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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
January
2, 2025
Date
of Report (Date of earliest event reported)
STAFFING
360 SOLUTIONS, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
001-37575 |
|
68-0680859 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(I.R.S.
Employer
Identification
Number) |
757
Third Avenue |
|
|
27th
Floor |
|
|
New
York, NY |
|
10017 |
(Address
of principal executive offices) |
|
(Zip
Code) |
(646)
507-5710
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report.)
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)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common
stock |
|
STAF |
|
NASDAQ |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
First
Amendment to the Agreement and Plan of Merger
On
January 7, 2025, Staffing 360 Solutions, Inc. a Delaware corporation (the “Company”), Atlantic International
Corp., a Delaware corporation (“Atlantic”) and A36 Merger Sub Inc., a Delaware Corporation and a wholly-owned
subsidiary of Atlantic (“Merger Sub”), entered into that certain First Amendment (the “Amendment”)
to the Agreement and Plan of Merger (as amended, the “Merger Agreement”).
Pursuant
to the Amendment, upon completion of the merger (the “Merger”), each share Series H Convertible Preferred Stock
(“Series H Preferred Stock”) and Series I Preferred Stock (the “Series I Preferred Stock”)
immediately prior to the effective time of the Merger, other than certain excluded shares, will be canceled and converted into the right
to receive a number of shares of validly issued, fully paid and nonassessable shares of common stock of Atlantic, par value of $0.00001
per share (the “Atlantic Common Stock”), equal to the applicable Exchange Ratio (as defined in the Amendment)
for the Series H Preferred Stock and the Series I Preferred Stock, with any resulting fractional shares to be rounded to the nearest
whole share.
Pursuant
to the Amendment, at or prior to the closing of the Merger (the “Closing”), the Company shall enter into a
signed settlement agreement (the “Jackson Agreement”) with Jackson Investment Group, LLC (“Jackson”).
Pursuant to the Jackson Agreement, (i) all interest accrued and payable to Jackson will be waived or forgiven and (ii) the principal
amount of the Loan will be converted into 5,600,000 shares of Series I Preferred Stock. Additionally, pursuant to the Amendment and
further agreement between the applicable parties, Jackson shall enter into a lock-up agreement such that the Merger Consideration
(as defined in the Merger Agreement) for all of the Series I Preferred Stock are subject to a lock up period for the one year after the
Closing, provided, however, that 600,000 shares of Merger Consideration shall be freely tradable following the Closing.
Pursuant
to the Amendment, at or prior to the Closing, the applicable parties shall enter into signed agreements, pursuant to which any amounts
owed in Earned Contingent Cash Payment (as defined in the Merger Agreement) shall be converted into 5,000,000 shares of Series H Preferred
Stock and any interest/dividends or other payments due from the Company related to the Series H Preferred Stock shall be waived. Additionally,
pursuant to the Amendment, the applicable parties shall enter into lock-up agreements such that the Merger Consideration for all shares
of Series H Preferred Stock are (A) subject to a lock up for the 6 months after Closing as follows; (B) 1,750,000 shares of Atlantic
Common Stock are subject to a lock-up for the period starting on 6 months after Closing until 9 months after Closing; (C) 875,000 shares
of Atlantic Common Stock are subject to a lock-up for the period starting on 9 months after Closing until 12 months after Closing; (D)
the lock-up shall terminate 12 months after Closing and (E) the lock-up shall not apply to the extent shares of Atlantic Common Stock
must be sold to pay any taxes from such applicable holder.
Additionally,
pursuant to the Amendment, the Termination Date (as defined in the Merger Agreement) is extended to March 31, 2025.
The
foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text
of the Amendment, a copy of which is attached hereto as Exhibit 2.1, and incorporated herein by reference.
Amendment
Nos. 35 and 36 to Credit and Security Agreement with MidCap
On
January 2, 2025, the Company entered into Amendment No. 35 to Credit and Security Agreement and Limited Waiver (“Amendment
No. 35”), effective as of December 27, 2024, by and among the Company, as Parent, Monroe Staffing Services, LLC, a Delaware
limited liability company, Faro Recruitment America, Inc., a New York corporation, Lighthouse Placement Services, Inc., a Massachusetts
corporation, Key Resources, Inc., a North Carolina Corporation, Headway Workforce Solutions, Inc., a Delaware corporation, Headway Employer
Services LLC, a Delaware limited liability company, Headway Payroll Solutions, LLC, a Delaware limited liability company, Headway HR
Solutions, Inc., a New York corporation, and NC PEO Holdings, LLC, a Delaware limited liability company, collectively, as borrowers (collectively,
the “Borrowers”), and MidCap Funding IV Trust, as agent for the lenders (as successor by assignment to MidCap
Funding X Trust, “MidCap”) and the lenders party thereto from time to time (the “Lenders”),
which such Amendment No. 35 amends that certain Credit and Security Agreement, dated as of April 8, 2015 (as amended and restated, supplemented,
or otherwise modified from time to time, the “Credit and Security Agreement”), by and among the Company, the
Borrowers, MidCap and the Lenders. Pursuant to Amendment No. 35, the Commitment Expiry Date (as defined in the Credit and Security Agreement)
is extended to January 3, 2025.
On
January 8, 2025, the Company, the Borrowers, MidCap, and the Lenders entered into Amendment No. 36 to Credit and Security Agreement (“Amendment
No. 36”), effective as of January 3, 2025. Pursuant to Amendment No. 36, (i) the Commitment Expiry Date is extended to
January 10, 2025, and (ii) the Additional Reserve Amount (as defined in the Credit and Security Agreement) is amended to be, as of any
date of determination, $490,000.
Additionally,
in consideration for MidCap’s agreement to enter into Amendment No. 36, the Company has agreed to pay to MidCap a modification
fee of $150,000, which such fee shall be non-refundable and fully earned as of January 3, 2025.
The
foregoing descriptions of Amendment No. 35 and Amendment No. 36 do not purport to be complete and are qualified in their entirety by
reference to the full text of Amendment No. 35 and Amendment No. 36, copies of which are attached hereto as Exhibit 10.1 and Exhibit
10.2, respectively, and are incorporated herein by reference.
Limited
Consents to Intercreditor Agreement
On
January 2, 2025, and January 8, 2025, in connection with Amendment No. 35 and Amendment No. 36, respectively, the Company
entered into Limited Consents to the Intercreditor Agreement, dated as of September 15, 2017, as amended, by and between the Company
and Jackson, which each such Limited Consent permits the Company’s entry into Amendment No. 35 and Amendment No. 36, respectively.
