SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS
Exhibit 10.14
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
AND OTHER LOAN DOCUMENTS
This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS (this “Amendment”) is made as of the 15th day of June, 2011, 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, Borrowers have requested that Lender 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 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:
“Letter of Credit Commitment” shall mean, at any time, an amount equal to One Hundred Seventy-Five Thousand and No/100 Dollars ($175,000.00)
“Letter of Credit Maturity Date” shall mean June 15, 2012, except as such date may be extended by Lender in its sole discretion.
“Revolving Loan Maturity Date” shall mean October 15, 2011, unless extended by Lender pursuant to any modification, extension or renewal note executed by Borrowers and accepted by Lender in its sole and absolute discretion in substitution for the Revolving Note.
“Term Loan Maturity Date” shall mean October 15, 2011, unless extended by Lender pursuant to any modification, extension or renewal note executed by Borrowers and accepted by Lender in its sole and absolute discretion in substitution for the Term Note.
3. Amendment to the Revolving Note. That certain Amended and Restated Revolving Note dated as of December 13, 2010 executed jointly and severally by Borrowers and made payable to the order of Lender in the maximum principal amount of $4,500,000.00 (the “Existing Revolving Note”) is hereby replaced with that certain Second 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 $4,500,000.00 (the “Second Amended and Restated Revolving Note”). The Second Amended and Restated Revolving Note amends and restates in its entirety the Existing Revolving Note and evidences a renewal of the indebtedness evidenced by the Existing Revolving Note. Nothing contained in the Second 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.
4. Amendment to the Term Note. That certain Term Note dated as of May 24, 2010 executed jointly and severally by Borrowers and made payable to the order of Lender in the original principal amount of $5,540,000.00 (the “Existing Term Note”) is hereby replaced with that certain Amended and Restated Term Note dated as of even date herewith executed jointly and severally by Borrowers and made payable to the order of Lender in the principal amount of $4,352,000.00 (the “Amended and Restated Term Note”). The Amended and Restated Term Note amends and restates in its entirety the Existing Term Note and evidences the current outstanding principal balance as of the date hereof of the indebtedness evidenced by the Existing Term Note. Nothing contained in the Amended and Restated Term Note shall be deemed to be payment and satisfaction or a novation of the indebtedness evidenced by the Existing Term Note.
5. 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, the Revolving Note and the Term Note.
6. Subordinated Debt Payments. Notwithstanding anything to the contrary contained in the Loan Agreement, any of the other Loan Documents, any of the 2007 Subordinated Loan Documents, any of the 2009 Subordinated Loan Documents or any of the 2010 Subordinated Loan Documents, each Borrower hereby covenants and agrees that it shall not make any payments on any of the Subordinated Debt nor any payment of management fees or similar fees to any Person, including, without limitation, any of the Subordinated Debt under the 2007 Subordinated Loan Documents owing to the 2007 Subordinated Creditors, any of the Subordinated Debt under the 2009 Subordinated Loan Documents owing to the 2009 Subordinated Creditors, and any of the Subordinated Debt under the 2010 Subordinated Loan Documents owing to the 2010 Subordinated Creditors, at any time prior to October 16, 2011.
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7. 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.
(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.
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(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.
8. 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.
(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, other than the Event of Default occurring by reason of Borrowers’ failure to make timely payments under Section 2.10 of the Loan Agreement and as set forth in that certain letter dated April 15, 2011 from Lender to Borrowers (the “Existing Default”), 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.
9. Waiver of Existing Default. Subsequent to the occurrence of the Existing Default, Borrowers made payments to Lender in the amount equal to the missed payments under Section 2.10 of the Loan Agreement. Accordingly, Lender hereby waives the Existing Default. This waiver shall be narrowly construed and shall neither extend to any other existing or future violations under, or default of, the Loan Agreement, including but not limited to, any violation of Section 2.10 at any future time, nor shall this waiver prejudice any rights or remedies which Lender may have or be entitled to with respect to such future violations or defaults.
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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 Second Amended and Restated Revolving Note, duly authorized and fully executed by each Borrower, shall have been delivered to Lender.
(c) The Amended and Restated Term Note, duly authorized and fully executed by each Borrower, shall have been delivered to Lender.
