EXHIBIT 2.1
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THE SECURITY PURCHASE
AND TENDER OFFER AGREEMENT (THE "PURCHASE
AGREEMENT") HAS BEEN INCLUDED TO PROVIDE INVESTORS AND
SECURITY
HOLDERS WITH INFORMATION REGARDING ITS TERMS. IT IS
NOT INTENDED TO
PROVIDE ANY OTHER FACTUAL INFORMATION ABOUT THE
COMPANY. THE
REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED IN
THE PURCHASE
AGREEMENT WERE MADE ONLY FOR PURPOSES OF SUCH
AGREEMENT AND AS OF
SPECIFIC DATES, WERE SOLELY FOR THE BENEFIT OF THE
PARTIES TO SUCH
AGREEMENT, AND ARE SUBJECT TO LIMITATIONS AGREED UPON
BY THE
CONTRACTING PARTIES, INCLUDING BEING QUALIFIED,
MODIFIED OR LIMITED BY
CONFIDENTIAL DISCLOSURES EXCHANGED BETWEEN THE PARTIES
IN CONNECTION
WITH THE EXECUTION OF THE PURCHASE AGREEMENT. THE
REPRESENTATIONS AND
WARRANTIES MAY HAVE BEEN MADE FOR THE PURPOSES OF
ALLOCATING
CONTRACTUAL RISK BETWEEN THE PARTIES TO THE AGREEMENT
INSTEAD OF
ESTABLISHING THESE MATTERS AS FACTS, AND MAY BE
SUBJECT TO STANDARDS
OF MATERIALITY APPLICABLE TO THE CONTRACTING PARTIES
THAT DIFFER FROM
THOSE APPLICABLE TO INVESTORS. INVESTORS ARE NOT
THIRD-PARTY
BENEFICIARIES UNDER THE PURCHASE AGREEMENT AND SHOULD
NOT RELY ON THE
REPRESENTATIONS, WARRANTIES AND COVENANTS OR ANY
DESCRIPTIONS THEREOF
AS CHARACTERIZATIONS OF THE ACTUAL STATE OF FACTS OR
CONDITION OF THE
COMPANY OR PURCHASER OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES OR
AFFILIATES. MOREOVER, INFORMATION CONCERNING THE
SUBJECT MATTER OF THE
REPRESENTATIONS AND WARRANTIES MAY CHANGE AFTER THE
DATE OF THE
PURCHASE AGREEMENT, WHICH SUBSEQUENT INFORMATION MAY
OR MAY NOT BE
FULLY REFLECTED IN THE COMPANY'S PUBLIC DISCLOSURES.
ACCORDINGLY, THE
REPRESENTATIONS AND WARRANTIES IN THE PURCHASE
AGREEMENT SHOULD NOT BE
VIEWED OR RELIED UPON AS STATEMENTS OF ACTUAL FACTS OR
THE ACTUAL
STATE OF AFFAIRS OF THE COMPANY.
SECURITIES PURCHASE AND
TENDER OFFER AGREEMENT
This Securities Purchase
and Tender Offer Agreement ("Agreement")
is dated as of March 30, 2009, between General
Employment Enterprises,
Inc., an Illinois corporation ("Company"), and PSQ,
LLC, a newly
formed Kentucky limited liability company created as a
special purpose
vehicle as purchaser of the securities that are the
subject of this
Agreement ("Purchaser").
WHEREAS, subject to the
terms and conditions set forth in this
Agreement, the Company desires to issue and sell to
Purchaser, and
Purchaser desires to purchase from the Company,
newly-issued shares of
Common Stock (as defined below) of the Company as more
fully described
in this Agreement; and
WHEREAS, each of the
respective Boards of Member-Managers or
Directors of Purchaser and the Company has determined
it is in the
best interests of their respective stockholders or
members for the
Purchaser to also offer to acquire up to 2,500,000
shares of the
Common Stock of the Company ("Maximum Number of
Shares") at a price of
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$.60 in cash per share pursuant to a cash tender offer
("Offer") upon
the terms and conditions set forth herein.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants
contained in this Agreement, and for other good and
valuable
consideration the receipt and adequacy of which are
hereby
acknowledged, the Company and Purchaser agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS.
In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement,
the following
terms have the meanings set forth in this Section
1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.2(j).
"Affiliate" means any Person that, directly or indirectly
through one or more
intermediaries, controls or is controlled by
or is under common
control with a Person as such terms are used
in and construed under
Rule 405 under the Securities Act. With
respect to Purchaser,
any investment fund or managed account that
is managed on a
discretionary basis by the same investment
manager as Purchaser
will be deemed to be an Affiliate of
Purchaser.
