SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION
AGREEMENT
(this “
Agreement
”), is dated as of ___________, 2013, by Staffing 360 Solutions, Inc., a Nevada
corporation (the “
Company
”), and the subscriber signatory hereto (“
Subscriber
”).
WHEREAS
, the
Company and Subscriber are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded
by (a) the provisions of Section 4(a)(2) and/ or Rule 506 of Regulation D (“
Regulation D
”) or (b) similar exemptions
under state law or the provisions of Regulation S (“
Regulation S
”), each as promulgated by the United States
Securities and Exchange Commission (the “
Commission
” or “
SEC
”) under the Securities Act of
1933, as amended (the “
Securities Act
”); and
WHEREAS
, the
Company is offering, in a private placement transaction to (a) accredited investors and/or (b) investors who are not “U.S.
Persons” as defined in Rule 902 of Regulation S (the “
Offering
”), up to 200 units (the “
Units
”)
consisting of (i) 27,778 shares of the Company’s common stock, par value $0.00001 per share (“
Common Stock
”)
and (ii) a warrant (“
Warrant
”) to purchase 13,889 shares (the “
Warrant Shares
”) of Common
Stock at an exercise price of $1.80 per Share, for a purchase of $25,000 per Unit (the “
Purchase Price
”), for
gross proceeds of up to $5.0 million;
WHEREAS
, the
Subscriber desires to subscribe for and purchase in the Offering the number of Units indicated on the signature page hereto (the
“
Purchased Units
”) for the aggregate Purchase Price indicated on the signature page hereto (the “
Aggregate
Purchase Price
”);
WHEREAS
, this
Offering is being conducted pursuant to a private placement memorandum dated April 15, 2013 and the exhibits attached thereto (collectively,
the “
Offering Documents
”); and
WHEREAS
, certain
piggy-back registration rights are being granted to Subscriber by the Company which are set forth on
Exhibit A
attached
hereto.
NOW, THEREFORE
,
in consideration of the premises above, which are incorporated in this Agreement as if fully set forth below, and the mutual covenants
and other agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and Subscriber hereby agree as follows:
1.
Acceptance
and Rejection; Closing; Conditions
.
(a)
Acceptance
or Rejection
.
(i) Upon
execution, the Subscriber’s obligation to purchase the Purchased Units shall be irrevocable, and the Subscriber shall be
legally bound to purchase the Purchased Units subject to the terms set forth in this Agreement.
(ii) The
Subscriber understands and agrees that the Company reserves the right to reject Subscriber’s subscription for any Units,
in whole or in part, at any time prior to the closing of the purchase and sale of the Purchased Units for any or no reason, notwithstanding
the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s subscription.
(iii) In
the event of rejection of this subscription by the Company or if the sale of the Units is not consummated for any reason, this
Agreement and any other agreement entered into between the Subscriber and the Company relating to the Offering shall thereafter
be null and void and have no force or effect, and the Company shall promptly return or cause to be returned to the Subscriber the
Aggregate Purchase Price remitted to the Company, without interest thereon or deduction therefrom.
(b)
Closing;
No Minimum Offering; Finders
.
(i) The
Closing shall take place at the offices of Ellenoff Grossman & Schole LLP, 150 E. 42
nd
Street, New York, NY 10017,
or such other place as determined by the Company (including remotely via deliver of electronic documents), at one or more closings
(each a “
Closing
”) on or after the date the
Aggregate Purchase Price for the Units (represented by cleared funds in the case of checks delivered) has been received by the
Company, and assuming the satisfaction of the conditions set forth in Section 1(c) below. Promptly following the Closing, the Company
shall deliver and issue to the Subscriber (at the address set forth on the signature page hereto), (i) copies of the signed Subscription
Agreement and Confidential Investor Questionnaire (the “
Confidential Investor Questionnaire
”) provided to the
Company by Subscriber; (ii) a
share certificate evidencing the applicable number of shares of Common
Stock subscribed for hereunder against payment in U.S. Dollars of the Purchase Price
and (ii) a Warrant certificate evidencing
the number of Warrant Shares Investor subscribed for hereunder.
(ii) There
is no minimum number of Units which the Company must sell before it receives, and has the right to expend, the net proceeds from
the sale of any Units. The Company has a commitment from a third party investor to purchase no less than 50 Units, for a total
minimum purchase price of $1.25 million; however, no assurances can be given that all or any of the full $5.0 million amount of
the Offering in excess of $1.25 million will be subscribed for.
(iii) The
Subscriber specifically acknowledges and agrees that the Company has the right to retain finders who will seek to introduce accredited
investors to the Company for potential participation in the Offering. The Company shall pay to such finders, from the gross proceeds
of the Offering, customary fees not to exceed 13% in cash and 10% in warrants to purchase Common Stock (with an exercise price
equal to the exercise price of the Warrants). Any such finders shall be broker-dealers registered with the Commission and the Financial
Industry Regulatory Authority, Inc.