Important
Information about the Merger and Where to Find It
In
connection with the Merger, the Company will file relevant materials with the Securities and Exchange Commission (the “SEC”),
including a registration statement on Form S-4, as may be amended, that will include a consent solicitation or proxy statement, as applicable,
pertaining to the Company and Atlantic. This Current Report on Form 8-K does not contain all the information that should be considered
concerning the Merger and is not a substitute for any other documents that the Company may file with the SEC. It is not intended to form
the basis of any investment decision or any other decision in respect to the Merger. Investors and stockholders will be able to obtain
free copies of the consent solicitation statement or proxy statement, as applicable. and other documents filed by the Company with the
SEC (when they become available) through the website maintained by the SEC at www.sec.gov. In addition, investors and stockholders
should note that the Company communicates with investors and the public using its website (www.staffing360solutions.com), where
anyone will be able to obtain free copies of the consent solicitation statement or proxy statement and other documents filed by the Company
with the SEC and stockholders are urged to read the consent solicitation statement or proxy statement, as applicable, and the other relevant
materials when they become available before making any voting or investment decision with respect to the Merger.
Participants
in the Solicitation
The
Company and its directors and executive officers may be deemed to be participants in the solicitation of consents in connection with
the Merger. Information about the Company’s directors and executive officers is included in the Company’s most recent Annual
Report on Form 10-K, including any information incorporated therein by reference, as filed with the SEC. Additional information regarding
these persons and their interests in the proposed transaction will be included in the consent solicitation statement or proxy statement,
as applicable, relating to the Merger when it is filed with the SEC. These documents can be obtained free of charge from the sources
indicated above.
Forward-Looking
Statements Regarding the Merger
This
Current Report on Form 8-K, along with the exhibits attached hereto, contains certain “forward-looking statements” within
the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”), and Section 21E of the Exchange Act. All statements other than statements of historical
fact contained in this Current Report on Form 8-K, including statements regarding the benefits of the Merger, the anticipated timing
of the completion of the Merger, the services offered Atlantic and the markets in which Atlantic plans to operate, the advantages of
Atlantic’s services, Atlantic’s competitive landscape and positioning, and Atlantic’s growth plans and strategies,
are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including
“may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,”
“believe,” “predict,” “plan,” “targets,” “projects,” “could,”
“would,” “continue,” “forecast” or the negatives of these terms or variations of them or similar
expressions. All forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to
differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements are based upon estimates,
forecasts and assumptions that, while considered reasonable by the Company and its management, and Atlantic and its management, as the
case may be, are inherently uncertain and many factors may cause the actual results to differ materially from current expectations which
include, but are not limited to:
● |
the
occurrence of any event, change or other circumstance that could give rise to the termination of the Merger; |
● |
the
outcome of any legal proceedings that may be instituted against Atlantic or the Company related to the Merger; |
● |
failure
of the Company and Atlantic to realize the anticipated benefits of the Merger; |
● |
the
inability to satisfy the initial listing criteria of the Nasdaq Capital Market (“Nasdaq”) or obtain Nasdaq
approval of the initial listing of the combined company on Nasdaq; |
|
|
● |
the
ability the Company to maintain its listing on Nasdaq; |
● |
the
risk that the price of shares subsequent to the Merger may be volatile due to a variety of factors, including changes in the highly
competitive industry in which Atlantic operates, variations in performance across competitors, changes in laws and regulation that
may impose additional costs and compliance burdens on Atlantic’s operations, macro-economic and social environments affecting
Atlantic’s business and changes in the combined capital structure; |
● |
the
inability to implement business plans, forecasts, and other expectations after the completion of the Merger; |
● |
the
risk that Atlantic may be unable to raise additional capital on acceptable terms to finance its operations and remain a going concern;
and |
● |
the
risk that Atlantic’s estimates of market demand may be inaccurate. |
Item 9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit
No. |
|
Description |
|
|
|
2.1+ |
|
First Amendment to Agreement and Plan of Merger among Staffing 360 Solutions, Inc, A36 Merger Sub Inc. and Atlantic International Corp., dated January 7, 2025. |
10.1 |
|
Amendment No. 35 to the Credit and Security Agreement, effective as of December 27, 2024, by and between Staffing 360 Solutions, Inc. and MidCap Funding X Trust. |
10.2 |
|
Amendment No. 36 to the Credit and Security Agreement, effective as of January 3, 2025, by and between Staffing 360 Solutions, Inc. and MidCap Funding X Trust. |
104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL document) |
+
Certain of the schedules (and similar attachments) to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation
S-K under the Securities Act because they do not contain information material to an investment or voting decision and that information
is not otherwise disclosed in the exhibit or the disclosure document. The registrant hereby agrees to furnish a copy of all omitted schedules
(or similar attachments) to the SEC upon its request.
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:
January 13, 2025 |
STAFFING
360 SOLUTIONS, INC. |
|
|
|
|
By: |
/s/
Brendan Flood |
|
|
Brendan
Flood |
|
|
Chairman
and Chief Executive Officer |
Exhibit
2.1
FIRST
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This
First Amendment (this “First Amendment”) to the Merger Agreement (as defined below) is made and entered into as
of January 7, 2025, by and Atlantic International Corp a Delaware corporation (“Atlantic”), A36 Merger Sub Inc., a
Delaware corporation (“Merger Sub”), and Staffing 360 Solutions, Inc. a Delaware corporation (the “Company”).
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement (defined below).
WHEREAS,
Atlantic, Merger Sub, and the Company have entered into that certain Agreement and Plan of Merger, dated as of November 1, 2024 (the
“Merger Agreement”)
WHEREAS,
the Parties desire to amend the terms and conditions of the Merger Agreement to, among other things: (i) clarify the treatment of
certain preferred stock of the Company; and (ii) removal of dissenter and appraisal rights consistent with Delaware Law.
