Exhibit 10.19


 


SEVENTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT


AND OTHER LOAN DOCUMENTS 


 


This SEVENTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS (this “Amendment”) is made as of the 28th
day of May, 2013, by and among LTN STAFFING, LLC, a Delaware limited liability company (“LTN Staffing”), BG
STAFFING, LLC, a Delaware limited liability company (“BG Staffing”), BG PERSONNEL SERVICES, LP, a Texas limited
partnership (“BG Personnel Services”), BG PERSONNEL, LP, a Texas limited partnership (“BG Personnel”),
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”),
and FIFTH THIRD BANK, an Ohio banking corporation, successor by merger with Fifth Third Bank, a Michigan banking corporation (“Lender”).


 


WITNESSETH:


 


WHEREAS, Borrowers
and Lender are parties to that certain Loan and Security Agreement dated as of May 24, 2010, as amended from time to time (as amended,
and as it may be further amended, restated, modified or supplemented and in effect from time to time, the “Loan Agreement”);
and


 


WHEREAS, InStaff Holding
Corporation, a Texas corporation (“InStaff Holding”), InStaff Personnel, LLC, a Texas limited liability company
(“InStaff Personnel”, and together with InStaff Holding, collectively, “InStaff Sellers”
and each an “InStaff Seller”), North Texas Opportunity Fund, L.P., a Texas limited partnership, Randy Burkhart,
Beth Garvey, Arthur W. Hollingsworth and John Lewis (collectively, “InStaff Selling Persons”), have entered
into that certain Asset Purchase Agreement dated as of May 28, 2013 (the “InStaff Purchase Agreement”), providing
for the purchase by LTN Staffing of certain of the assets of and the assumption by LTN Staffing of certain liabilities of InStaff
Sellers, in accordance with the terms thereof (the “InStaff Purchase Transaction”); and


 


WHEREAS, Borrowers
have requested that Lender consent to the InStaff Purchase Transaction and amend the Loan Agreement and the other Loan Documents
in certain respects, and Lender is agreeable to such request, on and subject to the terms and conditions set forth herein;


 


NOW, THEREFORE, the parties hereto hereby
agree as follows:


 


1.          Definitions.
Capitalized terms used herein which are defined in the Loan Agreement and not otherwise defined herein are used with the meanings
given such terms in the Loan Agreement.


 


2.          Amendments
to Loan Agreement. The Loan Agreement is hereby amended as follows:


 


(a)          by
amending and restating each of the following definitions in Section 1.1 as follows:


 




    	 



    	 



    

 


“2007
Subordinated Creditor” and “2007 Subordinated Creditors” shall mean, respectively, each of and collectively,
the following Persons: Legg Mason SBIC Mezzanine Fund, L.P., a Delaware limited partnership, Brookside Pecks Capital Partners,
L.P., a Delaware limited partnership, and Brookside Mezzanine Fund II, L.P., a Delaware limited partnership.


 


“2007
Subordinated Loan Documents” shall mean, collectively, that certain Amended and Restated Securities Purchase Agreement
dated as of May 28, 2013 by and among Borrowers, Guarantor and the 2007 Subordinated Creditors with respect to those certain subordinated
loans made by the 2007 Subordinated Creditors to one or more Borrowers, and all other documents, agreements, instruments and certificates
executed in connection with any of the foregoing and with any of the subordinated loans made by the 2007 Subordinated Creditors
to one or more Borrowers, as each may be amended, restated, modified or supplemented and in effect from time to time.


 


“2007
Subordination Agreement” shall mean that certain Subordination and Intercreditor Agreement dated as of October 17, 2007
by and among Borrowers, Guarantor, the 2007 Subordinated Creditors and Lender, as amended from time to time, and as it may be further
amended, restated, modified or supplemented and in effect from time to time.


 


“Debt
Service” shall mean, 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)
hereof), 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.


 


“EBITDA”
shall mean 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 $500,000 incurred by Borrowers in connection with closing the Extrinsic Purchase Transaction, provided that such
closing costs are verified by Lender and consented to by Lender in its sole discretion, plus (v) actual closing costs in
an amount not to exceed $400,000 incurred by Borrowers in connection with closing the API Purchase Transaction, provided that such
closing costs are verified by Lender and consented to by Lender in its sole discretion, plus (vi) actual closing costs in
an amount not to exceed $500,000 incurred by Borrowers in connection with closing the InStaff Purchase Transaction, provided that
such closing costs are verified by Lender and consented to by Lender in its sole discretion.


 




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


 


“Revolving
Loan Commitment” shall mean Twenty Million and No/100 Dollars ($20,000,000.00).


 


“Senior
Funded Indebtedness to EBITDA Ratio” shall mean 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.


