EXHIBIT 2.1
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THE SECURITY PURCHASE AND TENDER OFFER AGREEMENT (THE "PURCHASE
AGREEMENT") HAS BEEN INCLUDED TO PROVIDE INVESTORS AND SECURITY
HOLDERS WITH INFORMATION REGARDING ITS TERMS. IT IS NOT INTENDED TO
PROVIDE ANY OTHER FACTUAL INFORMATION ABOUT THE COMPANY. THE
REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED IN THE PURCHASE
AGREEMENT WERE MADE ONLY FOR PURPOSES OF SUCH AGREEMENT AND AS OF
SPECIFIC DATES, WERE SOLELY FOR THE BENEFIT OF THE PARTIES TO SUCH
AGREEMENT, AND ARE SUBJECT TO LIMITATIONS AGREED UPON BY THE
CONTRACTING PARTIES, INCLUDING BEING QUALIFIED, MODIFIED OR LIMITED BY
CONFIDENTIAL DISCLOSURES EXCHANGED BETWEEN THE PARTIES IN CONNECTION
WITH THE EXECUTION OF THE PURCHASE AGREEMENT. THE REPRESENTATIONS AND
WARRANTIES MAY HAVE BEEN MADE FOR THE PURPOSES OF ALLOCATING
CONTRACTUAL RISK BETWEEN THE PARTIES TO THE AGREEMENT INSTEAD OF
ESTABLISHING THESE MATTERS AS FACTS, AND MAY BE SUBJECT TO STANDARDS
OF MATERIALITY APPLICABLE TO THE CONTRACTING PARTIES THAT DIFFER FROM
THOSE APPLICABLE TO INVESTORS. INVESTORS ARE NOT THIRD-PARTY
BENEFICIARIES UNDER THE PURCHASE AGREEMENT AND SHOULD NOT RELY ON THE
REPRESENTATIONS, WARRANTIES AND COVENANTS OR ANY DESCRIPTIONS THEREOF
AS CHARACTERIZATIONS OF THE ACTUAL STATE OF FACTS OR CONDITION OF THE
COMPANY OR PURCHASER OR ANY OF THEIR RESPECTIVE SUBSIDIARIES OR
AFFILIATES. MOREOVER, INFORMATION CONCERNING THE SUBJECT MATTER OF THE
REPRESENTATIONS AND WARRANTIES MAY CHANGE AFTER THE DATE OF THE
PURCHASE AGREEMENT, WHICH SUBSEQUENT INFORMATION MAY OR MAY NOT BE
FULLY REFLECTED IN THE COMPANY'S PUBLIC DISCLOSURES. ACCORDINGLY, THE
REPRESENTATIONS AND WARRANTIES IN THE PURCHASE AGREEMENT SHOULD NOT BE
VIEWED OR RELIED UPON AS STATEMENTS OF ACTUAL FACTS OR THE ACTUAL
STATE OF AFFAIRS OF THE COMPANY.
SECURITIES PURCHASE AND
TENDER OFFER AGREEMENT
This Securities Purchase and Tender Offer Agreement ("Agreement")
is dated as of March 30, 2009, between General Employment Enterprises,
Inc., an Illinois corporation ("Company"), and PSQ, LLC, a newly
formed Kentucky limited liability company created as a special purpose
vehicle as purchaser of the securities that are the subject of this
Agreement ("Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to Purchaser, and
Purchaser desires to purchase from the Company, newly-issued shares of
Common Stock (as defined below) of the Company as more fully described
in this Agreement; and
WHEREAS, each of the respective Boards of Member-Managers or
Directors of Purchaser and the Company has determined it is in the
best interests of their respective stockholders or members for the
Purchaser to also offer to acquire up to 2,500,000 shares of the
Common Stock of the Company ("Maximum Number of Shares") at a price of
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$.60 in cash per share pursuant to a cash tender offer ("Offer") upon
the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants
contained in this Agreement, and for other good and valuable
consideration the receipt and adequacy of which are hereby
acknowledged, the Company and Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement, the following
terms have the meanings set forth in this Section 1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.2(j).
"Affiliate" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by
or is under common control with a Person as such terms are used
in and construed under Rule 405 under the Securities Act. With
respect to Purchaser, any investment fund or managed account that
is managed on a discretionary basis by the same investment
manager as Purchaser will be deemed to be an Affiliate of
Purchaser.
"Board of Directors" means the board of directors of the
Company from time to time as constituted.
"Business Day" means any day except any Saturday, any
Sunday, any day which is a federal legal holiday in the United
States or any day on which banking institutions in the State of
New York are authorized or required by law or other governmental
action to close.
"Closing" means the simultaneous consummation of the
purchase and sale of the Securities to be acquired by the
Purchaser pursuant to Section 2.1 hereof and the consummation of
the Offer described in Section 2.3 hereof.
"Closing Date" means the Trading Day when the Closing
occurs.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock of the Company, no par
value, and any other class of securities into which such
securities may hereafter be reclassified or changed into.
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"Common Stock Equivalents" means any securities of the
Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants
or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
"Company Counsel" means ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, with offices
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated there under.
"GAAP" shall have the meaning ascribed to such term in
Section 3.2(h).
"Indebtedness" shall have the meaning ascribed to such term
in Section 3.2(x).
"Intellectual Property Rights" shall have the meaning
ascribed to such term in Section 3.2(o).
"Liens" means a lien, charge, security interest,
encumbrance, right of first refusal, preemptive right or other
restriction.
"Material Adverse Effect" shall have the meaning assigned to
such term in Section 3.1.
"Material Permits" shall have the meaning ascribed to such
term in Section 3.2(m).
"Offer" shall mean the tender offer Purchaser shall commence
(within the meaning of Rule 14d-2 under the Exchange Act) within
ten (10) business days of the date hereof, as described in this
Agreement.
"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
"Required Approvals" shall have the meaning ascribed to such
term in Section 3.2(e).
"Registration Rights Agreement" means the agreement that is
one of the Transaction Documents ancillary to this Agreement to
be executed by the Purchaser, the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇.
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"SEC Reports" shall have the meaning ascribed to such term
in Section 3.2(h).
"Securities" means the Shares of Common Stock to be sold to
Purchaser by the Company pursuant to this Agreement.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated there under.
"Shares" means shares of Common Stock.
"Short Sales" means all "short sales" as defined in Rule 200
of Regulation SHO under the Exchange Act (but shall not be deemed
to include the location and/or reservation of borrowable shares
of Common Stock).
"Trading Day" means a day on which the Common Stock is
traded on the Trading Market or an over-the-counter market, if
applicable.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the
date in question: NYSE Amex.
"Transaction Documents" means this Agreement and any other
documents or agreements executed in connection with the
transactions contemplated hereunder.
"Transfer Agent" means Continental Stock Transfer & Trust
Company.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING.
(a) The Closing shall occur no later than the third Business Day
after satisfaction of the conditions set forth in Section 2.5 (other
than those conditions that by their nature are to be satisfied at
Closing).
(b) On the Closing Date, upon the terms and subject to the
conditions set forth herein, immediately after the consummation of the
Offer on the Closing Date, the Company agrees to sell, and the
Purchaser agrees to purchase, an aggregate of 7,700,000 Shares of
Common Stock at the Purchase Price set forth below. On the Closing
Date, Purchaser shall direct the Escrow Agent (as defined below) to
deliver to the Company from the Escrow Account (as defined below), via
wire transfer, immediately available funds equal to the Purchase Price
and the Company shall deliver to Purchaser duly authorized
certificates representing the Securities.
