Item
1.01 Entry into a Material Definitive Agreement.
On
December 30, 2020, Staffing 360 Solutions, Inc. (the “Company”) entered into a securities purchase agreement (the
“Purchase Agreement”) with certain institutional and accredited investors (the “Purchasers”). Pursuant
to the Purchase Agreement, the Company agreed to sell in a registered direct offering 2,662,596 shares (the “Shares”)
of the Company’s common stock, $0.00001 par value per share (the “Common Stock”), to the Purchasers at an offering
price of $0.655 per share.
The
Company expects to receive net proceeds from the sale of the Shares, after deducting placement agent fees and other estimated
offering expenses payable by the Company, of approximately $1.54 million. The Company intends to use approximately (i) 75% of
the net proceeds from the offering to redeem a portion of the Company’s Second Amended and Restated 12% Senior Secured Note
due September 30, 2020 and (ii) 25% of the net proceeds from the offering to redeem a portion of the Company’s Series E
Convertible Preferred Stock.
The
offering is expected to close on December 31, 2020, subject to satisfaction of customary closing conditions.
On
December 21, 2020, the Company entered into an engagement letter (the “Engagement Letter”) with H.C. Wainwright &
Co., LLC (the “Wainwright”), pursuant to which Wainwright agreed to serve as the exclusive placement agent for the
Company, on a reasonable best efforts basis, in connection with the offering. The Company will pay Wainwright an aggregate cash
fee equal to 7.5% of the gross proceeds of the offering and a management fee equal to 1.0% of the gross proceeds of the
offering, and reimburse Wainwright for a non-accountable expense allowance of $25,000 and $12,900 for clearing expenses. Additionally,
the Company has agreed to issue to Wainwright or its designees warrants to purchase up to 199,695 shares of Common Stock,
equal to 7.5% of the aggregate number of shares of Common Stock placed in the offering (the “Wainwright Warrants”).
The Wainwright Warrants have a term of five (5) years from the commencement of sales under the offering and an exercise price
of $0.8188 per share (equal to 125% of the offering price per share).
Neither
the issuance of the Wainwright Warrants nor the shares of Common Stock issuable upon the exercise of the Wainwright Warrants (the
“Wainwright Warrant Shares”) are registered under the Securities Act of 1933, as amended (the “Securities Act”).
The Wainwright Warrants and the Wainwright Warrant Shares will be issued in reliance on the exemptions from registration provided
by Section 4(a)(2) under the Securities Act, for transactions not involving a public offering.
The
sale of the Shares will be made pursuant to the Company’s effective Registration Statement on Form S-3 (Registration No.
333-230503), including a prospectus contained therein dated April 11, 2019, as supplemented by a prospectus supplement, dated
December 30, 2020, relating to the offering.
The
Purchase Agreement contains customary representations, warranties, and covenants of the Company and also provides for customary
indemnification by Company against certain liabilities of the Purchasers.
A
copy of the opinion of Haynes and Boone, LLP relating to the legality of the issuance and sale of the Shares is attached as Exhibit
5.1 hereto.
The
foregoing descriptions of the terms and conditions of the Purchase Agreement, the form of Wainwright Warrant, and the Engagement
Letter are qualified in their entirety by reference to the full text of the Purchase Agreement, the form of Wainwright Warrant,
and the Engagement Letter, copies of which are attached hereto as Exhibits 10.1, 4.1, and 99.1, respectively, and which are incorporated
herein by reference.