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Source Capital Group, Inc. Proposed Offering Engagement Letter

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STAFFING 360 SOLUTIONS, INC. | Financial Industry Regulatory Authority, Inc | Source Capital Group, Inc | Staffing 360 Solutions, Inc

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Title: Source Capital Group, Inc. Proposed Offering Engagement Letter
Governing Law: New York     Date: 6/27/2016
Industry: Restaurants     Sector: Services

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Capital Group, Inc.






Brendan Flood

Staffing 360 Solutions, Inc.

641 Lexington Avenue, Suite 1526 New York, NY 10022

June 23, 2016



Source Capital Group, Inc. Proposed Offering Engagement Letter



To Brendan:


The purpose of this engagement letter is to set forth the terms pursuant to which Source Capital Group, Inc. whose address is 276 Post Road West, Westport, CT 06880 (hereinafter referred to as “ Source ” or “ SCG ” or “ Dealer Manager ”) will act as the sole exclusive placement agent and financial advisor for a proposed issuance, or series of issuances, of up to $3 million of convertible securities (“ Proposed Offering ”) of Staffing 360 Solutions, Inc. a Nevada Corporation (collectively, with its subsidiaries and affiliates), (hereinafter referred to as the “ Issuer ” or the “ Company ”).


The terms of our agreement are as follows:


1. The Issuer hereby retains and engages Source, for the period beginning on the date hereof and ending on the latest of (i) the completion of the Proposed Offering or (ii) July 31, 2016 , unless sooner terminated pursuant to the terms of this engagement letter agreement or extended for an additional thirty (30) day period at the mutual discretion of the Issuer and Source (the “ Engagement Period ”), to act as the Issuer’s sole exclusive placement agent, financial advisor and/or dealer-manager in connection with the Proposed Offering. The compensation for acting as the exclusive sole placement agent to the Issuer and conditions of Source’s engagement is stated hereunder. During the Engagement Period and as long as Source is proceeding in good faith with activities in connection with the Proposed Offering, the Issuer agrees not to solicit, negotiate with or enter into any agreement with any other source of financing (whether equity, debt or otherwise other than bank financings or financings in connection with strategic alliances), any placement agent, financial advisor, dealer manager or any other person or entity in connection with the Proposed Offering, as the case may be, subject to prior written approval from Source.


2. In consideration for its services in the Proposed Offering , Source shall be entitled to a cash fee equal to 8% of the dollar amount received by the Issuer from any proceeds received by the Issuer in connection with the Proposed Offering, as a 6% commission and 2% non-accountable expense fee in connection with a Proposed Offering, provided that, upon the execution of this engagement letter the Issuer shall pay Source $10,000 as an advance against such non- accountable expense allowance (the “Advance”). If the engagement hereunder is terminated, the portion of the Advance not used for Source’s actual out-of-pocket expenses shall be promptly reimbursed to the Issuer as required under FINRA rule 5110 (f)(2)(D).


3. The Issuer shall be responsible for and pay all expenses relating to the Proposed Offering, including, without limitation, all filing fees relating to any registration statement required by be filed as part of the Proposed Offering of and any filing fees relating to the review of the Proposed Offering materials by the Financial Industry Regulatory Authority, Inc. (“ FINRA ”); all fees and expenses relating to the listing of such Shares on the exchange where the Common Stock is (or will be) listed; all fees, expenses and disbursements relating to the registration or qualification of the Shares under the “blue sky” securities laws of any states or other jurisdictions; the costs of mailing and printing all of the Proposed Offering documents, Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto and as many preliminary and final Prospectuses as Source may reasonably deem necessary.


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Capital Group, Inc.




4. Source may plan and arrange one or more “road show” trips for the Issuer’s management to market the Proposed Offering. The Issuer shall pay for its own expenses, including, without limitation, travel and lodging expenses, associated with such trips. During the 45-day period prior to the filing of the Registration Statement, if applicable, with the Securities and Exchange Commission (“ Commission ”), and at all times thereafter prior and following the effectiveness of such Registration Statement, the Issuer and its officers, directors and related parties will abide by all rules and regulations of the Commission relating to public Proposed Offerings, including, without limitation, those relating to public statements (i.e., “gun jumping”) and disclosures of material non-public information.


5. The Issuer shall supply Source and its counsel, at the Issuer’s cost, with bound volumes of the Proposed Offering materials within a reasonable time after the closing of the Proposed Offering (the “ Closing ”).




