UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

April 5, 2017

 

Date of Report (Date of earliest event reported)

STAFFING 360 SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

 

 

 

Nevada

 

001-37575

 

68-0680859

 

(State or other jurisdiction of

incorporation)

 

(Commission File Number)

 

(I.R.S. Employer

Identification Number)

641 Lexington Avenue

27 th Floor

New York, NY 10022

(Address of principal executive offices)

(646) 507-5710

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

 

Amended Purchase Agreement and April Note

 

As previously reported on its Current Reports on Form 8-K filed with the Securities Exchange Commission (“SEC”) on January 31, 2017 and March 20, 2017, respectively, Staffing 360 Solutions, Inc. (the “Company”) entered into a financing transaction (the “Financing”) on January 25, 2017, pursuant to a Note and Warrant Purchase Agreement (the “Purchase Agreement”) by and between the Company, Jackson Investment Group LLC (the “Purchaser”) and various subsidiaries of the Company, pursuant to which the Company issued to the Purchaser (i) a 6% Subordinated Secured Note (the “Note”) in the aggregate principal amount of $7,400,000, with 50% of the accrued interest on the Note convertible into shares of Common Stock, at the sole election of the Purchaser prior to maturity, at a conversion price equal to $2.00 per share (subject to adjustment), (ii) one warrant (the “Warrant”) to purchase shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) and (iii) 1,650,000 shares of Common Stock. In connection with the issuance of the Warrant, the Company and the Purchaser entered into a warrant agreement, which was subsequently amended as reported on the Company’s Current Report on Form 8-K filed with the SEC on March 20, 2017 (the “Warrant Agreement”), which governs the terms of the Warrant.

 

On April 5, 2017, the Company, the Purchaser and various subsidiaries of the Company entered into an Omnibus Amendment and Reaffirmation Agreement (the “Amended Purchase Agreement”) which, among other things, amended the Purchase Agreement.  Specifically, pursuant to the Amended Purchase Agreement, the Company agreed to issue and sell (i) 667,905 shares of its Common Stock (the “April Commitment Shares”) and (ii) a 6% Subordinated Secured Note (the “April Note”) to the Purchaser in return for total gross proceeds to the Company of $1,650,000.  The April Note accrues interest on the outstanding principal amount at a rate of six percent (6%) per annum. All accrued and unpaid interest on the outstanding principal balance of the April Note shall be due and payable in full on June 8, 2019 (the “Maturity Date”). In the event, however, that the Company’s obligations under that certain Credit and Security Agreement, dated as of April 8, 2015, by and among the Company, MidCap Funding X Trust, as successor-by-assignment to Midcap Financial Trust, and the other parties thereto, are discharged by payment in full in cash or if otherwise consented to in writing by MidCap Funding X Trust, the “Maturity Date” in respect of the April Note will be July 25, 2018. The April Note’s principal is not convertible into shares of Common Stock, however 50% of the accrued interest on the April Note can be converted into shares of Common Stock, at the sole election of the Purchaser prior to maturity, at a conversion price equal to $1.50 per share (subject to adjustment).

 

The Amended Purchase Agreement provides that, in the event that the Company has not fully and irrevocably discharged all of its obligations under the April Note on or prior to the Maturity Date, the Company is obligated to issue 200,000 additional shares of its Common Stock (the “Fee Extension Shares”) to the Purchaser.  Under the Amended Purchase Agreement, the Company is obligated to register the April Commitment Shares, the shares issuable upon conversion of accrued interest on the April Note and the Fee Extension Shares pursuant to a registration statement with the SEC no later than 45 days after April 5, 2017.  In addition, the Amended Purchase Agreement modified the conversion rate applicable upon the conversion of 50% of the accrued interest on the Note from $2.00 per share to $1.50 per share.

 

Amendment No. 2 to the Warrant Agreement

 

In connection with its entry into the Amended Purchase Agreement, the Company entered into Amendment No. 2 to the Warrant Agreement (the “Second Amendment”).  The Second Amendment modified the initial exercise price under the Warrant Agreement from $1.35 per share (subject to adjustment) to $1.00 per share (subject to adjustment).  In addition, the Second Amendment allows the holder of the Warrant to purchase up to 4,527,537 shares of the Company’s Common Stock.

 

Amendment No. 1 to the Subordination Agreement

 

As previously reported on its Current Report on Form 8-K filed with the SEC on January 31, 2017, the Company entered into a Subordination Agreement, by and among the Company, the Purchaser, certain subsidiaries of the Company and MidCap Funding X Trust, pursuant to which the parties thereto agreed that the obligations of the Company to the Purchaser under the Purchase Agreement and under the Note shall be subordinate to the Company’s obligations to MidCap Funding X Trust, as successor-by-assignment to Midcap Financial Trust, under those certain


Credit and Security Agreements, entered into on April 8, 2015, which agreements the Company, the subsidiaries of the Company , and MidCap Funding X Trust are a party to.   In connection with its entry into the Amended Purchase Agreement, the Company , the Purchaser, certain subsidiaries of the Company and MidCap Funding X Trust entered into Amendment No. 1 to the Subord ination Agreement (the “Amended Subordination Agreement”), pursuant to which the parties agreed that the obligations of the Company to the Purchaser under the April Note shall also be subordinate to the Company’s obligations to MidCap Funding X Trust .

 

Second Amendment to Stock Purchase Agreement

 

On April 5, 2017, the Company entered into a Second Amendment to Stock Purchase Agreement (the “Amended SPA”) with the holder of its Series D Redeemable Convertible Preferred Stock (the “Series D Shares”), pursuant to which the Company used a portion of the proceeds it received in connection with its entry into the Amended Purchase Agreement to redeem 62 shares of its Series D Shares.  The Series D Shares were redeemed for an aggregate redemption price of $1,500,000 plus 300,000 free trading shares of the Company’s Common Stock.  Following the redemption of the 62 Series D Shares, no additional Series D Shares remain outstanding.  

 

A copy of the Amended Purchase Agreement, the April Note, the Second Amendment, the Amended Subordination Agreement and the Amended SPA are filed with this Current Report on Form 8-K as Exhibits 10.1, 4.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by reference, and the foregoing descriptions of such documents and the transactions contemplated thereby are qualified in their entirety by reference thereto.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information set forth under Item 1.01 above with respect to the issuance of 667,905 shares of Common Stock and the issuance of the April Note to the Purchaser pursuant to the Amended Purchase Agreement, is incorporated herein by reference. Such issuances were undertaken in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits .

 

 

 

 

Exhibit No.

Description

4.1

April Note, dated April 5, 2017, issued to the Purchaser

10.1

Amended Purchase Agreement, dated April 5, 2017, by and among the Company, the Purchaser and certain subsidiaries of the Company

10.2

Second Amendment, dated April 5, 2017, by and among the Company and the Purchaser

10.3

Amended Subordination Agreement, dated April 5, 2017, by and among Midcap Funding X Trust, the Purchaser, the Company and certain subsidiaries of the Company

10.4

Amended SPA, dated April 5, 2017, by and among the Company and the holder of the Series D Shares

 

 



SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:  April 6, 2017

STAFFING 360 SOLUTIONS, INC.

 

 

 

 

 

 

By:

/s/ Brendan Flood

 

 

Brendan Flood

 

 

Executive Chairman

 

 

 

Exhibit 4.1

 

NEITHER THIS NOTE, NOR ANY SECURITIES CONSTITUTING INTEREST CONVERSION SHARES (DEFINED BELOW) THAT MAY BE ISSUED AS PROVIDED HEREIN, 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.  THIS NOTE AND ANY SECURITIES CONSTITUTING INTEREST CONVERSION SHARES (DEFINED BELOW) THAT MAY BE ISSUED AS PROVIDED HEREIN, MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The indebtedness and securities evidenced hereby are subordinated in accordance with and subject to the terms of that certain Subordination Agreement (as amended, restated, supplemented or modified from time to time, the “Subordination Agreement”), dated as of January 25, 2017, by and among Jackson Investment Group, LLC, a Georgia limited liability company, (“Subordinated Lender”), Staffing 360 Solutions, Inc., a Nevada corporation (“Parent”), certain of the Parent’s subsidiaries party thereto and MidCap Funding X Trust, in its capacity as agent (together with its affiliates and their respective successors and assigns, “Senior Agent”) for the Senior Lenders (as defined in the Subordination Agreement), and each holder and transferee of this instrument or agreement, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.

 

 

 

6% SUBORDINATED SECURED NOTE

$1,650,000

April 5, 2017

 

FOR VALUE RECEIVED, the undersigned, STAFFING 360 SOLUTIONS, INC., a Nevada corporation (the “ Company ”), hereby promises to pay to Jackson Investment Group, LLC ( together with its successors and assigns, the “ Purchaser ”), the principal sum of ONE Million SIX HUNDRED fifty THOUSAND Dollars ($1,650,000) on June 8, 2019 (or such earlier date upon any acceleration of this Note as provided for herein, the “ Maturity Date provided , that in the event that the Obligors’ Debt under the MidCap Credit Agreement is at any time hereafter discharged by payment in full in cash or if otherwise consented to in writing by MidCap Senior Agent, the “Maturity Date” in respect of this Note shall be July 25, 2018 or such earlier date upon acceleration of this Note as provided for herein), together with interest (computed on the basis of a 360-day year of twelve 30 day months) (a) on the unpaid balance hereof at the rate of six percent (6.00%) per annum, accruing from and after the Second Closing Date (as defined in the Purchase Agreement referenced below) and until the entire principal balance of this 6% Subordinated Secured Note (this “ Note ”) shall have been repaid in full, and (b) to the extent permitted by law, on any overdue payment of principal or interest, at a rate per annum from time to time equal to five percent (5%) in excess of the rate of interest otherwise payable hereunder.