"Board of Directors" means the board of directors of the
Company from time to
time as constituted.
"Business Day" means any day except any Saturday, any
Sunday, any day which is
a federal legal holiday in the United
States or any day on
which banking institutions in the State of
New York are authorized
or required by law or other governmental
action to close.
"Closing" means the simultaneous consummation of the
purchase and sale of the
Securities to be acquired by the
Purchaser pursuant to
Section 2.1 hereof and the consummation of
the Offer described in
Section 2.3 hereof.
"Closing Date" means the Trading Day when the Closing
occurs.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock of the Company, no par
value, and any other
class of securities into which such
securities may hereafter
be reclassified or changed into.
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"Common Stock Equivalents" means any securities of the
Company or the
Subsidiaries which would entitle the holder
thereof to acquire at
any time Common Stock, including, without
limitation, any debt,
preferred stock, rights, options, warrants
or other instrument that
is at any time convertible into or
exercisable or
exchangeable for, or otherwise entitles the holder
thereof to receive,
Common Stock.
"Company Counsel" means Schiff Hardin LLP, with offices
located at 6600 Sears
Tower, Chicago, Illinois 60606.
"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 Herbert F. Imhoff,
Jr.
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"SEC Reports" shall have the meaning ascribed to such term
in Section 3.2(h).
"Securities" means the Shares of Common Stock to be sold to
Purchaser by the Company
pursuant to this Agreement.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules
and regulations promulgated there under.
"Shares" means shares of Common Stock.
"Short Sales" means all "short sales" as defined in Rule 200
of Regulation SHO under
the Exchange Act (but shall not be deemed
to include the location
and/or reservation of borrowable shares
of Common Stock).
"Trading Day" means a day on which the Common Stock is
traded on the Trading
Market or an over-the-counter market, if
applicable.
"Trading Market" means the following markets or exchanges on
which the Common Stock
is listed or quoted for trading on the
date in question: NYSE
Amex.
"Transaction Documents" means this Agreement and any other
documents or agreements
executed in connection with the
transactions
contemplated hereunder.
"Transfer Agent" means Continental Stock Transfer & Trust
Company.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING.
(a) The Closing
shall occur no later than the third Business Day
after satisfaction of the conditions set forth in
Section 2.5 (other
than those conditions that by their nature are to be
satisfied at
Closing).
(b) On the Closing
Date, upon the terms and subject to the
conditions set forth herein, immediately after the
consummation of the
Offer on the Closing Date, the Company agrees to sell,
and the
Purchaser agrees to purchase, an aggregate of
7,700,000 Shares of
Common Stock at the Purchase Price set forth below. On
the Closing
Date, Purchaser shall direct the Escrow Agent (as
defined below) to
deliver to the Company from the Escrow Account (as
defined below), via
wire transfer, immediately available funds equal to
the Purchase Price
and the Company shall deliver to Purchaser duly
authorized
certificates representing the Securities.
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(c) As soon as
reasonably practicable after the Closing,
Purchaser shall instruct the Escrow Agent to mail to
each holder of
record of a certificate or certificates that,
immediately prior to the
Closing, evidenced outstanding Shares (the
"Certificates"), (i) a form
of letter of transmittal (which shall specify that
delivery shall be
effected, and risk of loss and title to the
Certificates shall pass,
only upon proper delivery of the Certificates to the
Escrow Agent, and
shall be in such form and have such other provisions
as are reasonable
and customary in transactions such as the Offer) and
(ii) instructions
for use in effecting the surrender of the Certificates
in exchange for
the Per Share Offer Consideration to be paid therefore
pursuant to
Section 2.2(b), and, if applicable, a new Certificate
representing any
Shares represented by the surrendered Certificate that
were not
surrendered or accepted for surrender in the
Offer. Upon surrender of
a Certificate to the Escrow Agent together with such
letter of
transmittal, duly executed, and such other customary
documents as may
be required pursuant to such instructions, the holder
of such
Certificate shall be entitled to receive from
Purchaser in exchange
therefor cash in an amount equal to the product of (i)
the number of
Shares theretofore represented by such Certificate
that were validly
tendered on or prior to the Final Expiration Date (as
defined below)
and not timely withdrawn, subject to reduction
pursuant to Section
2.3.1(c), and (ii) the Per Share Offer
Consideration. If the
Certificate represented more Shares than the number of
Shares validly
tendered by the holder thereof (and not withdrawn)
prior to the Final
Expiration Date after taking into account any
reduction pursuant to
Section 2.3.1(c), then the Company shall issue a new
Certificate to
the surrendering holder thereof representing the
number of Shares
represented by the surrendered Certificate that were
not so tendered
or accepted for tender in the Offer. No interest
shall be paid or
accrued on any cash payable upon the surrender of any
Certificate. If
payment is to be made to a person other than the
person in whose name
the surrendered Certificate is registered, it shall be
a condition of
payment that the Certificate so surrendered shall be
properly endorsed
or otherwise in proper form for transfer and that the
person
requesting such payment shall pay any transfer or
other taxes required
by reason of the payment to a person other than the
registered holder
of the surrendered Certificate or established to the
satisfaction of
Purchaser and the Company that such taxes have been
paid or are not
applicable. Any portion of the Escrow Amount
which remains
undistributed to the holders of Certificates one year
after the
Closing shall be delivered to Purchaser, upon demand,
and any holders
of Certificates that have not theretofore complied
with this Section
2.1(c) shall thereafter look only to Purchaser, and
only as general
creditors thereof, for payment of their claim for any
Per Share Offer
Consideration. None of Purchaser, the Company or the
Escrow Agent
shall be liable to any person in respect of any
payments or
distributions payable from the Escrow Amount delivered
to a public
official pursuant to any applicable abandoned
property, escheat or
similar law.