 


(b)          by
inserting the following definitions to Section 1.1 in their respective proper alphabetical order:


 


“2007
Subordinated Debt” shall mean the Subordinated Debt of Borrowers to the 2007 Subordinated Creditors pursuant to the 2007
Subordinated Loan Documents, in the original aggregate principal amount of $9,000,000, as later increased to $9,250,000 and as
increased to $15,642,202.18 as of May 28, 2013.


 


“Commodity
Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any
successor statute.


 


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


 


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


 


“Earn
Out Payables” shall mean, 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.


 






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“Excluded
Swap Obligation” shall mean, with respect to any guarantor of a Swap Obligation, including the grant of a security interest
to secure the guaranty of such Swap Obligation, any Swap Obligation if, and to the extent that, such Swap Obligation is or becomes
illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application
or official interpretation of any thereof) by virtue of such guarantor’s failure for any reason to constitute an “eligible
contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty or
grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master
agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable
to swaps for which such Swap Obligation or security interest is or becomes illegal.


 


“InStaff
Sellers” shall mean, collectively, InStaff Holding Corporation, a Texas corporation, and InStaff Personnel, LLC, a Texas
limited liability company.


 


“InStaff
Purchase Agreement” shall mean that certain Asset Purchase Agreement dated as of May 28, 2013 by and among LTN Staffing,
InStaff Sellers and InStaff Selling Persons.


 


“InStaff
Purchase Transaction” shall mean the purchase by LTN Staffing of certain of the assets of and the assumption by LTN Staffing
of certain liabilities of InStaff Sellers, pursuant to the terms of the InStaff Purchase Agreement.


 


“InStaff
Selling Persons” shall mean, collectively, North Texas Opportunity Fund, L.P., a Texas limited partnership, Randy Burkhart,
Beth Garvey, Arthur W. Hollingsworth and John Lewis.


 


“Management
Fee Addback” shall mean 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.


 


“Swap
Obligation” shall mean any Rate Management Obligation that constitutes a “swap” within the meaning of section
1a(47) of the Commodity Exchange Act, as amended from time to time.


 


(a)          by
inserting the following to the end of the definition of “Obligations” in Section 1.1:


 


“Notwithstanding
anything to the contrary contained herein, the term “Obligations” shall not include any Excluded Swap Obligations.”


 






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(b)          by
amending and restating Section 8.12 in its entirety to read as follows:


 


8.12         Covenant
Compliance Certificate. Borrowers shall, within one hundred twenty (120) days after the end of each fiscal year, and within
thirty (30) days after the end of each fiscal quarter ending in March, June and September of each year, deliver to Lender a duly
completed compliance certificate, dated the date of such financial statements and certified as true and correct by an appropriate
officer of Borrowers, containing a computation of each of the financial covenants set forth in Section 10 and stating that
no Borrower has become aware of any Event of Default or Unmatured Event of Default that has occurred and is continuing or, if there
is any such Event of Default or Unmatured Event of Default describing it and the steps, if any, being taken to cure it.


 


(c)          by
inserting the following as Section 8.23:


  


8.23         Mandatory
Prepayment; Early Termination. Notwithstanding anything to the contrary contained herein, Borrowers shall immediately repay
the entire principal balance of the Term Loan, together with interest, any fees (including any prepayment fees) and any other amounts
due thereunder, upon the occurrence of the following event: the Revolving Loan facility terminates for any reason, including, without
limitation, termination of the Revolving Loan facility at the request of Borrowers, termination resulting from failure by Lender
to renew the Revolving Loan facility for any reason, or termination as otherwise provided under this Agreement or the other Loan
Documents.


 


(d)          by
amending and restating Section 9.1(iv) in its entirety to read as follows:


 


(iv)        Subordinated
Debt, consisting of 2007 Subordinated Debt in an outstanding principal amount not to exceed $15,250,000 in the aggregate. Such
2007 Subordinated Debt shall be subject to the terms of the 2007 Subordination Agreement or such other subordination agreement
acceptable to Lender in its sole discretion; and


 


(e)          by
amending and restating Section 9.11 in its entirety to read as follows:


 


9.11         Bank
Accounts. No Borrower shall establish any new Deposit Accounts or other bank accounts, other than Deposit Accounts or other
bank accounts established at or with Lender without the prior written consent of Lender. In addition, Borrowers covenant and agree
that, as soon as possible, and in any event within one hundred twenty (120) days after May 28, 2013, it shall close or cause to
be closed each of the existing bank accounts with respect to the InStaff Sellers and open corresponding accounts with Lender.


 


(f)          by
amending and restating Section 10.1 in its entirety to read as follows:


 


10.1         Debt
Service Coverage. Borrowers 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 1.20 to 1.00.


 






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(g)          by
amending and restating Section 10.2 in its entirety to read as follows:


 


10.2         Senior
Funded Indebtedness to EBITDA. As of the end of each fiscal quarter of Borrowers for the four fiscal quarter period then ending,
Borrowers 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
	March 2013	 	2.75 to 1.00
	June 2013	 	3.00 to 1.00
	September 2013	 	2.75 to 1.00
	December 2013	 	2.25 to 1.00
	March 2014 and each fiscal quarter thereafter	 	2.00 to 1.00


 


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 Section 8.8 hereof. 