The Proposed Offering shall be conditioned upon, among other things, the following:


(a) Satisfactory completion by Source of its due diligence investigation and analysis of: (i) the Issuer’s arrangements with its officers, directors, employees, affiliates, customers and suppliers, (ii) the audited historical financial statements of the Issuer as may be required by the Act and rules and regulations of the Commission thereunder for inclusion in the Registration Statement, if applicable, and (iii) the Issuer’s projected financial results for the fiscal year ending December 31, 2016;


(b) The continued listing of the Common Stock on its current exchange or migration to a higher exchange (“ Trading Market ”);


(c) Source shall have received from outside counsel to the Issuer such counsel’s written opinion, addressed to Source, dated as of the Closing, in customary form and substance reasonably satisfactory to Source;


(d) FINRA shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement. In addition, the Company shall, if requested by Source, make or authorize Source’s counsel to make on the Company’s behalf, an Issuer Filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110 and pay all filing fees required in connection therewith.


(e) Prior to the Closing, the Company shall have furnished to Source such further information, certificates and documents as Source may reasonably request, including customary audit comfort letters (all opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for Source);


(f) Any Proposed Offering shall fund through an escrow account established by Source and paid for by the Issuer;



7. Source shall not be granted the right of first refusal (“ No Right of First Refusal ”) on subsequent offerings by the Issuer.




The Issuer represents and warrants to Source as follows:


(a) The Issuer has the requisite corporate power and authority to enter into and to consummate the transactions contemplated hereunder and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Issuer and the consummation by it of the transactions contemplated hereby


Members FINRA & SIPC276 Post Road West, Westport, CT 06880

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Capital Group, Inc.



have been duly authorized by all necessary action on the part of the Issuer and no further action is required by the Issuer, its board of directors or its stockholders in connection herewith. This Agreement has been duly authorized and executed by the Issuer and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (iii) that rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto.




The execution, delivery and performance of this Agreement by the Issuer do not and will not

(i) conflict with or violate any provision of the Issuer’s or any subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Issuer or any subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing Issuer or subsidiary debt or otherwise) or other understanding to which the Issuer or any subsidiary is a party or by which any property or asset of the Issuer or any subsidiary is bound or affected (except as may have been consented to or waived), or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Issuer or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Issuer or a Subsidiary is bound or affected.


(c) The Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other “ Person ” (defined as an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability Issuer, joint stock Issuer, government (or an agency or subdivision thereof) or other entity of any kind) in connection with the execution, delivery and performance by the Issuer of this Agreement, other than such filings as are required to be made under applicable Federal and state securities laws, by the Trading Market.


(d) Except as otherwise provided in this Agreement, no brokerage or finder’s fees or commissions are or will be payable by the Issuer to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. Source shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the offer and sale of the Securities contemplated by this Agreement.


(e) The Issuer has not, and to its knowledge none of its officers or directors have, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Issuer to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities (other than Source’s placement of the Securities), or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Issuer other than pursuant to this Agreement.


(f) To the knowledge of the Issuer, there are no affiliations with any FINRA member firm among the Issuer’s officers, directors or any five percent (5%) or greater stockholder of the Issuer.


Members FINRA & SIPC276 Post Road West, Westport, CT 06880

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Capital Group, Inc.



(g) Source shall be a third party beneficiary of any representations and warranties given to any investors in the Proposed Offering, which representation and warranties shall be reasonably acceptable to Source.


9. Source reserves the right to reduce any item of its compensation or adjust the terms thereof as specified herein in the event that a determination and/or suggestion shall be made by FINRA to the effect that Source’s aggregate compensation is in excess of FINRA rules or that the terms thereof require adjustment; provided, however, the aggregate compensation otherwise to be paid to Source by the Issuer may not be increased above the amounts stated herein without the approval of the Issuer.


10. The Issuer agrees that no solicitation material apart from, if applicable, the Registration Statement will be used by it in connection with the Proposed Offering or filed with the Commission or any federal, state or local governmental or regulatory authority by or on behalf of the Issuer without Source’s prior approval, which approval may not be unreasonably delayed, withheld or denied.


11. The Issuer agrees that it will not issue press releases or engage in any other publicity, without Source’s prior written consent, commencing on the date hereof and continuing for a period of forty (40) days from the Closing of the Proposed Offering, other than normal and customary releases issued in the ordinary cou

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