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(d) The Closing
shall occur at the offices of Company Counsel or
such other location as the parties shall mutually
agree.
2.2 PURCHASE
PRICE.
(a) The Company
has agreed to issue and sell to the Purchaser
and the Purchaser has agreed to purchase the
Securities at a price
equal to $.25 per Share, for an aggregate purchase
price of $1,925,000
("Purchase Price").
(b) In addition,
in accordance with Section 2.3, below,
Purchaser has agreed to consummate the Offer for a
maximum of
2,500,000 Shares of the Company's outstanding Common
Stock (subject to
satisfaction of the conditions described in Section
2.5(b)), at a
price of $.60 per Share ("Per Share Offer
Consideration"), for a
maximum aggregate Offer amount of $1,500,000.
(c) Simultaneous
with the execution of this Agreement, Purchaser
has caused to be deposited into a financial
institution escrow account
("Escrow Account") with Park Avenue Bank, 460 Park
Avenue, New York,
NY 10022 ("Escrow Agent") the maximum aggregate
Purchase Price
totaling $1,925,000 ("Purchase Escrow Amount"), and no
later than
three (3) days prior to the Closing, Purchaser shall
provide written
evidence satisfactory to the Company of the
availability of the
aggregate maximum amount of the consideration needed
to consummate the
Offer totaling $1,500,00 ("Maximum Offer
Amount").The Purchase Escrow
Amount shall be subject to the terms of an
escrow agreement entered
into between the Company, Purchaser and the Escrow
Agent on the date
hereof which, among other things, provides for a
return of the Escrow
Amount to the Purchaser in the event of any
termination of this
Agreement, except if such termination provides for the
payment of
damages to the Company as provided for in Section
6.2.
2.3 TENDER
OFFER.
2.3.1 TERMS OF
TENDER OFFER.
(a) Provided that
this Agreement shall not have been terminated
in accordance with Section 6.1 hereof, Purchaser shall
commence
(within the meaning of Rule 14d-2 under the Exchange
Act) the Offer
within ten (10) business days of the date hereof.
Consummation of the
Offer will be subject only to the satisfaction or
waiver of the
conditions set forth in Section 2.5(b) hereof, any of
which conditions
may be waived in the sole discretion of Purchaser.
Assuming all of the
conditions to consummation of the Offer are satisfied,
Purchaser shall
consummate the Offer as promptly as possible to the
extent necessary
to acquire the Maximum Number of Shares (taking into
account the
Shares validly tendered and not timely withdrawn as of
the Final
Expiration Date).
(b) Purchaser
agrees that upon the terms and subject to the
conditions of this Agreement, Purchaser shall accept
for payment all
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Shares (including any Securities), up to the Maximum
Number of Shares,
that are validly tendered on or prior to the Final
Expiration Date and
not timely withdrawn, as soon as it is permitted to do
so under
applicable law, and shall pay for such Shares promptly
thereafter.
(c) In the event
that the number of Shares that are validly
tendered on or prior to the Final Expiration Date and
not timely
withdrawn exceed the Maximum Number of Shares, the
final number of
Shares deemed validly tendered by each stockholder of
the Company as
of the Final Expiration Date shall be reduced to be an
amount equal to
the product of: (i) the number of Shares validly
tendered by such
stockholder (and not withdrawn) as of the Final
Expiration Date and
(ii) the quotient of (A) 2,500,000 over (B) the total
number of Shares
validly tendered (and not withdrawn) by all
stockholders of the
Company as of the Final Expiration Date.