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(c) As soon as reasonably practicable after the Closing,
Purchaser shall instruct the Escrow Agent to mail to each holder of
record of a certificate or certificates that, immediately prior to the
Closing, evidenced outstanding Shares (the "Certificates"), (i) a form
of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Escrow Agent, and
shall be in such form and have such other provisions as are reasonable
and customary in transactions such as the Offer) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
the Per Share Offer Consideration to be paid therefore pursuant to
Section 2.2(b), and, if applicable, a new Certificate representing any
Shares represented by the surrendered Certificate that were not
surrendered or accepted for surrender in the Offer. Upon surrender of
a Certificate to the Escrow Agent together with such letter of
transmittal, duly executed, and such other customary documents as may
be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive from Purchaser in exchange
therefor cash in an amount equal to the product of (i) the number of
Shares theretofore represented by such Certificate that were validly
tendered on or prior to the Final Expiration Date (as defined below)
and not timely withdrawn, subject to reduction pursuant to Section
2.3.1(c), and (ii) the Per Share Offer Consideration. If the
Certificate represented more Shares than the number of Shares validly
tendered by the holder thereof (and not withdrawn) prior to the Final
Expiration Date after taking into account any reduction pursuant to
Section 2.3.1(c), then the Company shall issue a new Certificate to
the surrendering holder thereof representing the number of Shares
represented by the surrendered Certificate that were not so tendered
or accepted for tender in the Offer. No interest shall be paid or
accrued on any cash payable upon the surrender of any Certificate. If
payment is to be made to a person other than the person in whose name
the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed
or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder
of the surrendered Certificate or established to the satisfaction of
Purchaser and the Company that such taxes have been paid or are not
applicable. Any portion of the Escrow Amount which remains
undistributed to the holders of Certificates one year after the
Closing shall be delivered to Purchaser, upon demand, and any holders
of Certificates that have not theretofore complied with this Section
2.1(c) shall thereafter look only to Purchaser, and only as general
creditors thereof, for payment of their claim for any Per Share Offer
Consideration. None of Purchaser, the Company or the Escrow Agent
shall be liable to any person in respect of any payments or
distributions payable from the Escrow Amount delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law.
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(d) The Closing shall occur at the offices of Company Counsel or
such other location as the parties shall mutually agree.
2.2 PURCHASE PRICE.
(a) The Company has agreed to issue and sell to the Purchaser
and the Purchaser has agreed to purchase the Securities at a price
equal to $.25 per Share, for an aggregate purchase price of $1,925,000
("Purchase Price").
(b) In addition, in accordance with Section 2.3, below,
Purchaser has agreed to consummate the Offer for a maximum of
2,500,000 Shares of the Company's outstanding Common Stock (subject to
satisfaction of the conditions described in Section 2.5(b)), at a
price of $.60 per Share ("Per Share Offer Consideration"), for a
maximum aggregate Offer amount of $1,500,000.
(c) Simultaneous with the execution of this Agreement, Purchaser
has caused to be deposited into a financial institution escrow account
("Escrow Account") with Park Avenue Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ ("Escrow Agent") the maximum aggregate Purchase Price
totaling $1,925,000 ("Purchase Escrow Amount"), and no later than
three (3) days prior to the Closing, Purchaser shall provide written
evidence satisfactory to the Company of the availability of the
aggregate maximum amount of the consideration needed to consummate the
Offer totaling $1,500,00 ("Maximum Offer Amount").The Purchase Escrow
Amount shall be subject to the terms of an escrow agreement entered
into between the Company, Purchaser and the Escrow Agent on the date
hereof which, among other things, provides for a return of the Escrow
Amount to the Purchaser in the event of any termination of this
Agreement, except if such termination provides for the payment of
damages to the Company as provided for in Section 6.2.
2.3 TENDER OFFER.
2.3.1 TERMS OF TENDER OFFER.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 6.1 hereof, Purchaser shall commence
(within the meaning of Rule 14d-2 under the Exchange Act) the Offer
within ten (10) business days of the date hereof. Consummation of the
Offer will be subject only to the satisfaction or waiver of the
conditions set forth in Section 2.5(b) hereof, any of which conditions
may be waived in the sole discretion of Purchaser. Assuming all of the
conditions to consummation of the Offer are satisfied, Purchaser shall
consummate the Offer as promptly as possible to the extent necessary
to acquire the Maximum Number of Shares (taking into account the
Shares validly tendered and not timely withdrawn as of the Final
Expiration Date).
(b) Purchaser agrees that upon the terms and subject to the
conditions of this Agreement, Purchaser shall accept for payment all
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Shares (including any Securities), up to the Maximum Number of Shares,
that are validly tendered on or prior to the Final Expiration Date and
not timely withdrawn, as soon as it is permitted to do so under
applicable law, and shall pay for such Shares promptly thereafter.
(c) In the event that the number of Shares that are validly
tendered on or prior to the Final Expiration Date and not timely
withdrawn exceed the Maximum Number of Shares, the final number of
Shares deemed validly tendered by each stockholder of the Company as
of the Final Expiration Date shall be reduced to be an amount equal to
the product of: (i) the number of Shares validly tendered by such
stockholder (and not withdrawn) as of the Final Expiration Date and
(ii) the quotient of (A) 2,500,000 over (B) the total number of Shares
validly tendered (and not withdrawn) by all stockholders of the
Company as of the Final Expiration Date.
(d) The Offer shall initially be scheduled to expire seventy-
five (75) days following the commencement thereof; provided that,
unless this Agreement shall have been terminated pursuant to Section
6.1 hereof, Purchaser shall be required to extend the Offer from time-
to-time until the Closing Date in the event that, at a then-scheduled
expiration date, the conditions to Closing set forth in Section 2.5
have not been satisfied (such final expiration date of the Offer being
referred to herein as the "Final Expiration Date"); provided further
that, under no circumstances shall any such extension be less than the
minimum number of days required by the Exchange Act or the rules and
regulations promulgated thereunder or by applicable law.
(e) As promptly as practicable on the date of commencement of
the Offer, Purchaser shall file with the United States Securities and
Exchange Commission ("SEC") a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule
TO") with respect to the Offer which shall comply as to form in all
material respects with the provisions of applicable federal securities
laws. The Schedule TO shall contain or incorporate by reference an
offer to purchase ("Offer to Purchase") and forms of the related
letter of transmittal and all other ancillary Offer documents
(collectively, together with all amendments and supplements thereto,
the "Offer Documents"). The Company and Purchaser shall cause the
Offer Documents to be disseminated to the holders of the Shares as and
to the extent required by applicable federal securities laws.
Purchaser, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or
misleading in any material respect, and Purchaser will cause the Offer
Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. In conducting
the Offer, Purchaser shall comply in all material respects with the
provisions of the Exchange Act and any other applicable law. The
Company and its counsel shall be given a reasonable opportunity to
review and comment upon the Schedule TO before it is filed with the
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SEC. In addition, Purchaser agrees to provide the Company and its
counsel with any comments, whether written or oral, that Purchaser or
its counsel may receive from time-to-time from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such
comments and to consult with the Company and its counsel prior to
responding to any such comments.
(f) For the avoidance of doubt, without the prior written
consent of the Company, Purchaser shall not (i) decrease or change the
form of the Per Share Offer Consideration described in Section 2.2(b)
above, (ii) amend any term of the Offer in any manner adverse to
holders of Shares of Common Stock, or (iii) change any of the closing
conditions to the Offer described in Section 2.5(b) or impose any
additional conditions to the Offer.