 


 

 

Payments of principal, interest and any other amount due with respect to this Note are to be made in lawful money of the United States of America at the address of the Purchaser as specified in Section 10.1 of the Purchase Agreement (defined below) or at such other place as shall have been designated by the Purchaser by written notice from the Purchaser to the Company.

 

This Note has been issued pursuant to that certain Note and Warrant Purchase Agreement, dated as of the date hereof (as amended, restated supplemented or modified from time to time, the “ Purchase Agreement ”), among the Company, the Subsidiary Guarantors party thereto and the Purchaser, and is entitled to the benefits thereof and is secured by and entitled to the benefits of the Security Documents and is guaranteed by each of the Subsidiary Guarantors pursuant to the guaranty provided for in Article 4 of the Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Purchase Agreement.

 

This Note is a registered Note and, as provided in the Purchase Agreement, upon surrender of this Note for registration of transfer, accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount (less any principal amount repaid prior to such transfer in accordance with the Purchase Agreement) will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the Company may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.  The transfer or assignment of this Note by the Purchaser is subject to the provisions of Section 10.5 of the Purchase Agreement, and so long as no Default or Event of Default exists, the consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned).

 

This Note is subject to optional prepayment, in whole or from time to time in part, without penalty or premium, subject to the notice and other requirements as provided in Section 2.4(b) of the Purchase Agreement.

 

All accrued and unpaid interest on the outstanding principal balance of the Subordinated Note shall be due and payable in full on the Maturity Date, provided that (i) Purchaser may require a portion of such accrued interest to be paid in Interest Conversion Shares (as defined below) pursuant to Section 2.3(b) of the Purchase Agreement and as provided below in this Note, and (ii) upon any prepayment of this Note or any portion thereof, accrued and unpaid interest shall be payable with respect to the principal amount of this Note so prepaid on such date of prepayment (subject to the right of Purchaser as set forth in Section 2.3(b) of the Purchase Agreement to receive Interest Conversion Shares in lieu of cash interest).

 

Purchaser shall have the sole option (exercised in its sole discretion) to receive, in lieu of any cash interest payment otherwise due and payable hereunder, up to one-half (1/2) of such cash interest payment in the form of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company, at the conversion rate of $1.50 per share.  Any such shares of Common Stock of the Company issued in lieu of a cash interest payment on this Note are referred to herein as “ Interest Conversion Shares ”.  Purchaser may exercise said option with respect to any accrued interest on this Note by notifying the Company in writing (which may be made by electronic email) of Purchaser’s election to receive shares of Common Stock of the Company in lieu of any cash interest payment at any time prior to the payment of such interest by the Company to Purchaser and within three (3) Business Days after such cash interest payment has been received by the Purchaser (in which case, Purchaser shall return such cash interest payment in exchange for the issuance and receipt of an appropriate amount of Interest Conversion Shares).  

 


 

 

If an Event of Default occurs and is continuing, the principal of this Note and accrued interest on this Note may be accelerated and declared or otherwise become due and payable in the manner and with the effect provided in the Purchase Agreement.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS). THE TERMS OF SECTIONS 10.12 AND 10.13 OF THE PURCHASE AGREEMENT WITH RESPECT TO SUBMISSION TO JURISDICTION, CONSENT TO SERVICE OF PROCESS, VENUE AND WAIVER OF JURY TRIAL ARE INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS, AND THE COMPANY AGREES TO SUCH TERMS.  

 

In no event shall the amount or rate of interest due and payable under this Note exceed the maximum amount or rate of interest allowed by Applicable Law and, in the event any such excess payment is made by the Company or received by Purchaser, such excess sum shall be credited as a payment of principal or, if no principal shall remain outstanding, shall be refunded to the Company.  It is the express intent hereof that Company shall not pay and Purchaser not receive, directly or indirectly or in any manner, interest in excess of that which may be lawfully paid under Applicable Law.  

 

The Company hereby waives presentment, demand, protest or notice of any kind in connection with this Note.

 

On and after the effective time of the consummation of the Reincorporation, all references herein to the “Company” shall be deemed to refer to Staffing 360 Solutions, Inc., a Delaware corporation, as successor by merger to the Company.

 

 

 

 

STAFFING 360 SOLUTIONS, INC.

 

 

 

 

 

 

 

By:

/s/ Brendan Flood

 

Name:

Brendan Flood

 

Title:

Executive Chairman

 

 

 

 

Exhibit 10.1

OMNIBUS AMENDMENT AND REAFFIRMATION AGREEMENT

THIS OMNIBUS AMENDMENT AND REAFFIRMATION AGREEMENT (this “Agreement”), dated as of April 5, 2017, is by and among Staffing 360 Solutions, Inc. (the “Company”), Faro Recruitment America, Inc. (“Faro”), Monroe Staffing Services, LLC (“Monroe”), Longbridge Recruitment 360 Limited (“Longbridge”), The JM Group (IT Recruitment) Limited (“JM”), PeopleServe, Inc. (“PSI”), PeopleServe PRS, Inc. (“PRS”), and Lighthouse Placement Services, Inc. (“Lighthouse” and together with each of the Company, Faro, Monroe, Longbridge, JM, PSI and PRS, collectively, the “Obligors”) and Jackson Investment Group, LLC (the “Purchaser”).

WHEREAS, the Obligors and the Purchaser are parties to that certain Note and Warrant Purchase Agreement, dated as of January 25, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Purchase Agreement) pursuant to which the Company issued that certain Subordinated Secured Promissory Note, dated as of January 25, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Original Subordinated Note”), to the Purchaser in exchange for the purchase price therefore;

WHEREAS, simultaneously with the execution and delivery of this Agreement, the Company desires to issue a new subordinated promissory note in the principal amount of $1,650,000 (as amended, supplemented, restated or otherwise modified from time to time, the “ Second Subordinated Note ”) pursuant to the terms of the Purchase Agreement;

WHEREAS, the obligations of the Company and the other Obligors under the Second Subordinated Note, the Original Subordinated Note and the Purchase Agreement are and shall be secured by (i) that certain Security Agreement, dated as of January 25, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), by and among the Obligors and the Purchaser and (ii) that certain Pledge Agreement, dated as of January 25, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”); and

WHEREAS, it is a condition precedent to the issuance of the Second Subordinated Note and the payment of the purchase price by the Purchaser for such note, that the parties enter into this Agreement to, among other things, (i) provide that the obligations of the Company in respect of the Second Subordinated Note, together with all other “Obligations” as such term is defined in the Purchase Agreement, are and at all times hereafter shall continue to be guaranteed by the Subsidiary Guarantors pursuant to Article 4 of the Purchase Agreement and secured by the liens and security interests granted by the Obligors pursuant to the Security Agreement and the Pledge Agreement and (ii) amend certain provisions of the Purchase Agreement.

NOW THEREFORE, in order to induce the Purchaser to purchase the Second Subordinated Note and make available to the Borrower the proceeds thereof in accordance with the terms thereof and of the Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Amendments to the Purchase Agreement .

 

A. Section 1.1 if hereby amended by amending and restating the following defined terms in their entity with the applicable definitions set forth below:

 

1


 

Closing ” means, collectively or individually, as context may require, the Original Closing and the Second Closing.

 

Closing Date ” means, collectively or individually, as context may require, the Original Closing Date and the Second Closing Date.

 

Maturity Date ” means (i) in respect of the Original Subordinated Note, July 25, 2018, or such earlier date upon the acceleration thereof pursuant to Section 9.2 hereof and (ii) in respect of the Second Subordinated Note, June 8, 2019, or such earlier date upon the acceleration thereof pursuant to Section 9.2 hereof; provided , that in the event that the Obligors’ Debt under the MidCap Credit Agreement is at any time hereafter discharged by payment in full in cash or if otherwise consented to in writing by MidCap Senior Agent, the “Maturity Date” in respect of the Second Subordinated Note shall be July 25, 2018, or such earlier date upon the acceleration thereof pursuant to Section 9.2 hereof.

 

Pay Proceeds Letter ” means (i) in respect of the Original Subordinated Note, that certain Pay Proceeds Letter, dated the Original Closing Date, executed by the Company and addressed to the Purchaser and (ii) in respect of the Second Subordinated Note, that certain Second Pay Proceeds Letter, dated the Second Closing Date, executed by the Company and addressed to the Purchaser.

 

Subordinated Note ” means, collectively or individually, as the context may require, the Original Subordinated Note and the Second Subordinated Note.