(c)
Closing
Conditions
. The Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the
following conditions precedent on or before the date such subscription is accepted (any or all of which may be waived by the Company
and the Subscriber in his, her or its sole discretion):
(i) On
the date of the Closing, no legal, administrative or regulatory action, suit or proceeding shall be pending which seeks to restrain
or prohibit the transactions contemplated by this Agreement;
(ii) The
Board of Directors of the Company shall have approved the Offering and the issuance of the Units pursuant to this Agreement in
accordance with the applicable laws of the jurisdiction of the Company’s incorporation;
(iii) The
Company shall not have previously rejected the Subscriber’s subscription for the Purchased Units, which the Company shall
have the right to do even if the Aggregate Purchase Price for the Purchased Units (or any portion thereof) has been funded to the
Company; and
(iv) The
representations and warranties of Subscriber contained in this Agreement shall have been true and correct on the date of this Agreement
and shall be true and correct as of the Closing.
(d)
Subscription
.
The Subscriber hereby subscribes for and agrees to purchase the number of Purchased Units indicated on the signature page hereof
on the terms and conditions described herein.
(e)
Purchase
of Units
. The Subscriber understands and acknowledges that the purchase price to be remitted in exchange for the Purchased
Units shall be $25,000 per Unit, for an Aggregate Purchase Price as set forth on the signature page hereto. The Subscriber’s
delivery of an executed version of this Agreement to the Company or its legal counsel shall be accompanied by payment for the Purchased
Units subscribed for hereunder, payable in United States dollars, by check or wire transfer to an account maintained by the Company
as provided in the instructions above. The Subscriber understands and agrees that, subject to the terms of this Agreement and applicable
laws, by executing this Agreement, he, she or it is entering into a binding agreement.
2.
Representations
and Warranties of Subscriber
. Subscriber represents and warrants to the Company as follows:
(a)
Subscriber acknowledges and understands that an investment in the Company involves a very high degree of risk and should not be
undertaken if the Subscriber cannot afford to lose the Subscriber’s entire investment in the Company. The Subscriber acknowledges
and confirms that the Subscriber can bear the economic risk of the purchase of the Purchased Units, including a total loss of the
Subscriber’s investment. Subscriber acknowledges and agrees that such Subscriber’s investment in the Company is reasonable
in relation to Subscriber’s net worth and financial needs.
(b) Subscriber
is either (1) an “accredited investor” as defined by Rule 501(a) of Regulation D (a copy of which definition is set
forth on
Exhibit B
attached hereto) under the Securities Act or (2) not a “U.S. Person” as defined in Rule 902
of Regulation S under the Securities Act, and has such knowledge and experience in financial and business matters that Subscriber
is capable of evaluating the merits and risks of Subscriber’s investment in the Purchased Units, of making an informed investment
decision with respect thereto, and has the ability and capacity to protect Subscriber’s interests. Subscriber has experience
with investing in early stage, pre-revenue companies.
(c)
Subscriber understands that the Purchased Units are not presently registered and other than as set forth herein the Company has
no obligation to register the Purchased Units or assist the Subscriber in obtaining an exemption from registration. Subscriber
understands that the Purchased Units will not be registered under the Securities Act on the ground that the issuance thereof is
exempt under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D as a transaction by an issuer not involving any
public offering and that, in the view of the SEC, the statutory basis for the exemption claimed would not be present if any of
the representations and warranties of Subscriber contained in this Agreement or those of other purchasers of the Purchased Units
are untrue or, notwithstanding the Subscriber’s representations and warranties, the Subscriber currently has in mind acquiring
any of the Purchased Units for resale upon the occurrence or non-occurrence of some predetermined event.
(d) Subscriber
is purchasing the Purchased Units subscribed for hereby for investment purposes and not with a view to distribution or resale,
nor with the intention of selling, transferring or otherwise disposing of all or any part thereof for any particular price, or
at any particular time, or upon the happening of any particular event or circumstance, except selling, transferring, or disposing
the Purchased Units made in full compliance with all applicable provisions of the Securities Act, the rules and regulations promulgated
by the SEC thereunder, and applicable state securities laws; and that an investment in the Purchased Units is not a liquid investment.
(e)
Subscriber acknowledges and understands that there exists no public market for the Purchased Units, that no such public
market may develop in the future, that the Purchased Units, when issued, will be “restricted securities” and as a result,
Subscriber acknowledges that the Purchased Units must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. Subscriber is aware of the provisions of Rule 144 promulgated under
the Securities Act which permit resales of common stock purchased in a private placement subject to certain limitations and to
the satisfaction of certain conditions provided for thereunder, including, among other things, the existence of a public market
for the common stock, the availability of certain current public information about the Company, the resale occurring, in general,
not less than six months after a party has purchased and paid for the security to be sold, the sale being effected through a “broker’s
transaction” or in transactions directly with a “market maker” and, in certain cases, the number of shares of
common stock being sold during any three-month period not exceeding specified limitations.