2.3.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of Directors, at a
meeting duly called and held, has (i) determined that the terms of the
Offer are fair to and in the best interests of the stockholders of the
Company, (ii) approved this Agreement, the Offer and the other
transactions contemplated hereby and (iii) resolved (subject to the
limitations contained herein) to recommend that the stockholders of
the Company accept the Offer, tender their Shares to Purchaser
thereunder and approve and adopt this Agreement. Subject to Section
4.3 below, the Company hereby consents to the inclusion in the Offer
Documents of the Board's recommendation described in the immediately
preceding sentence. The Company has been authorized by Prairie Capital
Advisors, Inc., the Company's financial advisor, to permit the
inclusion of a copy its fairness opinion with regard to the
transactions contemplated hereby.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule
14D-9, as amended or supplemented from time to time, the "Schedule
14D-9") containing, subject to Section 4.3 below, the recommendations
referred to in paragraph (a) above and shall mail the Schedule 14D-9
to the record holders of Shares as required by law. Purchaser will
promptly supply to the Company in writing, for inclusion in the
Schedule 14D-9, all information concerning Purchaser as required by
Section 14(f) of the Exchange Act and Rule 14F-1 thereunder, and the
Company shall include such information in the Schedule 14D-9. Each of
the Company and Purchaser shall promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that
such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required
by or deemed advisable under applicable federal securities laws.
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Purchaser and its counsel shall be given reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to its filing with
the SEC or dissemination to stockholders of the Company. The Company
shall provide Purchaser and its counsel in writing with any written
comments (and orally, any oral comments) the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments and shall consult
with Purchaser and its counsel prior to responding to such comments.
(c) The Company shall promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock
depositories, each as of a recent date, together with all other
available listings and computer files containing names, addresses and
security position listings of record holders and beneficial owners of
Shares. The Company shall furnish Purchaser with such additional
information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position
listings, and such other assistance as the Company, Purchaser or their
agents may reasonably require in communicating the Offer to the record
and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to
consummate the Offer, the Purchaser and its Affiliates shall hold in
confidence the information contained in such labels, listings and
files, shall use such information solely in connection with the Offer,
and, if this Agreement is terminated in accordance with Section 6.1
hereof, shall promptly deliver or cause to be delivered to the Company
all copies of such information, labels, listings and files then in
their possession or in the possession of their agents or
representatives.
2.4 COMPANY STOCKHOLDERS MEETING; PREPARATION OF THE PROXY
STATEMENT.
(a) As soon as practicable following the date hereof, the
Company shall use its commercially reasonable efforts to take all
action necessary, in accordance with the Illinois Business Corporation
Act of 1983, as amended ("Illinois Business Act"), the Exchange Act
and other applicable law and its certificate of incorporation and
bylaws to convene and hold a meeting of the stockholders of Company
(the "Stockholders Meeting") for the purpose of considering and voting
upon the sale by the Company of Securities to Purchaser as
contemplated by this Agreement and to solicit proxies pursuant to a
proxy statement of the Company to be filed by the Company in
connection therewith ("Company Proxy Statement"). Subject to the
provisions of Section 4.3 below, the Board of Directors shall
recommend that the holders of Shares vote in favor of the sale by the
Company of Securities to Purchaser as contemplated by this Agreement
at the Stockholders Meeting and shall cause such recommendation to be
included in the Company Proxy Statement.
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(b) As soon as practicable following the date hereof, the
Company, in consultation with Purchaser, shall prepare and file the
Company Proxy Statement with the SEC in accordance with the Exchange
Act and the rules and regulations thereunder. Each of the Company and
Purchaser shall promptly correct any information provided by it for
use in the Company Proxy Statement if and to the extent that such
information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or
supplement the Company Proxy Statement and to cause the Company Proxy
Statement as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the
extent required by or deemed advisable under applicable federal
securities laws, state law or the requirements of any securities
exchange on which the Company's Shares are listed. Purchaser and its
counsel shall be given reasonable opportunity to review and comment
upon the Company Proxy Statement prior to its filing with the SEC or
dissemination to stockholders of the Company. The Company shall
provide Purchaser and its counsel in writing with any written comments
(and orally, any oral comments) the Company or its counsel may receive
from the SEC or its staff with respect to the Company Proxy Statement
promptly after the receipt of such comments and shall consult with
Purchaser and its counsel prior to responding to such comments.
2.5 CLOSING CONDITIONS.
(a) The obligations of the Company hereunder in connection with
the Closing are subject to the following conditions being met or
waived by the Company at or prior to the Closing, provided, however,
that the Company may not rely on the failure of any of the following
conditions in this Section 2.5(a) to be satisfied if such failure was
caused by the Company's failure to act in good faith or to use best
efforts to cause the Closing to occur, as required by Section 4.2:
(i) the approval of the sale by the Company of the
Securities to Purchaser as contemplated hereby by affirmative vote (by
a majority of votes cast) by the holders of shares of Common Stock;
(ii) there is no order, litigation, injunction,
administrative stop order or other legal restraint pending against the
Company at the Closing Date that would limit or prohibit the Closing
of the transactions contemplated by this Agreement;
(iii) the accuracy in all material respects on the Closing
Date of the representations and warranties of the Purchaser contained
herein as though made as of such time, except to the extent that such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and
correct in all material respects as of such earlier date); and
(iv) all obligations, covenants and agreements of Purchaser
required to be performed at or prior to the Closing Date pursuant to
the terms hereof shall have been performed in all material respects.
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(b) The respective obligations of the Purchaser hereunder in
connection with the Closing are subject to the following conditions
being met or waived by Purchaser at or prior to the Closing, provided,
however, that Purchaser may not rely on the failure of any of the
following conditions in this Section 2.5(b) to be satisfied if such
failure was caused by Purchaser's failure to act in good faith or to
use best efforts to cause the Closing to occur, as required by Section
4.2:
(i) the accuracy on the Closing Date of the representations
and warranties of the Company contained herein as though made as of
such time, except to the extent that such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct as of such
earlier date), in each case except for inaccuracies or breaches as to
matters that, individually or in the aggregate, would not have a
Material Adverse Effect;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the Closing Date
pursuant to the terms hereof shall have been performed in all material
respects; and
(iii) there shall have been no Material Adverse Effect (as
defined in Section 3.1 below) with respect to the Company since the
date hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 GENERAL.
In this Agreement, any reference to a "Material Adverse Effect"
with respect to the Company means any event, change or effect that:
(a) is materially adverse to the financial condition,
properties, assets (including intangible assets), liabilities
(including contingent liabilities), business, operations or results of
operations of the Company and its Subsidiaries, taken as a whole,
except to the extent of any event, change or effect resulting from or
arising in connection with:
(i) any change in general economic, business, regulatory,
market conditions or political conditions, in each case both regional,
domestic and international, including changes or disruptions in
capital or financial markets;
(ii) natural disasters, acts of God, any outbreak or
escalation of hostilities, declared or undeclared acts of war or
terrorism or civil unrest;
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(iii) any change in applicable laws of any governmental
entity or interpretations thereof by any governmental entity or in
GAAP;
(iv) any change generally affecting the industry in which
the Company conducts its business;
(v) the execution, announcement or performance of this
Agreement or consummation of the transactions contemplated hereby,
including any loss or threatened loss of, or adverse change or
threatened adverse change in, the relationship of the Company with any
of its customers, employees, shareholders, financing sources or
vendors as a direct result thereof or in connection therewith;
(vi) any change in the market price or trading volume of the
securities of the Company (it being understood that the causes
underlying such change in market price or trading volume may be taken
into account in determining whether a Material Adverse Effect has
occurred), or any suspension of trading in securities generally on any
securities exchange on which the securities of the Company trade;
(vii) the failure of the Company in and of itself to meet
any internal or public projections, forecasts or estimates of revenues
or earnings (it being understood that the causes underlying such
failure may be taken into account in determining whether a Material
Adverse Effect has occurred);
(viii) any event, change or effect resulting from declines
in the operational or financial performance of the Company that are
not materially worse than the trends experienced by the Company in the
quarter ended December 31, 2008;
(ix) any actions taken (or omitted to be taken) at the
written request of Purchaser;
(x) any action taken by the Company that is required
pursuant to this Agreement; or
(xi) any of the matters specifically disclosed in the
Disclosure Schedule (as defined below);
provided, however, that with respect to clauses (i) and (iv) such
matter does not have a materially disproportionate effect on the
Company, relative to comparable entities operating in the
Company's business, and references in certain sections of this
Agreement to dollar amounts are not intended to be, and shall not
be deemed to be, illustrative or interpretative for purposes of
determining whether a "Material Adverse Effect" has occurred; or
(b) would prevent the Company from performing its material
obligations under this Agreement in any material respect.