(d) The Offer
shall initially be scheduled to expire seventy-
five (75) days following the commencement thereof;
provided that,
unless this Agreement shall have been terminated
pursuant to Section
6.1 hereof, Purchaser shall be required to extend the
Offer from time-
to-time until the Closing Date in the event that, at a
then-scheduled
expiration date, the conditions to Closing set forth
in Section 2.5
have not been satisfied (such final expiration date of
the Offer being
referred to herein as the "Final Expiration Date");
provided further
that, under no circumstances shall any such extension
be less than the
minimum number of days required by the Exchange Act or
the rules and
regulations promulgated thereunder or by applicable
law.
(e) As promptly as
practicable on the date of commencement of
the Offer, Purchaser shall file with the United States
Securities and
Exchange Commission ("SEC") a Tender Offer Statement
on Schedule TO
(together with all amendments and supplements thereto,
the "Schedule
TO") with respect to the Offer which shall comply as
to form in all
material respects with the provisions of applicable
federal securities
laws. The Schedule TO shall contain or incorporate by
reference an
offer to purchase ("Offer to Purchase") and forms of
the related
letter of transmittal and all other ancillary Offer
documents
(collectively, together with all amendments and
supplements thereto,
the "Offer Documents"). The Company and Purchaser
shall cause the
Offer Documents to be disseminated to the holders of
the Shares as and
to the extent required by applicable federal
securities laws.
Purchaser, on the one hand, and the Company, on the
other hand, will
promptly correct any information provided by it for
use in the Offer
Documents if and to the extent that it shall have
become false or
misleading in any material respect, and Purchaser will
cause the Offer
Documents as so corrected to be filed with the SEC and
to be
disseminated to holders of the Shares, in each case as
and to the
extent required by applicable federal securities laws.
In conducting
the Offer, Purchaser shall comply in all material
respects with the
provisions of the Exchange Act and any other
applicable law. The
Company and its counsel shall be given a reasonable
opportunity to
review and comment upon the Schedule TO before it is
filed with the
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SEC. In addition, Purchaser agrees to provide the
Company and its
counsel with any comments, whether written or oral,
that Purchaser or
its counsel may receive from time-to-time from the SEC
or its staff
with respect to the Offer Documents promptly after the
receipt of such
comments and to consult with the Company and its
counsel prior to
responding to any such comments.
(f) For the
avoidance of doubt, without the prior written
consent of the Company, Purchaser shall not (i)
decrease or change the
form of the Per Share Offer Consideration described in
Section 2.2(b)
above, (ii) amend any term of the Offer in any manner
adverse to
holders of Shares of Common Stock, or (iii) change any
of the closing
conditions to the Offer described in Section 2.5(b) or
impose any
additional conditions to the Offer.
2.3.2 COMPANY ACTION.
(a) The Company
hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of
Directors, at a
meeting duly called and held, has (i) determined that
the terms of the
Offer are fair to and in the best interests of the
stockholders of the
Company, (ii) approved this Agreement, the Offer and
the other
transactions contemplated hereby and (iii) resolved
(subject to the
limitations contained herein) to recommend that the
stockholders of
the Company accept the Offer, tender their Shares to
Purchaser
thereunder and approve and adopt this Agreement.
Subject to Section
4.3 below, the Company hereby consents to the
inclusion in the Offer
Documents of the Board's recommendation described in
the immediately
preceding sentence. The Company has been authorized by
Prairie Capital
Advisors, Inc., the Company's financial advisor, to
permit the
inclusion of a copy its fairness opinion with regard
to the
transactions contemplated hereby.
(b) On the date
the Offer Documents are filed with the SEC, the
Company shall file with the SEC a
Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer
(such Schedule
14D-9, as amended or supplemented from time to time,
the "Schedule
14D-9") containing, subject to Section 4.3 below, the
recommendations
referred to in paragraph (a) above and shall mail the
Schedule 14D-9
to the record holders of Shares as required by law.
Purchaser will
promptly supply to the Company in writing, for
inclusion in the
Schedule 14D-9, all information concerning Purchaser
as required by
Section 14(f) of the Exchange Act and Rule 14F-1
thereunder, and the
Company shall include such information in the Schedule
14D-9. Each of
the Company and Purchaser shall promptly correct any
information
provided by it for use in the Schedule 14D-9 if and to
the extent that
such information shall have become false or misleading
in any material
respect, and the Company shall take all steps
necessary to amend or
supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and
disseminated to
the Company's stockholders, in each case as and to the
extent required
by or deemed advisable under applicable federal
securities laws.