(f)
Subscriber acknowledges that Subscriber has had the opportunity to ask questions of, and receive answers from, the Company or any
authorized person acting on its behalf concerning the Company and its proposed business plan (including, without limitation, as
described in the Offering Documents) and to obtain any additional information, to the extent possessed by the Company (or to the
extent it could have been acquired by the Company without unreasonable effort or expense) necessary to verify the accuracy of the
information received by Subscriber. In connection therewith, Subscriber acknowledges that Subscriber has had the opportunity to
discuss the Company’s business, management and financial affairs with the Company’s management or any authorized person
acting on its behalf. Subscriber has received and reviewed all the information concerning the Company and the Purchased Units that
Subscriber desires (including, without limitation, the Offering Documents). Without limiting the generality of the foregoing, Subscriber
has been furnished with or has had the opportunity to acquire, and to review, all information that Subscriber desires with respect
to the Company’s business, management, financial affairs, prospects and risks. In determining whether to make this investment,
Subscriber has relied solely on Subscriber’s own knowledge and understanding of the Company and its business based upon Subscriber’s
own due diligence investigations and the information (if any) furnished pursuant to this paragraph.
(g)
Subscriber has all requisite legal and other power and authority to execute and deliver this Agreement and to carry out and perform
Subscriber’s obligations under the terms of this Agreement. This Agreement constitutes a valid and legally binding obligation
of Subscriber, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance, injunctive relief or other general principals of equity,
whether such enforcement is considered in a proceeding in equity or law.
(h) Subscriber
has carefully considered and has discussed with the Subscriber’s legal, tax, accounting and financial advisors, to the extent
the Subscriber has deemed necessary, the suitability of this investment and the transactions contemplated by this Agreement for
the Subscriber’s particular federal, state, local and foreign tax and financial situation and has independently determined
that this investment and the transactions contemplated by this Agreement are a suitable investment for the Subscriber. Subscriber
has relied solely on such advisors and not on any statements or representations of the Company or any of its agents. Subscriber
understands that Subscriber (and not the Company) shall be responsible for Subscriber’s own tax liability that may arise
as a result of this investment or the transactions contemplated by this Agreement.
(i)
This Agreement and the Confidential Investor Questionnaire does not contain any untrue statement of a material fact or omit any
material fact concerning Subscriber.
(j)
There are no actions, suits, proceedings or investigations pending against Subscriber or Subscriber’s assets before any court
or governmental agency (nor, to Subscriber’s knowledge, is there any threat thereof) which would impair in any way Subscriber’s
ability to enter into and fully perform Subscriber’s commitments and obligations under this Agreement or the transactions
contemplated hereby.
(k) The
execution, delivery and performance of and compliance with this Agreement and the issuance of the Purchased Units will not result
in any violation of, or conflict with, or constitute a default under, any of Subscriber’s articles or certificate of incorporation,
by-laws, operating agreement, partnership agreement, or trust agreement, if applicable, or any agreement to which Subscriber is
a party or by which it is bound, nor result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of
the assets or properties of Subscriber or the Purchased Units. If Subscriber is an individual, Subscriber has legal capacity to
execute and deliver this Agreement.
(l)
Subscriber recognizes that no federal, state or foreign agency has reviewed, recommended or endorsed the purchase of the Purchased
Units or any facts or circumstances related thereto.
(m) Subscriber acknowledges
that he/she/it has carefully reviewed and considered the risk factors discussed in the “Risk Factors” section of the
Offering Documents.
(n) Subscriber
understands that any and all certificates representing the Purchased Units and any and all securities issued in replacement thereof
or in exchange therefor shall bear the following legend or one substantially similar thereto, which Subscriber has read and understands:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND
SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”
In addition, the certificates
representing the Purchased Units, and any and all securities issued in replacement thereof or in exchange therefor, shall bear
such legend as may be required by the securities laws of (or based on) the jurisdiction in which Subscriber resides.
(o) Because
of the legal restrictions imposed on resale, Subscriber understands that the Company shall have the right to note stop-transfer
instructions in its stock transfer records, and Subscriber has been informed of the Company’s intention to do so. Any sales,
transfers or other dispositions of the Purchased Units by Subscriber, if any, will be made in compliance with the Securities Act
and all applicable rules and regulations promulgated thereunder.
(p) Subscriber
represents that (i) Subscriber has (and could be reasonably assumed to have) the ability and capacity to protect his/her/its interests
in connection with this investment; or (ii) Subscriber has a pre-existing personal or business relationship with either the Company
or any agent thereof of such duration and nature as would enable a reasonably prudent purchaser to be aware of the character, business
acumen and general business and financial circumstances of the Company or such affiliate and is otherwise personally qualified
to evaluate and assess the risks, nature and other aspects of this investment.
(q) Subscriber
further represents that the address of Subscriber set forth below is his/her principal residence (or, if Subscriber is a company,
partnership or other entity, the address of its principal place of business); that Subscriber is purchasing the Purchased Units
for Subscriber’s own account and not, in whole or in part, for the account of any other person; and that Subscriber has not
formed any entity, and is not an entity formed, for the purpose of purchasing the Purchased Units.