 

B. Section 1.1 of the Purchase Agreement is hereby further amended by adding the following definitions in appropriate alphabetical order:

 

First Omnibus Agreement ” means that certain Omnibus and Reaffirmation Agreement, dated as of April 5, 2017, by and among the Obligors and the Purchaser as may be amended, restated, supplemented or otherwise modified from time to time.

 

Obligations ” shall mean all present and future debt, liabilities and obligations of the Company owing to the Purchaser, or any Person entitled to indemnification hereunder, or any of their respective successors, permitted transferees or permitted assigns, arising under or in connection with this Agreement, the Original Subordinated Note, the Second Subordinated Note or any other Note Document.

 

Original Closing ” shall mean the closing of the purchase and sale of the Original Subordinated Note and the Warrant, and the payment of the Original Purchase Price therefor, as contemplated by this Agreement and the other Transaction Documents.

 

Original Closing Date ” shall mean the date upon which all conditions in Section 5.2 have been satisfied (or waived in writing by Purchaser in its sole discretion) and the Original Closing has occurred.

 

Original Subordinated Note ” shall mean, collectively, the Subordinated Secured Promissory Note, dated the Effective Date, in the principal amount of Seven Million Four Hundred Thousand Dollars ($7,400,000) issued by the Company to the Purchaser on the Original Closing Date pursuant to Section 2.1(a), in substantially the form of Exhibit A hereto, and each other subordinated promissory note now or hereafter delivered to the Purchaser in substitution, replacement or exchange thereof, in each case as amended, restated, supplemented or modified from time to time pursuant to the provisions of this Agreement.

 

2


 

Second Closing ” shall mean the closing of the purchase and sale of the Second Subordinated Note, and the payment of the Second Purchase Price therefor, as contemplated by this Agreement and the other Transaction Documents.

 

Second Closing Date ” shall mean the date upon which all conditions in Section 4 of the First Omnibus Agreement have been satisfied (or waived in writing by Purchaser in its sole discretion) and the Second Closing has occurred.

 

Second Subordinated Note ” shall mean, collectively, the Subordinated Secured Promissory Note, dated the Second Closing Date, in the principal amount of One Million Six Hundred Fifty Thousand Dollars ($1,650,000) issued by the Company to the Purchaser on the Second Closing Date pursuant to Section 2.1(b), in substantially the form of Exhibit A to the First Omnibus Agreement, and each other subordinated promissory note now or hereafter delivered to the Purchaser in substitution, replacement or exchange thereof, in each case as amended, restated, supplemented or modified from time to time pursuant to the provisions of this Agreement.

 

Transaction Documents ” means collectively, this Agreement, the Original Subordinated Note, the Second Subordinated Note, the Security Documents, the Warrant Documents, the Post-Closing Letter Agreement, the MidCap Intercreditor Agreement, the Acknowledgment and Reaffirmation Agreement, the Pay Proceeds Letter, the Second Pay Proceeds Letter, together with any other guaranty now or hereafter executed by any Obligor in favor of the Purchaser, and all consents, notices, documents, certificates and instruments heretofore, now or hereafter executed by or on behalf of any Obligor, and delivered to the Purchaser in connection with this Agreement, the Security Documents, the Warrant or the transactions contemplated thereby, each as amended, restated, supplemented or otherwise modified from time to time.

 

C. Section 2 of the Purchase Agreement is hereby amended by deleting Section 2.1 in the entirety and replacing it with the following:

 

2.1(a) Purchase and Sale of Original Subordinated Note and Warrant .  The Company hereby agrees to sell to the Purchaser and, subject to the terms and conditions set forth herein and in reliance upon the representations and warranties of the Company contained herein, Purchaser agrees to purchase from the Company the Original Subordinated Note and the Warrant for an aggregate total purchase price of Seven Million Four Hundred Thousand Dollars ($7,400,000) (the “Original Purchase Price”), subject to the conditions as provided below in this Section and to the satisfaction, on or prior to February 8, 2017 (or such later date as the parties hereto may mutually agree in writing), of each of the conditions precedent set forth in Section 5.2, to be paid in a single advance of Seven Million Four Hundred Thousand Dollars ($7,400,000) (the “First Advance”) on the Original Closing Date, as provided in the immediately succeeding sentence.  Upon satisfaction of all conditions to the Original Closing set forth in Section 5.2 on or prior to February 8, 2017 (or such later date as the parties hereto may mutually agree in writing), at the Original Closing the Purchaser shall pay the First Advance to the Company by wire transfer pursuant to the instructions of the Company as set forth in the Pay Proceeds Letter.  The purchase price consideration attributable to the Warrant shall be deemed fully paid and satisfied upon the funding of the First Advance on the Original Closing Date. For the avoidance of doubt, if the conditions precedent set forth in Section 5.2 are not satisfied (or waived in writing by Purchaser in its sole discretion) on or prior to February 8, 2017 (or such later date as the parties hereto may mutually agree in writing), then Purchaser shall be under no obligation to purchase the Original Subordinated Note and Warrant and pay the Original Purchase Price and, in such case, Purchaser shall return to the Company the Original Subordinated Note and Warrant, which shall not be considered issued and outstanding unless and until the Original Closing has occurred (as evidenced by payment of the Advance to the Company as provided above in this Section 2.1(a) on the Original Closing Date).

 

3


 

2.1(b) Purchase and Sale of Second Subordinated Note .  The Company hereby agrees to sell to the Purchaser and, subject to the terms and conditions set forth herein and in reliance upon the representations and warranties of the Company contained herein, Purchaser agrees to purchase from the Company the Second Subordinated Note for an aggregate total pu rchase price of One Million Six Hundred Fifty Thousand Dollars ($1,650,00 0) (the “Second Purchase Price”), subject to the conditions as provided below in this Section and to the satisfaction of each of the conditions precedent set forth in Section 4 of the First Omnibus Agreement, to be paid in a single advance of One Million Six Hundred Fifty Thousand Dollars ($1,6 50, 00 0) (the “Second Advance”) on the Second Closing Date, as provided in the immediately succeeding sentence.  Upon satisfaction of all conditions to the Second Closing set forth in Section 4 of the First Omnibus Agreement, at the Second Closing the Purchaser shall pay the Second Advance to the Company by wire transfer pursuant to the instructions of the Company as set forth in the Second Pay Proceeds Letter.  For the avoidance of doubt, if the conditions precedent set forth in Section 4 of the First Omnibus Agreement are not satisfied (or waived in writing by Purchaser in its sole discretion), then Purchaser shall be under no obligation to purchase the Second Subordinated Note and pay the Second Purchase Price and, in such case, Purchaser shall return to the Company the Second Subordinated Note, which shall not be considered issued and outstanding unless and until the Second Closing has occurred (as evidenced by payment of the Second Advance to the Company as provided above in this Section 2.1(b) on the Second Closing Date).

 

D. Section 2 of the Purchase Agreement is hereby amended by deleting the second sentence of Section 2.2 in the entirety and replacing it with the following:

 

2.2 Pursuant to GAAP and the applicable Treasury Regulations, the Company and the Purchaser agree that the aggregate amount of such original issue discount and the aggregate value of the Warrant for four million five hundred twenty-seven thousand, five hundred thirty-seven (4,527,537) (subject to adjustment as provided in the terms of the Warrant) shares of Common Stock of the Company is Two Hundred Fifty-Two Thousand Dollars ($252,000), which original issue discount and value of such Warrant shall be allocated to the Subordinated Note.  

 

E. Section 2 of the Purchase Agreement is hereby amended by deleting the first sentence of Section 2.3(b) in the entirety and replacing it with the following:

 

2.3(b) Notwithstanding anything to the contrary contained in Original Subordinated Note or any other Transaction Document, the Purchaser shall have the sole option (exercised in its sole discretion) to receive, in lieu of any cash interest payment otherwise due and payable under the Subordinated Note, up to one-half (50%) of such cash interest payment in the form of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company, at the conversion rate of $1.50 per share of Common Stock and on the terms as further specified in the Subordinated Note.  

 

F. Section 7 of the Purchase Agreement is hereby amended by deleting the first sentence of Section 7.14(a) in its entirety and replacing it with the following:

 

7.14(a) Registration Rights . The Interest Conversion Shares issuable to pay accrued interest under the Subordinated Note pursuant to Section 2.3(b), the Warrant Exercise Shares (as defined in the Warrant Agreement) issuable upon exercise of Warrants, and the Commitment Fee Shares, will be included in an existing Form S-3 Shelf Registration Statement with a resale prospectus through an amendment to such registration statement if permitted or through a new resale registration statement, either of which shall be filed by the Company with the SEC at the Company’s sole expense not later than, in respect of the Interest Conversion Shares issuable to pay accrued interest under the Original Subordinated Note, the Warrant Exercise Shares and the Initial Commitment Fee Shares, forty-five (45) days after the Closing Date and, in respect of the Interest Conversion Shares issuable to pay accrued interest under the Second Subordinated Note, Second

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Subordinated Note Fee Shares and the Maturity Extension Fee Shares , forty-five (45) days of the Second Closing Date .

