring
or engagement, execute and deliver to the Companies a standard and customary non-competition, non-disclosure, assignment of developments
and non-solicitation agreement, under which the Companies right to confidential information and developments and inventions shall
be protected and preserved, which agreement shall be in a form which has been approved by the Board and the Lenders.


 


6.19 Communication
with Accounting Firm. Each Company authorizes each Lender to communicate directly with the Accounting Firm and authorizes
and shall instruct the Accounting Firm to disclose and make available to each Lender any and all financial statements and other
supporting financial documents, schedules and information relating to any Company with respect to the business, financial condition
and other affairs of any Company.


 


6.20 Management.
The Companies shall, at all times, maintain senior executive management that is reasonably satisfactory to the Lenders.


 


6.21 SBA Covenants.


 


(a) Each Company agrees
that it shall not engage in any activities, nor shall any Company use directly or indirectly the proceeds of the Senior Subordinated
Loans for any purpose, for which an SBIC is prohibited from providing funds by the Act, including Title 13, Code of Federal Regulations,
§107.720.


 


(b) Each Company shall
provide the Lenders and the SBA reasonable access to its books and records for the purpose of verifying the use of the proceeds
of the Senior Subordinated Loans and for all other purposes required by the SBA.


 


(c) Promptly after
the end of each Fiscal Year (but in any event prior to February 28 of each year) during which the Senior Subordinated Loans
remain outstanding, each Company shall provide to the Lenders a written assessment, in form and substance reasonably satisfactory
to the Lenders, of the economic impact of the financing described herein, specifying the full-time equivalent jobs created or retained,
the impact of the financing on such Company’s business in terms of expanded revenue and taxes and other appropriate economic
benefits, including, but not limited to, technology development or commercialization, minority business development, urban or rural
business development, expansion of exports and assistance to manufacturing firms.


 






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(d) Upon the request
of any Lender, for so long as the Lenders hold any interest in any Company, directly or indirectly, each Company will (i) provide
to such Lender such financial statements and other information as such Lender may from time to time reasonably request for the
purpose of assessing each Company’s financial condition and (ii) provide to such Lender all information relating to
each Company as such Lender may from time to time reasonably request in order to prepare and file SBA Form 468 or as any Governmental
Authority asserting jurisdiction over such Lender may reasonably request or require.


 


(e) Each Company will
at all times comply with the non-discrimination requirements of Title 13, Code of Federal Regulations, Parts 112, 113 and
117 for so long as Lender holds any interest in either Company, directly or indirectly.


 


6.22 Post-Closing
Legal Opinion Letter. Each Company hereby covenants and agrees that in the event there are any future amendments to, modifications
of, or any amendment and restatements of, this Agreement or any of the other Loan Documents, such Company shall cause to be delivered
to the Lenders in connection therewith an opinion letter from Companies’ counsel (including local Delaware counsel), in form
and substance acceptable to the Lenders; provided, however, nothing herein shall be construed in any way as an agreement,
intention, proposal or commitment by the Lenders, nor shall anything set forth herein bind the Lenders in any way, to amend, modify
or amend and restate this Agreement or any of the other Loan Documents at any time in the future in any respect.


 


6.23 Post-Closing
Covenants. The Companies shall satisfy all of the post-closing covenants and agreements set forth on Schedule 6.23
within the time periods required thereby, which covenants and agreements are incorporated herein by reference thereto as if fully
set forth herein.


 


SECTION
7. NEGATIVE COVENANTS.


 


Subject to the provisions
of Section 6.16(i), the Companies covenant and agree that from and after the Closing Date and so long as any of the Obligations
remain outstanding and unpaid, in whole or in part, the Companies will observe the following covenants unless the Required Lenders
shall otherwise consent in writing:


 


7.1 Debt.
Each Company agrees that it will not, nor will it permit any Subsidiary to, create, incur, assume or suffer or permit to exist
any Debt, including indebtedness for borrowed money or any indebtedness constituting the deferred portion of the purchase price
of any property, except:


 


(a) any Obligations,
whether evidenced by the Senior Subordinated Notes or any other instruments;


 


(b) Debt to suppliers
and other trade creditors incurred in the ordinary course of business by such Company and its Subsidiaries;


 






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(c) Senior Debt in
the aggregate maximum amount equal to the amount defined as “Senior Debt” under and pursuant to Senior Lender Subordination
Agreement; provided, however, the Borrowers shall be permitted to refinance the Senior Debt with another financial
institution (a “Replacement Senior Lender”) subject to the satisfaction of the following conditions:
(i) the aggregate principal amount of the replacement senior debt to be provided by such Replacement Senior Lender shall not exceed
the maximum amount of Senior Debt permitted in accordance with this Section 7.1(c) (the “Replacement
Senior Debt”); (ii) the Lenders shall have received not less than thirty (30) days prior written notice of the closing
of any Replacement Senior Debt (including copies of all documents relating to such Replacement Senior Debt in “draft”
form not less than fifteen (15) Business Days prior to the closing thereof and final copies of such documents promptly upon such
closing (the “Replacement Senior Loan Documents”); (iii) the Replacement Senior Loan Documents shall
be satisfactory to the Lenders and on terms substantially similar to the Senior Loan Documents, including, without limitation,
similar amortization periods with respect to the repayment of the Senior Debt and financial covenants similar to the financial
covenants currently set forth in the Senior Loan Documents; (iv) the Replacement Senior Lender and the Lenders shall have executed
an intercreditor and subordination agreement dated the date of the closing of such Replacement Senior Debt, in such form as may
be reasonably required by the Replacement Senior Lender with respect to the Replacement Senior Debt but containing terms which
are not materially more onerous on the Lenders as the Senior Lender Subordination Agreement; and (v) the net cash proceeds received
by Borrowers from the Replacement Senior Debt shall be used by the Borrowers to repay the outstanding principal balance due and
owing by Borrowers under the Senior Debt, which repayment shall be accompanied by a permanent termination of the Senior Debt and
a release on any Liens on the Companies’ assets.  


 


(d) Debt to the Sellers
in respect of the Earnout Payments.


 


7.2 Liens.


 


(a) Each Company agrees
that it will not, nor will it permit any Subsidiary to, create, assume, or suffer to exist, any Lien of any kind upon the Premises
or any of its other assets, whether now owned or hereafter acquired, except:


 


(i) the
Liens created under the Senior Loan Documents;


 


(ii) Liens
for taxes not yet payable or being contested in good faith by appropriate proceedings and for which adequate reserves have been
provided on the books of such Company or Subsidiary;


 


(iii) mechanics’,
materialmen’s, warehousemen’s, carriers’ or other like Liens arising in the ordinary course of business of such
Company or any Subsidiary, arising with respect to obligations which are not overdue for a period longer than thirty (30) days
or which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided on the
books of such Company or any Subsidiary;


 






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(iv) deposits
or pledges to secure the performance of bids, tenders, contracts, leases, public or statutory obligations, surety or appeal bonds
or other deposits or pledges for purposes of a like general nature or given in the ordinary course of business by such Company
or any Subsidiary; and


 


(v) other
encumbrances consisting of zoning restrictions, easements, restrictions on the use of real property or minor irregularities in
the title thereto, which do not arise in connection with the borrowing of, or any obligation for the payment of, money and which,
in the aggregate, do not materially detract from the value of the Premises or the business, properties or assets of such Company
or any Subsidiary.


 


(b) Each Company shall
not, nor shall it permit any Subsidiary to, agree or covenant with or promise any Person, other than the Senior Lender and the
Lender, that it will not pledge its assets or properties or otherwise grant any Liens on any of its property, real or personal,
whether now owned or hereafter acquired nor pledge, or permit to be pledged, any equity interest in any Company.