 


(h)          by
inserting the following as Section 10.3:


 


10.3         Capital
Expenditures. Borrowers shall not incur Capital Expenditures in an amount greater than Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00) in the aggregate in any one fiscal year.


 






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(i)          by
inserting the following as Section 11.16:


 


11.16         Cross-Default.
Any “Default” or “Event of Default” occurs under any of the 2007 Subordinated Loan Documents.


 


3.          Amendment
to the Revolving Note. That certain Fifth Amended and Restated Revolving Note dated as of December 3, 2012 executed jointly
and severally by Borrowers and made payable to the order of Lender in the maximum principal amount of $12,000,000.00 (the “Existing
Revolving Note”) is hereby replaced with that certain Sixth Amended and Restated Revolving Note dated as of even date
herewith executed jointly and severally by Borrowers and made payable to the order of Lender in the maximum principal amount of
$20,000,000.00 (the “Sixth Amended and Restated Revolving Note”).  The Sixth Amended
and Restated Revolving Note amends and restates in its entirety the Existing Revolving Note and
evidences a renewal and an increase of the indebtedness evidenced by the Existing Revolving Note.
Nothing contained in the Sixth Amended and Restated Revolving Note shall be deemed to be payment
and satisfaction or a novation of the indebtedness evidenced by the Existing Revolving Note.
References to the “Revolving Note” in the Loan Agreement and the other Loan Documents shall be deemed to mean the Sixth
Amended and Restated Revolving Note.


  


4.          Amendment
to the Other Loan Documents. The other Loan Documents are hereby amended to the extent necessary to be consistent with the
foregoing amendments to the Loan Agreement and the amendment and restatement of the Revolving Note.


 


5.          Interest
Rate. Notwithstanding anything to the contrary contained in herein or in the Loan Agreement, each Borrower acknowledges and
agrees that the Applicable Margin for the Revolving Loans and the Applicable Margin for the Term Loan shall be 3.75% and 4.50%,
respectively, until the Interest Rate Change Date occurs with respect to the financial statements of Borrowers for fiscal quarter
ending in June 2013.


 


6.          Consent
to InStaff Purchase Transaction. Subject to the terms and conditions hereof, Lender hereby consents to the InStaff Purchase
Transaction. The consent set forth herein shall be effective only in the specific instance and for the
specific purpose set forth herein and shall neither extend to any other violations under, or default of, the Loan Agreement or
any of the other Loan Documents, nor shall this consent prejudice any rights or remedies of Lender under the Loan Agreement or
any of the other Loan Documents with respect to matters not specifically addressed hereby.


 



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7.          Escrow.
Pursuant to that certain Escrow Agreement dated as of even date herewith (the “Escrow Agreement”; capitalized
terms used in this Section 7 which are defined in the Escrow Agreement and not otherwise defined herein are used with the meanings
given such terms in the Escrow Agreement) by and among LTN Staffing, InStaff Sellers and Grand Bank (the “Escrow Agent”),
LTN Staffing has deposited with Escrow Agent (i) $250,000 of the purchase price as a source of payment for adjustments to the purchase
price in favor of LTN Staffing (the “Purchase Deposit”), (ii) $700,000 of the purchase price as a source of
payment for (A) liabilities relating to that certain Federal Tax Lien on the assets of InStaff Personnel WC LLC (File No. 20110826000906540
filed with the County Clerk of Collin County, Texas, and File No. 11-0025342583 filed with the Secretary of State of Texas), (B)
liabilities relating to Tennessee business taxes (the “Tennessee Business Tax Liabilities”), and (C) any Tax
Losses, and (iii) $300,000 of the purchase price as a source of payment for the amount of Taxes, if any, necessary to be paid to
Texas and New Mexico to obtain the issuance of the tax clearance certificates from Texas and New Mexico. LTN Staffing hereby covenants
and agrees that it shall abide by each of the terms of the Escrow Agreement, including, without limitation, (A) if on the Tax Escrow
Release Date the Release Conditions have not been satisfied, instructing the Escrow Agent in writing on the Tax Escrow Release
Date (or if the 90 Day Extension is granted, on the last day of the 90 Day Extension) to disburse on or within three (3) business
days after the Tax Escrow Release Date (or if the 90 Day Extension is granted, within three (3) business days of the last day of
the 90 Day Extension) any or all of the Tax Escrow Fund directly to applicable Governmental Bodies in order to fully pay, resolve
and settle the Federal Tax Liabilities (including, without limitation, for purposes of having any Federal Tax Liens with respect
to such liabilities released) and the Tennessee Business Tax Liabilities, and (B) if on the Tax Clearance Certificate Escrow Release
Date the Tax Clearance Release Conditions have not been satisfied, instructing the Escrow Agent in writing on the Tax Clearance
Certificate Escrow Release Date to disburse on or within three (3) business days after the Tax Clearance Certificate Escrow Release
Date any or all of the Tax Clearance Escrow Fund directly to applicable Governmental Bodies in order to fully pay, resolve and
settle the Tax liabilities of Texas or New Mexico necessary to satisfy the Tax Clearance Release Conditions. LTN Staffing hereby
covenants and agrees that it shall, prior to providing such instructions as set forth in (A) and (B) above, it shall provide written
notice thereof to Sellers. In addition to the foregoing, LTN Staffing hereby covenants and agrees that, notwithstanding anything
to the contrary contained in the Escrow Agreement, (i) it shall not provide any approval or consent, written or otherwise, to the
90 Day Extension under the Escrow Agreement without the prior written consent of Lender, and (ii) it shall not amend nor permit
the Escrow Agreement to be amended in any respect without the prior written consent of Lender.