 

G. Section 7 of the Purchase Agreement is hereby amended by deleting Section 7.15 in the entirety and replacing it with the following:

 

7.15 Closing Commitment Fee .  The Company shall issue to the Purchaser 1,650,000 shares of the Company's Common Stock (the " Initial Commitment Fee Shares ") as a closing commitment fee, which fee shall be due and payable in full and such shares shall be issued not later than five (5) days after the Original Closing Date. The Initial Commitment Fee Shares shall be evidenced by an original share certificate duly executed and validly issued and delivered by the Company to the Purchaser, representing 1,650,000 shares of Common Stock of the Company.  In connection with the closing of the Second Subordinated Note, the Company hereby covenants and agrees that it shall issue to the Purchaser a total of 667,905 shares of the Company’s Common Stock (the “ Second Subordinated Note Fee Shares ”), as a closing commitment fee, which fee shall be due and payable in full as follows:  296,984 of such shares shall be issued and delivered by Company to Purchaser on the Second Closing Date and 370,921 of such shares shall be issued and delivered by Company to Purchaser not later than three (3) Business Days after the earlier of (i) approval by the shareholders of the Company of the issuance of the Warrant shares and the Second Subordinated Note Fee Shares to the Purchaser or (ii) such time as NASDAQ listing requirements no longer require such approval. Purchaser acknowledges that the Company may not issue additional shares of Common Stock to Purchaser unless the Company has obtained such stockholder approval pursuant to NASDAQ Marketplace Rule 5635(d), or a waiver from the NASDAQ Stock Market of the Company’s compliance with Rule 5635(d), and that Amendment 1 to the Warrant Agreement caps the issuance of the Company’s Common Stock to Purchaser at 1,946,985 shares, which represents 19.9% of the Company’s outstanding shares of Common Stock on January 26, 2017. The Second Subordinated Note Fee Shares shall be evidenced by one or more original share certificates duly executed and validly issued and delivered by the Company to the Purchaser, representing an aggregate amount of 667,905 shares of Common Stock of the Company.  In the event the Company has not fully and irrevocably discharged all of the Obligations arising under the Second Subordinated Note by the payment in full in cash on or prior to July 16, 2018 (the “ Fee Trigger Date ”), the Company shall issue to the Purchaser 200,000 shares of the Company’s Common Stock (the “ Maturity Extension Fee Shares ” and together with the Initial Commitment Fee Shares and the Second Subordinated Note Fee Shares, collectively, the “ Commitment Fee Shares ”) as an additional fee, which fee shall be due and payable in full and such shares shall be issued not later than five (5) days after the Fee Trigger Date.

 

H. Section 8 of the Purchase Agreement is hereby amended by deleting Section 8.17(c) in the entirety and replacing it with the following:

 

(c) Total Leverage Ratio .  Commencing December 31, 2016 through and including March 31, 2017, the Obligors will not, as of the end of any Fiscal Month, permit the Total Leverage Ratio, calculated on a trailing T12M basis, to be greater than 5.6 to 1.00. Commencing April 1, 2017 and until such time as all Obligations are paid, satisfied and discharged in full, the Obligors will not permit the Total Leverage Ratio as of the end of any Fiscal Month, calculated on a trailing T12M basis and averaged over such current Fiscal Month and the immediately preceding two months, to be greater than 6.0 to 1.00.  By way of example only,  (a) for the Fiscal Month ended April 30, 2017, the trailing T12M Adjusted EBITDA would be calculated based upon the arithmetic average of the trailing T12M Adjusted EBITDA for each of the Fiscal Months ended February 28, 2017, March 31, 2017 and April 30, 2017, and (b) for the Fiscal Month ended May 31, 2017, the trailing T12M Adjusted EBITDA would be calculated based upon the arithmetic average of the trailing T12M Adjusted EBITDA for each of the Fiscal Months ended  March 31, 2017, April 30, 2017 and May 31, 2017.

 

 

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2. Amendments to Security Documents .

 

A. The Security Agreement is hereby amended as follows: (i) the term “Secured Obligations” as defined in the Security Agreement shall be deemed to include, without limitation, the following additional obligations (a) all obligations, covenants, agreements and liabilities, of the Company and the other Obligors under the Transaction Documents (including, without limitation, the Second Subordinated Note), and (b) the obligation of the Company to pay all amounts when due under the Second Subordinated Note and the other Transactions Documents including, without limitation, all principal, accrued interest, fees and other amounts, (ii) all references in the Security Agreement to the “Note” shall be deemed to also refer to the Second Subordinated Note and (ii) all references in the Security Agreement to the “Note Documents” shall be deemed to refer to the Transaction Documents as defined in the Purchase Agreement as amended hereby.

 

B. The Pledge Agreement is hereby amended as follows: (i) the term “Secured Obligations” as defined in the Pledge Agreement shall be deemed to include, without limitation, the following additional obligations (a) all obligations, covenants, agreements and liabilities, of the Company and the other Obligors under the Transaction Documents (including, without limitation, the Second Subordinated Note), and (b) the obligation of the Company to pay all amounts when due under the Second Subordinated Note and the other Transactions Documents including, without limitation, all principal, accrued interest, fees and other amounts, (ii) all references in the Pledge Agreement to the “Note” shall be deemed to also refer to the Second Subordinated Note and (ii) all references in the Pledge Agreement to the “Note Documents” shall be deemed to refer to the Transaction Documents as defined in the Purchase Agreement as amended hereby.

 

3. Reaffirmation . Each of the Obligors hereby reaffirms (a) all of its obligations under the Transaction Documents, and agrees that this Agreement and all documents, agreements and instruments executed in connection herewith do not operate to reduce or discharge any Obligor’s obligations under the Transaction Documents, and (b) the continuing security interests in its respective assets granted in favor of the Purchaser pursuant to the Security Documents.  Each of the Obligors hereby (i) acknowledges and consents to the execution, delivery and performance of this Agreement and the Second Subordinated Note, (ii) acknowledges and agrees that its guarantee of the Obligations includes, without limitation, all principal, interest, fees and other amounts now or hereafter due by the Company under the Second Subordinated Note, and the other Transaction Documents, (iii) ratifies all the provisions of, and reaffirms its obligations under, the guarantee set forth in Article 4 of the Purchase Agreement and any other Transaction Document to which it is a party and confirms that all provisions of each such document are and shall remain in full force and effect in accordance with its terms, and (iv) reaffirms the continuing security interests in its assets granted in favor of the Purchaser pursuant to the Security Documents.

 

4. Conditions Precedent : This Agreement shall not become effective until and the obligations of the Purchaser to purchase the Second Subordinated Note and pay the Second Purchase Price therefore are subject to satisfaction (or waiver by the Purchaser in its sole discretion, which such waiver must be in writing signed by Purchaser and specifically reference this Section 4) of each of the following conditions:

 

A. No Injunction, etc.   No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of, this Agreement or the Second Subordinated Note or the consummation of the transactions contemplated hereby or thereby, or which, in Purchaser’s sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or the Second Subordinated Note.

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B. Documentation.  The Purchaser shall have received, on or prior to the Second Closing Date, the following, each in form and substance satisfactory to the Purchaser and its counsel:

 

(i) duly executed counterparts of this Agreement;

 

(ii) the Second Subordinated Note in the prin cipal amount of One Million Six Hundred Fifty Thousand Dollars ($1,650,000) duly executed and issued by the Company to the Purchaser;

 

(iii) the Second Pay Proceeds Letter, duly executed by the Company, directing application of the proceeds of the funded Second Purchase Price to the payment of fees and expenses owed by the Company to the Purchaser and as otherwise provided therein, all in form and substance satisfactory to the Purchaser;

 

(iv) the Amendment No. 2 to the Warrant, duly executed by the Company;

 

(v) Secretary Certificate for the Company, (a) certifying that the copies of the certificate of formation, organization or jurisdictional equivalent of each Obligor furnished to the Purchaser in connection with the Original Closing remain in full force and effect and, since the Original Closing, have not been amended, altered, revoked or rescinded and (b) attaching good standing certificates or jurisdictional equivalent for each Obligor, issued by the relevant Secretary of State and or equivalent governmental authority in which such Obligor is organized, in each case as of a recent date; (c) attaching a copy of resolutions adopted by the governing board of the Company, authorizing the execution, delivery and performance of this Agreement, the Second Subordinated Note, the Warrant Amendment and other related transaction documents, certified as true, complete and correct by the relevant secretary or manager of the Company; and (d) certifying that the officers and members of the Obligors executing this Agreement and the Second Subordinated Note have duly retained their respective office since the Original Closing;

 

(vi)favorable legal opinion of the General Counsel of the Company, addressed to the Purchaser, covering such matters relating to the Obligors and the transactions contemplated hereby as the Purchaser may reasonably request, and in form and scope reasonably satisfactory to Purchaser and its counsel;

 

(vii) the Purchaser shall have received evidence of the Company’s unconditional and irrevocable instruction, in form and substance satisfactory to the Purchaser, to VStock Transfer LLC, the Company’s transfer agent, to issue a certificates, on the Second Closing Date, for one or more stock certificates of the Company evidencing the Purchaser’s ownership of the Second Subordinated Note Fee Shares due and payable to the Purchaser on the Second Closing Date; and

 

(viii)evidence satisfactory to the Purchaser of (a) the execution and delivery by all parties of the Second Amendment to Stock Purchase Agreement, dated as of April 5, 2017 (the “ SPA Amendment ”), by and between the Company and Discover Growth Fund and (b) the delivery of 300,000 shares of Common Stock of the Company to Discover Growth Fund in accordance with Article II of the SPA Amendment.