NOW,
THEREFORE, for and in consideration of the mutual covenants contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each Party hereto, the Parties agree as follows:
| 1. | Amendment
to Agreement. The Agreement is hereby amended as follows: |
| a. | Recital
(D) of the Merger Agreement is deleted in its entirety and replaced with the following: |
“
D. Upon completion of the Merger, each share of the issued and outstanding common stock of the Company (“Company Common Stock”)
immediately prior to the Effective Time, other than Excluded Shares, will be canceled and converted into the right to receive the Merger
Consideration.
| b. | Section
2.2(a) of the Merger Agreement is deleted in its entirety and replaced with the following: |
“
(a) Conversion of Shares. Each: (i) share of Company Common Stock; (ii) share of Series H Preferred Shares; and (iii) share of
Series I Preferred Shares issued and outstanding immediately prior to the Effective Time (each a “Share” and collectively,
the “Shares”), other than any Excluded Shares, shall be cancelled and shall cease to exist and shall be converted
automatically into the right to receive the Merger Consideration. “Merger Consideration” means (i) a number of shares
of validly issued, fully paid and nonassessable shares of common stock of Atlantic, par value of $.00001 per share (the “Atlantic
Common Stock”), equal to their respective Exchange Ratio, with any resulting fractional shares to be rounded to the nearest
whole share.”
| c. | Section
2.2(d) of the Merger Agreement is deleted in its entirety and replaced with the following: |
“(d)
Exchange Agent. On or prior to the Closing Date, Atlantic will select a transfer agent or another reputable bank or trust company
reasonably acceptable to Company to act as exchange agent in connection with the Merger (the “Exchange Agent”). Promptly
after the Effective Time, Atlantic shall cause each person who was, at the Effective Time, a holder of record of Shares entitled to receive
the Merger Consideration pursuant hereto instructions for use in effecting the surrender of the non-certificated Company Common Stock
represented by book-entry in exchange for the Merger Consideration. The holder of such Share shall be entitled to receive in exchange
therefor the Merger Consideration, pursuant to the Exchange Ratio and the terms of this Agreement. Until surrendered as contemplated
by this Section 2.2(d), each book-entry share shall be deemed at all times after the Effective Time to represent only the right to receive
upon such surrender the Merger Consideration to which holder of such book-entry share is entitled to.”
| d. | Section
2.3 is hereby deleted in its entirety and replaced with the following: |
“[Reserved]”
| e. | Section
2.4 is hereby deleted in its entirety and replaced with the following: |
“[Reserved]”
| f. | Section
3.2(f) is hereby deleted in its entirety and replaced with the following: |
“(f)
a signed settlement agreement with the appropriate Jackson Investment (“Jackson”) party converting the Company’s indebtedness
with the appropriate Jackson party whereby (i) all interest accrued and payable to appropriate Jackson party will be waived or forgiven;
(ii) the principal amount of the Loan will be converted into 5,600,000 shares of Series I Preferred Stock and lock-up agreement such
that the Merger Consideration for all of the Series I Preferred Stock are subject to a lock up for the one (1) year after the Closing;”
| g. | Section
3.2(g) is hereby deleted in its entirety and replaced with the following: |
“(g)
signed agreements to be mutually agreed to by the Parties whereby the applicable parties shall: (i) convert any amounts owed in Earned
Contingent Cash Payment into five million (5,000,000) Series H Preferred Shares of the Company and waive any interest/dividends or other
payments due from the Company related to the Series H Preferred Shares; and (ii) lock-up agreements such that the Merger Consideration
for all of the Series H Preferred are; (A) subject to a lock up for the 6 months after Closing as follows; (B) 1,750,000 shares of Atlantic
Common Stock are subject to a lock-up for the period starting on 6 months after Closing until 9 months after Closing; (C) 875,000 shares
of Atlantic Common Stock are subject to a lock-up for the period starting on 9 months after Closing until 12 months after Closing; and
(D) the lock-up shall terminate 12 months after Closing and (E) the lock-up shall not apply to the extent shares of Atlantic Common Stock
must be sold to pay any taxes from such applicable holder;”
| h. | Section
3.9(c) is hereby deleted in its entirety and replaced with the following: |
“[Reserved]”
| i. | Section
5.5(a) of the Merger Agreement is deleted in its entirety and replaced with the following: |
“(a)
The authorized capital stock of Atlantic consists of 300,000,000 shares of Atlantic Common Stock $.00001 par value of which 57,338,135
shares are issued and outstanding as of the date of this First Amendment and 4,903,052 shares are issuable upon the exercise of RSUs,
for an aggregate of 62,241,187 shares of common stock. All outstanding shares of Atlantic Common Stock are duly authorized, validly issued,
fully paid, and non-assessable and were issued in compliance with all applicable federal and state securities laws;”
| j. | Section
8.1(d) of the Merger Agreement is deleted in its entirety and replaced with the following: |
“(d)
by Atlantic or the Company if the transactions contemplated by this Agreement shall not have been consummated on or prior to March 31,
2025 (the “Termination Date”); provided that (i) the right to terminate this Agreement pursuant to this Section 8.1(d) shall
not be available to Atlantic if Atlantic’s breach of any of its covenants or obligations under this Agreement shall have proximately
caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination Date, (ii) the right to
terminate this Agreement pursuant to this Section 8.1(d) shall not be available to the Company if the Company’s breach of its covenants
or obligations under this Agreement shall have proximately caused the failure to consummate the transactions contemplated by this Agreement
on or before the Termination Date; and (iii) the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available
to any party if such party’s breach of any of its covenants or obligations under this Agreement shall have proximately caused the
failure to consummate the transactions contemplated by this Agreement on or before the Termination Date; or”
| k. | The
definition for “Earned Contingent Cash Payment” is hereby added
as follows: |
“
“Earned Contingent Cash Payment” means the Contingent Payment (as defined in that certain Stock Purchase Agreement
between the Company, Headway Workforce Solutions, Inc. and Chapel Hill Partners, LP) due from the Company pursuant to the Stock Purchase
Agreement between the Company, Headway Workforce Solutions, Inc. and Chapel Hill Partners, LP.”
| l. | The
definition for “Exchange Ratio” is hereby deleted in its entirety
and replaced with the following: |
“
“Exchange Ratio” means with respect to the conversion of: (i) Company Common Stock, 1.202; (ii) Series H Preferred
Stock, 0.25 and (iii) Series I Preferred Stock, 1.00.”
| 2. | No
Other Changes. Except as expressly provided in this Amendment, the Agreement shall
remain in full force and effect upon its original terms. This Amendment and the Agreement
constitute an integrated agreement with respect to the subject matter hereof and thereof.