  


8.          Reaffirmation
and Confirmation of Security Interests. Each Borrower hereby confirms to Lender that such Borrower has granted to Lender a
security interest in or Lien upon substantially all of the property of such Borrower, including, without limitation, the Collateral,
to secure the Obligations. Each Borrower hereby reaffirms its grant of such security interest and Lien to Lender for such purpose
in all respects.


 


In addition to the
foregoing:


 


(a)          LTN
Staffing hereby confirms to Lender that LTN Staffing has granted to Lender a security interest in or Lien upon the Pledged Collateral
(as defined in that certain Membership Interests Security Agreement dated as of May 24, 2010 by and between LTN Staffing and Lender
(as amended, restated, modified or supplemented and in effect from time to time, the “LTN Staffing Membership Interests
Security Agreement”)), to secure the Liabilities (as defined in the LTN Staffing Membership Interests Security Agreement),
under and pursuant to the LTN Staffing Membership Interests Security Agreement. LTN Staffing hereby expressly agrees that the Lien
on the Pledged Collateral shall secure all of the Liabilities (as defined in the LTN Staffing Membership Interests Security Agreement),
including, without limitation, the Loans, and hereby reaffirms its grant of such security interest and Lien to Lender for such
purpose in all respects.


 



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(b)          LTN
Staffing hereby confirms to Lender that LTN Staffing has granted to Lender a security interest in or Lien upon the Pledged Collateral
(as defined in that certain Partnership Interests Security Agreement dated as of May 24, 2010 by and between LTN Staffing and Lender
(as amended, restated, modified or supplemented and in effect from time to time, the “LTN Staffing Partnership Interests
Security Agreement”)), to secure the Liabilities (as defined in the LTN Staffing Partnership Interests Security Agreement),
under and pursuant to the LTN Staffing Partnership Interests Security Agreement. LTN Staffing hereby expressly agrees that the
Lien on the Pledged Collateral shall secure all of the Liabilities (as defined in the LTN Staffing Partnership Interests Security
Agreement), including, without limitation, the Loans, and hereby reaffirms its grant of such security interest and Lien to Lender
for such purpose in all respects.


 


(c)          BG
Staffing hereby confirms to Lender that BG Staffing has granted to Lender a security interest in or Lien upon the Pledged Collateral
(as defined in that certain Partnership Interests Security Agreement dated as of May 24, 2010 by and between BG Staffing and Lender
(as amended, restated, modified or supplemented and in effect from time to time, the “BG Staffing Partnership Interests
Security Agreement”)), to secure the Liabilities (as defined in the BG Staffing Partnership Interests Security Agreement),
under and pursuant to the BG Staffing Partnership Interests Security Agreement. LTN Staffing hereby expressly agrees that the
Lien on the Pledged Collateral shall secure all of the Liabilities (as defined in the BG Staffing Partnership Interests Security
Agreement), including, without limitation, the Loans, and hereby reaffirms its grant of such security interest and Lien to Lender
for such purpose in all respects. 


 


(d)          LTN
Staffing hereby confirms to Lender that LTN Staffing has granted to Lender a security interest in or Lien upon the Pledged Collateral
(as defined in that certain Securities Pledge Agreement dated as of May 24, 2010 by and between LTN Staffing and Lender (as amended,
restated, modified or supplemented and in effect from time to time, the “LTN Staffing Securities Pledge Agreement”)),
to secure the Liabilities (as defined in the LTN Staffing Securities Pledge Agreement), under and pursuant to the LTN Staffing
Securities Pledge Agreement. LTN Staffing hereby expressly agrees that the Lien on the Pledged Collateral shall secure all of the
Liabilities (as defined in the LTN Staffing Securities Pledge Agreement), including, without limitation, the Loans, and hereby
reaffirms its grant of such security interest and Lien to Lender for such purpose in all respects.