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In this Agreement, the words "Aware," "Knowledge" or similar
words, expressions or phrases with respect to a party means the actual
knowledge of such party's directors.
The Company represents and warrants to Purchaser that the
statements contained in this Article III are true and correct, except
as set forth in the Disclosure Schedule, if any, delivered by the
Company to Purchaser immediately prior to the execution and delivery
of this Agreement (the "Disclosure Schedule"). Reference to any
section in the Disclosure Schedule in this Article III shall be deemed
to be a reference to all other sections in the Disclosure Schedule.
Any reference in this Article III to an agreement being "Enforceable"
shall be deemed to be qualified to the extent such enforceability is
subject to (i) laws of general application relating to bankruptcy,
insolvency, moratorium, fraudulent conveyance and the relief of
debtors and (ii) the availability of specific performance, injunctive
relief and other equitable remedies.
3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the SEC Reports, which SEC Reports shall qualify any
representation or warranty otherwise made herein to the extent of such
disclosure, the Company hereby makes the following representations and
warranties set forth below to Purchaser:
(a) SUBSIDIARIES. The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each of its direct
and indirect subsidiaries (individually, a "Subsidiary") free and
clear of any Liens, and all of the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) ORGANIZATION AND QUALIFICATION. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation or default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in
a Material Adverse Effect on the Company, and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing
or seeking to revoke, limit or curtail such power and authority or
qualification.
13
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and, subject to the
approval of its stockholders with respect to the sale by the Company
to Purchaser of the Securities as contemplated hereby, to consummate
the transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action
on the part of the Company subject to the aforementioned stockholder
approval and, except for obtaining such stockholder approval, no
further action is required by the Company, the Board of Directors or
the Company's stockholders in connection therewith other than in
connection with the Required Approvals. Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company
enforceable against the Company 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 there under
may be limited by federal or state securities laws or public policy
relating thereto.
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the
Securities and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of the Company'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 Company 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 a
Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or
affected (except as may have been waived) or (iii) subject to the
Required Approvals, 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
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of
the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as would not have a Material
Adverse Effect.
14
(e) FILINGS, CONSENTS AND APPROVALS. The Company 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
in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filings
contemplated by Sections 2.3.2 and 2.4 hereof, (iii) obtaining
approval of its stockholders with respect to the sale by the Company
to Purchaser of the Securities as contemplated hereby, (iv) filings
required pursuant to Section 4.1 of this Agreement, (v) application(s)
to each applicable Trading Market for the listing of the Securities
for trading thereon in the time and manner required thereby and (vi)
such filings as are required to be made under applicable state
securities laws, FINRA and the Trading Market (collectively, the
"Required Approvals").
(f) ISSUANCE OF THE SECURITIES. The Securities are duly
authorized and, when issued and paid for in accordance with this
Agreement, will be duly and validly issued, fully paid and non-
assessable, free and clear of all Liens imposed by the Company other
than any restrictions on transfer provided herein.
(g) CAPITALIZATION. The capitalization of the Company is as
described in the most recent applicable SEC Reports. The Company has
not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than as described in the SEC
Reports, or pursuant to the exercise of employee stock options under
the Company's stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Company's employee stock purchase
plans and pursuant to the conversion or exercise of Common Stock
Equivalents. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as
a result of the purchase and sale of the Securities and as described
in the SEC Reports, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. Except
as disclosed in the SEC Reports, the issuance and sale of the
Securities will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchaser) and
will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under any of
such securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and non-assessable, have been
issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any
15
preemptive rights or similar rights to subscribe for or purchase
securities. Except for approval by the Company's stockholders, no
approval or authorization of the Board of Directors or others is
required for the issuance and sale of the Securities. Except as
described in the SEC Reports, there are no stockholders agreements,
voting agreements or other similar agreements with respect to the
Company's capital stock to which the Company is a party.
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has complied
in all material respects with requirements to file all reports,
schedules, forms, statements and other documents required to be filed
by the Company under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the year preceding the date hereof (or
such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the "SEC Reports") on a
timely basis or has received a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable, and the rules and regulation of the
Commission promulgated there under, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and
the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods
involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of
the Company and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABILITIES OR
DEVELOPMENTS. Since the date of the latest audited financial
statements included within the SEC Reports except as disclosed in the
SEC Reports, (i) there has been no event, occurrence or development
that has had or that would result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or disclosed in filings made with the
16
Commission, (iii) the Company has not altered its method of accounting
except as required by law or GAAP, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company equity compensation plans. The
Company does not have pending before the Commission any request for
confidential treatment of information. Except with respect to the
transactions contemplated by this Agreement or as set forth in the SEC
Reports, since the end of the period covered by the last SEC report,
no event, liability or development has occurred or exists with respect
to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required
to be disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been
publicly disclosed prior to the date of this Agreement.
(j) LITIGATION. Except as disclosed in the SEC Reports, there is
no action, suit, or proceeding or, to the knowledge of the Company,
investigation, pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an "Action") in effect as of
the date hereof which (i) challenges the legality, validity or
enforceability of any of the Transaction Documents or (ii) would, if
there were an unfavorable decision, have a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor, to the knowledge of the
Company, any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary
duty. To the knowledge of the Company, there is not pending or
contemplated any investigation by the Commission involving the Company
or any current or former director or officer of the Company. To the
knowledge of the Company, the Commission has not issued any stop order
or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
(k) LABOR RELATIONS. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the
employees of the Company which would have a Material Adverse Effect.
No executive officer, to the knowledge of the Company, is in violation
of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant, and, to the Company's knowledge, the continued employment of
each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating
17
to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in
compliance would not, individually or in the aggregate, have a
Material Adverse Effect.
(l) COMPLIANCE. Except as disclosed in the SEC Reports, neither
the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which
it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that
affect the environment, except in each case as would not have a
Material Adverse Effect.
(m) REGULATORY PERMITS. Except as disclosed in the SEC Reports,
the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state,
local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where
the failure to possess such permits would not have a Material Adverse
Effect ("Material Permits"), and neither the Company nor any
Subsidiary has received any notice of proceedings in the last year
relating to the revocation or modification of any Material Permit.
(n) TITLE TO ASSETS. The Company and the Subsidiaries have good
title in fee simple to all real property owned by them and good title
in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for Liens that do not materially affect the
value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other
taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are
in compliance.
(o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade
secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights necessary or material for use in
connection with their respective businesses as described in the SEC
18
Reports and which the failure to so have would have a Material Adverse
Effect (collectively, the "Intellectual Property Rights"). Neither the
Company nor any Subsidiary has received a notice (written or
otherwise) in the last year that any of the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes
upon the rights of any Person. To the knowledge of the Company, there
is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have
taken reasonable measures to protect the secrecy, confidentiality and
value of all of their intellectual properties, except where failure to
do so would not, individually or in the aggregate, have a Material
Adverse Effect.
(p) INSURANCE. The Company and the Subsidiaries have insurance
policies against such losses and risks and in such amounts as
management for the Company believes is appropriate for the businesses
in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage. To the
knowledge of the Company, such insurance contracts are accurate and
complete.
(q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company
or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner, other than for (i) payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements or any other similar arrangements
under any equity plan of the Company.
(r) ▇▇▇▇▇▇▇▇-▇▇▇▇▇; INTERNAL ACCOUNTING CONTROLS. The Company is
in material compliance with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 which are applicable to it as of the Closing Date. The Company
and the Subsidiaries maintain a system of internal accounting controls
that is designed to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined
19
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company that
are designed to ensure that information required to be disclosed by
the Company in the reports it files or submits under the Exchange Act
is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms. The Company's
certifying officers have evaluated the effectiveness of the Company's
disclosure controls and procedures required under the Exchange Act.