(r)
Subscriber understands that the Company shall have the unconditional right to accept or reject this subscription, in whole or in
part, for any reason or without a specific reason, in the sole and absolute discretion of the Company (even after receipt and clearance
of Subscriber’s funds). This Agreement is not binding upon the Company until accepted in writing by an authorized officer
of the Company.
(s)
Subscriber has not been furnished with any oral representation or oral information in connection with or in any way relating to
the Offering or the business or prospects of the Company that is not contained in, or is in any way contrary to or inconsistent
with, statements made in this Agreement or the disclosures contained in the Offering Documents.
(t)
Subscriber represents that Subscriber is not subscribing for the Purchased Units as a result of or subsequent to any advertisement,
article, notice or other communication published in any newspaper, magazine or similar media or broadcast over the Internet, television
or radio or presented at any seminar or meeting or any public announcement or filing of or by the Company or any of their affiliates,
agents or representatives.
(u) Subscriber
has carefully read each of the Offering Documents, including but not limited to the Offering Documents and this Subscription Agreement
(including all annexes and exhibits hereto and thereto), and agrees to each of the terms and provisions of this Subscription Agreement.
(v) Subscriber
acknowledges that no representations or warranties have been made to Subscriber by the Company, or any officer, employee, agent,
affiliate or subsidiary of the Company, other than the representations of the Company contained herein, and in subscribing for
the Purchased Units the Subscriber is not relying upon any representations other than those contained in this Subscription Agreement.
(w) Subscriber
represents and warrants that Subscriber has kept and will keep confidential any information made available in connection with its
investigation of the Company and its intended business and agrees that all such information shall be kept in confidence by the
Subscriber and neither be used by the Subscriber for the Subscriber’s personal benefit (other than in connection with this
subscription) nor disclosed to any third party for any reason (other than Subscriber’s legal and tax advisors) notwithstanding
that the Subscriber’s subscription may not be accepted by the Company. Subscriber will not undertake any purchases of the
Company’s securities while in possession of material non-public information regarding the Company (it being agreed and acknowledged
by the Subscriber that the contents of the Offering Documents constitute material non-public information within the meaning of
the U.S. federal securities laws).
(x) If
the Subscriber is a corporation, partnership, limited liability company, trust, or other entity, the person executing this Agreement
hereby represents and warrants that the above representations and warranties shall be deemed to have been made on behalf of such
entity and the Subscriber has made the same after due inquiry to determine the truthfulness of such representations and warranties.
(y) If
the Subscriber is a corporation, partnership, limited liability company, trust, or other entity, it represents that: (i) it is
duly organized, validly existing and in good standing in its jurisdiction of incorporation or organization and has all requisite
power and authority to execute and deliver this Agreement and purchase the Purchased Units as provided herein; (ii) the execution
and delivery of this Agreement and Subscriber’s purchase of the Purchased Units has been duly authorized by all necessary
action on behalf of the Subscriber; (iii) all of the documents relating to the Subscriber’s subscription to the Purchased
Units have been duly executed and delivered on behalf of the Subscriber and constitute a legal, valid and binding agreement of
the Subscriber; and (iv) has not been organized for the specific purpose of purchasing the Purchased Units (unless all beneficial
owners of the Subscriber are “accredited investors”) and is not prohibited from so purchasing the Purchased Units.
3.
Representations
and Warranties of the Company
. The Company represents and warrants to Subscriber as follows:
(a) The
Company is duly organized and validly existing as corporations in good standing under the laws of its state of incorporation.
(b) The
Company has the corporate power and authority to enter into, deliver and perform this Agreement and the agreements to be entered
into therewith.
(c) All
necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance
of this Agreement by the Company, and the issuance and sale of the Purchased Units to be sold by the Company pursuant to this Agreement.
(d) This
Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles.
(e) The
Purchased Units upon issuance:
(i) are,
or will be, free and clear of any security interests, liens, claims or other encumbrances, subject only to restrictions upon transfer
under the Securities Act and any applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on their respective dates of issuance the Common Stock, Warrants and Warrant
Shares will be duly and validly issued, fully paid and non-assessable;
(iii) will
not subject the holders thereof to personal liability by reason of being such holders; and
(iv) assuming
the representations and warranties of Subscriber as set forth in Section 2 hereof are true and correct, will not result in a violation
of Section 5 under the Securities Act.
(f)
No
General Solicitation
. Neither the Company, nor to its knowledge, any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection
with the offer or sale of the Purchased Units.
(g)
Private
Placement
. Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 2, no registration
under the Securities Act is required for the offer and sale of the Purchased Units by the Company to Subscriber as contemplated
hereby.
4.
Indemnification;
No Short Sales
.