 


7.3 Investments;
Permitted Investments. Each Company agrees that it will not, nor will it permit any Subsidiary to, make or suffer to exist
any Investment (by way of transfer of property, contribution to capital, purchase of stock, securities, partnership or other ownership
interests or evidence of indebtedness, acquisition of the business or assets or otherwise) in, or make or suffer to exist any advances
or loans to, any Person, except that:


 


(a) each Company and
its Subsidiaries, if any, may extend trade credit under usual and customary arm’s length terms in the ordinary course of
business;


 


(b) Investments (including
equity securities and debt obligations) of the Companies and their Subsidiaries received in connection with the bankruptcy or reorganization
of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business; and


 


(c) each Company and
its Subsidiaries may make Permitted Investments.


 


7.4 Restricted
Payments; Acquisition or Issuance of Securities. Each Company agrees that it will not, nor will it cause or permit any
Subsidiary to, declare or pay any Restricted Payment (whether in cash or in property) and no Company or any Subsidiary shall issue
any such Capital Stock, warrants, rights, or other securities to any Person (or permit any Subsidiary to do so) except as follows:


  


(a) LTN Staffing may
make distributions to the Parent for the purpose of which is to fund distributions permitted to be made by the Parent hereunder;


 


(b) BG Staffing may
make distributions to LTN Staffing;


 


(c) BG Personnel,
BG Personnel Staffing and B G Staff Services may make distributions to BG Staffing;


 


(d) the Brookside
II Warrant Units may be issued by the Parent to Brookside II upon exercise of the Brookside II Warrant;


 






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(e) the Calvert Warrant
Units may be issued by the Parent to Calvert upon exercise of the Calvert Warrant;


 


(f) the Parent may
satisfy its put obligations under and pursuant to Section 6.16;


 


(g) the Parent may
make distributions to Brookside and Calvert pursuant to the Warrants;


 


(h) additional Class
B Units may be issued to members of the Borrowers’ management following the Closing Date, so long as (i) the Class B Units
are profits interests issued under an equity incentive plan approved by the Board and the Lenders and (ii) the Lenders shall consent
in writing to the issuance of such Class B Units;


 


(i) the Parent may
issue Units for the purpose of raising additional equity capital that is required for the Companies’ business so long as
(i) the issuance is approved by the Board, (ii) the Lenders have the pre-emptive right to purchase their respective pro-rata share
of such Units in accordance with the provisions of Section 6.2 of the LLC Agreement, (iii) the issuance is dilutive on a proportionate
basis to other holders of Units (determined on an as-converted or as-exercised, as appropriate, basis) and (iv) the issuance does
not give rise to a Change of Control; and


 


(j) the Parent may
make Tax Distributions so long as no Default or Event of Default has occurred or would be caused thereby.


 


7.5 Mergers,
Consolidations; Amendment of Organizational Documents. Each Company agrees that it will not, nor will it permit any Subsidiary
to, (i) enter into any transaction of merger, consolidation, share exchange, reorganization or similar transaction, except
that, so long as no Default or Event of Default exists or would result therefrom, any Borrower may merge, consolidate or reorganize
with and into another Borrower, (ii) complete a public offering, or (iii) modify, amend, restate, or supplement any Organizational
Document of any Company or Subsidiary, except that, so long as no Default or Event of Default exists or would result therefrom,
any Borrower may modify, amend, restate or supplement, its Organizational Documents so long as such modification, amendment, restatement
or supplement does not violate or cause such Borrower to violate any term or provision of the Loan Agreement or any of the other
Loan Documents.


  


7.6 Disposition
of Assets. Each Company agrees that it will not, nor will it permit any Subsidiary to, liquidate or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, pledge, or otherwise transfer or dispose of any part of its properties,
assets or business except that each Company and its Subsidiaries may sell used equipment no longer used or useful in connection
with their respective businesses so long as such sale does not or, as far as any Company can reasonably foresee, could have a Material
Adverse Effect, provided that the sales permitted hereunder shall be conditioned upon (x) the absence of a Default
or Event of Default (and any Default or Event of Default arising therefrom, (y) the sale being completed for a purchase price equal
to or greater than fair market value, and (z) the proceeds from the sale, net of reasonable expenses, being reinvested in the Companies.


 






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7.7 Board Fees.
The Parent will not, nor will it permit any Subsidiary to, pay fees to members of the Board (or similar governing body), except
that an outside independent director may receive fees in an aggregate amount not to exceed Twenty-Five Thousand Dollars ($25,000.00)
during any Fiscal Year so long as the aggregate amount of fees paid to all outside independent directors does not exceed Seventy-Five
Thousand Dollars ($75,000.00) during any Fiscal year; provided that (i) none of the members on the Board as of the
Closing Date shall be considered outside independent directors for purposes of this Section 7.7 and (ii) none of the fees
otherwise due and payable by the Parent to outside independent directors shall be paid while there is an Event of Default under
Section 8.1(a)(i) (but such fees, together with past due fees, may be paid if and when such Event of Default has been cured).


 


7.8 Guaranty
Obligations. Each Company agrees that it will not, nor will it permit any Subsidiary to, become or remain liable, directly
or indirectly, in connection with Guaranty Obligations, except that (i) the Companies and any Subsidiary may endorse negotiable
instruments for collection in the ordinary course of their respective businesses and (ii) the Parent may guarantee the Borrower’s
obligations in respect of the Senior Debt.


 


7.9 Sales and
Lease-Backs. Each Company agrees that it will not, nor will it permit any Subsidiary to, enter into any arrangement, directly
or indirectly, with any Person, whereby such Company or any Subsidiary shall sell or transfer any property, real or personal, whether
now owned or hereafter acquired, and thereafter rent or lease such property or other property which such Company or such Subsidiary
intends to use for substantially the same purpose or purposes as the property being sold or transferred.


 


7.10 Continuance
of Business.


 


(a) Each Company agrees
that it will not, nor will it permit any Subsidiary to, engage in any line of business other than those in which such Company was
actively engaged immediately prior to the Closing Date. In addition thereto, no Company or any Subsidiary will engage in any activities
or use, directly or indirectly, the proceeds from the sale of the Senior Subordinated Loans for any purpose for which a small business
investment company is prohibited from providing funds by the SBIC Act, including 13 C.F.R. §107.


 


(b) Parent agrees
that it will not engage in any line of business other than to serve as a holding company for the ownership interests of the Borrowers.


 


7.11 Voluntary
Prepayments; Modification of Debt Instruments; Management Agreements. Each Company agrees that it will not, nor will it
permit any Subsidiary to, (i) prepay, purchase, redeem or otherwise acquire for value prior to the stated maturity thereof
all or any part of any Debt of such Company or any Subsidiary, if any, for borrowed money (other than the Obligations as provided
herein and the Senior Debt as provided in the Senior Loan Documents), (ii) amend, modify or supplement in any way, or request
any waiver of the provisions of, (A) any instrument providing for or evidencing any Debt of such Company or any of its Subsidiaries,
if any, for borrowed money or constituting the deferred purchase price of property or assets, (B) Sections 5.2, 6, 7, 8, 10 or
12 of the LLC Agreement, (C) the Management Agreement or (D) any employment, non-competition, or other agreement relating or pertaining
to the management of the Companies or (iii) enter into any agreement under which it is responsible for the payment of Management
Fees (other than the Management Agreement).


 






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7.12 Protection
of Property. Each Company agrees that it will not, nor will it permit any Subsidiary to, permit any equipment to become
a fixture or an accession to other goods.