(s) CERTAIN FEES. Except as otherwise provided in the
Transaction Documents, no brokerage or finder's fees or commissions
are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the
Transaction Documents. The Purchasers 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 from the Company in connection with the transactions
contemplated by the Transaction Documents.
(t) INVESTMENT COMPANY. The Company is not, and immediately
after receipt of payment for the Securities, will not be an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(u) REGISTRATION RIGHTS. Except as disclosed in the SEC Reports,
no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the
Company, which rights are currently not satisfied.
(v) LISTING AND MAINTENANCE REQUIREMENTS. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the date
hereof, received notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements of
such Trading Market.
(w) APPLICATION OF TAKEOVER PROTECTIONS. The Company and the
Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the
Company's certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become
applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights under
the Transaction Documents, including without limitation as a result of
20
the Company's issuance of the Securities and the Purchaser ownership
of the Securities.
(x) "Indebtedness" The SEC Reports sets forth as of the dates
specified therein all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" means (a) any liabilities for borrowed money or amounts
owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business) and (b) all guaranties,
endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
(y) TAX STATUS. Except for matters that would not, individually
or in the aggregate, have a Material Adverse Effect, the Company and
each Subsidiary has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been asserted or threatened against the Company
or any Subsidiary in the last year.
(z) FOREIGN CORRUPT PRACTICES. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf
of the Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made
any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution
made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
(aa) Except for the representations and warranties of the Company
contained in this Section 3.2, neither the Company nor any other
Person on behalf of the Company makes any other express or implied
representation or warranty with respect to the Company or any of its
Affiliates or with respect to any other information provided by the
Company or any of its Affiliates.
3.3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser
hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:
(a) ORGANIZATION; AUTHORITY. Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
21
jurisdiction of its organization with full right, limited liability
company power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the other Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the other
Transaction Documents and performance by Purchaser of the transactions
contemplated by this Agreement and the other Transaction Documents
have been duly authorized by all necessary limited liability company
or similar action on the part of Purchaser. Each Transaction Document
to which it is a party has been duly executed by Purchaser, and when
delivered by Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of Purchaser,
enforceable against it 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)
insofar as indemnification and contribution provisions may be limited
by applicable law.
(b) OWN ACCOUNT. Purchaser is acquiring the Shares (including
the Securities) contemplated by this Agreement as principal for its
own account and not with a view to or for distributing or reselling
such Shares or any part thereof in violation of the Securities Act or
any applicable state securities law, has no present intention of
distributing any of such Shares in violation of the Securities Act or
any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or
regarding the distribution of such Shares (this representation and
warranty not limiting Purchaser's right to sell the Shares otherwise
in compliance with applicable federal and state securities laws) in
violation of the Securities Act or any applicable state securities
law.
(c) PURCHASER'S FUNDS. Purchaser has available all the funds
necessary to consummate the Offer and the purchase of the Securities
contemplated hereby, and to make all other necessary payments of fees
and expenses required to be paid by Purchaser relating to such
transactions, and Purchaser (i) has deposited the Purchase Escrow
Amount with the Escrow Agent on the date hereof, and (ii) shall have
provided written evidence satisfactory to the Company of the
availability of the aggregate maximum amount of the consideration
needed to consummate the Offer totaling $1,500,00 no later than three
(3) days prior to the Closing Date.
(d) PURCHASER STATUS. At the time Purchaser was offered the
Securities, it was, and at the date hereof it is an "accredited
investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) under the Securities Act. Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act.
22
(e) CERTAIN FEES. Except for fees payable by Purchaser to MC
Capital Funding Group and except as otherwise provided in the
Transaction Documents, no brokerage or finder's fees or commissions
are or will be payable by the Purchaser to any broker, financial
advisor or consultant, finder, placement agent, investment banker,
bank or other person with respect to the transactions contemplated by
the Transaction Documents. Otherwise, Purchaser shall have no
obligation with respect to any such fees or with respect to any claims
made by or on behalf of other persons for fees of a type contemplated
in this Section.
(f) EXPERIENCE OF PURCHASER. Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Shares to be acquired hereunder, and has so evaluated the merits and
risks of such investment. Purchaser acknowledges that an investment in
such Shares involves a high degree of risk and that Purchaser is able
to bear the economic risk of an investment in such Shares and, at the
present time, is able to afford a complete loss of such investment.
(g) LITIGATION. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of
the Purchaser, threatened against or affecting the Purchaser, any
Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an
"Action") which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the
Securities or (ii) would, if there were an unfavorable decision, have
a Material Adverse Effect. There has not been, and to the knowledge of
the Purchaser, there is not pending or contemplated, any investigation
by the Commission involving the Purchaser or any current or former
member or officer of the Purchaser.
(h) FILINGS, CONSENTS AND APPROVALS. The Purchaser 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 in connection with the execution, delivery and
performance by the Purchaser of the Transaction Documents, other than
filings required pursuant to Section 2.3 of this Agreement.
(i) SHORT SALES AND CONFIDENTIALITY PRIOR TO THE DATE HEREOF.
Other than consummating the transactions contemplated hereunder,
Purchaser has not, nor has any Person acting on behalf of or pursuant
to any understanding with Purchaser, directly or indirectly executed
any purchases or sales, including Short Sales, of the securities of
the Company during the period commencing from the time that Purchaser
and its Affiliates first submitted a term sheet (written or oral) to
the Company setting forth the material terms of the transactions
contemplated hereunder. Neither Purchaser nor any of its Affiliates
23
owns, directly or indirectly, beneficially or of record, any Shares,
and none of Purchaser or any of its Affiliates holds any rights to
acquire Shares except pursuant to this Agreement. Other than to other
Persons party to this Agreement, Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
The Purchaser acknowledges that it has read the SEC Reports. The
Purchaser has not received any written documents that would constitute
an offer to sell, or the solicitation of an offer to buy the
Securities or that would constitute a prospectus under the Securities
Act.
(j) INTERIM OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated by
this Agreement and has not engaged in any business activities or
conducted any operations other than in connection with the
transactions contemplated by this Agreement.
(k) DISCLOSURE. None of the information supplied or to be
supplied by Purchaser for inclusion in the Schedule 14D-9 or the Offer
Documents or the Company Proxy Statement, including any amendment or
supplement to the Schedule 14D-9 or the Offer Documents or the Company
Proxy Statement, will, at the respective times such documents are
filed, contain any untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements made
therein in light of the circumstances under which they are made not
misleading.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall (a)
by 9:30 a.m. (New York City time) on the Business Day immediately
following the date hereof, issue a press release disclosing the
material terms of the transactions contemplated hereby, and (b) within
the time period prescribed by the Exchange Act, file a Current Report
on Form 8-K disclosing the material terms of the transactions
contemplated hereby and including this Agreement as an exhibit
thereto. The Company shall provide the Purchaser a reasonable
opportunity to review and comment upon the press release and the
Current Report on Form 8-K to be filed by the Company in accordance
with the Exchange Act prior to the release or filing thereof. The
Company and Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated
hereby, and neither the Company nor Purchaser shall issue any such
press release or otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of the
Purchaser, or without the prior consent of Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably
be withheld or delayed, except if such disclosure is required by law
or the rules of any listing agreement with any securities exchange, in
24
which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication..