This Amendment may be amended, modified, and supplemented only in accordance with the terms
of the Agreement. |
| 3. | Governing
Law. This Amendment shall be governed by and construed in accordance with the laws
of the State of Delaware applicable to contracts made and performed in such State, without
reference to such State’s or any other state’s or other jurisdiction’s
principles of conflict of laws. |
| 4. | Counterparts.
This Amendment may be executed in one or more counterparts, each of which will be deemed
an original, but all of which together will constitute one and the same instrument. |
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed as of the date first written above by their respective
officers thereunto duly authorized.
|
COMPANY |
|
STAFFING
360 SOLUTIONS, INC. |
|
|
|
|
By: |
/s/
Brendan Flood |
|
Name: |
Brendan
Flood |
|
Title: |
Chief
Executive Officer |
|
|
|
|
MERGER
SUB |
|
A36
MERGER SUB INC. |
|
|
|
|
By: |
/s/
Jeffrey Jagid |
|
Name: |
Jeffrey
Jagid |
|
Title: |
Chief
Executive Officer |
|
|
|
|
ATLANTIC |
|
ATLANTIC
INTERNATIONAL CORP. |
|
|
|
|
By: |
/s/
Jeffrey Jagid |
|
Name: |
Jeffrey
Jagid |
|
Title: |
Chief
Executive Officer |
Exhibit
10.1
AMENDMENT
NO. 35 TO
CREDIT
AND SECURITY AGREEMENT
THIS
AMENDMENT NO. 35 TO CREDIT AND SECURITY AGREEMENT (this “Amendment”) is made as of the 2nd day of January,
2025, and effective nunc pro tunc as of December 27, 2024, by and among MONROE STAFFING SERVICES, LLC, a Delaware limited
liability company, FARO RECRUITMENT AMERICA, INC., a New York corporation, LIGHTHOUSE PLACEMENT SERVICES, INC., a Massachusetts
corporation, KEY RESOURCES, INC., a North Carolina corporation, HEADWAY WORKFORCE SOLUTIONS, INC., a Delaware corporation,
HEADWAY EMPLOYER SERVICES LLC, a Delaware limited liability company, HEADWAY PAYROLL SOLUTIONS, LLC, a Delaware limited
liability company, HEADWAY HR SOLUTIONS, INC., a New York corporation, and NC PEO HOLDINGS, LLC, a Delaware limited liability
company (each of the foregoing Persons being referred to herein individually as a “Borrower”, and collectively as
“Borrowers”), STAFFING 360 SOLUTIONS, INC., a Delaware corporation (as “Parent”), and MIDCAP
FUNDING IV TRUST, a Delaware statutory trust, as successor-by-assignment to MidCap Funding X Trust (as Agent for Lenders, “Agent”,
and individually, as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement
referenced below, each as a Lender.
RECITALS
A.
Borrowers, Agent and Lenders are party to that certain Credit and Security Agreement dated as of April 8, 2015 (as amended by that certain
Amendment No. 1 and Joinder Agreement to Credit and Security Agreement dated as of July 13, 2015, by that certain Amendment No. 2 to
Credit and Security Agreement dated as of August 31, 2015, by that certain Overadvance Letter dated October 9, 2015, by that certain
Overadvance Letter dated as of November 20, 2015, by that certain Overadvance Letter dated as of February 8, 2016, by that certain Amendment
No. 3 to Credit and Security Agreement and Limited Waiver dated as of February 8, 2016, by that certain Amendment No. 4 and Joinder Agreement
to Credit and Security Agreement dated as of July 11, 2016, by that certain Amendment No. 5 to Credit and Security Agreement dated as
of September 26, 2016, by that certain Amendment No. 6 to Credit and Security Agreement and Limited Consent dated as of January 26, 2017,
by that certain Amendment No. 7 to Credit and Security Agreement and Limited Consent dated as of June 5, 2017, by that certain Amendment
No. 8 and Joinder Agreement to Credit and Security Agreement and Limited Consent dated as of September 15, 2017, by that certain Amendment
No. 9 to Credit and Security Agreement and Limited Consent dated as of June 6, 2018, by that certain Amendment No. 10 and Joinder Agreement
to Credit and Security Agreement and Limited Consent dated as of August 27, 2018, by that certain Overadvance Letter dated as of January
3, 2019, by that certain Amendment No. 11 to Credit and Security Agreement dated as of February 7, 2019, by that certain Overadvance
Letter dated as of April 1, 2019, by that certain Amendment No. 12 to Credit and Security Agreement dated as of April 1, 2019, by that
certain Overadvance Letter dated as of July 15, 2019, by that certain Amendment No. 13 to Credit and Security Agreement dated as of August
2, 2019, by that certain Amendment No. 14 dated as of August 8, 2020, by that certain Amendment No. 15 dated as of September 7, 2020,
by that certain Amendment No. 16 dated as of October 7, 2020, by that certain Amendment No. 18 to Credit and Security Agreement dated
as of February 8, 2021, by that certain Amendment No. 19 to Credit and Security Agreement dated as of December 23, 2021, by that certain
Amendment No. 20 to Credit and Security Agreement and Limited Consent dated as of April 18, 2022, by that certain Amendment No. 21 to
Credit and Security Agreement and Limited Consent dated as of August 30, 2022, by that certain Amendment No. 22 to Credit and Security
Agreement dated as of September 15, 2022, by that certain Amendment No. 23 to Credit and Security Agreement dated as of September 26,
2022, by that certain Amendment No. 24 to Credit and Security Agreement dated as of September 29, 2022, by that certain Amendment No.
25 to Credit and Security Agreement dated as of October 13, 2022, by that certain Amendment No. 26 to Credit and Security Agreement dated
as of October 20, 2022, by that certain Amendment No. 27 and Joinder Agreement to Credit and Security Agreement dated as of October 27,
2022, by that certain Amendment No. 28 to Credit and Security Agreement and Limited Waiver dated as of August 30, 2023, by that certain
Amendment No. 29 to Credit and Security Agreement dated as of July 18, 2024, by that certain Amendment No. 30 to Credit and Security
Agreement dated as of September 11, 2024, by that certain Amendment No. 31 to Credit and Security Agreement dated as of October 9, 2024,
by that certain Amendment No. 32 to Credit and Security Agreement dated as of December 9, 2024, by that certain Amendment No. 33 to Credit
and Security Agreement dated as of December 13, 2024, and by that certain Amendment No. 34 to Credit and Security Agreement dated as
of December 24, 2024 (as so amended, the “Existing Credit Agreement”, and as amended hereby and as it may be further
amended, modified, supplemented and/or restated from time to time, the “Credit Agreement”)). Capitalized terms used
but not otherwise defined in this Amendment shall have the meanings set forth in the Credit Agreement.