 


7.13 Transactions
with Affiliates. Except as expressly permitted by this Agreement, each Company agrees that it will not, nor will it permit
any Subsidiary to, directly or indirectly:


 


(a) make any Investment
in, or loan or advance to, an Affiliate of such Company, except that, so long as no Default or Event of Default exists or would
result therefrom, any Borrower may make any Investment in, or loan or advance to another Borrower;


 


(b) transfer, sell,
lease, assign or otherwise dispose of any assets to an Affiliate of such Company, except that, so long as no Default or Event of
Default exists or would result therefrom, any Borrower may transfer, sell, lease, assign or otherwise dispose of any assets to
another Borrower;


 


(c) merge into or
consolidate with or purchase or acquire assets from an Affiliate of such Company, except that, so long as no Default or Event of
Default exists or would result therefrom, each Borrower may merge or consolidate into another Borrower; or


 


(d) enter into any
other transaction directly or indirectly with or for the benefit of any Affiliate (including, without limitation, any guarantees
or assumptions of obligations of an Affiliate) of such Company except that, so long as no Default or Event of Default exists or
would result therefrom, any Company may enter into a transaction directly or indirectly with another Company;


 


provided that the Companies and any Subsidiary may enter into any transaction with an Affiliate of the Companies for the leasing of property,
the rendering or receipt of services or the purchase or sale of assets in the ordinary course of business for a consideration
which is substantially as advantageous to the Companies or such Subsidiary as the consideration which it would obtain in a comparable
arm’s length transaction with a Person which is not an Affiliate.


  


7.14 Fiscal
Year; Auditors. Each Company agrees that it will not, nor will it permit any Subsidiary to, change its Fiscal Year or its
auditors without the prior written consent of the Lenders, which consent shall not be unreasonably withheld.


 


7.15 OFAC.
Each Company agrees that it will not, nor will it permit any Subsidiary to, (i) become a Person whose property or interests
in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)),
(ii) engage in any dealings or transactions prohibited by Section 2 of such executive order, or be otherwise associated
with any such person in any manner violative of Section 2, or (iii) otherwise become a Person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC regulation or executive
order.


 






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7.16 Management
Fees. No Company or any Subsidiary shall pay any Management Fees to any Person, except that the Parent may pay to the Sponsor
Management Fees, provided that (i) the annual amount of Management Fees may not exceed One Hundred Seventy-Five Thousand Dollars
($175,000.00), (ii) the quarterly Management Fees may not exceed Forty-Three Thousand Seven Hundred Fifty Dollars ($43,750.00),
(iii) no Management Fees may be paid if an Event of Default has occurred and is continuing under Section 8.1(a), (iv) the
Companies are in compliance with the Financial Covenants at the time of the payment of such Management Fees and would be in pro-forma
compliance with the Financial Covenants after giving effect to the payment of such Management Fees, and (v) payment of the Management
Fees is permitted under Section 9.6(c) of the Senior Loan Agreement as in effect on the date hereof. At the request of the Lenders,
the Companies covenant and agree to cause any recipient of Management Fees to acknowledge, recognize and agree to the restrictions
contained in clause (iii) of the immediately preceding sentence of this Section 7.16. 


 


7.17 Earnout
Payments. No Company shall make any payment in respect of Earn Out Payments unless (i) the Companies have provided the
Lenders with advance written notice of the Earn Out Payment, together with any supporting documentation relating thereto, but only
if such advance notice and documentation requirement is required under the Senior Loan Agreement, (ii) no Default or Event of Default
shall be in existence at the time of such Earn Out Payment, (iii) no Default or Event of Default shall occur as a result of the
Earn Out Payment and (iv) the Earn Out Payment shall be expressly permitted under the Senior Loan Agreement. At the request of
the Lenders, the Companies covenant and agree to cause any recipient of Earn Out Payments to acknowledge, recognize and agree to
the restrictions contained in clauses (ii) and (iii) of the immediately preceding sentence of this Section 7.17.


 


7.18 Registration
Rights. Parent covenants and agrees that it shall not, nor shall it permit any Company, to grant demand, S-3, piggyback
or other registration rights for and with respect to any equity security of Parent (or any successor thereto formed for the purpose
of or in contemplation of an Initial Public Offering) unless the Parent and/or such other Company provides such registration rights
to the Lenders as well.


 


SECTION
8. EVENTS OF DEFAULT, REMEDIES.


 


8.1 Events of
Default. The following shall constitute “Events of Default:”


 


(a) Non-Payment.
(i) Failure by the Companies to pay the principal of or accrued interest on any Senior Subordinated Note or any other instrument
evidencing any Obligation by the date such amount becomes due, or (ii) failure of the Companies or any Subsidiary to pay any
other amount payable to the Lenders, whether under this Agreement, any other Loan Document or otherwise, within three (3) Business
Days after such amount becomes due.


 






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(b) Falsity
of Representations and Warranties. Any representation or warranty made by the Companies or any Subsidiary in this Agreement
or in any other Loan Document or in any certificate, financial or other statement furnished at any time under or in connection
with this Agreement or any other Loan Document shall be false or misleading in any material respect.


 


(c) Failure
to Perform Certain Covenants. Failure by the Companies or any Subsidiary to observe or perform any other covenants, conditions
or provisions contained in this Agreement or in any other Loan Document, provided that, except with respect to a violation of the
covenants contained in Sections 6.11 (Joinders), 6.13 (Financial Covenants), 6.14 (Board Observation
Rights), 6.15 (Preemptive Rights), 6.16 (Put Rights), 6.21 (SBA Covenants), 6.23 (Post-Closing Covenants)
or Section 7, such failure shall continue for a period of thirty (30) days after the earlier of (i) written notice
thereof from any Lender to the Companies, or (ii) the date on which any officer or manager of any Company knew, or should
reasonably have known, of such failure.


 


(d) Default
Under Other Obligations. Any Company or any Subsidiary:


 


(i) defaults
in any payment of principal of or interest on any material obligations for borrowed money (other than under the Senior Subordinated
Notes or in connection with the Senior Debt under and pursuant to the Senior Loan Agreement) or for the deferred purchase price
of property beyond any period of grace provided with respect thereto; or


 


(ii) defaults
in the performance of any other agreement, term or condition contained in any such material obligation or in any agreement relating
thereto beyond any period of grace provided with respect thereto,


 


if the effect of such default is to cause,
or to permit the holder or holders of such material obligation (or a trustee on behalf of such holder or holders) to then cause,
such material obligation to become due prior to its stated maturity. As used herein, “material obligation” means any
obligation of any Company or Subsidiary in excess of Five Hundred Thousand Dollars ($500,000.00).


 


(e) Voluntary
Bankruptcy, Etc. The commencement by any Company or any Subsidiary of a voluntary case under the Bankruptcy Code, as now
constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency, reorganization, rehabilitation
or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of any Company or any Subsidiary or for any substantial part of its property,
or the making by it of any assignment for the benefit of creditors, or the failure of any Company or any Subsidiary generally to
pay its debts as such debts become due, or the taking of any limited liability company action by or corporate action, as appropriate,
by any Company or any Subsidiary in furtherance of any of the foregoing.


 


(f) Involuntary
Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of
any Company or any Subsidiary in an involuntary case under the Bankruptcy Code, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of any Company or any Subsidiary or for any substantial part of its property, or ordering the
winding-up or liquidation of its affairs and the continuance of any such decree or order unstayed and in effect for a period of
sixty (60) days.


 






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(g) ERISA.