 

C. MidCap Approval .  Purchaser shall have received evidence satisfactory to it of the consent of MidCap Funding X Trust to the incurrence of Debt under the Second Subordinated Note pursuant to the terms and conditions of an amendment to the MidCap Intercreditor Agreement in a form and substance satisfactory to the Purchaser in its sole discretion.

 

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D. No Material Adverse Effect .  No Material Adverse Effect has occurred since May 31, 2016.

 

E. No Default, Etc .  No Default or Event of Default shall exist.

 

F. Representations Accurate .  All representations and warranties made by the Obligors contained herein or in any other Transaction Document shall be true and correct in all material respects on and as of the Second Closing Date.  In addition to the foregoing, the Obligors hereby represent and warrant to the Purchaser that (i) since the Original Closing Date, no default, breach or other violation has occurred under or with respect to any Material Contract (including, without limitation, the Existing Senior Secured Debt Documents), (ii) no default, breach or other violation shall arise under any Material Contract (including, without limitation, the Existing Senior Secured Debt Documents) as a result of the Obligors’ execution, delivery and performance of the Second Subordinated Note, this Agreement and the other documents, instruments and agreements contemplated hereby including, without limitation, the incurrence of indebtedness under the Existing Senior Debt Documents and (iii) since the Original Closing, there have been no amendments, modifications, waivers, extensions, forbearances or other alterations of any Material Contract (including, without limitation, the Existing Senior Debt Documents).  

 

G. Payment of Fees and Expenses .  The Company shall have paid to the Purchaser all fees and other amounts due and payable to the Purchaser, including but not limited to the payment of all reasonable and documented out-of-pocket fees and expenses of legal counsel and other advisors to the Purchaser in connection with the transactions contemplated by this Agreement and the Second Subordinated Note and the preparation, negotiation, execution and delivery of the Transaction Documents contemplated thereby.  The Company hereby authorizes the Purchaser to deduct from the proceeds of the Second Purchase Price to be paid for the Second Subordinated Note pursuant to Section 2.1(b) of the Purchase Agreement all such fees and expenses to the extent not paid directly by the Company on or prior to the Second Closing Date.

 

5. Release .  The Obligors hereby remise, release, acquit, satisfy and forever discharge the Purchaser and its respective agents, employees, officers, directors, predecessors, attorneys and all others acting or purporting to act on behalf of or at the direction of the Purchaser of and from any and all manner of actions, causes of action, suit, debts, accounts, covenants, contracts, controversies, agreements, variances, damages, judgments, claims and demands whatsoever, in law or in equity, which any of such parties ever had or now has against the Purchaser and its respective agents, employees, officers, directors, attorneys and all persons acting or purporting to act on behalf of or at the direction of the Purchaser (“Releasees”), for, upon or by reason of any matter, cause or thing whatsoever arising from, in connection with or in relation to any of the Transaction Documents (including this Agreement) through the date hereof; provided, that the foregoing clause shall not apply to a Releasee in the event of fraud or willful misconduct of the such Releasee.  Without limiting the generality of the foregoing, the Obligors waive and affirmatively agree not to allege or otherwise pursue any defenses, affirmative defenses, counterclaims, claims, causes of action, setoffs or other rights they do, shall or may have as of the date hereof, including, but not limited to, the rights to contest any conduct of the Purchaser or other Releasees on or prior to the date hereof; provided, that the foregoing clause shall not apply to a Releasee in the event of fraud or willful misconduct of such Releasee.  

 

6. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy or other electronic transmissions, e.g. .pdf), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

7. This Agreement shall be deemed and shall constitute a “ Note Document” and “Transaction Document” as such terms are defined in the Purchase Agreement. Except as modified and amended herein, the Purchase Agreement, the Security Agreement and Pledge Agreement remain in full force and effect.  

 

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8 . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS).

 

[SIGNATURE PAGES TO FOLLOW]

 


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IN WITNESS WHEREOF, each of the parties hereto has caused this Omnibus Amendment and Reaffirmation Agreement to be duly executed by its authorized officers, and the Purchaser, has caused the same to be accepted by its authorized officer, as of the day and year first above written.

 

 

 

COMPANY:

 

STaffing 360 solutions, inc.

 

 

By: /s/ Brendan Flood

Name: Brendan Flood

Title:   Executive Chairman

 

 

 

 

 

 

SUBSIDIARY GUARANTORS:

 

 

 

FARO RECRUITMENT AMERICA, INC.

 

 

By: /s/ Brendan Flood

Name: Brendan Flood

Title:   Executive Chairman

 

 

MONROE STAFFING SERVICES, LLC

 

 

By: /s/ Brendan Flood

Name:  Brendan Flood

Title:    Executive Chairman

 

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STAFFING 360 SOLUTIONS LIMITED

 

 

By: /s/ Brendan Flood

Name:  Brendan Flood

Title:    Executive Chairman

 

LONGBRIDGE RECRUITMENT 360 LIMITED

 

 

By: /s/ Brendan Flood

Name: Brendan Flood

Title:   Executive Chairman

 

 

 

 

THE JM GROUP (IT RECRUITMENT) LIMITED

 

 

By: /s/ Brendan Flood

Name:  Brendan Flood

Title:    Executive Chairman

 

 

PEOPLESERVE, INC.

 

 

By: /s/ Brendan Flood

Name:  Brendan Flood

Title:    Executive Chairman

 

 

PEOPLESERVE PRS, INC.

 

 

By: /s/ Brendan Flood

Name:  Brendan Flood

Title:    Executive Chairman

 

 

LIGHTHOUSE PLACEMENT SERVICES, INC.

 

 

By: /s/ David Faiman

Name:  David Faiman

Title:    Secretary and Treasurer

 

 

 

PURCHASER:

 

JACKSON INVESTMENT GROUP, LLC

 

 

By: /s/ Richard L. Jackson

Name:  Richard L. Jackson

Title:    Chief Executive Officer

 

 

 

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EXHIBIT A

 

NEITHER THIS NOTE, NOR ANY SECURITIES CONSTITUTING INTEREST CONVERSION SHARES (DEFINED BELOW) THAT MAY BE ISSUED AS PROVIDED HEREIN, 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.  THIS NOTE AND ANY SECURITIES CONSTITUTING INTEREST CONVERSION SHARES (DEFINED BELOW) THAT MAY BE ISSUED AS PROVIDED HEREIN, MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The indebtedness and securities evidenced hereby are subordinated in accordance with and subject to the terms of that certain Subordination Agreement (as amended, restated, supplemented or modified from time to time, the “Subordination Agreement”), dated as of January 25, 2017, by and among Jackson Investment Group, LLC, a Georgia limited liability company, (“Subordinated Lender”), Staffing 360 Solutions, Inc., a Nevada corporation (“Parent”), certain of the Parent’s subsidiaries party thereto and MidCap Funding X Trust, in its capacity as agent (together with its affiliates and their respective successors and assigns, “Senior Agent”) for the Senior Lenders (as defined in the Subordination Agreement), and each holder and transferee of this instrument or agreement, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.

 

 

 

6% SUBORDINATED SECURED NOTE

 

$1,650,000

April 5, 2017

 

FOR VALUE RECEIVED, the undersigned, STAFFING 360 SOLUTIONS, INC., a Nevada corporation (the “ Company ”), hereby promises to pay to Jackson Investment Group, LLC ( together with its successors and assigns, the “ Purchaser ”), the principal sum of ONE Million SIX HUNDRED fifty THOUSAND Dollars ($1,650,000) on June 8, 2019 (or such earlier date upon any acceleration of this Note as provided for herein, the “ Maturity Date provided , that in the event that the Obligors’ Debt under the MidCap Credit Agreement is at any time hereafter discharged by payment in full in cash or if otherwise consented to in writing by MidCap Senior Agent, the “Maturity Date” in respect of this Note shall be July 25, 2018 or such earlier date upon acceleration of this Note as provided for herein), together with interest (computed on the basis of a 360-day year of twelve 30 day months) (a) on the unpaid balance hereof at the rate of six percent (6.00%) per annum, accruing from and after the Second Closing Date (as defined in the Purchase Agreement referenced below) and until the entire principal balance of this 6% Subordinated Secured Note (this “ Note ”) shall have been repaid in full, and (b) to the extent permitted

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b y law, on any overdue payment of principal or interest , at a rate per annum from time to time equal to five percent (5 % ) in excess of the rate of interest otherwise payable hereunder.

 

Payments of principal, interest and any other amount due with respect to this Note are to be made in lawful money of the United States of America at the address of the Purchaser as specified in Section 10.1 of the Purchase Agreement (defined below) or at such other place as shall have been designated by the Purchaser by written notice from the Purchaser to the Company.