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Purchaser and its counsel shall be given reasonable
opportunity to
review and comment upon the Schedule 14D-9 prior to
its filing with
the SEC or dissemination to stockholders of the
Company. The Company
shall provide Purchaser and its counsel in writing
with any written
comments (and orally, any oral comments) the Company
or its counsel
may receive from the SEC or its staff with respect to
the Schedule
14D-9 promptly after the receipt of such comments and
shall consult
with Purchaser and its counsel prior to responding to
such comments.
(c) The Company
shall promptly furnish Purchaser with mailing
labels containing the names and addresses of all
record holders of
Shares and with security position listings of Shares
held in stock
depositories, each as of a recent date, together with
all other
available listings and computer files containing
names, addresses and
security position listings of record holders and
beneficial owners of
Shares. The Company shall furnish Purchaser with such
additional
information, including, without limitation, updated
listings and
computer files of stockholders, mailing labels and
security position
listings, and such other assistance as the Company,
Purchaser or their
agents may reasonably require in communicating the
Offer to the record
and beneficial holders of Shares. Subject to the
requirements of
applicable law, and except for such steps as are
necessary to
disseminate the Offer Documents and any other
documents necessary to
consummate the Offer, the Purchaser and its Affiliates
shall hold in
confidence the information contained in such labels,
listings and
files, shall use such information solely in connection
with the Offer,
and, if this Agreement is terminated in accordance
with Section 6.1
hereof, shall promptly deliver or cause to be
delivered to the Company
all copies of such information, labels, listings and
files then in
their possession or in the possession of their agents
or
representatives.
2.4 COMPANY
STOCKHOLDERS MEETING; PREPARATION OF THE PROXY
STATEMENT.
(a) As soon as
practicable following the date hereof, the
Company shall use its commercially reasonable efforts
to take all
action necessary, in accordance with the Illinois
Business Corporation
Act of 1983, as amended ("Illinois Business Act"), the
Exchange Act
and other applicable law and its certificate of
incorporation and
bylaws to convene and hold a meeting of the
stockholders of Company
(the "Stockholders Meeting") for the purpose of
considering and voting
upon the sale by the Company of Securities to
Purchaser as
contemplated by this Agreement and to solicit proxies
pursuant to a
proxy statement of the Company to be filed by the
Company in
connection therewith ("Company Proxy
Statement"). Subject to the
provisions of Section 4.3 below, the Board of
Directors shall
recommend that the holders of Shares vote in favor of
the sale by the
Company of Securities to Purchaser as contemplated by
this Agreement
at the Stockholders Meeting and shall cause such
recommendation to be
included in the Company Proxy Statement.
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(b) As soon as
practicable following the date hereof, the
Company, in consultation with Purchaser, shall prepare
and file the
Company Proxy Statement with the SEC in accordance
with the Exchange
Act and the rules and regulations thereunder.
Each of the Company and
Purchaser shall promptly correct any information
provided by it for
use in the Company Proxy Statement if and to the
extent that such
information shall have become false or misleading in
any material
respect, and the Company shall take all steps
necessary to amend or
supplement the Company Proxy Statement and to cause
the Company Proxy
Statement as so amended or supplemented to be filed
with the SEC and
disseminated to the Company's stockholders, in each
case as and to the
extent required by or deemed advisable under
applicable federal
securities laws, state law or the requirements of any
securities
exchange on which the Company's Shares are listed.
Purchaser and its
counsel shall be given reasonable opportunity to
review and comment
upon the Company Proxy Statement prior to its filing
with the SEC or
dissemination to stockholders of the Company. The
Company shall
provide Purchaser and its counsel in writing with any
written comments
(and orally, any oral comments) the Company or its
counsel may receive
from the SEC or its staff with respect to the Company
Proxy Statement
promptly after the receipt of such comments and shall
consult with
Purchaser and its counsel prior to responding to such
comments.
2.5 CLOSING
CONDITIONS.
(a) The
obligations of the Company hereunder in connection with
the Closing are subject to the following conditions
being met or
waived by the Company at or prior to the Closing,
provided, however,
that the Company may not rely on the failure of any of
the following
conditions in this Section 2.5(a) to be satisfied if
such failure was
caused by the Company's failure to act in good faith
or to use best
efforts to cause the Closing to occur, as required by
Section 4.2:
(i) the approval of the sale by the Company of the
Securities to Purchaser as contemplated hereby by
affirmative vote (by
a majority of votes cast) by the holders of shares of
Common Stock;
(ii) there is no order, litigation,
injunction,
administrative stop order or other legal restraint
pending against the
Company at the Closing Date that would limit or
prohibit the Closing
of the transactions contemplated by this
Agreement;
(iii) the accuracy in all material respects on the
Closing
Date of the representations and warranties of the
Purchaser contained
herein as though made as of such time, except to the
extent that such
representations and warranties expressly relate to an
earlier date (in
which case such representations and warranties shall
be true and
correct in all material respects as of such earlier
date); and
(iv) all obligations, covenants and agreements of Purchaser
required to be performed at or prior to the Closing
Date pursuant to
the terms hereof shall have been performed in all
material respects.