 


(i) (A)(1) Any
Employee Pension Plan is terminated within the meaning of Title IV of ERISA, or (2) a trustee is appointed by the appropriate
United States District Court to administer any Employee Pension Plan, or (3) the PBGC institutes proceedings to terminate
any Employee Pension Plan, or (4) any Reportable Event occurs which the Lenders determine in good faith indicates a substantial
likelihood that an event described in (1), (2), or (3) above will occur, or (5) any Company or any of its Controlled Group
Members incur any Withdrawal Liability with respect to any Multiemployer Plan or (6) any Multiemployer Plan enter Reorganization,
and (B) with respect to events described in (1)-(4) above, only, the benefit commitments (within the meaning of ERISA §4001(a)(16)),
exceed the market value of the assets in the fund under the Employee Pension Plan by, five percent (5%) or more of such Company’s
or its Controlled Group Members’ tangible net worth;


 


(ii) there
occurs any Accumulated Funding Deficiency with respect to any Employee Pension Plan and any Company or any of its Controlled Group
Members fails to correct such Accumulated Funding Deficiency prior to the end of the taxable period within the meaning of Code
§4971(c)(3); or


 


(iii) any
Employee Pension Plan loses its tax-qualified status.


 


(h) Default
Under Other Documents. An “Event of Default” or similar event shall have occurred and be continuing
under any other Loan Document.


 


(i) Default
Under Senior Loan Documents; Cross-Acceleration. An “Event of Default” or similar event shall
have occurred and be continuing under any Senior Loan Document which gives rise to a cessation of Permitted Payments as provided
by the terms of the Senior Lender Subordination Agreement (a “Senior Lender Loan Document Default”);
provided, however, the waiver by the Senior Lender of such Senior Lender Loan Document Default which is accompanied
by the payment to the Lenders of all past due Permitted Payments (including late charges) and the resumption of the payment of
scheduled Permitted Payments shall constitute an automatic cure of the Event of Default described in this Section 8.1(i).


 


(j) Unenforceability.
(i) Any material provision of any of the Loan Documents shall at any time for any reason cease to be a valid and binding obligation
of any Company or Subsidiary which is a party thereto, or shall be declared to be null and void or (ii) the validity or enforceability
thereof shall be contested by any Company or Subsidiary or any governmental agency or authority, or any such Company or Subsidiary
shall deny that it has any further liability or obligation under any Loan Document to which it is a party.


 






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(k) Judgments.
Any judgments are entered against any Company in an aggregate amount exceeding Five Hundred Thousand Dollars ($500,000) in any
fiscal year or in such lesser amount as could reasonably be expected to have a Material Adverse Effect, that are not covered by
insurance and all such judgments shall not have been satisfied, stayed or bonded pending appeal within thirty (30) days from the
entry thereof, provided that all rights of execution on any attachment or judgment lien or other action by such judgment creditor
against any Company and/or its Subsidiaries, as appropriate, have been discharged or stayed.


 


(l) Criminal
and Related Violations. The indictment of any Company or Subsidiary under any criminal statute of criminal or civil proceedings
against any Company or Subsidiary pursuant to which statute or proceedings the penalties or remedies sought or available include
forfeiture of any material property of any Company or Subsidiary, or any Company or Subsidiary engages or participates in any “check
kiting” activity regardless of whether a criminal investigation has been commenced.


 


(m) Liquidity
Event. The occurrence of a Liquidity Event.


 


8.2 Acceleration.


 


(a) Upon the occurrence
of a Non-Bankruptcy Event of Default, but subject to the automatic cure provisions of Section 8.1(i), the Required
Lenders may, by written notice to the Borrower, declare the Senior Subordinated Notes, and all other instruments evidencing the
Obligations to be due and payable, whereupon the principal amount of the Senior Subordinated Notes and all outstanding Obligations,
together with accrued interest thereon and all other amounts payable thereunder, shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or
in the documents evidencing the same to the contrary notwithstanding.


 


(b) Upon the occurrence
of a Bankruptcy Event of Default, the Senior Subordinated Notes and all instruments evidencing the Obligations shall automatically
and immediately become due and payable, in all cases without any action on the part of the Lender.


 


8.3 Right of
Setoff. Upon the occurrence of a Default or an Event of Default, the Lenders shall have the right, in addition to all other
rights and remedies available to them, to set off against the unpaid balance of the Obligations, any debt owing to any Company
by the Lenders.


 


8.4 No Marshalling,
Etc., Required. If an Event of Default shall have occurred and be continuing, the Lenders shall not be required to marshal
any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular
order and the Companies waive, to the fullest extent that they lawfully can, any right they might have to require the Lenders to
pursue any particular remedy before proceeding against them.


 


8.5 Remedies
Cumulative. The Lenders may exercise any of their rights and remedies set forth in this Agreement and the other Loan Documents.
The remedies of the Lenders shall be cumulative and concurrent, and may be pursued singly, successively, or together, at their
sole discretion, and may be exercised as often as the occasion therefore shall occur; and the failure to exercise any such right
or remedy shall in no event be construed as a waiver or release thereof.


 






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8.6 Annulment
of Defaults. Section 8.1 is subject to the condition that, if at any time after the principal of the Senior
Subordinated Notes or any other Obligations and liabilities of the Companies to the Lenders under any other Loan Document shall
have become due and payable, and before any judgment or decree for the payment of the moneys so due, or any portion thereof, shall
have been entered, then and in every such case the Lenders may, by written instrument signed by the Lenders and filed with the
Companies, rescind and annul such declaration and its consequences; but no such rescission or annulment shall extend to or affect
any subsequent Default or Event of Default or impair any right consequent thereon.


 


8.7 Right to
Cause a Liquidity Event. In addition to the foregoing rights and remedies, in the event that an Event of Default has occurred
under Section 8.1(a)(i) or Section 8.1(a)(ii) which is not cured within one hundred eighty (180)
days and in addition to all other rights and remedies available to the Lenders as a result thereof, the Companies shall take, or
cause to be taken, any and all action necessary to cause a Liquidity Event to occur as soon as possible thereafter, but in any
event within one hundred eighty (180) days, which would result in the payment and satisfaction in full of the Obligations.


 


8.8 Appointment
of Representative Under Loan Documents.


 


(a) Each Lender hereby
designates and appoints Brookside and Calvert as jointly as their representative (in such capacity, the “Representative”)
of such Lender under the Loan Documents, and each Lender authorizes the Representative to take such action on its behalf under
the provisions of the Loan Documents as the Representative deems appropriate and to exercise all powers of the Lenders under the
Loan Documents, together with such other powers as are reasonably incidental thereto. Borrower shall be entitled to rely upon any
communication it receives from the Representative as the action of the Lenders and shall not be charged with the obligation to
inquire of the Lenders as to whether such communication was authorized by the Lenders. Notwithstanding any provision to the contrary
elsewhere in the Loan Documents, the Representative shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into the Loan Documents or otherwise exist against the Representative.


 


(b) The Representative
may exercise any of its powers under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such powers. The Representative shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable care.


 






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(c) Neither the Representatives
nor any of its officers, directors, partners, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan Documents (except for its
or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any Lender for any
recitals, statements, representations or warranties made by the Companies or any officer thereof contained in the Loan Documents
or in any certificate, report, statement or other document referred to or provided for in, or received by the Representative under
or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency
of the Loan Documents or for any failure of the Companies to perform their obligations thereunder. The Representative shall not
be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained
in, or conditions of, the Loan Documents, or to inspect the properties, books or records of the Companies.


 


(d) The Representative
shall be entitled to rely, and shall be fully protected in relying, upon any note, writing resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Person and upon advice and
statements of legal counsel (including without limitation, counsel to the Companies, independent accountants and other experts
selected by the Representative. The Representative may deem and treat the holder of any of the Securities as the owner thereof
for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Representative.
The Representative shall be fully justified in acting or refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of the holders of the Senior Subordinated Notes or, after payment in full of the Senior Subordinated
Notes and all amounts payable hereunder in respect of the Senior Subordinated Notes, the holders the SubDebt Units and the Warrant
Units (the “Required Lenders”) as it deems appropriate or it shall first be indemnified to its satisfaction
by the Required Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing
to take any such action. The Representative shall in all cases by fully protected in acting, or in refraining from acting, under
the Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of the Securities.