 

This Note has been issued pursuant to that certain Note and Warrant Purchase Agreement, dated as of the date hereof (as amended, restated supplemented or modified from time to time, the “ Purchase Agreement ”), among the Company, the Subsidiary Guarantors party thereto and the Purchaser, and is entitled to the benefits thereof and is secured by and entitled to the benefits of the Security Documents and is guaranteed by each of the Subsidiary Guarantors pursuant to the guaranty provided for in Article 4 of the Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Purchase Agreement.

 

This Note is a registered Note and, as provided in the Purchase Agreement, upon surrender of this Note for registration of transfer, accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount (less any principal amount repaid prior to such transfer in accordance with the Purchase Agreement) will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the Company may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.  The transfer or assignment of this Note by the Purchaser is subject to the provisions of Section 10.5 of the Purchase Agreement, and so long as no Default or Event of Default exists, the consent of the Company (which consent shall not be unreasonably withheld, delayed or conditioned).

 

This Note is subject to optional prepayment, in whole or from time to time in part, without penalty or premium, subject to the notice and other requirements as provided in Section 2.4(b) of the Purchase Agreement.

 

All accrued and unpaid interest on the outstanding principal balance of the Subordinated Note shall be due and payable in full on the Maturity Date, provided that (i) Purchaser may require a portion of such accrued interest to be paid in Interest Conversion Shares (as defined below) pursuant to Section 2.3(b) of the Purchase Agreement and as provided below in this Note, and (ii) upon any prepayment of this Note or any portion thereof, accrued and unpaid interest shall be payable with respect to the principal amount of this Note so prepaid on such date of prepayment (subject to the right of Purchaser as set forth in Section 2.3(b) of the Purchase Agreement to receive Interest Conversion Shares in lieu of cash interest).

 

Purchaser shall have the sole option (exercised in its sole discretion) to receive, in lieu of any cash interest payment otherwise due and payable hereunder, up to one-half (1/2) of such cash interest payment in the form of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company, at the conversion rate of $1.50 per share.  Any such shares of Common Stock of the Company issued in lieu of a cash interest payment on this Note are referred to herein as “ Interest Conversion Shares ”.  Purchaser may exercise said option with respect to any accrued interest on this Note by notifying the Company in writing (which may be made by electronic email) of Purchaser’s election to receive shares of Common Stock of the Company in lieu of any cash interest payment at any time prior to the payment of such interest by the Company to Purchaser and within three (3) Business Days after such cash interest payment has been received by the Purchaser (in which case, Purchaser shall return such cash interest payment in exchange for the issuance and receipt of an appropriate amount of Interest Conversion Shares).  

 

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If an Event of Default occurs and is continuing, the principal of this Note and accrued interest on this Note may be accelerated and declared or otherwise become due and payable in the manner and with the effect provided in the Purchase Agreement.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS). THE TERMS OF SECTIONS 10.12 AND 10.13 OF THE PURCHASE AGREEMENT WITH RESPECT TO SUBMISSION TO JURISDICTION, CONSENT TO SERVICE OF PROCESS, VENUE AND WAIVER OF JURY TRIAL ARE INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS, AND THE COMPANY AGREES TO SUCH TERMS.  

 

In no event shall the amount or rate of interest due and payable under this Note exceed the maximum amount or rate of interest allowed by Applicable Law and, in the event any such excess payment is made by the Company or received by Purchaser, such excess sum shall be credited as a payment of principal or, if no principal shall remain outstanding, shall be refunded to the Company.  It is the express intent hereof that Company shall not pay and Purchaser not receive, directly or indirectly or in any manner, interest in excess of that which may be lawfully paid under Applicable Law.  

 

The Company hereby waives presentment, demand, protest or notice of any kind in connection with this Note.

 

On and after the effective time of the consummation of the Reincorporation, all references herein to the “Company” shall be deemed to refer to Staffing 360 Solutions, Inc., a Delaware corporation, as successor by merger to the Company.

 

 

STAFFING 360 SOLUTIONS, INC.

 

 

By:___________________

Name: Brendan Flood

Title:   Executive Chairman

 

 

 

14

 

Exhibit 10.2

AMENDMENT 2 to W ARRANT AGREEMENT

 

THIS SECOND AMENDMENT to WARRANT AGREEMENT (this " Amendment 2 "), dated as of April 5, 2017, is by and between Staffing 360 Solutions, Inc., a Nevada corporation (the " Company "), and Jackson Investment Group, LLC, a Georgia limited liability company (together with its successors and assigns, the " Holder ").

 

WHEREAS, on January 25, 2017, the Company and Holder entered into a Warrant Agreement (the " Warrant "), which entitled Holder to purchase shares of the Company's common stock, par value $0.00001 per share (" Common Stock" ),  in connection with the Holder's execution of a Note and Warrant Purchase Agreement (“ NWPA ”) for the purchase of a $7,400,000 principal amount 6% Subordinated Secured Note on January 26, 2017 (the " Note Transaction" );

 

WHEREAS , on March 14, 2017, the Company and the Holder entered into Amendment 1 to Warrant Agreement which includes provisions that, among other things, prevent JIG from (a) beneficially owning in excess of 19.9% of the number of shares of Common Stock outstanding immediately after giving effect to such issuance or (b) controlling in excess of 19.9% of the total voting power of the Company's securities outstanding immediately after giving effect to such issuance that are entitled to vote on a matter being voted on by holders of the Common Stock, unless and until the Company obtains stockholder approval permitting such issuances in accordance with applicable Nasdaq rules;

 

WHEREAS, in connection with the Holder’s execution of an amendment to the NWPA to provide for the Holder’s purchase of an additional Subordinated Secured Note of even date herewith, the parties desire to amend the Warrant to increase the number of Warrant Exercise Shares and to decrease the Exercise Price of the Warrant Exercise Shares;

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree that the Warrant shall be amended as follows:

 

1. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed in the Warrant.

 

2. Section 2.1(b) of the Warrant shall be amended and restated in its entirety to read as follows:

 

(b) The maximum number of shares of Common Stock issuable pursuant to exercise of the Warrant shall be 4,527,537 shares, as such amount may be adjusted from time to time pursuant to this Agreement.

 

3. Section 3.1 of the Warrant shall be amended and restated in its entirety to read as follows:

 

Section 3.1 Exercise Price. . Commencing on a date that is six (6) months following the Date of Issuance, the Warrant shall entitle the Registered Holder thereof, subject to the provisions of this Agreement, the right to purchase from the Company up to 4,527,537 shares of Common Stock at the price of $1.00 per share, subject to adjustment from time to time as provided in Article IV (the “ Exercise Price ”).

 

1

 


 

4. The second and third full sentences of Exhibit A to the Warrant shall be amended and restated as follows:

 

The Warrant entitles the holder and its registered assigns (collectively, the “ Registered Holder ”) to purchase by exercise from Staffing 360 Solutions, Inc., a Nevada corporation (the “ Company ”), subject to the terms and conditions hereof, at any time before 5:00 p.m., Eastern time, on January 25, 2022, four million, five hundred twenty-seven thousand, five hundred and thirty-seven ( 4,527,537) fully paid and non-assessable shares of common stock, par value $0.00001 per share (“ Common Stock ”) of the Company at the Exercise Price (as defined in the Warrant Agreement). The Exercise Price and the number and kind of shares purchasable hereunder are subject to adjustment from time to time as provided in Article IV of the Warrant Agreement. The initial Exercise Price shall be $1.00 per share.

 

5. The first sentence of the “Form of Reverse of Warrant” of Exhibit A to the Warrant shall be amended and restated as follows:

 

The Warrant evidenced by this Warrant certificate is a duly authorized issuance of a Warrant to purchase 4,527,537 shares of Common Stock issued pursuant to the Warrant Agreement, as dated January 25, 2017 between Staffing 360 Solutions, Inc. and Jackson Investment Group, LLC (together with its successors and assigns, the “Holder” and the agreement, the “ Warrant Agreement ”), a copy of which may be inspected at the office of the Company.

 

6. This Amendment 2 may be executed in any number of original or facsimile or electronic PDF counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

 

 

[ Intentionally blank - signatures on next page ]

 

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IN WITNESS WHEREOF, this Amendment 2 has been duly executed by the undersigned parties hereto, effective as of the date first above written .

 

 

 

 

COMPANY:

 

STaffing 360 solutions, inc.