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(b) The respective
obligations of the Purchaser hereunder in
connection with the Closing are subject to the
following conditions
being met or waived by Purchaser at or prior to the
Closing, provided,
however, that Purchaser may not rely on the failure of
any of the
following conditions in this Section 2.5(b) to be
satisfied if such
failure was caused by Purchaser's failure to act in
good faith or to
use best efforts to cause the Closing to occur, as
required by Section
4.2:
(i) the accuracy on the Closing Date of the
representations
and warranties of the Company contained herein as
though made as of
such time, except to the extent that such
representations and
warranties expressly relate to an earlier date (in
which case such
representations and warranties shall be true and
correct as of such
earlier date), in each case except for inaccuracies or
breaches as to
matters that, individually or in the aggregate, would
not have a
Material Adverse Effect;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the
Closing Date
pursuant to the terms hereof shall have been performed
in all material
respects; and
(iii) there shall have been no Material Adverse Effect
(as
defined in Section 3.1 below) with respect to the
Company since the
date hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 GENERAL.
In this Agreement, any
reference to a "Material Adverse Effect"
with respect to the Company means any event, change or
effect that:
(a) is materially
adverse to the financial condition,
properties, assets (including intangible assets),
liabilities
(including contingent liabilities), business,
operations or results of
operations of the Company and its Subsidiaries, taken
as a whole,
except to the extent of any event, change or effect
resulting from or
arising in connection with:
(i) any change in general economic, business, regulatory,
market conditions or political conditions, in each
case both regional,
domestic and international, including changes or
disruptions in
capital or financial markets;
(ii) natural disasters, acts of God, any outbreak or
escalation of hostilities, declared or undeclared acts
of war or
terrorism or civil unrest;
11
(iii) any change in applicable laws of any governmental
entity or interpretations thereof by any governmental
entity or in
GAAP;
(iv) any change generally affecting the industry in which
the Company conducts its business;
(v) the execution, announcement or performance of this
Agreement or consummation of the transactions
contemplated hereby,
including any loss or threatened loss of, or adverse
change or
threatened adverse change in, the relationship of the
Company with any
of its customers, employees, shareholders, financing
sources or
vendors as a direct result thereof or in connection
therewith;
(vi) any change in the market price or trading volume of the
securities of the Company (it being understood that
the causes
underlying such change in market price or trading
volume may be taken
into account in determining whether a Material Adverse
Effect has
occurred), or any suspension of trading in securities
generally on any
securities exchange on which the securities of the
Company trade;
(vii) the failure of the Company in and of itself to meet
any internal or public projections, forecasts or
estimates of revenues
or earnings (it being understood that the causes
underlying such
failure may be taken into account in determining
whether a Material
Adverse Effect has occurred);
(viii) any event, change or effect resulting from
declines
in the operational or financial performance of the
Company that are
not materially worse than the trends experienced by
the Company in the
quarter ended December 31, 2008;
(ix) any actions taken (or omitted to be taken) at the
written request of Purchaser;
(x) any action taken by the Company that is required
pursuant to this Agreement; or
(xi) any of the matters specifically disclosed in the
Disclosure Schedule (as defined below);
provided, however, that
with respect to clauses (i) and (iv) such
matter does not have a
materially disproportionate effect on the
Company, relative to
comparable entities operating in the
Company's business, and
references in certain sections of this
Agreement to dollar
amounts are not intended to be, and shall not
be deemed to be,
illustrative or interpretative for purposes of
determining whether a
"Material Adverse Effect" has occurred; or
(b) would prevent
the Company from performing its material
obligations under this Agreement in any material
respect.
12
In this Agreement, the
words "Aware," "Knowledge" or similar
words, expressions or phrases with respect to a party
means the actual
knowledge of such party's directors.
The Company represents
and warrants to Purchaser that the
statements contained in this Article III are true and
correct, except
as set forth in the Disclosure Schedule, if any,
delivered by the
Company to Purchaser immediately prior to the
execution and delivery
of this Agreement (the "Disclosure Schedule").
Reference to any
section in the Disclosure Schedule in this Article III
shall be deemed
to be a reference to all other sections in the
Disclosure Schedule.