 


9.          Representations
and Warranties. Each Borrower hereby represents, warrants and covenants to Lender that:


 


(a)          Authorization.
Each Borrower is duly authorized to execute and deliver this Amendment and all deliveries required hereunder, and is and will continue
to be duly authorized to borrow monies under the Loan Agreement, as amended hereby, and to perform its obligations under the Loan
Agreement and the other Loan Documents.


 


(b)          No
Conflicts. The execution and delivery of this Amendment and all deliveries required hereunder, and the performance by each
Borrower of its obligations under the Loan Agreement and the other Loan Documents do not and will not conflict with any provision
of law or of the charter or by-laws, operating agreement or partnership agreement of any Borrower or of any agreement binding upon
any Borrower.


 






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(c)          Validity
and Binding Effect. This Amendment, the Loan Agreement and the other Loan Documents are a legal, valid and binding obligation
of each Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights
or by general principles of equity limiting the availability of equitable remedies.


 


(d)          No
Events of Default. As of the date hereof, no default or Event of Default under the Loan Agreement or any of the other Loan
Documents has occurred or is continuing.


 


(e)          Warranties.
As of the date hereof, the representations and warranties in the Loan Agreement and the other Loan Documents are true and correct
as though made on such date, except where a different date is specifically indicated.


 


10.         Conditions
to Effectiveness. This Amendment shall be deemed to be effective as of the date hereof (the “Amendment Effective Date”),
and the effectiveness of this Amendment shall be subject to, the satisfaction of all of the following conditions:


  


(a)          This
Amendment, duly authorized and fully executed by each Borrower and Lender, and the Consent and Ratification of Guaranty and the
Consent and Ratification of Membership Interests Security Agreement, each attached hereto and made a part hereof, each duly authorized
and fully executed by the parties thereto, shall have been delivered to Lender.


 


(b)          The
Sixth Amended and Restated Revolving Note, duly authorized and fully executed by each Borrower, shall have been delivered to Lender.


 


(c)          A
fully-executed copy of the InStaff Purchase Agreement, together with all other agreements, documents or instruments executed or
to be delivered in connection with the InStaff Purchase Transaction, including, without limitation, the Escrow Agreement, each
in form and substance acceptable to Lender, shall have been delivered to Lender, and all of the conditions to closing the InStaff
Purchase Transaction as set forth under the InStaff Purchase Agreement shall have been performed to the satisfaction of Lender.


 


(d)          That
certain Assignment of Undertakings Under Purchase Agreement, duly authorized and fully executed by LTN Staffing and consented to
by InStaff Sellers and InStaff Selling Persons, in form and substance acceptable to Lender, shall have been delivered to Lender.


 


(e)          That
certain Collateral Assignment of Escrow Agreement, duly authorized and fully executed by LTN Staffing and consented to by InStaff
Sellers, InStaff Selling Persons and the Escrow Agent, in form and substance acceptable to Lender, shall have been delivered to
Lender.


 


(f)          That
certain Fifth Amendment to Subordination and Intercreditor Agreement dated as of even date herewith, in form and substance acceptable
to Lender, duly authorized and fully executed by each of the 2007 Subordinated Creditors, Borrowers and Guarantor, shall have been
delivered to Lender.


 






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(g)          A
Capital Contribution Agreement dated as of even date herewith by and among Taglich Private Equity, LLC, Borrowers and Lender, in
form and substance acceptable to Lender, shall have been delivered to Lender.


 


(h)          An
aged schedule of the Accounts of InStaff Sellers, listing the name and amount due from each Account Debtor and showing the aggregate
amounts due from (a) 0-30 days, (b) 31-60 days, (c) 61-90 days and (d) more than 90 days, and certified as accurate by InStaff’s
treasurer or chief financial officer, shall have been delivered to Lender.


 


(i)          A
Borrowing Base Certificate which includes the Accounts of InStaff Sellers and which demonstrates opening availability of not less
than $2,000,000, in form and substance acceptable to Lender, shall have been delivered to Lender.


 


(j)          That
certain Amended and Restated Securities Purchase Agreement dated as of even date herewith by and among the 2007 Subordinated Creditors,
Borrowers and Guarantors, including evidence that the 2007 Subordinated Creditors have consented to the InStaff Purchase Transaction,
together with copies of the subordinated notes, in each case in form and substance acceptable to Lender.


 


(k)          If
required by Lender, Certificates of Insurance with respect to property and liability insurance of Borrowers, showing Lender as
certificate holder, lenders loss payee with respect to property insurance, and showing Lender as certificate holder and additional
insured with respect to liability insurance, together a lender’s loss payable endorsement, shall have been delivered to Lender.