(a) Subscriber
agrees to indemnify, hold harmless, reimburse and defend the Company and its officers, directors, employees, agents, counsel, control
persons and principal stockholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable
legal fees) of any nature, incurred by or imposed upon the Company or any such person which results, arises out of or is based
upon (i) any material misrepresentation by Subscriber or breach of any representation or warranty by Subscriber in the Confidential
Investor Questionnaire, this Agreement or in any Exhibits (the “
Exhibits
”) attached hereto, or other agreement
delivered pursuant hereto or in connection herewith, now or after the date hereof; or (ii) after any applicable notice and/ or
cure periods, any breach or default in performance by Subscriber of any covenant or undertaking to be performed by Subscriber hereunder,
or any other agreement entered into by Subscriber and the Company relating hereto.
(b) If
any action shall be brought against an indemnified party in respect of which indemnity may be sought pursuant to this Agreement,
the indemnified party shall promptly notify the indemnifying party in writing, and the indemnifying party shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the indemnified party. Any indemnified
party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified party except to the extent that (i) the employment thereof
has been specifically authorized by the indemnifying party in writing, (ii) the indemnifying party has failed after a reasonable
period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel,
a material conflict on any material issue between the position of the indemnifying party and the position of the indemnified party,
in which case the indemnifying party shall be responsible for the reasonable fees and expenses of no more than one such separate
counsel. The indemnifying party will not be liable to the indemnified party under this Agreement (y) for any settlement by an indemnified
party effected without the indemnifying party’s prior written consent, which shall not be unreasonably withheld or delayed;
or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to the indemnified party’s
breach of any of the representations, warranties, covenants or agreements made by the indemnified party in this Agreement.
(c) The
Subscriber, whether in its own capacity or through a representative, agent or affiliate, agrees that it will not enter into or
effect any “short sales” of any publicly traded capital stock of the Company or any hedging, stabilization or other
similar transaction, whether on a U.S. domestic exchange, Over-the-Counter Bulletin Board or the Pink Sheets or any foreign exchange
for a period commencing on the issuance of the Purchased Units and ending one year after any registration statement covering the
public sale of any Company securities has been declared effective by the SEC.
5.
Registration
Rights
. The Company hereby grants to the Subscriber the registration rights with respect to the Common Stock purchased in the
Offering, and the Warrant Shares, set forth on
Exhibit A
hereto.
6.
Right
to Participate in Future Financings
. Immediately following the final Closing of this Offering, and for a period expiring on
the later of: (i) the twelve-month anniversary of the date of such final Closing or (ii) as long as a majority of the Common Stock
issued at the Closings are then-held by the Subscribers, each Subscriber shall have a right to participate with respect to all
non-public equity or equity-linked capital raising transactions of the Company, subject to certain customary exceptions (each,
a “
Subsequent Financing
”). The Company shall give advance written notice to the Subscribers prior to any Subsequent
Financing. Each Subscriber shall have ten (10) business days from receipt of such notice to deliver a written notice to the Company
that such Subscriber elects to exercise its right to participate in the Subsequent Financing with respect to an amount of the Subsequent
Financing equal to (a) such Subscriber’s Pro Rata Share (as defined below) of the Subsequent Financing, plus (b) a pro rata
amount (based upon the relative amount of the participating Subscribers’ respective Pro Rata Share) of the aggregate of the
unsubscribed for Pro Rata Share of the other subscribers. “
Pro Rata Share
” of each Subscriber shall equal the
ratio of (x) the subscription amount paid by such Subscriber for Units and (y) the sum of the aggregate subscription amounts purchased
by all Subscribers participating in such Subsequent Financing.
7.
Miscellaneous
.
(a)
Notices
.
Any notice or other document required or permitted to be given or delivered to the parties hereto shall be in writing and sent:
(i) by fax if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid) or (c) by a recognized overnight
delivery service (with charges prepaid).
If to the Company, at:
Staffing 360 Solutions, Inc.
641 Lexington Ave
Suite 1526
New York, New York
10022
Telephone: (212) 634-641
Fax Number: (509)
694-8692
Attention: Alfonso
J. Cervantes, President
With a copy (which
shall not constitute notice) to:
Ellenoff Grossman
& Schole LLP
150 E. 42
nd
Street, 11
th
Floor
New York, NY 10017
Telephone: (212) 370-1300
Facsimile: (212) 370-7889
Attention: Barry I.
Grossman, Esq.
If to the Subscriber,
at its address set forth on the signature page to this Subscription Agreement, or such other address as Subscriber shall have specified
to the Company in writing.
(b)
Entire
Agreement; Assignment
. This Agreement represents the entire agreement between the parties hereto with respect to the subject
matter hereof and may be terminated, modified, waived or amended only by a writing executed and delivered by both parties. Neither
the Company nor Subscriber has relied on any representations not contained or referred to in this Agreement. No right or obligation
of a party shall be assigned or otherwise transferred without prior notice to and the written consent of the other party. Any assignment
or transfer in violation of the foregoing shall be null and void.