B.
Borrowers have requested that the Agent and the Lenders have agreed to amend the Existing Credit Agreement to extend the Commitment Expiry
Date.
C.
Borrowers, Agent and Lenders have agreed to amend the Credit Agreement as set forth herein.
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, Lenders, Parent and Borrowers hereby agree as follows:
1.
Recitals. This Amendment shall constitute a Financing Document and 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.
Amendments to Existing Credit Agreement.
(a)
Section 1.1 (Defined Terms). The definition of “Commitment Expiry Date” in Section 1.1 of the Credit Agreement is
hereby amended and restated to read as follows:
“Commitment
Expiry Date” means January 3, 2025.
3.
Confirmation of Representations and Warranties; Reaffirmation of Security Interest.
(a)
Each Borrower hereby confirms that all of the representations and warranties set forth in Article 3 of the Credit Agreement are true
and correct in all material respects with respect to such Borrower as of the date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, and covenants to perform its respective obligations under the Credit Agreement. To
induce Agent and Lender to enter into this Agreement, Borrowers and Parent further represent and warrant that:
(i)
no Default or Event of Default has occurred or is continuing as of the date hereof (excluding those certain Events of Default set forth
in the Reservation of Rights Letters (as defined below)), which has not been waived in writing by the Agent;
(ii)
as of the date hereof and, immediately after giving effect to this Amendment and the transactions contemplated hereby, the representations
and warranties of Borrowers contained in the Financing Documents are true and correct in all material respects (or if any representation
or warranty is qualified with respect to materiality, in all respects) on and as of the date hereof to the same extent as though made
on and as of such date except to the extent such representations and warranties specifically relate to an earlier date; and
(iii)
the execution, delivery and performance by Borrowers and Parent of this Amendment are within each of its corporate powers and have been
duly authorized by all necessary corporate action, and this Amendment is the legal, valid and binding obligation of Borrowers and Parent
enforceable against Borrowers and Parent in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency
or other similar laws relating to the enforcement of creditors’ rights generally and by equitable principles, and neither the execution,
delivery or performance by Borrowers and Parent of this Agreement (A) violates any Law, or any other rule or decree of any Governmental
Authority, (B) conflicts with or results in the breach or termination of, constitutes a default under or accelerates any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrowers or Parent is a party or
by which Borrowers or Parent or any of its property is bound, except for such conflicts, breaches, terminations, defaults or accelerations
that would not reasonably be expected to have a Material Adverse Effect, (C) results in the creation or imposition of any Lien upon any
of the Collateral, (D) violates or conflicts with the by-laws or other organizational documents of Borrowers and Parent, or (E) requires
the consent, approval or authorization of, or declaration or filing with, any other Person, except for those already duly obtained.
(b)
Each Borrower and Parent confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect,
and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens. Nothing herein is intended
to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral. For the avoidance
of any doubt, the Collateral secures repayment of the Obligations and the Affiliated Obligations, and in furtherance thereof, Borrowers
and Parent hereby reaffirm the grant to Agent, for the benefit of itself and Lenders, of a continuing first priority Lien (subject to
Permitted Liens) on and security interest in all of the Collateral as security for the payment and performance of the Obligations, and
for the payment and performance of all obligations under the Affiliated Financing Documents.
4.
Enforceability. This Amendment constitutes the legal, valid and binding obligation of each Borrower and Parent, and is enforceable
against each Borrower and Parent in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency
or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.
5.
Costs and Fees. Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred
in connection with the preparation of this Amendment and any related documents. If Agent or any Lender uses in-house counsel for any
of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that
would otherwise be charged by outside legal counsel selected by Agent or such Lender for the work performed. Borrowers hereby authorize
Agent to deduct all of such fees set forth in this Section 5 from the proceeds of one or more Revolving Loans made under the Credit Agreement.
6.
Reaffirmation of Security Interest. Each of the Borrowers and Parent confirms and agrees that: (i) all security interests
and liens granted to Agent continue in full force and effect, and (ii) all Collateral remains free and clear of any liens other than
liens in favor of Agent and Permitted Encumbrances. Nothing herein contained is intended to impair or limit the validity, priority and
extent of Agent’s security interest in and liens upon the Collateral.
7.
Conditions to Effectiveness. This Amendment shall become effective nunc pro tunc as of December 27, 2024 upon the satisfaction
of each of the following conditions (the “Effective Date”):
(a)
Amendment. Borrowers and Parent shall have delivered to Agent this Amendment, duly executed by an authorized officer of each Credit
Party;
(b)
Representations and Warranties. All representations and warranties of Borrowers contained herein shall be true and correct in
all material respects as of the date hereof except to the extent such representations and warranties specifically relate to an earlier
date (and such parties’ delivery of their respective signatures hereto shall be deemed to be their certification thereof);
(c)
JIG Consent. Agent shall have received a duly executed copy of the Limited Consent to Intercreditor Agreement by JIG; and
(d)
Fees and Expenses. Agent shall have received from Borrowers of all of the fees owing pursuant to this Amendment and Agent’s
reasonable out-of-pocket legal fees and expenses.
8.
Release. Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and
on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns,
and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “Releasing
Parties”), does hereby fully and completely release, acquit and forever discharge each Indemnitee (as defined in the Credit
Agreement) of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs,
expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or
contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them),
that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “Prior
Related Event” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether
known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any
of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto
or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any
Indemnitee, all on or prior to the date hereof. Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s
and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.
9.
No Waiver or Novation. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents,
instruments and agreements executed or delivered in connection with any of the foregoing. Nothing herein is intended or shall be construed
as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s
rights and remedies in respect of such Defaults or Events of Default. This Amendment (together with any other document executed in connection
herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement. For the avoidance of doubt, nothing
herein shall operate as a waiver of any right, power or remedy of Agent or any Lender (including, without limitation, the right to implement
additional reserves and/or adjustments, and/or increase existing reserves and/or adjustments to the Borrowing Base), nor constitute a
waiver or other modification of any provision set forth in the Reservation of Rights Letter, dated April 12, 2024, the Post-Default Advance
Letter, dated April 16, 2024, or the Reservation of Rights Letter, dated October 18, 2024, each of which shall remain in full force and
effect (collectively, the “Reservation of Rights Letters”).