 


(l)          Resolutions
shall have been adopted by Guarantor’s board of managers authorizing the execution, delivery and performance of the Consents
and Ratifications to this Amendment, and a copy thereof, certified by a manager of Guarantor, together with a certificate of a
manager of Guarantor stating that there have been no amendments, modifications or changes to Guarantor’s Certificate of Formation
or Amended and Restated Limited Liability Company Agreement since December 3, 2012, shall have been delivered to Lender.


 


(m)          Resolutions
shall have been adopted by LTN Staffing’s members authorizing the execution, delivery and performance of this Amendment,
the Sixth Amended and Restated Revolving Note and the other documents to be delivered in connection herewith, and a copy thereof,
certified by a member of LTN Staffing, together with a certificate of a member of LTN Staffing stating that there have been no
amendments, modifications or changes to LTN Staffing’s Certificate of Formation or Limited Liability Company Agreement since
December 3, 2012, shall have been delivered to Lender.


 


(n)          Resolutions
shall have been adopted by BG Staffing’s members authorizing the execution, delivery and performance of this Amendment, the
Sixth Amended and Restated Revolving Note, the InStaff Purchase Agreement and the other documents to be delivered in connection
herewith, and a copy thereof, certified by a member of BG Staffing, together with a certificate of a member of BG Staffing stating
that there have been no amendments, modifications or changes to BG Staffing’s Certificate of Formation or Limited Liability
Company Agreement since December 3, 2012, shall have been delivered to Lender.


 






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(o)          Resolutions
shall have been adopted by BG Staffing’s members authorizing the execution, delivery and performance of this Amendment, the
Sixth Amended and Restated Revolving Note and the other documents to be delivered in connection herewith, on behalf of and as the
general partner of BG Personnel Services, certified by a member of BG Staffing, together with a certificate of a member of BG Staffing
stating that there have been no amendments, modifications or changes to BG Personnel Services’ Certificate of Limited Partnership
or Limited Partnership Agreement, or to BG Staffing’s Certificate of Formation or Limited Liability Company Agreement, in
each case since December 3, 2012, shall have been delivered to Lender.


 


(p)          Resolutions
shall have been adopted by BG Staffing’s members authorizing the execution, delivery and performance of this Amendment, the
Sixth Amended and Restated Revolving Note and the other documents to be delivered in connection herewith, on behalf of and as the
general partner of BG Personnel, certified by a member of BG Staffing, together with a certificate of a member of BG Staffing stating
that there have been no amendments, modifications or changes to BG Personnel’s Certificate of Limited Partnership or Limited
Partnership Agreement, or to BG Staffing’s Certificate of Formation or Limited Liability Company Agreement, in each case
since December 3, 2012, shall have been delivered to Lender.


  


(q)          Resolutions
shall have been adopted by B G Staff Services’ Board of Directors authorizing the execution, delivery and performance of
this Amendment, the Sixth Amended and Restated Revolving Note and the other documents to be delivered in connection herewith, and
a copy thereof, certified by the duly elected and acting President of B G Staff Services, together with a certificate of the duly
elected and acting President of B G Staff Services stating that there have been no amendments, modifications or changes to B G
Staff Services’ Articles of Incorporation or By-Laws since December 3, 2012, shall have been delivered to Lender.


 


(r)          An
amendment fee in the amount of $80,000.00, and a note processing fee with respect to the Revolving Loans in the amount of $900.00
shall in each case have been paid by Borrowers to Lender.


 


(s)          Each
of the other conditions of borrowing set forth in Section 3 of the Loan Agreement (including, without limitation, Sections
3.2, 3.3, 3.4 and 3.5) shall have been met to the satisfaction of Lender.


 


(t)          A
Landlord Waiver made by RPI LBJ Oates, Ltd. in favor of Lender and consented to by LTN Staffing, with respect to the location at
1900 Oates Drive, Suite 134, Mesquite, Texas 75150, in form and substance acceptable to Lender, shall have been delivered to Lender.


 


(u)          All
payoff letters and UCC-3 financing statements (such UCC-3 financing statements to be filed on or prior to the date hereof) with
respect to the InStaff Sellers, each in form and substance acceptable to Lender, shall have been delivered to Lender.


 






    	-12-



    	 



    

 


(v)         Such
other documents, instruments or agreements as Lender may reasonably request in order to effectuate fully the transactions contemplated
herein shall have been duly executed and delivered to Lender.


 


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


 


12.         Costs
and Expenses. Borrowers shall jointly and severally pay all costs and expenses in connection with the preparation of this Amendment
and other related loan documents, including, without limitation, reasonable attorneys’ fees.


 


13.         Miscellaneous. 


 


(a)          Captions.
Section captions and headings used in this Amendment are for convenience only and are not part of and shall not affect the construction
of this Amendment.


 


(b)          Governing
Law. This Amendment shall be a contract made under and governed by the laws of the State of Illinois, without regard to conflict
of laws principles. Whenever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Amendment.