(c)
Counterparts/Execution
.
This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.
This Agreement may be executed by facsimile transmission, .pdf, electronic signature or other similar electronic means with the
same force and effect as if such signature page were an original thereof.
(d)
Law
Governing this Agreement
. This Subscription Agreement shall be enforced, governed and construed in all respects in accordance
with the laws of the State of New York, as such laws are applied by the New York courts within the borders of such state, except
with respect to the conflicts of law provisions thereof, and shall be binding upon the Subscriber and the Subscriber’s heirs,
estate, legal representatives, successors and permitted assigns and shall inure to the benefit of the Company and their respective
successors and assigns.
(e)
Consent
to Jurisdiction
. Any action relating to any dispute hereunder shall be brought only in the state courts of New York or in the
federal courts located in the state and county of New York. The parties to this Agreement hereby irrevocably waive any objection
to jurisdiction and venue of any such action instituted under this Section 7(e) and shall not assert any defense based on lack
of jurisdiction or venue or based upon
forum non conveniens
.
The parties executing this Agreement and other agreements
referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the
in personam
jurisdiction
of such courts and hereby irrevocably waive trial by jury with respect to any such actions.
Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding under this Section 7(e)
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. The Company and Subscriber hereby irrevocably waive and agree not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in New York of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
(f)
Drafting
.
This Agreement shall not be construed for or against a party based upon authorship.
(g)
Captions;
Certain Definitions
. The captions of the various sections and paragraphs of this Agreement have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and shall not be deemed in any manner to modify, explain,
enlarge or restrict any of the provisions of this Agreement. As used in this Agreement the term “
person
” shall
mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated
organization or any other legal entity and a government or any department or agency thereof.
(h)
Severability
.
In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise
unenforceable pursuant to applicable law by an authority having jurisdiction and venue, that determination shall not impair or
otherwise affect the validity, legality or enforceability: (i) by or before that authority of the remaining terms and provisions
of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
(i)
No
Assignment
. Subscriber agrees not to transfer or assign this Agreement or any of Subscriber’s interest herein and further
agrees that the transfer or assignment of the Purchased Units acquired pursuant hereto shall be made only in accordance with all
applicable laws.
(j)
No
Revocation
. Subscriber agrees that Subscriber cannot cancel, terminate, or revoke this Agreement or any agreement of Subscriber
made hereunder, and this Agreement shall survive the death or legal disability of Subscriber and shall be binding upon Subscriber’s
heirs, executors, administrators, successors, and permitted assigns.
(k)
Counsel
.
Subscriber acknowledges that it has been advised and has had the opportunity to consult with Subscriber’s own attorney and
other advisors regarding this Agreement and Subscriber has done so to the extent that Subscriber deems appropriate.
Signature Page for Individuals:
IN WITNESS WHEREOF,
Subscriber agrees to purchase Units indicated below and has caused this Subscription Agreement to be executed as of the date indicated
below.
|
$___________________________________
|
___________________________________
|
|
Aggregate
Purchase Price
|
Number
of Purchased Units
|
|
____________________________________
|
___________________________________
|
|
Print
or Type Name
|
Print
or Type Name (Joint-owner)
|
|
____________________________________
|
___________________________________
|
|
Signature
|
Signature
(Joint-owner)
|
|
___________________________________
|
___________________________________
|
|
Date
|
Date
(Joint-owner)
|
|
____________________________________
|
___________________________________
|
|
Social
Security Number
|
Social
Security Number (Joint-owner)
|
|
|
|
|
___________________________________
|
____________________________________
|
|
Address
|
Address
(Joint-owner)
|
|
|
|
|
_______
Joint Tenancy
|
______
Tenants in Common
|
Signature Page for Partnerships, Corporations or Other Entities:
IN WITNESS WHEREOF, Subscriber has caused
this Subscription Agreement to be executed as of the date indicated below.
|
$ __________________________
|
_____________________________
|
|
Aggregate Purchase Price
|
Number of Purchased Units
|
____________________________________
Print or Type Name of Entity
_____________________________________________________________________________________
Address
|
____________________________________
|
____________________________________
|
|
Taxpayer I.D. No. (if applicable)
|
Date
|
|
By: ____________________________________
|
____________________________________
|
|
Signature:
|
|
|
Name:
|
Print or Type Name and Indicate
|
|
Title:
|
Title or Position with Entity
|
Acceptance:
IN WITNESS WHEREOF, the Company has caused
this Subscription Agreement to be executed, and the foregoing subscription accepted, as of the date indicated below, as to _______________________
Units.
STAFFING 360 SOLUTIONS, INC.
By: __________________________________
Name: Alfonso J. Cervantes
Title: President
Date: _____________________, 2013
LIST OF EXHIBITS AND
APPENDICES
|
|
Exhibit A
|
Registration Rights
|
EXHIBIT A
REGISTRATION RIGHTS
All shares of Common
Stock sold in the Offering, including the Warrant Shares and any Common Stock which may be paid as a dividend on the Common Stock,
will be deemed “
Registrable Securities
” subject to the provisions of this Exhibit A. All capitalized terms used
but not defined in this Exhibit A shall have the meanings ascribed to such terms in the Subscription Agreement to which this Exhibit
is attached.