4.2 ADDITIONAL AGREEMENTS; COOPERATION.
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this
Agreement, and to cooperate with each other in connection with the
foregoing, including using its best efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to loan
agreements, material leases and other material contracts, (ii) to
obtain all necessary consents, approvals and authorizations as are
required to be obtained under any federal, state or foreign law or
regulations, (iii) to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions
contemplated hereby, (iv) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of
the parties to consummate the transactions contemplated hereby, (v) to
effect all necessary registrations and filings, including, but not
limited to, submissions of information requested by governmental
authorities, (vi) to provide all necessary information for the Company
Proxy Statement and (vii) to fulfill all conditions to this Agreement.
(b) Each of the parties hereto agrees to furnish to the other
party hereto such necessary information and reasonable assistance as
such other party may request in connection with its preparation of
necessary filings or submissions to any regulatory or governmental
agency or authority, including, without limitation, any filing
necessary under any applicable Federal or state statute. At any time
upon the written request of Purchaser, the Company shall advise
Purchaser of the number of Shares outstanding.
4.3 NO SOLICITATION.
(a) Neither the Company nor any of its affiliates will, directly
or indirectly, through any directors, officers, employees, agents,
representatives or otherwise, solicit, initiate, facilitate or
encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect
to any merger, consolidation or other business combination involving
the Company or its Subsidiaries or the acquisition of all or any
significant assets or capital stock of the Company and its
Subsidiaries taken as a whole ("Acquisition Proposal") or negotiate,
explore or otherwise engage in discussions with any person (other than
Purchaser and its representatives) with respect to any Acquisition
Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the
transactions contemplated hereby.
25
(b) Notwithstanding the provisions of Section 4.3(a) hereof, in
the event that prior to the consummation of the transactions
contemplated by this Agreement, the Board of Directors determines in
good faith, after consultation with outside counsel, that it is
necessary to respond to an Unsolicited Superior Proposal (as defined
below) or an Acquisition Proposal that it reasonably believes could
lead to an Unsolicited Superior Proposal in order to comply with its
fiduciary duties to the Company's stockholders under applicable law,
(i) the Company may directly or indirectly through any directors,
officers, employees, agents, representatives or otherwise (x)
participate in discussions or negotiations with the Person making such
proposal and (y) provide to such Person non-public information and
access to properties, books, records and personnel of the Company,
subject to entering into, and providing the Purchaser with a copy of,
a confidentiality agreement entered into with such Person in such form
as is reasonably acceptable to the Company, and (ii) the Board of
Directors may (x) withdraw or modify its approval or recommendation of
this Agreement or (y) approve or recommend an Unsolicited Superior
Proposal or terminate this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into
any agreement with respect to any Unsolicited Superior Proposal), but
in each of the cases set forth in this clause (ii)(y), no action shall
be taken by the Company pursuant to clause (ii)(y) until a time that
is after the fifth (5th) business day following Purchaser's receipt of
written notice advising Purchaser that the Board of Directors has
received an Unsolicited Superior Proposal, specifying the material
terms and conditions of such Unsolicited Superior Proposal and
identifying the person making such Unsolicited Superior Proposal, to
the extent such identification of the person making such proposal does
not breach the fiduciary duties of the Board of Directors as advised
by outside legal counsel. For purposes of this Agreement, an
"Unsolicited Superior Proposal" means any bona fide, unsolicited,
written proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities,
more than 50% of the voting power of the shares of Company Common
Stock then outstanding or all or substantially all the assets of the
Company and otherwise on terms that the Board of the Company
determines in its good faith judgment (after consultation with its
financial advisor) to be more favorable to the Company's stockholders
than the transactions contemplated by this Agreement.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.3, the Company shall
immediately advise Purchaser orally and in writing of any request for
non-public information from any Person in connection with making an
Acquisition Proposal or of any Acquisition Proposal, the material
terms and conditions of such request or Acquisition Proposal, and to
the extent such disclosure is not a breach of the fiduciary duties of
the Board of Directors as advised by outside legal counsel, the
identity of the person making such request or Acquisition Proposal.
26
(d) Nothing contained in this Section 4.3 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act, or
from making any disclosure to the Company's stockholders if, in the
good faith judgment of the Board of Directors, after consultation with
outside counsel, failure to disclose would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law;
provided, however, that neither the Company nor the Board of Directors
nor any committee thereof shall, except as permitted by Section
4.3(b), withdraw or modify, or propose publicly to withdraw or modify,
its position with respect to this Agreement or approve or recommend,
or propose publicly to approve or recommend, a Acquisition Proposal.
4.4 ACCESS TO INFORMATION.
(a) From the date of this Agreement until the Closing Date, the
Company will give Purchaser and its authorized representatives
(including counsel, environmental and other consultants, accountants
and auditors) full access during normal business hours to all
facilities, personnel and operations and to all books, records,
documents, contracts, and financial statements of it and its
Subsidiaries, provided such access does not unreasonably disrupt the
Company's operations, and will cause its officers and those of its
Subsidiaries to furnish Purchaser with such financial and operating
data and other information regularly prepared by the Company with
respect to its business and properties as Purchaser may from time to
time reasonably request.
(b) Purchaser acknowledges that information received by it or
them concerning the Company and its operations is subject to the
Confidentiality Agreement dated February 11, 2009 between Purchaser
and the Company ("Confidentiality Agreement""), which remains in full
force and effect. Without limiting the foregoing, Purchaser will not,
and will cause its Affiliates and representatives not to, use any
information obtained pursuant to Section 4.4(a) for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement.
4.5 NOTIFICATION OF CERTAIN MATTERS. The Company or Purchaser,
as the case may be, shall promptly notify the other of (i) its
obtaining of actual knowledge as to the occurrence, or failure to
occur, of any event, which occurrence or failure to occur would be
likely to cause or result in the failure of a condition to Closing
specified in Section 2.5 hereof; provided, however, that no such
notification shall affect the representations or warranties of the
parties or the conditions to the obligations of the parties hereunder.
4.6 RESIGNATION AND APPOINTMENT OF CERTAIN DIRECTORS AND
OFFICERS. At or prior to the Closing Date, (a) the Company shall
deliver to Purchaser the resignations of (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ from their positions as directors
of the Company, and (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. from his officer
27
positions as Chief Executive Officer of the Company and Chairman of
the Board (such resignation shall not, however, include ▇▇. ▇▇▇▇▇▇'▇
resignation as a member of the Board), with such resignations, in the
case of each of clauses (i) and (ii), to be effective as of the
Closing, and (b) the Company shall cause (i) each of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ (▇▇▇▇▇) ▇.▇. ▇▇▇▇▇▇▇ III and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to be appointed
to the Board, and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to be appointed as Chief
Executive Officer of the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ to be appointed as
Chairman of the Board, with such appointments, in the case of each of
clauses (i) and (ii), to be effective as of the Closing and
immediately after the resignations described in the foregoing clause
(a).
4.7 DIRECTORS' AND OFFICERS' INSURANCE.
(a) Purchaser shall cause to be maintained in effect for not
less than six (6) years from the Closing Date the current policies of
the directors' and officers' liability insurance maintained by the
Company (provided that Purchaser may substitute therefore policies of
at least the same coverage containing terms and conditions which are
no less advantageous) with respect to matters occurring on or prior to
the Closing Date; provided, that in no event shall Purchaser or the
Company be required to expend annually more than 150% of the amount
that the Company spent for these purposes in the last fiscal year to
maintain or procure insurance coverage pursuant hereto.
(b) From and after the Closing Date, Purchaser shall cause the
Company to indemnify and hold harmless each person who is now, at any
time has been or who becomes prior to the Closing Date a director or
officer of Company or any of its Subsidiaries, and their heirs and
personal representatives (the "Indemnified Parties"), against any and
all expenses incurred in connection with any claim, suit,
investigation or proceeding arising out of or pertaining to any action
or omission occurring on or prior to the Closing Date (including,
without limitation, any claim, suit, investigation or proceeding which
arises out of or relates to the transactions contemplated by this
Agreement), and shall promptly pay to each Indemnified Party expenses
incurred by each Indemnified Party in connection with and in advance
of the final disposition of any such claim, suit, investigation or
proceeding, in each case, to the full extent permitted by law.