10.
Affirmation. Except as specifically amended pursuant to the terms hereof, the Credit Agreement and all other Financing Documents
(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 Borrowers. Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit
Agreement (as amended hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions
or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment
to such terms, covenants and conditions.
11.
Miscellaneous.
(a)
Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement
to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall
mean and be a reference to the Credit Agreement, as amended by this Amendment. Except as specifically amended above, the Credit Agreement,
and all other Financing Documents (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 Borrowers.
(b)
Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing
Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference
to the same extent as if reproduced herein in their entirety.
(c)
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.
(d)
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 PAGES]
IN
WITNESS WHEREOF, intending to be legally bound, and intending that this document constitute an agreement executed under seal, the
undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.
AGENT: |
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MIDCAP
FUNDING IV TRUST |
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By: |
Apollo
Capital Management, L.P., |
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its
investment manager |
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By: |
Apollo
Capital Management GP, LLC, |
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its
general partner |
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By: |
/s/
Maurice Amsellem (SEAL) |
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Name: |
Maurice
Amsellem |
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Title: |
Authorized
Signatory |
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LENDER: |
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MIDCAP
FUNDING IV TRUST |
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By: |
Apollo
Capital Management, L.P., |
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its
investment manager |
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By: |
Apollo
Capital Management GP, LLC, |
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its
general partner |
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By: |
/s/
Maurice Amsellem (SEAL) |
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Name: |
Maurice
Amsellem |
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Title: |
Authorized
Signatory |
Signature
Page to
Amendment
No. 35 to Credit and Security Agreement
BORROWERS: |
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MONROE
STAFFING SERVICES, LLC,
a Delaware limited liability company |
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By: |
/s/
Brendan Flood (Seal) |
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Name: |
Brendan
Flood |
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Title: |
Chairman
and Chief Executive Officer |
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LIGHTHOUSE
PLACEMENT SERVICES, INC.,
a
Massachusetts corporation
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FARO
RECRUITMENT AMERICA, INC.,
a New York corporation
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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HEADWAY
WORKFORCE SOLUTIONS, INC., a Delaware corporation
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KEY
RESOURCES, INC.,
a
North Carolina corporation
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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HEADWAY
PAYROLL SOLUTIONS, LLC, a Delaware limited liability company
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HEADWAY
EMPLOYER SERVICES
LLC,
a Delaware limited liability company
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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HEADWAY
HR SOLUTIONS, INC., a
New
York corporation
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NC
PEO HOLDINGS, LLC, a Delaware
limited
liability company
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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PARENT: |
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STAFFING
360 SOLUTIONS, INC.,
a
Delaware corporation |
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By: |
/s/
Brendan Flood (Seal) |
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Name: |
Brendan
Flood |
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Title: |
Chief
Executive Officer |
Signature
Page to
Amendment
No. 35 to Credit and Security Agreement
Exhibit
10.2
Execution
Version
AMENDMENT
NO. 36 TO
CREDIT
AND SECURITY AGREEMENT
THIS
AMENDMENT NO. 36 TO CREDIT AND SECURITY AGREEMENT (this “Amendment”) is made as of the 8th day of January, 2025,
and effective nunc pro tunc as of January 3, 2025, by and among MONROE STAFFING SERVICES, LLC, a Delaware limited liability
company, FARO RECRUITMENT AMERICA, INC., a New York corporation, LIGHTHOUSE PLACEMENT SERVICES, INC., a Massachusetts corporation,
KEY RESOURCES, INC., a North Carolina corporation, HEADWAY WORKFORCE SOLUTIONS, INC., a Delaware corporation, HEADWAY
EMPLOYER SERVICES LLC, a Delaware limited liability company, HEADWAY PAYROLL SOLUTIONS, LLC, a Delaware limited liability
company, HEADWAY HR SOLUTIONS, INC., a New York corporation, and NC PEO HOLDINGS, LLC, a Delaware limited liability company
(each of the foregoing Persons being referred to herein individually as a “Borrower”, and collectively as “Borrowers”),
STAFFING 360 SOLUTIONS, INC., a Delaware corporation (as “Parent”), and MIDCAP FUNDING IV TRUST, a Delaware
statutory trust, as successor-by-assignment to MidCap Funding X Trust (as Agent for Lenders, “Agent”, and individually,
as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below,
each as a Lender.
RECITALS
A.
Borrowers, Agent and Lenders are party to that certain Credit and Security Agreement dated as of April 8, 2015 (as amended by that certain
Amendment No. 1 and Joinder Agreement to Credit and Security Agreement dated as of July 13, 2015, by that certain Amendment No. 2 to
Credit and Security Agreement dated as of August 31, 2015, by that certain Overadvance Letter dated October 9, 2015, by that certain
Overadvance Letter dated as of November 20, 2015, by that certain Overadvance Letter dated as of February 8, 2016, by that certain Amendment
No. 3 to Credit and Security Agreement and Limited Waiver dated as of February 8, 2016, by that certain Amendment No. 4 and Joinder Agreement
to Credit and Security Agreement dated as of July 11, 2016, by that certain Amendment No. 5 to Credit and Security Agreement dated as
of September 26, 2016, by that certain Amendment No. 6 to Credit and Security Agreement and Limited Consent dated as of January 26, 2017,
by that certain Amendment No. 7 to Credit and Security Agreement and Limited Consent dated as of June 5, 2017, by that certain Amendment
No. 8 and Joinder Agreement to Credit and Security Agreement and Limited Consent dated as of September 15, 2017, by that certain Amendment
No. 9 to Credit and Security Agreement and Limited Consent dated as of June 6, 2018, by that certain Amendment No. 10 and Joinder Agreement
to Credit and Security Agreement and Limited Consent dated as of August 27, 2018, by that certain Overadvance Letter dated as of January
3, 2019, by that certain Amendment No. 11 to Credit and Security Agreement dated as of February 7, 2019, by that certain Overadvance
Letter dated as of April 1, 2019, by that certain Amendment No. 12 to Credit and Security Agreement dated as of April 1, 2019, by that
certain Overadvance Letter dated as of July 15, 2019, by that certain Amendment No. 13 to Credit and Security Agreement dated as of August
2, 2019, by that certain Amendment No. 14 dated as of August 8, 2020, by that certain Amendment No. 15 dated as of September 7, 2020,
by that certain Amendment No. 16 dated as of October 7, 2020, by that certain Amendment No. 18 to Credit and Security Agreement dated
as of February 8, 2021, by that certain Amendment No. 19 to Credit and Security Agreement dated as of December 23, 2021, by that certain
Amendment No. 20 to Credit and Security Agreement and Limited Consent dated as of April 18, 2022, by that certain Amendment No. 21 to
Credit and Security Agreement and Limited Consent dated as of August 30, 2022, by that certain Amendment No. 22 to Credit and Security
Agreement dated as of September 15, 2022, by that certain Amendment No. 23 to Credit and Security Agreement dated as of September 26,
2022, by that certain Amendment No. 24 to Credit and Security Agreement dated as of September 29, 2022, by that certain Amendment No.
