EXHIBIT 10.2

EXECUTION VERSION

THIS NOTE HAS NOT 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 MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

SECOND AMENDED AND RESTATED 12% SENIOR SECURED NOTE

DUE SEPTEMBER 30, 2022

 

$35,739,794 plus all PIK Interest

October 26, 2020

 

FOR VALUE RECEIVED, the undersigned, STAFFING 360 SOLUTIONS, INC., a Delaware
corporation (the “Company”), hereby promises to pay to Jackson Investment Group,
LLC (together with its successors and assigns, the “Purchaser”), the principal
sum of (a) Thirty-Five Million Seven Hundred Thirty-Nine Thousand Seven Hundred
Ninety-Four Dollars ($35,739,794), plus (b) the entire amount of any and all PIK
Interest (as defined below) that at any time on or after the date hereof is
added or deemed added to the principal balance of this Second Amended and
Restated 12% Senior Secured Note (this “Note”) pursuant to the terms hereof and
the Purchase Agreement (as defined below), on September 30, 2022 (or such
earlier date upon any acceleration of this Note as provided for herein, the
“Maturity Date”), together with interest (computed on the basis of a 360-day
year of twelve 30 day months) on the unpaid balance of this Note (which
principal balance includes, for the avoidance of doubt, any and all PIK Interest
that on or after the date hereof is added or deemed added to the principal
amount of this Note) (a) at the rate of twelve percent (12.00%) per annum,
accruing from and after the date of this Note and until the entire principal
balance of this Note shall have been repaid in full, and (b) on and at all times
during which the Default Rate applies pursuant to Section 2.2(c), to the extent
permitted by law, at a rate per annum equal to five percent (5%) in excess of
the rate of interest specified in the immediately preceding clause (a).

This Note has been issued by the Company to the Purchaser pursuant to that
certain Second Amended and Restated Note Purchase Agreement, dated as of the
date hereof, among the Company, the Subsidiary Guarantors party thereto and the
Purchaser (as the same may be amended, restated, supplemented or otherwise
modified from time to time, 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.  All Section
references used herein refer to Sections of the Purchase Agreement.

This Note is being issued in replacement and substitution for (i) that certain
Amended and Restated 12% Senior Secured Note due September 15, 2020, dated
November 15, 2018, in the principal amount of $27,312,000 (the “Amended and
Restated Note”), previously issued by the Company to the Purchaser pursuant to
the Existing Note Purchase Agreement, and (ii) that certain 12% Senior Secured
Note due September 15, 2020, dated August 27, 2018, in the principal amount of
$8,427,794 (the “Second Senior Note”; together with the Amended and Restated
Note referred to herein collectively as

 

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the “Prior Notes”), previously issued by the Company to the Purchaser pursuant
to the Existing Note Purchase Agreement.  This Note (i) evidences the
consolidation on the date hereof of the total outstanding principal balances of
the Prior Notes into the principal balance of this Note, and (ii) amends and
restates in the entirety the terms of each of the Prior Notes. This Note and the
consolidation of the principal amounts of the Prior Notes into this Note on the
date hereof, is not intended nor shall be construed to be a novation,
forgiveness or an accord and satisfaction of any of the indebtedness evidenced
by any of the Prior Notes. For the avoidance of doubt, (i) the entire
outstanding principal balance of the Prior Notes, and (ii) all accrued and
unpaid interest on the principal balance of the Prior Notes during the period
commencing on the date of such Prior Note through the date of this Note, shall
in each case be evidenced by this Note and be payable in accordance with the
terms hereof and the Purchase Agreement.

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 or at such other place as
shall have been designated by the Purchaser by written notice from the Purchaser
to the Company; provided that a portion of the accrued interest on this Note
otherwise payable in cash may, prior to the Maturity Date and to the extent
permitted pursuant to Section 2.2(a)(ii), instead be paid in kind (such paid in
kind interest being referred to herein as “PIK Interest”) and, in such case,
such PIK Interest amount will be capitalized and deemed incurred and added to
the outstanding principal balance of this Note in accordance with the terms
hereof and Section 2.2(a)(ii).  For the avoidance of doubt, in calculating any
accrued interest under this Note, the principal balance of this Note shall
include the amount of any and all PIK Interest that on or after the date of this
Note has been deemed added to this Note.  

This Note has been issued in connection with the Purchase Agreement and the
Purchaser is entitled to the benefits thereof, and this Note 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.  

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, 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 (a) 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 2.3(b), and (b) mandatory prepayment to the
extent provided in Section 2.3(c).

All accrued and unpaid interest on the outstanding principal balance of this
Note shall be due and payable on each monthly Interest Payment Date as provided
in Section 2.2 (with the first such monthly payment due on November 1, 2020 to
include all accrued and unpaid interest on this Note from and after the date
hereof, together with all unpaid interest under the Prior Notes accrued prior to
the date hereof) and on the Maturity Date, provided, however, that (a) 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, and (b) notwithstanding the above interest payment
provisions in respect of accrued interest on the outstanding principal balance
of this Note, interest otherwise due and

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payable in cash on each Reduced Interest Payment Date occurring on and after the
date of this Note will be reduced in an amount equal to $166,000 for each such
Reduced Interest Payment Date, and, in such case, shall not be required to be
paid on the applicable Reduced Interest Payment Date, provided that (A) the
above interest reduction provisions in this clause (b), shall not apply if the
Maturity Date shall have occurred as a result of acceleration of the maturity of
this Note following the occurrence of any Event of Default, and (B) on each
Increased Interest Payment Date, the interest otherwise due and payable in cash
on each such Increased Interest Payment Date shall be increased by $166,000,
such that on each such Increased Interest Payment Date there shall be due and
payable in cash by the Company to the Purchaser the following sum: (x) all
accrued and unpaid due and payable on such Increased Interest Payment Date
pursuant to Section 2.2(a), plus (y) $166,000. In the event of any conflict
between the terms of this Note and Section 2.2 in respect of the payment of any
interest on this Note, the terms of Section 2.2 shall control.

If an Event of Default occurs and is continuing, the principal of this Note and
all accrued and unpaid interest on the principal amount of this Note (including,
without limitation, any unpaid Deferred Interest and any accrued interest
thereon) 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 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.  

[Signature Page Follows]

 

 

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

 

STAFFING 360 SOLUTIONS, INC.

By:

 

/s/ Brendan Flood

Name:

 

Brendan Flood

Title:

 

Chairman and Chief Executive Officer

 

[Signature Page to Second Amended and Restated 12% Senior Secured Note]