1.
Piggy-Back
Registration
.
1.1
Piggy-Back
Rights
. If at any time on or after the date the Company consummates the Closing (but prior to the date that is five years from
the date of the initial Closing) the Company proposes to file a Registration Statement (a “
Registration Statement
”)
under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable
for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account
(or by the Company and by shareholders of the Company), other than a Registration Statement (i) filed in connection with any employee
stock option or other benefit plan, (ii) for a dividend reinvestment plan or (iii) in connection with a merger or acquisition,
then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities appearing on the
books and records of the Company as soon as practicable but in no event less than ten (10) days before the anticipated filing date,
which notice shall describe the amount and type of securities to be included in such Registration Statement, the intended method(s)
of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the
holders of Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities
as such holders may request in writing within five (5) days following receipt of such notice (a “
Piggy-Back Registration
”).
Subject to Section 1.2 below, the Company shall cause such Registrable Securities to be included in such registration and shall
use its commercially reasonable efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any
similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with
the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities
through a Piggy-Back Registration that involves an underwriter or underwriters shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such Piggy-Back Registration.
1.2
Reduction
of Offering
. If the managing underwriter or underwriters for a Piggy-Back Registration that is to be an underwritten offering
advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock
which the Company desires to sell, taken together with the Common Stock, if any, as to which registration has been demanded pursuant
to written contractual arrangements with persons other than the holders of Registrable Securities hereunder, the Registrable Securities
as to which registration has been requested under this Section 1, and the Common Stock, if any, as to which registration has been
requested pursuant to the written contractual piggy-back registration rights of other shareholders of the Company, exceeds the
maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering
price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum
number of shares, as applicable, the “
Maximum Number of Shares
”), then the Company shall include in any such
registration:
(a) If
the registration is undertaken for the Company’s account: (A) first, the share of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clause (A), the share of Common Stock or other securities, if any, comprised
of Registrable Securities, as to which registration has been requested pursuant to the applicable written contractual piggy-back
registration rights of such security holders, pro rata in accordance with the number of shares that each such Person has requested
be included in such registration, regardless of the number of shares held by each such Subscriber (“
Pro Rata
”),
that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities for the account of
other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such
persons and that can be sold without exceeding the Maximum Number of Shares; and
(b) If
the registration is a “demand” (including a registration that was filed on behalf of holders of the Company’s
securities pursuant to contractual rights that existed prior to the date of the sale of the Purchased Units) or “piggyback”
registration undertaken at the demand of holders of shares of Common Stock, (A) first, the shares of Common Stock or other securities
for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second,
to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock
or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third,
to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the shares of Registrable
Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof, that can be sold without exceeding
the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing
clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated
to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number
of Shares.
1.3
Withdrawal
.
Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of
the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a
demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness
of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders
of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.6 below.
1.4 The Company shall
notify the Subscriber at any time when a prospectus relating to such Subscriber’s Registrable Securities is required to be
delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus
included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances
then existing. At the request of the Subscriber, the Company shall also prepare, file and furnish to the Subscriber a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then
existing. The Subscriber agrees not to offer or sell any Registrable Securities covered by the Registration Statement after receipt
of such notification until the receipt of such supplement or amendment.
1.5 The Company may
request the Subscriber to furnish the Company such information with respect to the Subscriber and the Subscriber’s proposed
distribution of the Registrable Securities pursuant to the Registration Statement as the Company may from time to time reasonably
request in writing or as shall be required by law or by the SEC in connection therewith, and the Subscriber agrees to furnish the
Company with such information.
1.6 The Company agrees
to bear all SEC registration and filing fees, printing and mailing expenses, and fees and disbursements of counsel and accountants
for the Company in connection with the registration of Registrable Securities called for hereunder.
[End of Exhibit A]
NEITHER THIS SECURITY
NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
COMMON STOCK PURCHASE WARRANT
STAFFING
360 SOLUTIONS, INC.
|
Warrant Shares: [_______
|
Initial Exercise Date: [_______, 2013
|
THIS COMMON STOCK PURCHASE
WARRANT (this “
Warrant
”) certifies that, for value received, _____________ or its assigns (the “
Holder
”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after the date hereof (the “
Initial Exercise Date
”) and on or prior to the close of business on the three
(3) year anniversary of the Initial Exercise Date (the “
Termination Date
”) but not thereafter, to subscribe
for and purchase from Staffing 360 Solutions, Inc., a Nevada corporation (the “
Company
”), up to ______ shares
(as subject to adjustment hereunder, the “
Warrant Shares
”) of common stock, par value $0.00001 of the Company
(the “
Common Stock
”). The purchase price of one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
Section 1
.