25 to Credit and Security Agreement dated as of October 13, 2022, by that certain Amendment No. 26 to Credit and Security Agreement dated
as of October 20, 2022, by that certain Amendment No. 27 and Joinder Agreement to Credit and Security Agreement dated as of October 27,
2022, by that certain Amendment No. 28 to Credit and Security Agreement and Limited Waiver dated as of August 30, 2023, by that certain
Amendment No. 29 to Credit and Security Agreement dated as of July 18, 2024, by that certain Amendment No. 30 to Credit and Security
Agreement dated as of September 11, 2024, by that certain Amendment No. 31 to Credit and Security Agreement dated as of October 9, 2024,
by that certain Amendment No. 32 to Credit and Security Agreement dated as of December 9, 2024, by that certain Amendment No. 33 to Credit
and Security Agreement dated as of December 13, 2024, by that certain Amendment No. 34 to Credit and Security Agreement dated as of December
24, 2024, and by that certain Amendment No. 35 to Credit and Security Agreement dated as of January 2, 2025 (as so amended, the “Existing
Credit Agreement”, and as amended hereby and as it may be further amended, modified, supplemented and/or restated from time
to time, the “Credit Agreement”)). Capitalized terms used but not otherwise defined in this Amendment shall have the
meanings set forth in the Credit Agreement.
B.
Borrowers have requested that the Agent and the Lenders have agreed to amend the Existing Credit Agreement to extend the Commitment Expiry
Date.
C.
Borrowers, Agent and Lenders have agreed to amend the Credit Agreement as set forth herein.
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, Lenders, Parent and Borrowers hereby agree as follows:
1.
Recitals. This Amendment shall constitute a Financing Document and 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.
Amendments to Existing Credit Agreement.
(a)
Section 1.1 (Defined Terms). The definition of “Commitment Expiry Date” in Section 1.1 of the Credit Agreement is
hereby amended and restated to read as follows:
“Commitment
Expiry Date” means January 10, 2025.
(b)
Section 1.1 (Defined Terms). The definition of “Additional Reserve Amount” in Section 1.1 of the Credit Agreement
is hereby amended by restating the same as follows:
“Additional
Reserve Amount” means, as of any date of determination, $490,000.00.
3.
Confirmation of Representations and Warranties; Reaffirmation of Security Interest.
(a)
Each Borrower hereby confirms that all of the representations and warranties set forth in Article 3 of the Credit Agreement are true
and correct in all material respects with respect to such Borrower as of the date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, and covenants to perform its respective obligations under the Credit Agreement. To
induce Agent and Lender to enter into this Agreement, Borrowers and Parent further represent and warrant that:
(i)
no Default or Event of Default has occurred or is continuing as of the date hereof (excluding those certain Events of Default set forth
in the Reservation of Rights Letters (as defined below)), which has not been waived in writing by the Agent;
(ii)
as of the date hereof and, immediately after giving effect to this Amendment and the transactions contemplated hereby, the representations
and warranties of Borrowers contained in the Financing Documents are true and correct in all material respects (or if any representation
or warranty is qualified with respect to materiality, in all respects) on and as of the date hereof to the same extent as though made
on and as of such date except to the extent such representations and warranties specifically relate to an earlier date; and
(iii)
the execution, delivery and performance by Borrowers and Parent of this Amendment are within each of its corporate powers and have been
duly authorized by all necessary corporate action, and this Amendment is the legal, valid and binding obligation of Borrowers and Parent
enforceable against Borrowers and Parent in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency
or other similar laws relating to the enforcement of creditors’ rights generally and by equitable principles, and neither the execution,
delivery or performance by Borrowers and Parent of this Agreement (A) violates any Law, or any other rule or decree of any Governmental
Authority, (B) conflicts with or results in the breach or termination of, constitutes a default under or accelerates any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrowers or Parent is a party or
by which Borrowers or Parent or any of its property is bound, except for such conflicts, breaches, terminations, defaults or accelerations
that would not reasonably be expected to have a Material Adverse Effect, (C) results in the creation or imposition of any Lien upon any
of the Collateral, (D) violates or conflicts with the by-laws or other organizational documents of Borrowers and Parent, or (E) requires
the consent, approval or authorization of, or declaration or filing with, any other Person, except for those already duly obtained.
(b)
Each Borrower and Parent confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect,
and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens. Nothing herein is intended
to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral. For the avoidance
of any doubt, the Collateral secures repayment of the Obligations and the Affiliated Obligations, and in furtherance thereof, Borrowers
and Parent hereby reaffirm the grant to Agent, for the benefit of itself and Lenders, of a continuing first priority Lien (subject to
Permitted Liens) on and security interest in all of the Collateral as security for the payment and performance of the Obligations, and
for the payment and performance of all obligations under the Affiliated Financing Documents.
4.
Enforceability. This Amendment constitutes the legal, valid and binding obligation of each Borrower and Parent, and is enforceable
against each Borrower and Parent in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency
or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.
5.
Costs and Fees. In consideration of Agent’s agreement to enter into this Amendment, Borrowers shall pay to Agent a modification
fee equal to One Hundred Fifty Thousand Dollars ($150,000.00) (the “Amendment No. 36 Modification Fee”). The Amendment
No. 36 Modification Fee shall be non-refundable and fully earned as of the Effective Date (as defined below). The Amendment No. 36 Modification
Fee shall constitute a portion of the Obligations and shall be secured by all Collateral. The Amendment No. 36 Modification Fee shall
be due and payable upon the earliest to occur of (a) the Termination Date, and (b) the repayment in full of all Obligations. Furthermore,
Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred in connection with
the preparation of this Amendment and any related documents. If Agent or any Lender uses in-house counsel for any of these purposes,
Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise
be charged by outside legal counsel selected by Agent or such Lender for the work performed. Borrowers hereby authorize Agent to deduct
all of such fees set forth in this Section 5 from the proceeds of one or more Revolving Loans made under the Credit Agreement.