 


(e) The Representative
shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default under any of the Loan Documents
unless the Representative has received notice from a Lender or the Borrower referring to the Loan Documents, describing such Default
or Event of Default and stating that such notice is a “notice of default”. In the event that the Representative
receives such a notice, the Representative shall give notice thereof to the Lenders. The Representative shall take such action
with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that
unless and until the Representative shall have received such directions, the Representative may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable
in the best interests of the Required Lenders.


 






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(f) Each Lender expressly
acknowledges that neither the Representative nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the Representative hereinafter taken, including any review
of the affairs of the Companies, shall be deemed to constitute any representation or warranty by the Representative to any Lender.
Each Lender represents to the Representative that it has, independently and without reliance upon the Representative or any Lender,
and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and creditworthiness of the Companies and made its own decision to
purchase the Securities and enter into the Loan Documents. Each Lender also represents that it will, independently and without
reliance upon the Representative or any other Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the business operations, property, financial and other
condition and creditworthiness of the Companies. The Representative shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects
or creditworthiness of the Companies which may come into the possession of the Representative or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.


 


(g) The Lenders agree
to indemnify the Representative in its capacity as such (to the extent not reimbursed by the Companies and without limiting the
obligation of the Companies to do so), ratably according to the respective outstanding amounts of their Senior Subordinated Notes,
from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of any
of the debentures or the termination of the Loan Documents) be imposed on, incurred by or asserts against the Representative in
any way relating to or arising out of the Loan Documents) be imposed on, incurred by or asserted against the Representative in
any way relating to or arising out of the Loan Documents or any documents contemplated by or referred to herein or therein or the
Transactions or any action taken or omitted by the Representative under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely from the Representative’s gross negligence or
willful misconduct. The agreements in this Section 8.8(g) shall survive the payment of the Senior Subordinated Notes
and all other amounts payable under the Loan Documents in respect of the Senior Subordinated Notes, and shall survive the issuance
of the SubDebt Units and the Warrant Units.


 


(h) The Representative
may resign as Representative upon ten (10) days’ notice to the Lenders. If the Representative shall resign as Representative
under the Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor representative for the Lenders,
whereupon such successor representative shall succeed to the rights, powers and duties of the Representative, and the term “Representative”
shall mean such successor representative effective upon its appointment, and the former Representative’s rights, powers and
duties as Representative shall be terminated, without any other or further act or deed on the part of such former Representative
or the Lenders or any of the parties to the Loan Documents. After any retiring Representative’s resignation as Representative,
the provisions of this Section 8.8 shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Representative under the Loan Documents.


 






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8.9 Distribution
of Proceeds. In the event that following the occurrence or during the continuance of any Default or Event of Default, any
Lender receives any monies with respect to the amounts due hereunder, such monies shall be distributed for application as follows:


 


(a) First,
to the payment of, or (as the case may be) the reimbursement of the Representative and the Lenders for or in respect of all reasonable
costs, expenses, disbursements and losses which shall have been incurred or sustained by the Lenders in connection with the collection
of such monies by the Lender, for the exercise, protection or enforcement by the Lender of all or any of the rights, remedies,
powers and privileges of the Lenders under the Senior Subordinated Notes and the Warrants or relating to the Senior Subordinated
Notes and the Warrants under this Agreement or any of the other Loan Documents;


 


(b) Second,
to all other Obligations in such order or preference as the Lenders may determine; provided, however, that distributions
shall be made to the Lenders pro-rata; and


 


(c) Third,
the excess, if any, shall be returned to the Companies or to such other Persons as are entitled thereto.


 


SECTION
9. MISCELLANEOUS.


 


9.1 No Waiver;
Cumulative Remedies. No failure or delay on the part of the Lenders in exercising any right, power or privilege hereunder
or under the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege hereunder or thereunder preclude or require any other or further exercise thereof or the exercise of any other right,
power or privilege. The Lenders shall not be deemed, by any act of omission or commission, to have waived any of their rights or
remedies hereunder (or any other provision hereof) unless such waiver is in writing and signed by the Lenders, and then only to
the extent specifically set forth in writing. A waiver with respect to one event shall not be construed as continuing or as a bar
to or a waiver of any right or remedy with respect to a subsequent event. The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by law.


 


9.2 Notices.
All notices and other communications shall have been duly given and shall be effective (i) when delivered, (ii) when
transmitted via telecopy (or other facsimile device) to the numbers set forth below, (iii) the Business Day following the
day on which the same has been delivered prepaid to a reputable national overnight air courier service, or (iv) the third
Business Day following the day on which the same is sent by certified or registered mail, post prepaid, in each case to the respective
parties at the address set forth below, or at such other address as such party may hereafter specify by written notice to the other
party hereof:


 


	The Companies:	LTN Acquisition, LLC
	 	LTN Staffing, LLC
	 	BG Staffing, LLC
	 	BG Personnel Services, LP
	 	B G Staff Services, Inc.
	 	14900 Landmark Boulevard, Suite 300
	 	Dallas, Texas 75254
	 	Attention:  L. Allen Baker, Jr, President and CEO



 






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	with a copy to:	Fulbright & Jaworski, L.L.P.
	 	2200 Ross Avenue, Suite 2800
	 	Dallas, Texas 75201
	 	Attention: William Paul Bowers, Esq
	 	 
	Calvert:	Legg Mason SBIC Mezzanine Fund, L.P.
	 	111 South Calvert Street, Suite 1800
	 	Baltimore, MD 21202
	 	Attention:  Mr. Joseph W. Hasse
	 	 
	Brookside and Brookside II:	Brookside Pecks Capital Partners, L.P.
	 	Brookside Mezzanine Fund II, L.P.
	 	201 Tresser Boulevard, Suite 330
	 	Stamford, CT 06901-3435
	 	 
	 	Attention: Mr. Corey L. Sclar
	With a copy to:	Stevens & Lee
	(in the case of	620 Freedom Business Center
	notices to	Suite 200
	Lenders)	King of Prussia, PA  19406
	 	 
	 	Attention:  Steven M. Tyminski, Esquire



 


9.3 Reimbursement
of Lenders. The Companies agree to pay all out-of-pocket costs and expenses of the Lenders, including reasonable fees and
disbursements of counsel, in connection with or incident to (i) the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents, together with the Transactions, (ii) any amendment, modification, waiver, or consent
relating hereto or thereto including, without limitation, any of the foregoing which relate or pertain to any work-out, restructuring,
or renegotiation of this Agreement or any of the Loan Documents, (iii) the enforcement of this Agreement or any of the Loan
Documents (and any of the agreements, documents or instruments executed in connection therewith and/or referred to therein), including,
without limitation, the reasonable fees and disbursements of counsel for the Lenders in connection with any such enforcement actions,
(iv) the review by the Lenders of, and advice sought from counsel with respect to, provisions relating to Defaults and Events
of Default and actions which the Lenders are permitted to take under or in connection with this Agreement and the other Loan Documents
provided that such review is initiated by a good faith belief by the Lenders that there may be a Default or an Event of Default,
including, without limitation, the reasonable fees and disbursements of counsel for the Lenders in connection with any such review,
(v) any bankruptcy, insolvency or similar proceeding instituted by or against any Company or Subsidiary, (vi) amounts
paid by the Lenders to third parties in connection with the maintenance and/or preservation of its rights and interests hereunder,
(vii)   advances made by the Lenders for the account of the Companies as authorized under this Agreement or any
of the other Loan Documents, (viii) the preparation for negotiations regarding consultations concerning the defense or prosecution
of any legal proceedings involving any claim (including third-party claims) made or threatened against the Lenders related to or
involving the Loan Documents, the Transactions, the Lenders’ relationship with the Companies, or any actions taken by or
on behalf of the Lenders under the Loan Documents, and (ix) all other costs and expenses incurred by or for the account of
the Lenders in connection with the Transactions (including, without limitation, expenses incurred in connection with the Lenders’
due diligence examination and review of the Companies, environmental site assessment fees, appraisal fees, lien search costs, and
filing and recordation fees).