 

 

By: /s/ Brendan Flood

Name: Brendan Flood

Title:   Executive Chairman

 

 

 

 

 

Accepted and agreed:

 

JACKSON INVESTMENT GROUP, LLC

 

 

By: /s/ Richard L. Jackson

Name:  Richard L. Jackson

Title:    Chief Executive Officer

 

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Exhibit 10.3

AMENDMENT NO. 1 TO SUBORDINATION AGREEMENT

 

THIS AMENDMENT NO. 1 TO SUBORDINATION AGREEMENT (this “ Amendment ”) is made as of this 5th day of April, 2017, by and among JACKSON INVESTMENT GROUP, LLC , a Georgia limited liability company, as purchaser and holder of the Subordinated Note (as defined below) and as secured party under the Subordinated Security Documents (as defined below) (“ Subordinated Lender ”), STAFFING 360 SOLUTIONS, INC ., a Nevada corporation (“ Parent ”), certain of the Parent’s subsidiaries party hereto, and MIDCAP FUNDING X TRUST , a Delaware statutory trust and successor by assignment from MidCap Financial Trust, as Agent for the financial institutions or other entities from time to time parties to the Senior Loan Agreements (as hereinafter defined) (acting in such capacity, “ Agent ”), and as a Lender, or such then present holder or holders of the Senior Loan (as hereinafter defined) as may from time to time exist (the “ Lenders ,” and collectively with the Agent, the “ Senior Lenders ”). Reference in this Agreement to “Subordinated Lender”, “Subordinated Lenders”, “each Subordinated Lender” or otherwise with respect to any one or more of the Subordinated Lenders shall mean each and every person included from time to time in the term “Subordinated Lender” and any one or more of the Subordinated Lenders, jointly and severally, unless a specific Subordinated Lender is expressly identified.

 

RECITALS

 

A. PEOPLESERVE, INC., MONROE STAFFING SERVICES, LLC, PEOPLESERVE PRS, INC., FARO RECRUITMENT AMERICA, INC., LIGHTHOUSE PLACEMENT SERVICES, INC. and any additional borrower that may hereafter be added to the Senior Loan Agreement (as hereinafter defined) (collectively, “ Borrowers ”), Parent, Agent and Senior Lenders have entered into a Credit and Security Agreement dated as of April 8, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Senior Loan Agreement ”) pursuant to which, among other things, Senior Lenders have made certain loans and financial accommodations to Borrowers and the other Credit Parties (as hereafter defined).  Parent has guaranteed the obligations of Borrowers pursuant to that certain Payment Guaranty dated April 8, 2015 (the “ Parent Guaranty ”).  All of Borrower’s obligations to Senior Lenders under the Senior Loan Agreement and the other Senior Loan Documents (as hereinafter defined) are secured by liens on and security interests in substantially all of the now existing and hereafter acquired personal property of Borrowers and Parent.

 

B. Subordinated Lender has extended to Parent, or may in the future extend to Parent, loans and other financial accommodations or Parent may become obligated to the Subordinated Lender for the payment of money.

 

C. Parent, certain of the Parent’s subsidiaries party hereto, Subordinated Lender and Agent have entered into that certain Subordination Agreement dated January 25, 2017 (as amended hereby and as it may be further amended, modified and restated from time to time, the “ Subordination Agreement ”). All other capitalized terms used but not defined herein shall have the meanings set forth in the Subordination Agreement.

 

D. It is proposed that Parent shall enter into a 6% Subordinated Secured Note dated the date hereof in an aggregate principal sum of $1,650,000 to be issued by Parent in favor of Subordinated Lender in the form attached hereto as Exhibit A (the “ April 2017 Subordinated Note ”) pursuant to the Subordinated Note Agreement.

 

E. As an inducement to and as one of the conditions precedent to the agreement of Agent and Senior Lenders to permit the April 2017 Subordinated Note under the Senior Loan Agreement, Agent and Senior Lenders have required the execution and delivery of this Amendment by Subordinated Lender,


Parent and certain of the Parent’s subsidiaries party hereto .

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Subordinated Lender, Parent and certain of the Parent’s subsidiaries party hereto hereby agree as follows:

 

1. Recitals.   The Recitals set forth above shall be construed as part of this Amendment as if set forth fully in the body of this Amendment.

 

2. Amendment to Subordination Agreement.   

 

(a) Section 1 (Definitions) of the Subordination Agreement is hereby amended to add the following defined term in its alphabetical order as follows:

 

First Amendment Closing Date ” shall mean April 5, 2017.

 

(b) The defined terms “Permitted Subordinated Debt Payments” and “Subordinated Note” in Section 1 (Definitions) of the Subordination Agreement are hereby amended and restated, respectively, in their entirety as follows:

 

Permitted Subordinated Debt Payments means payments of regularly scheduled payments of principal and interest on the Subordinated Debt, in each case due and payable on a non-accelerated basis in accordance with the terms of the Subordinated Debt Documents in effect as of the First Amendment Closing Date.

Subordinated Note ” shall mean, collectively, (i) that certain 6% Subordinated Secured Note dated as of January 25, 2017, in the principal amount of $7,400,000, issued by Parent to Subordinated Lender pursuant to the Subordinated Note Agreement, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement, and (ii) that certain 6% Subordinated Secured Note dated as of April 5, 2017, in the principal amount of $1,650,000, issued by Parent to Subordinated Lender pursuant to the Subordinated Note Agreement, in each case as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement together with any and all promissory notes at any time issued in substitution, exchange or replacement thereof.

4. Limited Consent . At the request of and as an accommodation to the Subordinated Lender, pursuant to the terms of Section 3.2 of the Subordination Agreement, Agent hereby consents to (i) the April 2017 Subordinated Note and (ii) the Omnibus Amendment and Reaffirmation Agreement in the form attached hereto as Exhibit B , each as an amendment, modification or supplement to the terms of the Subordinated Debt.  The limited consent set forth in this Section 4 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Subordination Agreement or of any other Senior Loan Document; (b) prejudice any right that Agent or the Lenders have or may have in the future under or in connection with the Senior Loan Agreement or any other Senior Loan Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Subordinated Lender on the one hand, or Agent or any Lender, on the other hand.

 

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5 . Affirmation.   Except as specifically amended pursuant to the terms hereof, the Subordination Agreement (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by the parties hereto .

 

6. Miscellaneous.

 

(a) Headings.   Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(b ) Counterparts.   This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  Signatures by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be treated as delivery of an original and shall bind the parties hereto. This Amendment constitutes the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

 

   

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

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IN WITNESS WHEREOF , intending to be legally bound, and intending that this Agreement constitute an instrument executed and delivered under seal, the parties have caused this Amendment to be executed under seal as of the date first written above.

 

 

AGENT :

MIDCAP FUNDING X TRUST ,

 

a Delaware statutory trust

 

 

 

By:          Apollo Capital Management, L.P.,

 

                its investment manager

 

 

 

By:          Apollo Capital Management GP, LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Michael Levin

 

Name:  Michael Levin

 

Title:    Authorized Signatory

 

 

Agent’s Signature Page to Amendment No. 1 to Subordination Agreement

 


 

SUBORDINATED LENDER:

 

 

JACKSON INVESTMENT GROUP, LLC

 

 

 

 

 

By:

/s/ Richard L. Jackson

(SEAL)

 

Name: Richard L. Jackson

 

Title:  Chief Executive Officer

 

 

 

Subordinated Lender’s Signature Page to Amendment No. 1 to Subordination Agreement

 


 

PARENT:

 

STAFFING 360 SOLUTIONS, INC.

 

 

 

 

 

By:

/s/ Brendan Flood

(Seal)

 

Name: Brendan Flood

 

Title:  Executive Chairman

 

SUBSIDIARIES:

 

MONROE STAFFING SERVICES, LLC

 

 

 

 

 

By:

/s/ Brendan Flood

(Seal)

 

Name: Brendan Flood

 

Title:  Executive Chairman

 

 

PEOPLESERVE, INC.

 

 

 

 

 

By:

/s/ Brendan Flood

(Seal)

 

Name: Brendan Flood

 

Title:  Executive Chairman

 

 

FARO RECRUITMENT AMERICA, INC.

 

 

 

 

 

By:

/s/ Brendan Flood

(Seal)

 

Name: Brendan Flood

 

Title:  Executive Chairman

 

 

LIGHTHOUSE PLACEMENT SERVICES, INC.

 

 

 

 

 

 

By:

/s/ David Faiman

(Seal)

 

Name: David Faiman

 

Title:  Secretary and Treasurer

 

 

PEOPLESERVE PRS, INC.

 

 

 

 

 

By:

/s/ Brendan Flood

(Seal)

 

Name: Brendan Flood

 

Title:  Executive Chairman

 

 

 

 

 

 

 

Exhibit 10.4

SECOND AMENDMENT TO

STOCK PURCHASE AGREEMENT

 

 

This Second Amendment to Stock Purchase Agreement (“ Amendment ”) is made and entered into on April 5, 2017 (“ Amendment Date ”), by and between Staffing 360 Solutions, Inc., a Nevada corporation (“ Company ”), and the investor whose name appears below (“ Investor ”).

 

Recitals

 

A. Reference is made to the Stock Purchase Agreement dated June 24, 2016, as amended on January 25, 2017, by and between Company and Investor (“ Agreement ”), which is incorporated herein by reference.  Pursuant to the Agreement, Investor purchased 211 shares of Series D Redeemable Convertible Preferred Stock (“ Preferred ”) of Company.  

 

B. As of the Amendment Date, Investor has converted 149 Preferred and owns 62 Preferred (the “ Outstanding Preferred Shares ”).  The Measurement Periods with respect to the Initial Notices delivered on August 29, 2016 and thereafter have not yet ended, and the Company may be obligated to pay additional Conversion Premium in connection with such conversions.

 

D. Investor and the Company have at all times fully and completely complied with all of their respective obligations under the Agreement.  