6.
Reaffirmation of Security Interest. Each of the Borrowers and Parent confirms and agrees that: (i) all security interests
and liens granted to Agent continue in full force and effect, and (ii) all Collateral remains free and clear of any liens other than
liens in favor of Agent and Permitted Encumbrances. Nothing herein contained is intended to impair or limit the validity, priority and
extent of Agent’s security interest in and liens upon the Collateral.
7.
Conditions to Effectiveness. This Amendment shall become effective nunc pro tunc as of January 3, 2025 upon the satisfaction
of each of the following conditions (the “Effective Date”):
(a)
Amendment. Borrowers and Parent shall have delivered to Agent this Amendment, duly executed by an authorized officer of each Credit
Party;
(b)
Representations and Warranties. All representations and warranties of Borrowers contained herein shall be true and correct in
all material respects as of the date hereof except to the extent such representations and warranties specifically relate to an earlier
date (and such parties’ delivery of their respective signatures hereto shall be deemed to be their certification thereof);
(c)
JIG Consent. Agent shall have received a duly executed copy of the Limited Consent to Intercreditor Agreement by JIG; and
(d)
Fees and Expenses. Agent shall have received from Borrowers of all of the fees owing pursuant to this Amendment and Agent’s
reasonable out-of-pocket legal fees and expenses.
8.
Release. Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and
on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns,
and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “Releasing
Parties”), does hereby fully and completely release, acquit and forever discharge each Indemnitee (as defined in the Credit
Agreement) of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs,
expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or
contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them),
that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “Prior
Related Event” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether
known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any
of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto
or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any
Indemnitee, all on or prior to the date hereof. Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s
and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.
9.
No Waiver or Novation. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents,
instruments and agreements executed or delivered in connection with any of the foregoing. Nothing herein is intended or shall be construed
as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s
rights and remedies in respect of such Defaults or Events of Default. This Amendment (together with any other document executed in connection
herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement. For the avoidance of doubt, nothing
herein shall operate as a waiver of any right, power or remedy of Agent or any Lender (including, without limitation, the right to implement
additional reserves and/or adjustments, and/or increase existing reserves and/or adjustments to the Borrowing Base), nor constitute a
waiver or other modification of any provision set forth in the Reservation of Rights Letter, dated April 12, 2024, the Post-Default Advance
Letter, dated April 16, 2024, or the Reservation of Rights Letter, dated October 18, 2024, each of which shall remain in full force and
effect (collectively, the “Reservation of Rights Letters”).
10.
Affirmation. Except as specifically amended pursuant to the terms hereof, the Credit Agreement and all other Financing Documents
(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 Borrowers. Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit
Agreement (as amended hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions
or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment
to such terms, covenants and conditions.
11.
Post-Closing Covenant. On or before January 10, 2025 (or such later date as agreed upon by Agent in its sole discretion),
Borrower and Parent shall have delivered to Agent a duly executed copy of an amendment to the JIG Note Purchase Agreement (and any other
related documents or notes as necessary) which extends the scheduled maturity of the Term Debt (as defined in the Intercreditor Agreement)
to a date acceptable to Agent, but in no event on or before the Commitment Expiry Date. The failure to satisfy this post-closing covenant
shall constitute an Event of Default under the Credit Agreement.
12.
Miscellaneous.
(a)
Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement
to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall
mean and be a reference to the Credit Agreement, as amended by this Amendment. Except as specifically amended above, the Credit Agreement,
and all other Financing Documents (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 Borrowers.
(b)
Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing
Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference
to the same extent as if reproduced herein in their entirety.
(c)
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.
(d)
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 PAGES]
IN
WITNESS WHEREOF, intending to be legally bound, and intending that this document constitute an agreement executed under seal, the
undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.
AGENT: |
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MIDCAP
FUNDING IV TRUST |
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By: |
Apollo
Capital Management, L.P., |
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its
investment manager |
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By: |
Apollo
Capital Management GP, LLC, |
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its
general partner |
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By: |
/s/
Maurice Amsellem (SEAL) |
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Name: |
Maurice
Amsellem |
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Title: |
Authorized
Signatory |
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LENDER: |
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MIDCAP
FUNDING IV TRUST |
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By: |
Apollo
Capital Management, L.P., |
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its
investment manager |
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By: |
Apollo
Capital Management GP, LLC, |
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its
general partner |
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By: |
/s/
Maurice Amsellem (SEAL) |
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Name: |
Maurice
Amsellem |
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Title: |
Authorized
Signatory |
Signature
Page to
Amendment
No. 36 to Credit and Security Agreement
BORROWERS: |
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MONROE
STAFFING SERVICES, LLC,
a Delaware limited liability company |
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By: |
/s/
Brendan Flood (Seal) |
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Name: |
Brendan
Flood |
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Title: |
Chairman
and Chief Executive Officer |
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LIGHTHOUSE
PLACEMENT SERVICES, INC.,
a
Massachusetts corporation
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FARO
RECRUITMENT AMERICA, INC.,
a New York corporation
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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HEADWAY
WORKFORCE SOLUTIONS, INC., a Delaware corporation
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KEY
RESOURCES, INC.,
a North Carolina corporation
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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HEADWAY
PAYROLL SOLUTIONS, LLC, a Delaware limited liability company
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HEADWAY
EMPLOYER SERVICES
LLC, a Delaware
limited liability company
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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HEADWAY
HR SOLUTIONS, INC., a
New York
corporation
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NC
PEO HOLDINGS, LLC, a Delaware
limited
liability company
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By: |
/s/
Brendan Flood (Seal) |
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By: |
/s/
Brendan Flood (Seal) |
Name: |
Brendan
Flood |
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Name: |
Brendan
Flood |
Title: |
Chief
Executive Officer |
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Title: |
Chief
Executive Officer |
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PARENT: |
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STAFFING 360 SOLUTIONS, INC.,
a Delaware corporation |
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By: |
/s/
Brendan Flood (Seal) |
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Name: |
Brendan
Flood |
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Title: |
Chief
Executive Officer |
Signature
Page to
Amendment
No. 36 to Credit and Security Agreement
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