 


(c)          Counterparts.
This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall
together constitute but one and the same document.


 


(d)          Successors
and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns.


 


(e)          References.
From and after the Amendment Effective Date, any reference to the Loan Agreement or the other Loan Documents contained in any notice,
request, certificate or other instrument, document or agreement executed concurrently with or after the execution and delivery
of this Amendment shall be deemed to include this Amendment unless the context shall otherwise require.


 


(f)          Continued
Effectiveness. Notwithstanding anything contained herein, the terms of this Amendment are not intended to and do not serve
to effect a novation as to the Loan Agreement. The parties hereto expressly do not intend to extinguish the Loan Agreement. Instead,
it is the express intention of the parties hereto to reaffirm the indebtedness created under the Loan Agreement and secured by
the Collateral. The Loan Agreement and each of the other Loan Documents, except as modified hereby, remain in full force and effect
and are hereby reaffirmed in all respects.


 






    	-13-



    	 



    

 


(g)          Customer
Identification - USA Patriot Act Notice; OFAC and Bank Secrecy Act. Lender hereby notifies each Borrower 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 Lender’s policies and practices, Lender is required to obtain, verify and record certain information and documentation
that identifies such Borrower, which information includes the name and address of such Borrower and such other information that
will allow Lender to identify such Borrower in accordance with the Act. In addition, each Borrower shall (a) ensure that no person
who owns a controlling interest in or otherwise controls such Borrower or any subsidiary of such Borrower is or shall be listed
on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets
Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit
the use of the proceeds of the Loan 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. 


 


[Remainder
of page intentionally left blank; signature pages follow]


 




    	-14-



    	 



    

 


IN WITNESS WHEREOF,
the parties have executed this Seventh Amendment to Loan and Security Agreement and Other Loan Documents as of the date first set
forth above.


 


	 	BORROWERS:
	 	 
	 	
        LTN STAFFING, LLC, a Delaware limited liability
company

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

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

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


 




    	 



    	 



    

 


	 	
        BG PERSONNEL, LP, a Texas limited partnership

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


 




    	 



    	 



    

 


	 	LENDER:
	 	 	 
	 	
        FIFTH THIRD BANK, an Ohio banking corporation,
successor by merger with Fifth Third Bank, a Michigan banking corporation

	 	 	 
	 	By:	/s/ Ingrid H. Deroubaix
	 	Name:	Ingrid H. Deroubaix
	 	Title:	Senior Vice President


 




    	 



    	 



    

 


Consent
and ratification OF GUARANTY


 


The undersigned (“Guarantor”)
is a guarantor of Borrowers to Lender under the terms of that certain Continuing Unconditional Guaranty dated as of May 24, 2010
made by Guarantor in favor of Lender (as amended, restated, modified or supplemented and in effect from time to time, the “Guaranty”).
Guarantor hereby expressly: (a) consents to the execution by Borrowers and Lender of the above Seventh Amendment to Loan and Security
Agreement and Other Loan Documents; (b) acknowledges that “Borrowers’ Liabilities” (as defined in the Guaranty)
includes all of the obligations and liabilities owing from time to time by Borrowers to Lender, including, but not limited to,
the obligations and liabilities of Borrowers to Lender under the Sixth Amended and Restated Revolving Note and the Fourth Amended
and Restated Term Note, each as modified, extended and/or replaced from time to time, and any other Notes (as defined in the Loan
Agreement) (but excluding any Excluded Swap Obligations); (c) acknowledges that Guarantor does not have any set-off, defense or
counterclaim to the payment or performance of any of the obligations of Borrowers under the Sixth Amended and Restated Revolving
Note, the Fourth Amended and Restated Term Note or any of the other Loan Documents or Guarantor under the Guaranty; (d) reaffirms,
assumes and binds itself in all respects to all of the obligations, liabilities, duties, covenants, terms and conditions that are
contained in the Guaranty; (e) agrees that all such obligations and liabilities under the Guaranty shall continue in full force
and that the execution and delivery of the above Seventh Amendment to Loan and Security Agreement and Other Loan Documents to,
and its acceptance by, Lender shall not in any manner whatsoever (i) impair or affect the liability of Guarantor to Lender under
the Guaranty, (ii) prejudice, waive, or be construed to impair, affect, prejudice or waive the rights and abilities of Lender at
law, in equity or by statute, against Guarantor pursuant to the Guaranty, and/or (iii) release or discharge, nor be construed to
release or discharge, any of the obligations and liabilities owing to Lender by Guarantor under the Guaranty; and (f) represents
and warrants that each of the representations and warranties made by Guarantor in any of the documents executed in connection with
the Loans remain true and correct as of the date hereof.