(c) The certificate of incorporation and by-laws of the Company
shall contain the provisions with respect to indemnification set forth
in the certificate of incorporation and by-laws of Company as of the
Closing, which provisions shall not be amended, repealed or otherwise
modified after the Closing in any manner that would adversely affect
the rights thereunder of the Indemnified Parties in respect of actions
or omissions occurring at or prior to the Closing (including, without
limitation, the transactions contemplated by this Agreement).
28
(d) The provisions of this Section 4.7 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties, his or her heirs and his or her personal representatives.
4.8 FEES AND EXPENSES. Except as otherwise provided in Section
6.2, whether or not the transactions contemplated by this Agreement
are consummated, the Company and Purchaser shall bear their respective
expenses incurred in connection with this Agreement, including,
without limitation, the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, and all fees and
expenses of investment bankers, finders, brokers, agents,
representatives, counsel and accountants.
4.9 STOCKHOLDER LITIGATION. Each of the Company and Purchaser
shall give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against or in the name of the
Company or Purchaser, as applicable, and/or their respective directors
relating to the transactions contemplated by this Agreement.
4.10 STOCKHOLDER RIGHTS PLAN. Prior to the earlier of the Closing
and the termination of this Agreement, no claim will be made or
enforced by the Company or, with the consent of the Company, any other
Person, that the Purchaser is an "Acquiring Person" under any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or similar anti-takeover plan
or arrangement in effect or hereafter adopted by the Company, or that
Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company
and the Purchasers.
4.11 RESERVATION OF COMMON STOCK. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and
keep available at all times, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the
Company to issue Securities pursuant to this Agreement.
4.12 PURCHASE OR SALES AFTER THE DATE HEREOF. Purchaser
covenants that neither it nor any Affiliate acting on its behalf or
pursuant to any understanding with it will execute any purchase or
sale of the Company's Common Stock during the period commencing on the
date hereof and ending at the Closing Date.
4.13 RESTRICTED TRANSACTIONS. For a period of three years after
the Closing Date, neither the Company nor any of its Subsidiaries
shall, and Purchaser shall not cause or permit the Company or any of
its Subsidiaries to: (a) declare, set aside or pay any cash dividend
in respect of its capital stock or purchase, redeem or otherwise
acquire any shares of its own capital stock or any of its
Subsidiaries, or (b) enter into any management agreement, advisory
agreement, consulting agreement or similar agreement with, or pay any
29
fees to, Purchaser or any of its Affiliates, including River Falls
Financial Services, Inc. or any of its Affiliates.
ARTICLE V.
CONDUCT OF BUSINESS OF PURCHASER AND
THE COMPANY PENDING THE CLOSING DATE
5.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE CLOSING DATE.
(a) Except as contemplated by this Agreement, or as expressly
agreed to in writing by Purchaser, during the period from the date of
this Agreement until the Closing Date, each of the Company and its
Subsidiaries will conduct their respective operations according to its
ordinary course of business consistent with past practice, and will
use all commercially reasonable efforts to preserve intact its
business organization, to keep available the services of its officers
and employees and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with it and will take no action which would materially
adversely affect the ability of the parties to consummate the
transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Closing Date, the Company
will not nor will it permit any of its Subsidiaries to, without the
prior written consent of Purchaser, which consent shall not be
unreasonably withheld:
(i) amend its certificate of incorporation or bylaws or
other organizational documents, except that the Company shall be
allowed to amend its bylaws to eliminate the provision therein that
limits the number of vacancies on the Board that can be filled by the
Board;
(ii) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or deliver
any shares of any class of its capital stock or any securities
convertible into shares of any class of its capital stock, except
pursuant to and in accordance with the terms of currently outstanding
options and except for the issuance of Securities contemplated hereby;
(iii) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock or purchase, redeem or
otherwise acquire any shares of its own capital stock or of any of its
Subsidiaries, except as otherwise expressly provided in this
Agreement;
(iv) (i) create, incur, assume, maintain or permit to exist
any debt for borrowed money other than under existing lines of credit
in the ordinary course of business consistent with past practice; (ii)
assume, guarantee, endorse or otherwise become liable or responsible
30
(whether directly, contingently or otherwise) for the obligations of
any other person except for its wholly owned subsidiaries, in the
ordinary course of business and consistent with past practices; or
(iii) make any loans, advances or capital contributions to, or
investments in, any other person in an aggregate amount exceeding
$50,000;
(v) (i) increase in any manner the compensation of any
employee, director or officer except in the ordinary course of
business consistent with past practice or except as required under
currently existing agreements, plans or arrangements; (ii) pay or
agree to pay any pension, retirement allowance or other employee
benefit not required, or enter into or agree to enter into any
agreement or arrangement with such director or officer or employee,
whether past or present, relating to any such pension, retirement
allowance or other employee benefit, except as required under
currently existing agreements, plans or arrangements; (iii) grant any
severance or termination pay to, or enter into any employment or
severance agreement with any employee, officer or director except
consistent with commercially acceptable standards or except as
required under currently existing agreements, plans or arrangements;
or (iv) except as may be required to comply with applicable law,
become obligated (other than pursuant to any new or renewed collective
bargaining agreement) under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit arrangement, or
similar plan or arrangement, which was not in existence on the date
hereof, including any bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other benefit plan, agreement or
arrangement, or employment or consulting agreement with or for the
benefit of any person, or amend any of such plans or any of such
agreements in existence on the date hereof; provided, however, that
this clause (iv) shall not prohibit the Company from renewing any such
plan, agreement or arrangement already in existence on terms no more
favorable to the parties to such plan, agreement or arrangement;
(vi) except as otherwise expressly contemplated by this
Agreement, enter into any material agreements, commitments or
contracts, except for (i) agreements, commitments or contracts for the
purchase, sale or lease of goods or services involving payments or
receipts by the Company or its Subsidiaries not in excess of $50,000
individually, or (ii) agreements, commitments or contracts (or
amendments thereof) otherwise entered into in the ordinary course of
the Company's current business;
(vii) except as otherwise expressly contemplated by this
Agreement, authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into any agreement in
principle or an agreement with respect to, any plan of liquidation or
dissolution, any acquisition of a material amount of assets or
securities, any sale, transfer, lease, license, pledge, mortgage, or
31
other disposition or encumbrance of a material amount of assets or
securities or any material change in its capitalization;
(viii) authorize or commit to make capital expenditures in
excess of $50,000;
(ix) make any change in the accounting methods or accounting
practices followed by the Company, except as required by GAAP;
(x) settle any action, suit, claim, investigation or
proceeding (legal, administrative or arbitrative) in excess of $50,000
without the consent of Purchaser;
(xi) make any election under the Internal Revenue Code which
would have a Material Adverse Effect; or
(xii) agree to do any of the foregoing.
5.2 CONDUCT OF BUSINESS OF PURCHASER PENDING THE CLOSING DATE.
Except as contemplated by this Agreement or as expressly agreed to in
writing by the Company, during the period from the date of this
Agreement to the Closing Date on which the transactions contemplated
herein are consummated, Purchaser will use all commercially reasonable
efforts to keep substantially intact its business, properties and
business relationships and will take no action which would materially
adversely affect the ability of the parties to consummate the
transactions contemplated by this Agreement.
ARTICLE VI.