Any reference in this Article III to an agreement
being "Enforceable"
shall be deemed to be qualified to the extent such
enforceability is
subject to (i) laws of general application relating to
bankruptcy,
insolvency, moratorium, fraudulent conveyance and the
relief of
debtors and (ii) the availability of specific
performance, injunctive
relief and other equitable remedies.
3.2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the SEC Reports, which SEC Reports shall
qualify any
representation or warranty otherwise made herein to
the extent of such
disclosure, the Company hereby makes the following
representations and
warranties set forth below to Purchaser:
(a) SUBSIDIARIES.
The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each
of its direct
and indirect subsidiaries (individually, a
"Subsidiary") free and
clear of any Liens, and all of the issued and
outstanding shares of
capital stock of each Subsidiary are validly issued
and are fully
paid, non-assessable and free of preemptive and
similar rights to
subscribe for or purchase securities.
(b) ORGANIZATION
AND QUALIFICATION. The Company and each of the
Subsidiaries is an entity duly incorporated or
otherwise organized,
validly existing and in good standing under the laws
of the
jurisdiction of its incorporation or organization (as
applicable),
with the requisite power and authority to own and use
its properties
and assets and to carry on its business as currently
conducted.
Neither the Company nor any Subsidiary is in violation
or default of
any of the provisions of its respective certificate or
articles of
incorporation, bylaws or other organizational or
charter documents.
Each of the Company and the Subsidiaries is duly
qualified to conduct
business and is in good standing as a foreign
corporation or other
entity in each jurisdiction in which the nature of the
business
conducted or property owned by it makes such
qualification necessary,
except where the failure to be so qualified or in good
standing, as
the case may be, could not have or reasonably be
expected to result in
a Material Adverse Effect on the Company, and no
Proceeding has been
instituted in any such jurisdiction revoking, limiting
or curtailing
or seeking to revoke, limit or curtail such power and
authority or
qualification.
13
(c) AUTHORIZATION;
ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and,
subject to the
approval of its stockholders with respect to the sale
by the Company
to Purchaser of the Securities as contemplated hereby,
to consummate
the transactions contemplated by each of the
Transaction Documents and
otherwise to carry out its obligations hereunder and
thereunder. The
execution and delivery of each of the Transaction
Documents by the
Company and the consummation by it of the transactions
contemplated
hereby and thereby have been duly authorized by all
necessary action
on the part of the Company subject to the
aforementioned stockholder
approval and, except for obtaining such stockholder
approval, no
further action is required by the Company, the Board
of Directors or
the Company's stockholders in connection therewith
other than in
connection with the Required Approvals. Each
Transaction Document has
been (or upon delivery will have been) duly executed
by the Company
and, when delivered in accordance with the terms
hereof and thereof,
will constitute the valid and binding obligation of
the Company
enforceable against the Company in accordance with its
terms, except
(i) as limited by general equitable principles and
applicable
bankruptcy, insolvency, reorganization, moratorium and
other laws of
general application affecting enforcement of
creditors' rights
generally (ii) as limited by laws relating to the
availability of
specific performance, injunctive relief or other
equitable remedies
and (iii) that rights to indemnification and
contribution there under
may be limited by federal or state securities laws or
public policy
relating thereto.
(d) NO CONFLICTS.
The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and
sale of the
Securities and the consummation by the Company of the
other
transactions contemplated hereby and thereby do not
and will not (i)
conflict with or violate any provision of the
Company's or any
Subsidiary's certificate or articles of incorporation,
bylaws or other
organizational or charter documents, or (ii) conflict
with, or
constitute a default (or an event that with notice or
lapse of time or
both would become a default) under, result in the
creation of any Lien
upon any of the properties or assets of the Company or
any Subsidiary,
or give to others any rights of termination,
amendment, acceleration
or cancellation (with or without notice, lapse of time
or both) of,
any agreement, credit facility, debt or other
instrument (evidencing a
Company or Subsidiary debt or otherwise) or other
understanding to
which the Company or any Subsidiary is a party or by
which any
property or asset of the Company or any Subsidiary is
bound or
affected (except as may have been waived) or (iii)
subject to the
Required Approvals, conflict with or result in a
violation of any law,
rule, regulation, order, judgment, injunction, decree
or other
restriction of any court or governmental authority to
which the
Company or a Subsidiary is subject (including federal
and state
securities laws and regulations), or by which any
property or asset of
the Company or a Subsidiary is bound or affected;
except in the case
of each of clauses (ii) and (iii), such as would not
have a Material
Adverse Effect.