(d) That certain Omnibus Consent and Ratification of Subordination and Intercreditor Agreements dated as of even date herewith, duly authorized and fully executed by each of the 2007 Subordinated Creditors, shall have been delivered to Lender.
(e) That certain Consent dated as of even date herewith, in form and substance acceptable to Lender, duly executed by each of the 2007 Subordinated Creditors, shall have been delivered to Lender.
(f) 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 Limited Liability Company Agreement since December 13, 2010, shall have been delivered to Lender.
(g) Resolutions shall have been adopted by LTN Staffing’s members authorizing the execution, delivery and performance of this Amendment, the Second Amended and Restated Revolving Note, the Amended and Restated Term 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 13, 2010, shall have been delivered to Lender.
(h) Resolutions shall have been adopted by BG Staffing’s members authorizing the execution, delivery and performance of this Amendment, the Second Amended and Restated Revolving Note, the Amended and Restated Term Note 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 13, 2010, shall have been delivered to Lender.
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(i) Resolutions shall have been adopted by BG Staffing’s members authorizing the execution, delivery and performance of this Amendment, the Second Amended and Restated Revolving Note, the Amended and Restated Term 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 13, 2010, shall have been delivered to Lender.
(j) Resolutions shall have been adopted by BG Staffing’s members authorizing the execution, delivery and performance of this Amendment, the Second Amended and Restated Revolving Note, the Amended and Restated Term 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 13, 2010, shall have been delivered to Lender.
(k) Resolutions shall have been adopted by B G Staff Services’ Board of Directors authorizing the execution, delivery and performance of this Amendment, the Second Amended and Restated Revolving Note, the Amended and Restated Term Note and the other documents to be delivered in connection herewith, and a copy thereof, certified by the corporate secretary of B G Staff Services, together with a certificate of the corporate secretary 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 13, 2010, shall have been delivered to Lender.
(l) 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. Condition Subsequent After Amendment Effective Date. Notwithstanding any other provision of this Amendment or the Loan Agreement to the contrary, the obligation of Lender to continue to disburse, make or continue all or any portion of the Loans (or otherwise extend credit under the Loan Agreement) is subject to the fulfillment, on or before the date applicable thereto, of the condition subsequent set forth below (the failure of Borrowers to so perform or cause to be performed by such date constituting an Event of Default):
(a) on or before July 1, 2011, the duly authorized and fully executed original signature pages for each of the 2009 Subordinated Creditors and each of the 2010 Subordinated Creditors to that certain Omnibus Consent and Ratification of Subordination and Intercreditor Agreements, shall have been delivered to Lender.
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.
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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 which is evidenced by the Amended and Restated Revolving Note provided for therein 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.
(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.
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IN WITNESS WHEREOF, the parties have executed this Second 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. Xxxxx Xxxxx, Xx. | |||
| Name: | L. Xxxxx Xxxxx, Xx. | |||
| 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. Xxxxx Xxxxx, Xx. | |||
| Name: | L. Xxxxx Xxxxx, Xx. | |||
| 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. Xxxxx Xxxxx, Xx. | |||
| Name: | L. Xxxxx Xxxxx, Xx. | |||
| 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. Xxxxx Xxxxx, Xx. | |||
| Name: | L. Xxxxx Xxxxx, Xx. | |||
| Title: | President and Chief Executive Officer | |||
| B G STAFF SERVICES INC., a Texas corporation | ||||
| By: | /s/ L. Xxxxx Xxxxx, Xx. | |||
| Name: | L. Xxxxx Xxxxx, Xx. | |||
| 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/ Xxxxxx X. Xxxxxxxxx | |
| Name: | Xxxxxx X. Xxxxxxxxx | |
| Title: | Vice President | |
Consent and ratification OF GUARANTY
The undersigned (“Guarantor”) is a guarantor of Borrower 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 Borrower and Lender of the above Second 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 Second Amended and Restated Revolving Note and the 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); (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 Second Amended and Restated Revolving Note, the 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 Second 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. Xxxxx Xxxxx, Xx. | |
| Name: | L. Xxxxx Xxxxx, Xx. | |
| 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 Second 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. Xxxxx Xxxxx, Xx. | |
| Name: | L. Xxxxx Xxxxx, Xx. | |
| Title: | Manager and Authorized Person | |