Definitions
.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement
(the “
Subscription Agreement
”), dated [__________, 2013, among the Company and the purchasers signatory thereto.
Section 2
.
Exercise
.
a)
Exercise
of Warrant
. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing
on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise form annexed hereto and within three (3)
Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available,
pursuant to the cashless exercise procedure specified in Section 2(c) below. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and this Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant
to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased
and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business
Day of receipt of such notice.
The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise
Price
. The exercise price per share of the Common Stock under this Warrant shall be
$1.80
, subject to adjustment hereunder
(the “
Exercise Price
”).
c)
Cashless
Exercise
. [If at any time after the one year anniversary of the date of the Subscription Agreement there is no effective Registration
Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant
may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive that number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
|
|
(A) =
|
the VWAP on the Trading Day immediately preceding the
date on which the Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable
Notice of Exercise;
|
|
|
(B) =
|
the Exercise Price of this Warrant, as adjusted hereunder;
and
|
|
|
(X) =
|
the number of Warrant Shares that would be issuable
upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather
than a cashless exercise.
|
“
VWAP
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board,
(c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are
then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the
Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the fees and
expenses of which shall be paid by the Corporation.
“
Trading
Market
” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).
d)
Mechanics
of Exercise
.
i.
Delivery
of Warrant Shares Upon Exercise
. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“
DWAC
”) if the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is ten (10) Trading
Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required),
and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the
“
Warrant Share Delivery Date
”). The Warrant Shares shall be deemed to have been issued, and the Holder or any
other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes,
as of the date this Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such
shares, having been paid. If the Company fails for any reason to deliver to the Holder certificates evidencing the Warrant Shares
subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Notice of Exercise), $5 per Trading Day for each Trading Day after such Warrant Share Delivery Date
until such certificates are delivered or Holder rescinds such exercise.
ii.
Delivery
of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request of the
Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called
for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii.
Rescission
Rights
. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind
such exercise.
iv.
Compensation
for Buy-In on Failure to Timely Deliver Shares Upon Exercise
. In addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant
Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “
Buy-In
”), then the Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation
was executed, and (B) at the option of the Holder, either reinstate the portion of this Warrant and equivalent number of Warrant
Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon
request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock
upon exercise of this Warrant as required pursuant to the terms hereof.
v.
No
Fractional Shares or Scrip
. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
vi.
Charges,
Taxes and Expenses
. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder;
provided
,
however
, that in the event certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any
Notice of Exercise.
vii.
Closing
of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e)
Holder’s
Exercise Limitations
. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was reported. The “
Beneficial Ownership Limitation
”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company,
may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e)
shall continue to apply. Any such increase or decrease will not be effective until the 61
st
day after such notice is
delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this
Warrant.
Section 3
.
Certain
Adjustments
.
a)
Stock
Dividends and Splits
. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Pro
Rata Distributions
. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security [other than the Common Stock (which shall be subject to Section 3(b)), then in each such
case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed
for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants
so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness
so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the record date mentioned above.
c)
Calculations
.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
d)
Notice
to Holder
.
i.
Adjustment
to Exercise Price
. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice
to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to exercise
this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.
Section 4
.
Transfer
of Warrant
.
a)
Transferability
.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions
of Section 4.1 of the Subscription Agreement, this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
This Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.
b)
New
Warrants
. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for this Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original
Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant
Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “
Warrant
Register
”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.
d)
Transfer
Restrictions
. If, at the time
of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either
(i) registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities
or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements
pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the transferee of this Warrant agrees
in writing to be bound by the provisions of the all of the documents executed in connection with the Offering.
e)
Representation
by the Holder
. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.
Section 5
.
Miscellaneous
.
a)
No
Rights as Stockholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof.
b)
Loss,
Theft, Destruction or Mutilation of Warrant
. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c)
Saturdays,
Sundays, Holidays, etc
. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.
d)
Authorized
Shares
.
The Company covenants
that, during the period this Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by
this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction
.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Subscription Agreement.
f)
Restrictions
.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does
not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver
and Expenses
. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date.
h)
Notices
.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Subscription Agreement.
i)
Limitation
of Liability
. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j)
Remedies
.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors
and Assigns
. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment
.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and
the Holder
.
m)
Severability
.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.
n)
Headings
.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
|
STAFFING 360 SOLUTIONS,
INC.
|
|
By:__________________________________________
Name:
Title:
|
NOTICE OF EXERCISE
To: Staffing
360 Solutions, Inc.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.
(2) Payment
shall take the form of (check applicable box):
[ ] in lawful
money of the United States; or
[ ] if permitted
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c),
to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is
specified below:
_______________________________
The Warrant Shares shall be delivered to
the following DWAC Account Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(4)
Accredited Investor
.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of
Investing Entity
: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to exercise the Warrant.)
FOR VALUE RECEIVED, [____
all of or [_______ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s Signature: _____________________________
Holder’s Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment
Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing Warrant.
