Item
1.01 Entry Into a Material Definitive Agreement.
On
April 21, 2021, Staffing 360 Solutions, Inc. (the “Company”) entered into a securities purchase agreement
(the “Purchase Agreement”) with certain institutional and accredited investors for the issuance
and sale of an aggregate of 4,697.6328 shares of Series F convertible preferred stock (the “Series F Preferred Stock”)
at a price of $1,000 per share and warrants to purchase up to an aggregate of 7,829,388 shares of common stock, par value $0.00001
per share (the “Common Stock”), at an exercise price of $0.60 per share (the “Warrants”).
The Warrants are exercisable upon the later of the Amendment Date (as defined below) and six months following the closing of
the private placement, and will expire five years following the date that the Warrants first become exercisable.
The
Series F Preferred Stock is convertible into an aggregate of approximately 7,829,388 shares of Common Stock at a conversion price
of $0.60 per share, subject to certain ownership limitations, upon the Company amending its certificate of incorporation to
effect a reverse split within a range of 2-into-1 to up to 20-into-1 to be determined by the Company’s board of directors
(the “Reverse Stock Split”). The Reverse Stock Split must be in a ratio sufficient to provide
for the full conversion of the Series F Preferred Stock, the full exercise of the Warrants and the satisfaction of the minimum
bid requirements of the Nasdaq Capital Market. The effective date of the Reverse Stock Split is referred to herein as
the “Amendment Date”. The Series F Preferred Stock is only entitled to dividends in the event dividends are paid on the Company’s
Common Stock and will not have any preferences over the Company’s Common Stock, including liquidation rights.
Subject
to certain beneficial ownership limitations, the Series F Preferred Stock shall vote on an “as converted” basis on
all matters submitted to the holders of Common Stock for approval; provided, however, that solely for purposes of determining
the number of votes that the Series F Preferred Stock is entitled to, the “Conversion Price” of the Series
F Preferred Stock shall be deemed $0.725. In addition, as long as any shares of the Series F Preferred Stock are outstanding,
the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series
F Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series F Preferred Stock, (b)
amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders
of the Series F Preferred Stock, or (c) increase the number of authorized shares of the Series F Preferred Stock, or (d) enter
into any agreement with respect to any of the foregoing.
The
investors in the private placement and the officers and directors of the Company entered into voting agreements
whereby they each agreed to vote in favor of the Reverse Stock Split at any meeting of the Company’s stockholders. The
Company intends to call a meeting of its stockholders for the purpose of approving the Reverse Stock Split as soon as
possible.
Under
a registration rights agreement (the “Registration Rights Agreement”) with the institutional investors,
the Company is required to file an initial registration statement with the Securities and Exchange Commission (the “SEC”)
covering the resale of the shares of the Company’s common stock underlying the Series F Preferred Stock and the Warrants
no later than 30 days after April 21, 2021, and to use best efforts to have the registration statement declared effective as promptly as
practical thereafter, and in any event no later than 60 days after the Amendment Date.
The
Company intends to use $1,000,000 of the net proceeds received from the private placement for working capital purposes and the
remaining proceeds will be used to repay existing debt.
H.C.
Wainwright & Co., LLC (“Wainwright”) served as the Company’s exclusive placement agent in
connection with the private placement, pursuant to that engagement letter, dated as of December 21, 2020, between the Company
and Wainwright, as amended on February 8, 2021 and February 9, 2021 (collectively, the “Engagement Letter”).
Pursuant to the Engagement Letter, the Company paid Wainwright (i) a total cash fee equal to 7.5% of the aggregate gross proceeds
of the private placement, (ii) $50,000 for Wainwright’s legal expenses, (iii) a management fee of $46,976.33, and
(iv) a non-accountable expense allowance of $35,000. In addition, the Company issued to Wainwright or its designees warrants (the
“Placement Agent Warrants”) to purchase up to 587,204 shares of Common Stock at an exercise price equal
to $0.75. The Placement Agent Warrants will be exercisable commencing upon the later of the Amendment Date and six months following
the closing of the private placement and will expire five years from the initial exercise date.
The Engagement Letter and the Purchase Agreement
contain customary representations and warranties, agreements and obligations, conditions to closing and termination provisions.
The foregoing descriptions of terms and conditions of the Purchase Agreement, the Series F Preferred Stock, the Warrants,
the Placement Agent Warrants, and the Registration Rights Agreement do not purport to be complete and are qualified in
their entirety by the full text of the form of the Purchase Agreement, the Certificate of Designation for the Series F Preferred
Stock, the form of the Warrant, the form of the Placement Agent Warrant, and the form of the Registration Rights Agreement,
which are attached hereto as Exhibits 10.1, 3.1, 4.1, 4.2, and 10.2, respectively.