Exhibit 10.5

 

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.

 

 

12% SENIOR SECURED NOTE DUE SEPTEMBER 15, 2020

 

$8,427,794August 27, 2018

 

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 Eight Million Four Hundred Twenty-Seven Thousand Seven Hundred
Ninety-Four Dollars ($8,427,794) on September 15, 2020 (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) (a) on the unpaid balance hereof at the rate of twelve percent (12.00%)
per annum, accruing from and after the date hereof and until the entire
principal balance of this 12% Senior Secured Note (this “Note”) shall have been
repaid in full, and (b) to the extent permitted by law, on any overdue payment
of principal or interest, at a rate per annum from time to time equal to five
percent (5%) in excess of the rate of interest otherwise payable hereunder.

 

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

 

This Note has been issued pursuant to that certain Amended and Restated Note
Purchase Agreement, dated as of September 15, 2017, among the Company, the
Subsidiary Guarantors party thereto and the Purchaser, as amended by that
certain First Omnibus Amendment, Joinder and Reaffirmation Agreement dated as of
the date hereof (as so amended and as the same may be further amended, restated
supplemented or modified from time to time, the “Purchase Agreement”), and is
entitled to the benefits thereof and is secured by and entitled to the benefits
of the Security Documents and is guaranteed by each of the Subsidiary Guarantors
pursuant to the guaranty provided for in Article 4 of the Purchase
Agreement.  Unless otherwise indicated, capitalized terms used in this Note
shall have the respective meanings ascribed to such terms in the Purchase
Agreement.

 

This Note is a registered Note and, as provided in the Purchase Agreement, upon
surrender of this Note for registration of transfer, accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such
holder’s attorney duly authorized in writing, a new Note for a like principal
amount (less any principal amount repaid prior to such transfer in accordance
with the Purchase

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Agreement) will be issued to, and registered in the name of, the
transferee.  Prior to due presentment for registration of transfer, the Company
may treat the Person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.  The transfer or assignment
of this Note by the Purchaser is subject to the provisions of Section 10.5 of
the Purchase Agreement, and so long as no Default or Event of Default exists,
the consent of the Company (which consent shall not be unreasonably withheld,
delayed or conditioned).

 

This Note is subject to optional prepayment, in whole or from time to time in
part, without penalty or premium, subject to the notice and other requirements
as provided in Section 2.3(b) of the Purchase Agreement. Subject to certain
conditions and limitations as set forth in Section 2.3(c) of the Purchase
Agreement, under certain circumstances a portion of the principal balance of
this Note may be forgiven by the Purchaser in an amount and to the extent
provided for in Section 2.3(c) of the Purchase Agreement.

 

All accrued and unpaid interest on the outstanding principal balance of this
Note shall be due and payable quarterly on January 1, April 1, July 1 and
October 1 in each year on and after the date hereof (with the first such
quarterly payment due on October 1, 2018 to include interest accruing from the
Closing Date) and on the Maturity Date, provided that 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.  Any overdue or default interest on this Note shall be due and
payable on demand.

 

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

 

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

 

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

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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:___________________

Name: Brendan Flood

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature page to 12% Senior Secured Promissory Note due September 15, 2020]

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