SECURITIES PURCHASE AND TENDER OFFER AGREEMENT
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 $.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.
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“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.
“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.
(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.
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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 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.
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(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 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.
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.
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(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.
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2.4
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Company Stockholders
Meeting; Preparation of the Proxy
Statement.
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(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.
(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.
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2.5
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Closing
Conditions.
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(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.
(b) The
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;
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(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;
(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);
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(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.
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.
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(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.
(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.
-11-
(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 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.
-12-
(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 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.
-13-
(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 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.
-14-
(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 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 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.
-15-
(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 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.
-16-
(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 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.
-17-
(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.
(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.
-18-
(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 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 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.
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(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.
(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.
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(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.
(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.
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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
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).
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(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 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
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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 (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;
-24-
(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 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.
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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 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.
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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.
(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.
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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 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 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.
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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.
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.
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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.
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.
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GENERAL
EMPLOYMENT ENTERPRISES, INC.
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By:__________________________________________
Name:
Title:
▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Chief Executive Officer
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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With
a copy to (which shall not constitute notice):
▇▇▇▇▇▇
▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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By:__________________________________________
Name:
Title:
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
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With
a copy to (which shall not constitute notice):
Law
Office of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
Professional
Limited Liability Company
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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