 

Agreement

 

In consideration of the preceding and the foregoing, the receipt and adequacy of which are hereby acknowledged, Company and Investor hereby agree as follows:

 

I. Definitions .  Capitalized terms that are not otherwise defined have the meanings set forth in the Agreement.  

 

II. Delivery .  As an express condition precedent to the effectiveness of this Amendment, Company will within 1 Trading Day of the Amendment Date, time being of the essence, deliver 300,000 free trading shares of Common Stock of Company (the “ Share Delivery ”) to Investor by DWAC pursuant to the broker DTC information provided to Company.

 

III. Payment .  As an express condition precedent to the effectiveness of this Amendment, Company will within 1 Trading Day of the Amendment Date, time being of the essence, pay $1,500,000.00 (the “ Payment Amount ”) to Investor by wire transfer of immediately available funds pursuant to the wire transfer information provided to Company.

 

IV. Cancellations .  Upon timely delivery of the Share Delivery and payment of the Payment Amount to Investor, (a) the Outstanding Preferred Shares will be deemed redeemed and returned to the Company’s treasury, (b) the Transfer Agent will not be required to issue any further Conversion Shares to Investor, (c) the Company will instruct Transfer Agent to release all

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Common Stock under reserve in connection with the Agreement, (d) Investor will retain all Conversion Shares previously issued by the Company and its Transfer Agent, (e) all other Transfer Agent Instructions shall be deemed null and void and of no further effect, and (f) the Agreement (except as provided in Section V below) will be terminated and o f no further force or effect.  

 

V. Ratification .    Sections IV.B, IV.D, IV.E, IV.F, IV.G, IV.I, IV.J, IV.K., VI.A, VI.B, VI.C, VI.D, VI.E, VI.F, VI.G, VI.H, VI.J, VI.K, VI.L, VI.M, VI.N, VI.O, VI.P, and VI.Q of the Agreement will remain in full force and effect, and are hereby ratified and affirmed in all respects.  For the avoidance of doubt, none of the Investor Parties will be entitled to indemnification under Section IV.G of the Agreement for any alleged breaches by the Company prior to the Amendment Date.

 

VI. Waivers and Releases .  Except for the obligations created by this Amendment and those specifically designated to survive as provided in Section V above, upon timely delivery of the Share Delivery and payment of the Payment Amount to Investor, each party hereby fully, completely, absolutely, and unconditionally waives, releases, discharges and holds harmless the other party, its affiliates, and each of their past and present officers, directors, stockholders, members, managers, consultants, advisors, representatives, employees, agents, attorneys and assigns, whether acting in their representative or individual capacities (collectively the “ Releasees ”), from any and all claims, causes of action, rights, obligations, damages, liabilities and claims of any kind or nature whatsoever, at law and in equity, which the parties may now own, hold, have or claim to have against each other, including without limitation all claims in any way arising out of or relating to the Agreement, Note, or Transaction Documents, and covenant to not institute any claim, demand, cause of action, arbitration proceeding, or lawsuit pertaining to or arising out of the Agreement, Note, or Transaction Documents, and release and forever discharges each other’s Releasees from any and all claims, demands, actions, causes of action, obligations, damages, liabilities, costs or expenses, including attorneys’ fees and costs, of any kind or nature whatsoever, past or present, ascertained or unascertained, regardless of whether known or unknown, foreseen or unforeseen, suspected or unsuspected, vested or contingent, accrued or unaccrued; provided, however that the waivers and releases in this Section VI will not include any claims that are based on or arise out of, or relate to this Amendment or the right to enforce or to seek relief for a breach of any terms of this Amendment under Section IV.G of the Agreement.

 

VII. Representations and Warranties .

 

A. Company hereby represents and warrants to, and as applicable covenants with, Investor as follows:

 

1. Organization and Qualification .  Company and each Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing (where such concept is applicable) under the laws of the jurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect.  Neither Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,

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bylaws or other organizational or charter documents, except as would not reasonably be expected to result in a Material Adverse Effect.

 

2. Authorization; Enforcement .  Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Amendment and otherwise to carry out its obligations hereunder.  The execution and delivery of this Amendment by Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Company and no further consent or action is required by Company.  This Amendment has been, or upon delivery will be, duly executed by Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of Company, enforceable against Company in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) insofar as indemnification and contribution provisions may be limited by applicable law.

 

3. No Conflicts .  The execution, delivery and performance of this Amendment by Company and the consummation by Company of the other transactions contemplated hereby do not and will not (a) conflict with or violate any provision of Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (b) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other instrument (evidencing Company or Subsidiary debt or otherwise) or other understanding to which Company or any Subsidiary is a party or by which any property or asset of Company or any Subsidiary is bound or affected, (c) conflict with or result in a violation of any material law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Company or a Subsidiary is subject (including U.S. federal and state securities laws and regulations), or by which any material property or asset of Company or a Subsidiary is bound or affected, or (d) conflict with or violate the terms of any material agreement by which Company or any Subsidiary is bound or to which any property or asset of Company or any Subsidiary is bound or affected; except in the case of each of clauses (b), (c) and (d), such as would not reasonably be expected to result in a Material Adverse Effect.

 

4. Acknowledgments Regarding Investor .  Company’s decision to enter into this Amendment has been based solely on the independent evaluation of Company and its representatives, and Company acknowledges and agrees that:

 

a. Investor is not, has never been, and as a result of the transactions contemplated by this Amendment will not become an officer, director, insider, control person, to Company’s knowledge 10% or greater stockholder, or otherwise an affiliate of Company as defined under Rule 12b-2 of the Exchange Act;

 

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b. Investor does not make or has not made any representations, warranties or agreements with respect to the Shares, this Amendment, or the transactions contemplated hereby other than those specifically set forth in Section VII.B below;

 

c. The resale of the Shares will result in dilution, which may be substantial; and

 

d. Investor is acting solely in the capacity of arm’s length purchaser with respect to this Amendment and the transactions contemplated hereby; neither Investor nor any of its Affiliates, agents or representatives has or is acting as a legal, financial, investment, accounting, tax or other advisor to Company, or fiduciary of Company, or in any similar capacity; neither Investor nor any of its Affiliates, agents or representatives has provided any legal, financial, investment, accounting, tax or other advice to Company; any statement made in connection with this Amendment or the transactions contemplated hereby is not advice or a recommendation, and is merely incidental to Investor’s purchase of the Shares.

 

B. Representations and Warranties of Investor .  Investor hereby represents and warrants to Company as follows:

 

1. Organization; Authority.  Investor is an entity validly existing and in good standing under the laws of the jurisdiction of its organization with full right, company power and authority to enter into and to consummate the transactions contemplated by this Amendment and otherwise to carry out its obligations hereunder.  The execution, delivery and performance by Investor of the transactions contemplated by this Amendment have been duly authorized by all necessary company or similar action on the part of Investor.  This Amendment has been, or will be, duly executed by Investor, and when delivered by Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of Investor, enforceable against it in accordance with its terms, except (a) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) insofar as indemnification and contribution provisions may be limited by applicable law.

 

2. Investor Status.  At the time Investor was offered the Shares, it was, and at the Effective Date it is:  (a) an accredited investor as defined in Rule 501(a) under the Act; and (b) not a registered broker-dealer, member of FINRA, or an affiliate thereof.

 

3. Experience of Investor.  Investor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment.  Investor is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

 

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VIII. General Provisions .

 

A. Execution .  This Amendment may be executed in two or more counterparts, all of which when taken together will be considered one and the same agreement and will become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by portable document format, facsimile or electronic transmission, such signature will create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

B. Publicity .  Neither party will disparage, denigrate or harm the reputation of the other party or any representative thereof, or the Agreement or the transactions contemplated thereby.  In addition, without the prior written consent of the other party, neither party will make, cause or permit to be made any statement, comment or inference regarding the other party, or any representative thereof, that is not substantially identical to statements made in prior public filings of the parties.

 

C. Entire Agreement .  This Amendment, and the Agreement, Note, and Transaction Documents as modified by this Amendment, contain the entire agreement and understanding of the parties, and supersedes all prior and contemporaneous agreements, term sheets, letters, discussions, communications and understandings, both oral and written, which the parties acknowledge have been merged into this Amendment and the Agreement, Note, and Transaction Documents as modified by this Amendment.  No party, representative, advisor, attorney or agent has relied upon any collateral contract, agreement, assurance, promise, understanding, statement or representation not expressly set forth herein.  The parties hereby absolutely, unconditionally and irrevocably waive all rights and remedies, at law and in equity, directly or indirectly arising out of or relating to, or which may arise as a result of, any Person’s reliance on any such statement or assurance.


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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories on the Amendment Date.

 

Company:

 

 

 

 

 

 

STAFFING 360 SOLUTIONS, INC.

 

 

 

 

 

 

 

 

By:  

 

 

 

Name:  

Brendan Flood

 

 

Title:  

Executive Chairman

 

 

 

 

 

 

 

 

 

 

Investor:

 

 

 

 

 

 

 

Investor Name

 

 

 

 

 

 

 

 

 

 

By:  

 

Name:  

 

Title:

 

 

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