 


	 	
        LTN ACQUISITION, LLC, a Delaware limited liability
company

	 	 	 
	 	By:	/s/ L. Allen Baker, Jr.
	 	Name:	L. Allen Baker, Jr.
	 	Title:	Manager and Authorized Person


 




    	 



    	 



    

 


Consent
and ratification OF


MEMBERSHIP
INTERESTS SECURITY AGREEMENT


 


The undersigned (“Grantor”)
is a grantor under the terms of that certain Membership Interests Security Agreement dated as of May 24, 2010 by and between Grantor
and Lender (as amended, restated, modified or supplemented and in effect from time to time, the “LTN Acquisition Membership
Interests Security Agreement”). Grantor hereby consents to the above Seventh Amendment to Loan and Security Agreement
and Other Loan Documents and hereby confirms that Grantor has granted to Lender a security interest in the Pledged Collateral (as
defined in the LTN Acquisition Membership Interests Security Agreement) to secure the Liabilities (as defined in the Membership
Interests Security Agreement), under and pursuant to the LTN Acquisition Membership Interests Security Agreement.  The undersigned
hereby expressly agrees that the Liens on the Pledged Collateral shall secure all of the Liabilities (as defined in the LTN Acquisition
Membership Interests Security Agreement), including, without limitation, the Loans, and hereby reaffirms its grant of such security
interests and Liens to Lender for such purpose in all respects.


 


	 	
        LTN ACQUISITION, LLC, a Delaware limited liability
company

	 	 	 
	 	By:	/s/ L. Allen Baker, Jr.
	 	Name:	L. Allen Baker, Jr.
	 	Title:	Manager and Authorized Person


 




    	 



    	 



    

 


Consent
and ratification OF


SUBORDINATION
AGREEMENT


 


Each of the undersigned
(collectively, “Subordinated Creditors” and each a “Subordinated Creditor”), is a subordinated
creditor to Borrower and entered into that certain Subordination and Intercreditor Agreement dated as of October 17, 2007 by and
among Lender, Subordinated Creditors, Borrowers and Guarantor, as amended from time to time (as amended, restated, modified or
supplemented and in effect from time to time, the “Subordination Agreement”). Each Subordinated Creditor hereby
(a) consents to the execution by Borrowers and Lender of the above Seventh Amendment to Loan and Security Agreement and Other Loan
Documents, providing for, among other things, the increase of the Revolving Loan Commitment to $20,000,000; (b) acknowledges that
the “Senior Debt” (as defined in the Subordination Agreement) includes all of the obligations and liabilities owing
from time to time by Borrowers to Lender, including, without limitation, the Obligations (which include the increased Revolving
Loans and the Term Loan); (c) acknowledges that the “Subordinated Debt” (as defined in the Subordination Agreement)
and any liens and security interests of Subordinated Creditors in the Collateral (as defined in the Subordination Agreement) shall
remain subordinate to the “Senior Debt” and the liens and security interests of Lender in the Collateral; (d) acknowledges
that no Subordinated Creditor has any set-off, defense or counterclaim to the payment or performance of any of the obligations
of such Subordinated Creditor under the Subordination Agreement; (e) reaffirms, assumes and binds itself in all respects to all
of the obligations, liabilities, duties, covenants, terms and conditions that are contained in the Subordination Agreement; (f)
agrees that all such obligations and liabilities under the Subordination Agreement shall continue in full force and effect and
shall not be discharged, limited, impaired or affected in any manner whatsoever; (g) represents and warrants that each of the representations
and warranties made by such Subordinated Creditor in any of the documents executed in connection with the Loans remain true and
correct as of the date hereof; and (h) represents and warrants that it has consented to the InStaff Purchase Transaction.


 


	 	SUBORDINATED CREDITORS:
	 	 	 	 
	 	
        LEGG MASON SBIC MEZZANINE FUND, L.P., a Delaware limited
partnership

	 	 	 	 
	 	By:	
        Legg Mason SBIC Mezzanine Fund Management, LLC

	 	Its:	General Partner
	 	 	 	 
	 	 	By:	/s/ Joseph W. Hasse
	 	 	Name:	Joseph W. Hasse
	 	 	Its: 	Member


 




    	 



    	 



    

 


	 	
        BROOKSIDE PECKS CAPITAL PARTNERS, L.P., a Delaware
limited partnership

	 	 	 	 
	 	By:	Brookside Pecks Management, LLC
	 	Its:	General Partner
	 	 	 	 
	 	 	By:	/s/ David D. Buttolph
	 	 	Name: David D. Buttolph 
	 	 	Its: Managing Director
	 	 	 	 
	 	
        BROOKSIDE MEZZANINE FUND II, L.P., a Delaware limited
partnership

	 	 	 	 
	 	By:	Brookside Mezzanine Partners II, LLC
	 	Its:	General Partner
	 	 	 	 
	 	 	By:	/s/ Corey L. Sclar
	 	 	Name: Corey L. Sclar
	 	 	Its: Managing Director