 






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9.4 Payment
of Expenses and Taxes. In addition to payment of the expenses and counsel fees provided for in Section 9.3,
the Companies agree to pay, and to save the Lenders harmless from any delay in paying, stamp and other similar taxes, if any, including,
without limitation, all levies, impositions, duties, charges or withholdings, together with any penalties, fines or interest thereon
or other additions thereto, which may be payable or determined to be payable in connection with the execution and delivery of this
Agreement and the Loan Documents or any modification of any thereof or any waiver or consent under or in respect of any thereof.


 


9.5 Survival
of Representations and Warranties. All representations, warranties, covenants and agreements made in this Agreement and
all other Loan Documents shall survive the execution and delivery of the Loan Documents and the making of the Senior Subordinated
Loans hereunder. The provisions of Sections 9.3, 9.4, 9.9, 9.10 and 9.11 hereof shall survive
payment of the Obligations.


 


9.6 Binding
Effect; Assignment. This Agreement, the Senior Subordinated Notes and the other Loan Documents shall inure to the benefit
of the Companies, the Lenders and all future holders of the Senior Subordinated Notes and each of their respective successors and
assigns. This Agreement, the Senior Subordinated Notes and the other Loan Documents shall be binding upon the Companies, the Lenders
and all future holders of any Senior Subordinated Note and their respective successors and assigns, and no such Person may assign,
delegate or transfer any Loan Document or any of its rights or obligations thereunder without the prior written consent of the
Lenders. No rights are intended to be created under any Loan Document for the benefit of any third party donee, creditor or incidental
beneficiary of any Company. Nothing contained in any Loan Document shall be construed as a delegation to the Lenders of any other
Person’s duty of performance. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, EACH COMPANY ACKNOWLEDGES AND AGREES
THAT EACH LENDER at any time and from time to time may (SUBJECT TO THE LIMITATIONS ON,
AND REQUIREMENTS FOR, THE ASSIGNMENT OR TRANSFER OF THE SENIOR SUBORDINATED NOTES CONTAINED HEREIN or therein) sell, assign or
transfer all or any part of its rights or obligations under ANY SENIOR SUBORDINATED NOTE, OR OTHER LOAN DOCUMENT TO OTHER PERSONS
(EACH SUCH TRANSFEREE, ASSIGNEE OR PURCHASER, AN “aDDITIONAL LENDER”) and  grant participating interests
in all or any part of its rights or obligations under EITHER SENIOR SUBORDINATED note OR OTHER LOAN DOCUMENT to other persons (each
such person, a “Participant”). Each Additional Lender shall (i) be subject to the approval
of the Borrower (which approval shall not be unreasonably withheld), provided that no such approval shall be required if (y) a
Default or Event of Default has occurred or (z) the Additional Lender is an Affiliate of such Lender, and (ii) have all of
the rights and benefits with respect to the Senior Subordinated Notes and/or the other Loan Documents held by it as fully as if
the original holder thereof and shall become a party to this Agreement by signing a counterpart of this Agreement or a joinder
or similar agreement. Each Participant shall have only the rights granted to it by such Lender granting its participating interest;
provided, however, that (i) such Lender’s obligations under this Agreement shall remain unchanged; (ii) such
Lender shall remain solely responsible to the Companies for the performance of such obligations; and (iii) the Companies shall,
unless otherwise notified in writing, continue to deal solely and directly with such Lender in connection with such Lender’s
rights, interests and obligations under this Agreement, the Senior Subordinated Notes and the other Loan Documents and such Lender
shall retain the sole right to enforce this Agreement.  Notwithstanding
anything to the contrary in the Senior Subordinated Notes or other Loan Document, the Companies shall not be obligated to pay under
this Agreement or any Senior Subordinated Notes to any Additional Lender or any Participant any sum in excess of the sum which
the Companies would have been otherwise obligated to pay under this Agreement had such transfer or participation not been effected.
Notwithstanding any other provision of any Loan Document, such Lender may disclose to any Additional Lender or Participant all
information, reports, financial statements, certificates and documents obtained under any provision of any Loan Document, subject
to the confidentiality obligations to which the Additional Lender and Participant may become subject under Section 6.14(b).
Each Lender shall also have the right to transfer and assign all or any portion of its Subdebt Units and the Warrants to an Additional
Lender or other Person subject, however, to the provisions of the LLC Agreement and this Agreement.


 






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9.7 Construction.
This Agreement, all Loan Documents, and the rights and obligations of the parties hereunder and thereunder, shall be governed by
and construed and interpreted in accordance with, the domestic internal laws of the State of Delaware without regard to its rules
pertaining to conflict of laws. The Section headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.


 


9.8 Severability.
Any provision contained in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 






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9.9 Indemnity.
The Companies hereby agree, whether or not any of the Transactions shall be consummated, to pay, assume liability for, and indemnify,
protect, defend, save and keep harmless each Lender (and its directors, officers, employees, shareholders, agents, successors,
assigns and Affiliates, the “Lender Indemnitees”) from and against, any and all liabilities, obligations,
losses, damages, settlements, claims, actions, suits, fines, penalties, costs and expenses (including, but not limited to, legal
and investigative fees and expenses) of whatsoever kind and nature, including, but not limited to claims based upon negligence,
strict or absolute liability, liability in tort, latent and other defects (whether or not discoverable), and any claim for patent,
trademark or copyright infringement which may from time to time be imposed on, incurred by or asserted against each Lender (whether
or not any such claim is also indemnified or insured against by any other Person) in any way relating to or resulting from this
Agreement, or any Loan Document, or any of the Transactions, provided that no Lender Indemnitee shall have the right
to be indemnified under this Section 9.9 for any liability resulting from the willful misconduct or gross negligence
of such Lender Indemnitee (as finally determined by a court of competent jurisdiction). In the event that the foregoing indemnity
is unavailable or insufficient to hold any Lender Indemnitee harmless, then the Companies shall (i) contribute to amounts
paid or payable by such Lender Indemnitee in respect of such Lender Indemnitee’s losses in such proportions as appropriately
reflect the relative benefits received by and fault of, the respective Companies, on the one hand, and such Lender Indemnitee,
on the other, in connection with the matters as to which such losses relate and other equitable considerations, but in no event
less than the maximum contribution amount permitted by law and (ii) in connection with the exercise of any Observation Right,
provide to the representative of each Lender who is serving as an observer or other Lender Indemnitee all rights under and benefits
of the indemnification provisions of the Organizational Documents of the Companies. The provisions of this Section 9.9
shall survive the payoff, release, foreclosure or other disposition, as applicable, of this Agreement and the Obligations.