MISCELLANEOUS
6.1 TERMINATION. This Agreement may be terminated and abandoned
at any time prior to the Closing, whether before or after approval by
the stockholders of the Company of the issuance of Securities to
Purchaser contemplated hereby:
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) if, upon a vote at the Stockholders Meeting, or any
adjournment thereof, the approval of the issuance of Securities to
Purchaser as contemplated by this Agreement by the stockholders of
Company required by the Illinois Business Act or by the applicable
rules of the Trading Market shall not have been obtained;
(ii) if, without any material breach by the terminating
party of its obligations under this Agreement, the issuance of
Securities to Purchaser contemplated hereby and the Offer shall not
have been consummated on or before the ninety-fifth (95th) day from
the date of this Agreement (the "Termination Trigger Date"); provided,
however, that if the Closing has not occurred on or prior to such 95th
32
day, and if the SEC has elected to review and/or comment upon any of
the Schedule TO, any other Offer Document, the Schedule 14D-9 or the
Company Proxy Statement, then the Termination Trigger Date shall be
extended until the close of business on the 50th day after the last
date on which the SEC completes its review of and has no further
comments to the Schedule TO, any other Offer Document, the Schedule
14D-9 and the Company Proxy Statement; or
(iii) if any Governmental Entity shall have enacted,
entered, promulgated or enforced a final and non-appealable order,
decree or injunction which prohibits the consummation of the
transactions contemplated hereby (provided that the party seeking to
rely upon this condition has fully complied with and performed its
obligations pursuant to Section 4.2(a) hereof), or permanently enjoins
the acceptance for payment of, or payment for, Shares pursuant to the
Offer or Securities pursuant to the proposed sale and purchase of
Securities contemplated hereby;
(c) by the Company if (i) Purchaser shall have failed to
commence the Offer within ten (10) Business Days following the date
hereof, or (ii) any change to the Offer is made in contravention of
the provisions of Article II;
(d) by the Company, if Purchaser shall materially breach any of
its representations, warranties or obligations hereunder which breach
cannot be or has not been cured within 30 days after the giving of
written notice to Purchaser, but only if such breach, individually or
together with all other such breaches, is reasonably likely to
materially and adversely affect Purchaser's ability to consummate the
Offer or the purchaser of Securities to be sold to Purchaser
hereunder; provided, however, that no cure period shall be applicable
under any circumstances with respect to the matter set forth in
Section 6.1(b)(i); or
(e) by either Purchaser or the Company if the Company enters
into a definitive agreement to effect a Superior Proposal.
Section 6.2 EFFECT OF TERMINATION.
(a) AGREEMENT VOID. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, the terminating
party shall provide written notice of such termination to the other
party (which notice shall specify the applicable provision of Section
6.1 under which such termination is being effected), this Agreement
shall forthwith become void and have no effect, without any liability
on the part of any party hereto or its Affiliates, directors, officers
or stockholders and all rights and obligations of any party hereto
shall cease except for agreements contained in Sections 6.4, 6.5, 6.7,
6.8, 6.9, 6.11, 6.13, 6.14, 6.16, 6.17, 6.18 and this Section 6.2,
provided, however, that nothing contained in this Section shall
relieve any party from liability for fraud or any intentional breach
of this Agreement prior to such termination.
33
(b) TERMINATION FEE.
(i) If this Agreement is terminated pursuant to Section
6.l(e), then the Company shall (provided that Purchaser is not then in
material breach of its obligations under this Agreement) (A) pay to
Purchaser promptly and in any event within two Business Days of such
termination $175,000 in cash and (B) reimburse Purchaser promptly and
in any event within seven Business Days of such termination for any of
Purchaser's documented out-of-pocket expenses (including without
limitation fees and expenses of outside professionals) incurred in
connection with the transactions contemplated hereby up to an
aggregate reimbursement amount pursuant to this clause (B) of
$150,000, in each case, by wire transfer of immediately available
funds to an account specified by Purchaser. The rights of Purchaser
to receive the payments contemplated by this Section 6.2(b)(i) shall
be in lieu of any damages remedy or other claim by Purchaser in
respect of the transactions contemplated hereby.
(ii) If this Agreement is terminated pursuant to Section
6.l(c) or Section 6.1(d), then Purchaser shall (provided that the
Company is not then in material breach of its obligations under this
Agreement) (A) pay to the Company promptly and in any event within two
Business Days of such termination $175,000 in cash and (B) reimburse
the Company promptly and in any event within seven Business Days of
such termination for any of the Company's documented out-of-pocket
expenses (including without limitation fees and expenses of outside
professionals) incurred in connection with the transactions
contemplated hereby up to an aggregate reimbursement amount pursuant
to this clause (B) of $150,000, in each case, by wire transfer of
immediately available funds to an account specified by the Company.
The rights of the Company to receive the payments contemplated by this
Section 6.2(b)(ii) shall be in lieu of any damages remedy or other
claim by the Company in respect of the transactions contemplated
hereby.
6.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; COVENANTS.
None of the representations or warranties contained in this Agreement
or the covenants to be performed prior to the Closing shall survive
the Closing, and thereafter there shall be no liability on the part of
any party hereto or any of their respective officers, directors or
stockholders in respect thereof. The covenants and agreements
contained herein to be performed or complied with at or after the
Closing shall survive the execution and delivery of this Agreement,
the Closing and the consummation of the transactions contemplated
hereby.
6.4 TRANSFER AGENT FEES. The Company shall pay all Transfer
Agent fees, stamp taxes and other similar taxes and duties levied in
connection with the delivery of any Securities to the Purchaser.
6.5 ENTIRE AGREEMENT. This Agreement, together with the other
Transaction Documents, and the exhibits and schedules hereto and
34
thereto, and the Confidentiality Agreement, contain the entire
understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.
6.6 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a)
the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages
attached hereto prior to 5:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on
any Trading Day, (c) the 2nd Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.
6.7 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case
of an amendment, by the Company and the Purchaser, in the case of a
waiver, by the party against whom enforcement of any such waived
provision is sought; provided, however, that after stockholder
approval at the Stockholders Meeting of the issuance of Securities
contemplated hereby, no amendment shall be made which by law requires
further approval by stockholders of the Company without obtaining such
approval. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default
or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right.
6.8 HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
6.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of
the Purchaser. The Purchaser may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of
the Company.
6.10 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective successors and
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permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except as otherwise set forth
in Sections 4.7, 4.13 and 4.14.
6.11 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the
internal laws of the State of Illinois, without regard to the
principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of Chicago. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United
States District Court for the Northern District of Illinois for the
adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys' fees and
other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
6.12 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a ".pdf" format data file, such signature
shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and
effect as if such facsimile or ".pdf" signature page were an original
thereof.
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6.13 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
6.14 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution
for and upon cancellation thereof (in the case of mutilation), or in
lieu of and substitution therefor, a new certificate or instrument,
but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction. The applicant for a new
certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
6.15 REMEDIES. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of
damages, each of the Purchaser and the Company will be entitled to
specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in
any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
6.16 LIQUIDATED DAMAGES. The Company's or Purchaser's, as the
case may be, obligations to pay any partial liquidated damages
pursuant to Section 6.2 (if applicable) or other amounts owing under
this Agreement or the other Transaction Documents is a continuing
obligation of such party and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to
which such partial liquidated damages or other amounts are due and
payable shall have been canceled.
6.17 SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed
day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such
action may be taken or such right may be exercised on the next
succeeding Business Day.
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6.18 CONSTRUCTION. The parties agree that each of them and/or
their respective counsel has reviewed and had an opportunity to revise
this Agreement and the other Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be employed in the
interpretation of the Transaction Documents or any amendments hereto
or thereto.
6.19 WAIVER OF JURY TRIAL. In any action, suit or proceeding in
any jurisdiction brought by any party against any other party, the
parties each knowingly and intentionally, to the greatest extent
permitted by applicable law, hereby absolutely, unconditionally,
irrevocably and expressly waives forever trial by jury.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase and Tender Offer Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.
GENERAL EMPLOYMENT ENTERPRISES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Chief Financial Officer and
Treasurer
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PSQ, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Member
Hurstbourne Place, Suite 1205
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to (which shall not constitute notice):
Law Office of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
Professional Limited Liability Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
39