14
(e) FILINGS,
CONSENTS AND APPROVALS. The Company is not required
to obtain any consent, waiver, authorization or order
of, give any
notice to, or make any filing or registration with,
any court or other
federal, state, local or other governmental authority
or other Person
in connection with the execution, delivery and
performance by the
Company of the Transaction Documents, other than (i)
compliance with
any applicable requirements of the Exchange Act, (ii)
the filings
contemplated by Sections 2.3.2 and 2.4 hereof, (iii)
obtaining
approval of its stockholders with respect to the sale
by the Company
to Purchaser of the Securities as contemplated hereby,
(iv) filings
required pursuant to Section 4.1 of this Agreement,
(v) application(s)
to each applicable Trading Market for the listing of
the Securities
for trading thereon in the time and manner required
thereby and (vi)
such filings as are required to be made under
applicable state
securities laws, FINRA and the Trading Market
(collectively, the
"Required Approvals").
(f) ISSUANCE OF
THE SECURITIES. The Securities are duly
authorized and, when issued and paid for in accordance
with this
Agreement, will be duly and validly issued, fully paid
and non-
assessable, free and clear of all Liens imposed by the
Company other
than any restrictions on transfer provided herein.
(g)
CAPITALIZATION. The capitalization of the Company is as
described in the most recent applicable SEC Reports.
The Company has
not issued any capital stock since its most recently
filed periodic
report under the Exchange Act, other than as described
in the SEC
Reports, or pursuant to the exercise of employee stock
options under
the Company's stock option plans, the issuance of
shares of Common
Stock to employees pursuant to the Company's employee
stock purchase
plans and pursuant to the conversion or exercise of
Common Stock
Equivalents. No Person has any right of first refusal,
preemptive
right, right of participation, or any similar right to
participate in
the transactions contemplated by the Transaction
Documents. Except as
a result of the purchase and sale of the Securities
and as described
in the SEC Reports, there are no outstanding options,
warrants, scrip
rights to subscribe to, calls or commitments of any
character
whatsoever relating to, or securities, rights or
obligations
convertible into or exercisable or exchangeable for,
or giving any
Person any right to subscribe for or acquire, any
shares of Common
Stock, or contracts, commitments, understandings or
arrangements by
which the Company or any Subsidiary is or may become
bound to issue
additional shares of Common Stock or Common Stock
Equivalents. Except
as disclosed in the SEC Reports, the issuance and sale
of the
Securities will not obligate the Company to issue
shares of Common
Stock or other securities to any Person (other than
the Purchaser) and
will not result in a right of any holder of Company
securities to
adjust the exercise, conversion, exchange or reset
price under any of
such securities. All of the outstanding shares of
capital stock of the
Company are validly issued, fully paid and
non-assessable, have been
issued in compliance with all federal and state
securities laws, and
none of such outstanding shares was issued in
violation of any
15
preemptive rights or similar rights to subscribe for
or purchase
securities. Except for approval by the Company's
stockholders, no
approval or authorization of the Board of Directors or
others is
required for the issuance and sale of the Securities.
Except as
described in the SEC Reports, there are no
stockholders agreements,
voting agreements or other similar agreements with
respect to the
Company's capital stock to which the Company is a
party.
(h) SEC REPORTS;
FINANCIAL STATEMENTS. The Company has complied
in all material respects with requirements to file all
reports,
schedules, forms, statements and other documents
required to be filed
by the Company under the Exchange Act, including
pursuant to Section
13(a) or 15(d) thereof, for the year preceding the
date hereof (or
such shorter period as the Company was required by law
or regulation
to file such material) (the foregoing materials,
including the
exhibits thereto and documents incorporated by
reference therein,
being collectively referred to herein as the "SEC
Reports") on a
timely basis or has received a valid extension of such
time of filing
and has filed any such SEC Reports prior to the
expiration of any such
extension. As of their respective dates, the SEC
Reports complied in
all material respects with the requirements of the
Securities Act and
the Exchange Act, as applicable, and the rules and
regulation of the
Commission promulgated there under, and none of the
SEC Reports, when
filed, contained any untrue statement of a material
fact or omitted to
state a material fact required to be stated therein or
necessary in
order to make the statements therein, in the light of
the
circumstances under which they were made, not
misleading. The
financial statements of the Company included in the
SEC Reports comply
in all material respects with applicable accounting
requirements and
the rules and regulations of the Commission with
respect thereto as in
effect at the time of filing. Such financial
statements have been
prepared in accordance with United States generally
accepted
accounting principles applied on a consistent basis
during the periods
involved ("GAAP"), except as may be otherwise
specified in such
financial statements or the notes thereto and except
that unaudited
financial statements may no