 


9.10 Waiver
of Trial by Jury; Jurisdiction.


 


(a) Each party to
this Agreement agrees that any suit, action, or proceeding, whether claim or counterclaim, brought or instituted by either party
hereto or any successor or assign of any party on or with respect to this Agreement or any other Loan Document or which in any
way relates, directly or indirectly, to the Loan Documents or any event, transaction, or occurrence arising out of or in any way
connection with the Loan Documents, or the dealings of the parties with respect thereto, shall be tried only by a court and not
by a jury. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. EACH COMPANY
ACKNOWLEDGES AND AGREES THAT THIS SECTION 9.10 IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AMONG THE PARTIES
AND THAT THE LENDERS WOULD NOT COMPLETE THE TRANSACTIONS IF THIS WAIVER OF JURY TRIAL SECTION WERE NOT A PART OF THIS AGREEMENT.


 


(b) For the purpose
of any suit, action or proceeding arising out of or relating to this Agreement and the Loan Documents, each Company hereby irrevocably
consents and submits to the jurisdiction and venue of any of the Courts of the State of Delaware, including, without limitation,
the United States District Court located in the State of Delaware, and appoints and constitutes the Secretary of State of the State
of Delaware as its agent to accept and acknowledge on its behalf all service of process in connection with any such matter, copies
of which process shall be mailed or delivered to such Company. Each Company 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 and agrees that service of process in accordance
with the foregoing sentence shall be deemed in every respect effective and valid personal service of process upon the Companies.
The provisions of this Section 9.10(b) shall not limit or otherwise affect the right of the Lender to institute and
conduct action in any other appropriate manner, jurisdiction or court.


 






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9.11 Waiver
of Automatic or Supplemental Stay. In the event that a petition for relief under any chapter of the Bankruptcy Code is
filed by or against any Company, each Company promises and covenants that it shall not seek a supplemental stay pursuant to Bankruptcy
Code §§ 105 or 362 or any other relief pursuant to Bankruptcy Code §105 or any other provision of the Bankruptcy
Code, whether injunctive or otherwise, that would stay, interdict, condition, reduce or inhibit any Lender’s ability to enforce
any rights it has, at law or in equity, to collect the Obligations from any Person other than such Company, as the case may be.


 


9.12 Actions
Against Lender; Release.


 


(a) Any action brought
by the Companies or any Subsidiary against any Lender which is based, directly or indirectly, or on this Agreement or any other
Loan Document or any matter in or related to this Agreement or any other Loan Document, including but not limited to the making
of the Senior Subordinated Loans or the administration or collection thereof, shall be brought only in the courts of the State
of Delaware. The Companies may not file a counterclaim against any Lender in a suit brought by any Lender against the Companies
in a state other than the State of Delaware unless under the rules of procedure of the court in which any Lender brought the action
the counterclaim is mandatory and will be considered waived unless filed as a counterclaim in the action instituted by such Lender.


 


(b) Upon full payment
and satisfaction of the Senior Subordinated Loans and the interest thereon, as provided in Section 2, the parties shall
thereupon automatically each be fully, finally, and forever released and discharged from any further claim, liability or obligation
in connection with the Senior Subordinated Loans except as expressly set forth herein, except to the extent any payment received
by the Lender is determined to be a preference or similar voidable transfer.


 


9.13 Press Releases
and Related Matters. Each party hereto agrees that neither it nor its Affiliates will in the future issue any press releases
or other public disclosure using the name of any other party, its respective Affiliates, or referring to this Agreement or the
other Loan Documents without at least two (2) Business Days prior notice to the other party and without the prior written consent
of the other party unless (and only to the extent that) such party or its Affiliates is required to do so under law and then, in
any event, such party will consult with the other party before issuing such press release or other public disclosure. Each party
hereto consents to the publication by the Lenders of a tombstone or similar advertising material relating to the financing transactions
contemplated hereby, and in connection therewith, grants to the Lenders the right to use its name, logo and a brief description
of its business and the financing transactions contemplated hereby.


 


9.14 Performance
by Lenders. If any Company shall fail to observe or perform any of the terms, agreements or covenants contained in this
Agreement or in any other Loan Document, the Lenders may, in their discretion, but without any obligation or duty to do so, and
without waiving any Default or Event of Default, perform any of such terms, agreements or covenants, in part or in whole, and any
money advanced or expended by the Lenders in or toward the fulfillment of such terms, agreements or covenants, shall be due on
demand and, until paid, bear interest at the Default Rate.


 






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9.15 Counterparts;
Signature by Facsimile and E-mail Transmission. This Agreement and any amendment, restatement, or termination of any provision
of this Agreement, may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist
of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto. A party's transmission
by facsimile or by e-mail transmission of an Adobe Portable Document Format (also known as a PDF file) of a copy of this Agreement
duly executed by that party shall constitute effective delivery by that party of an executed copy of this Agreement to the party
receiving the transmission. A party that has delivered this Agreement by facsimile or e-mail transmission shall forthwith deliver
an originally executed copy to the other party or parties.


 


9.16 Further
Actions. Each Company shall execute and deliver such documents and instruments, and take such other actions, as the Lenders
deem necessary to consummate the Transactions.


 


9.17 Entire
Agreement. This Agreement and the Loan Documents represent the entire agreement among the Lender and the Companies with
respect to the financing transactions to which they relate, and cannot be modified, supplemented, varied, changed or amended except
by an agreement in writing signed by (i) the Companies and (ii) both Lenders.


 


9.18 Customer
Identification - USA Patriot Act Notice; OFAC and Bank Secrecy Act. Each Lender hereby notifies each Company that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”),
and each Lender’s policies and practices, each Lender is required to obtain, verify and record certain information and documentation
that identifies such Company, which information includes the name and address of such Company and such other information that will
allow each Lender to identify such Company in accordance with the Act. In addition, each Company shall (a) ensure that no person
who owns a controlling interest in or otherwise controls such Company or any subsidiary of such Company is or shall be listed on
the Specially Designated Nationals and Blocked Person List or other similar lists maintained by OFAC, the Department of the Treasury
or included in any Executive Orders, (b) not use or permit the use of the proceeds of the Senior Subordinated Loans to violate
any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply,
and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations,
as amended.


 


9.19 Subordination
by Companies. The Companies hereby agree that all present and future Indebtedness of any Company to another Company or
a Subsidiary of any of them (“Intercompany Indebtedness”) shall be subordinate and junior in right of
payment and priority to the Obligations, and each Company agrees not to make, demand, accept or receive any payment in respect
of any present or future Intercompany Indebtedness, including, without limitation, any payment received through the exercise of
any right of setoff, counterclaim or cross claim, or any collateral therefor, unless and until such time as the Obligations shall
have been indefeasibly paid in full; provided that, so long as the Senior Subordinated Notes shall not have been declared
to be due and payable, each Company may make and receive such payments as shall be customary in the ordinary course of such Company’s
business, as and to the extent not prohibited under this Agreement. Without in any way limiting the foregoing, in the event of
any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization, dissolution or other similar proceedings
relative to any Company or to its businesses, properties or assets, the Lenders shall be entitled to receive payment in full of
all of the Obligations before any Company shall be entitled to receive any payment in respect of any present or future Intercompany
Indebtedness.


 


[the rest of this page intentionally
left blank]


 




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IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the
day and year first above written.


 


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


 


[Signature Page to Securities Purchase Agreement]


 




    	 



    	 



    

 


	 	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
	 	 	 
	 	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


 


[Signature Page to Securities Purchase Agreement]


 




    	 



    	 



    

 


	 	
        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
	 	 	 
	 	LENDERS:
	 	 
	 	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
	 	 	 
	 	BROOKSIDE PECKS CAPITAL PARTNERS L.P.
	 	 
	 	By:    Brookside Pecks Management, LLC, its sole General Partner
	 	 	 	 
	 	 	By: 	/s/ David D. Buttolph
	 	 	 	Name: David D. Buttolph
	 	 	 	Title: Managing Director
	 	 	 
	 	BROOKSIDE MEZZANINE FUND II, L.P.
	 	 
	 	By:    Brookside Mezzanine Partners II, LLC, its General Partner
	 	 	 	 
	 	 	By:	/s/ Corey Sclar
	 	 	 	Name: Corey Sclar
	 	 	 	Title:  Managing Director


 


[Signature Page to Securities Purchase Agreement]


  




    	 



    	 



    

 


SCHEDULES


 


	A	Financial Covenants
	B	Senior Loan Agreement; Senior Loan Amendment Documents
	2.1(a)(i)	Form of Brookside II Senior Subordinated Note
	2.1(a)(ii)	Form of Brookside II Warrant
	2.1(e)	OID Allocation (Brookside II)
	2.2(a)(i)	Form of Calvert Senior Subordinated Note No. 2
	2.2(a)(ii)	Form of Calvert Warrant
	2.2(b)	Form of Calvert Senior Subordinated Note No. 1
	2.2(f)	OID Allocation (Calvert)
	2.3(a)	Form of Brookside Senior Subordinated Note
	3.5	Litigation
	3.6	Title to Assets; Leases
	3.7	Licenses; Intellectual Property
	3.10(a)	GAAP Exceptions
	3.10(c)	Business Plan
	3.10(e)(i)	Capital Structure of Parent
	3.10(f))	Capital Structure of LTN Staffing
	3.10(g)	Capital Structure of BG Staffing
	3.10(h)	Capital Structure of BG Personnel
	3.10(i)	Capital Structure of BG Personnel Services
	3.10(j)	Capital Structure of B G Staff Services
	3.15	No Notices; No Violations
	3.17	Material Agreements
	3.18	Transactions with Affiliates
	3.20	Environmental Matters
	3.21	Closing/Success Fees
	6.22	Post Closing Covenants


 


EXHIBITS


 


“A”Form of Compliance Certificate


 




    	(i)



    	 



    

 


EXHIBIT
“A”


 


Form of Compliance Certificate


 


In accordance with the provisions of Section 6.1(b)
of the Amended and Restated Securities Purchase Agreement (the “Purchase Agreement”) dated May 28, 2013,
by and among LTN Acquisition, LLC, a Delaware limited liability company (the “Parent”), LTN Staffing,
LLC, a Delaware limited liability company formerly (“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”), and
B G Staff Services, Inc., a Texas corporation (“B G Staff Services”; and together with LTN Staffing,
BG Staffing, BG Personnel Services and BG Personnel, collectively, “Borrowers” and each a “Borrower;”
the Parent and the Borrowers, collectively, the “Companies” and each a “Company”),
parties of the first part, and Legg Mason SBIC Mezzanine Fund, L.P., Brookside Pecks Capital Partners, L.P. and Brookside Mezzanine
Fund II, L.P. (collectively, the “Lenders”), parties of the second part, the undersigned, being the Chief
Financial Officer of the Companies, does hereby certify to the Lenders as follows:


 


(i)  The representations
and warranties made by the Companies in Section 3 of the Purchase Agreement are true and complete in all material respects
as on and as of the date hereof as if made on and as of this date;


 


(ii)  The Companies
have, as of the date hereof, performed all covenants and agreements required to be performed by them under the Purchase Agreement
and related Loan Documents; and


 


(iii)  No Default
or Event of Default has occurred, [except and to the extent specifically set forth on Exhibit ”A”
attached hereto and made a part hereof].


 


(iv)  The Companies
are in compliance with the Financial Covenants. A calculation of the Financial Covenants is set forth in Exhibit ”B”
attached hereto and made a part hereof.


 


Any capitalized terms
which are used in this Certificate and which are not defined herein, but which are defined in the Purchase Agreement, shall have
the meanings given to those terms in the Purchase Agreement.


 


IN WITNESS WHEREOF,
I have executed this Certificate the ____ day of ___________________.


 


	 	 	(SEAL)
	 	Name:
	 	Title:  Chief Financial Officer of the Companies


 




    	 



    	 



    

 


schedule ”A”


 


Financial Covenants


 


1.
Defined Terms. Except as otherwise set forth in this Schedule ”A,” any
capitalized term used herein shall have the meaning ascribed to it in the Agreement.


 


2.
Capital Expenditures. The Companies agree that they will not, nor will they permit any Subsidiary to,
make or become obligated in connection with Capital Expenditures (including Capitalized Lease Obligations) if, after giving effect
thereto, the aggregate amount of the Capital Expenditures (including any Debt constituting the deferred portion of the purchase
price thereof) would exceed Two Hundred Seventy-Five Thousand Dollars ($275,000.00) during any Fiscal Year.


 


3.
Minimum Debt Service Ratio. The Companies shall not permit the Debt Service Coverage Ratio (i) for the
one Fiscal Quarter period ending in June 2013, (ii) for the two Fiscal Quarter period ending in September 2013, (iii) for the three
Fiscal Quarter period ending in December 2013, and (iv) for the four Fiscal Quarter period ending in March 2014 and for the four
Fiscal Quarter period ending in each Fiscal Quarter thereafter, to be less than 1.10 to 1.00.


 


4.
Senior Funded Indebtedness to EBITDA Ratio. As of the end of each Fiscal Quarter of Companies for the
four Fiscal Quarter period then ending, the Companies shall not permit the Senior Funded Indebtedness to EBITDA Ratio to be greater
than the maximum amount set forth below for the corresponding period set forth below:


 


	Four Fiscal Quarters Ended In:	 	Maximum Ratio
	June 2013	 	3.30 to 1.00
	September 2013	 	3.00 to 1.00
	December 2013	 	2.50 to 1.00
	March 2014 and each	 	2.20 to 1.00
	Fiscal Quarter thereafter	 	 


 


provided;
however, notwithstanding anything to the contrary contained herein, for purposes of calculating the Senior Funded Indebtedness
to EBITDA Ratio above, and solely for the four Fiscal Quarter period ending in each of September 2012, December 2012 and March
2013, EBITDA (regardless of how such term is defined or calculated pursuant to its definition set forth in Section 1.1 hereof)
for such periods shall be deemed to be as follows:


 


	Four Fiscal Quarters Ended In:	 	EBITDA	 
	September 2012	 	$	2,800,000	 
	December 2012	 	$	2,300,000	 
	March 2013	 	$	1,700,000	 



 


For purposes
of calculating the Senior Funded Indebtedness to EBITDA Ratio for the four Fiscal Quarter period ending in June 2013 and for the
four Fiscal Quarter period ending in each Fiscal Quarter thereafter, EBITDA shall be determined using the financial statements
required to be delivered to Lender pursuant to Sections 6.1(a) and 6.1(c) hereof.


 




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5.
Calculation of Financial Covenants. The calculation of any Financial Covenant applicable to the Companies,
or any component thereof, shall be made on a consolidated basis in accordance with GAAP after the elimination of all inter-company
items.


 




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Schedule 2.1(e)


 


	Brookside II Senior Subordinated Note	 	$	3,812,895	 
	Brookside II Warrant	 	$	187,105	 
	 	 	 	 	 
	Total	 	$	4,000,000	 



 




    	 



    	 



    

 


Schedule 2.2(e)


 


	Calvert Senior Subordinated Note No. 2	 	$	1,906,448	 
	Calvert Warrant	 	$	93,552	 
	 	 	 	 	 
	Total	 	$	2,000,000	 



 




    	 



    	 



    

 


Schedule 6.23


 


Post-Closing Schedule


 


As soon as possible after
the Closing Date, but in any event within thirty (30) days after the Closing Date, the Companies shall have delivered a fully-completed
SBA Form 1031 (Portfolio Financing Report) (in form and substance satisfactory to the Lenders)