Item 1.01 Entry into a Material Definitive Agreement
On June 30, 2020, GEE Group, Inc. (the "Company") completed and closed a
financial restructuring of approximately $19.7 million of its subordinated
indebtedness and approximately $27.7 million of its convertible preferred stock
(the "Restructuring") as required pursuant to the terms of that certain Seventh
Amendment dated as of April 28, 2020 (the "Seventh Amendment"), to the Revolving
Credit, Term Loan and Security Agreement, dated as of March 31, 2017, as
amended,(the "Credit Agreement") by and among the Company, Scribe Solutions,
Inc., Agile Resources, Inc. Access Data Consulting Corporation, Triad Personnel
Services, Inc. Triad Logistics, Inc., Paladin Consulting, Inc., BMCH, INC., GEE
Group Portfolio Inc., and SNI Companies, each subsidiary of the Company listed
as a "Guarantor" on the signature pages thereto each lender named therein and
MGG Investment Group LP, as administrative agent, collateral agent and term loan
agent for the lenders ("MGG"). In connection with the Restructuring, the
Company entered into the following agreements with the holders of its
subordinated indebtedness and convertible preferred stock.
The Company entered into a Repurchase Agreement for Preferred Stock and
Subordinated Notes (the "Repurchase Agreement"), dated as of June 30, 2020 with
Ronald R. Smith ("Mr. Smith"), Thrivent Financial for Lutherans ("Thrivent"),
Madison Capital Funding LLC ("Madison"), Maurice R. Harrison IV, Peter Langlois,
Vincent Lombardo and Shane Parr (collectively with Smith, Thrivent and Madison,
the "SNI Group Members" pursuant to which the SNI Group Members agreed to allow
the Company to repurchase and settle all of the 9.5% Convertible Subordinated
Notes (the "9.5% Notes"), Series B Convertible Preferred Stock, no par value
("Series B Preferred Stock"), 8% Convertible Subordinated Notes ("8% Notes") and
Series C 8% Cumulative Convertible Preferred Stock, no par value ("Series C
Preferred Stock") held by each of them as set forth below. All of the
outstanding 9.5% Notes and all of the outstanding Series B Preferred Stock were
held by SNI Group Members.
Pursuant to the Repurchase Agreement, the holders of the 9.5% Notes agreed to
accept an aggregate amount of $1,114,922.81 in cash (the "SNI Note Payment
Amount") in consideration for the purchase by the Company of the entire
$12,500,000.00 aggregate principal amount of the 9.5% Notes (the "SNI Note
Amount") held by them. The SNI Note Payment Amount was calculated based on the
following formula: the SNI Note Amount, divided by $5.83 (the price at which
the 9.5% Notes were convertible into shares of the Company's common stock,
without par value ("Common Stock"), times $0.52 (the closing price on the NYSE
American for the Common Stock on June 16, 2020). The SNI Note Payment Amount was
paid to the SNI Group Members on June 30, 2020.
Pursuant to the Repurchase Agreement the holders of the Series B Preferred Stock
agreed to accept an aggregate amount of $2,894,238.51 in cash (the "Series B
Preferred Stock Purchase Price") in consideration for the purchase by the
Company of all 5,565,843 currently outstanding shares of Series B Preferred
Stock (the "Series B Preferred Stock Amount") held by them. The Series B
Preferred Stock Purchase Price was calculated based on the following formula:
the Series B Preferred Stock Amount, divided by $4.86 (the price at which the
Series B Preferred Stock is convertible to Common Stock in the Statement of
Resolution Establishing Series of the Series B Preferred Stock), times $0.52
(the closing price on the NYSE American for the Common Stock on June 16, 2020).
The Series B Preferred Stock Purchase Price was paid to the SNI Group Members on
June 30, 2020.
Pursuant to the Repurchase Agreement, Mr. Smith agreed to accept an aggregate
amount of $520,000 in cash (the "Smith Note Payment Amount") in consideration
for the purchase by the Company of the $1,000,000 aggregate principal amount of
8% Notes (the "Smith Note Amount") held by him. The Smith Note Payment Amount
was calculated based on the following formula: the Smith Note Amount, divided
by $1.00 (the price at which the Smith Notes are convertible to Common Stock),
times $0.52 (the closing price on the NYSE American for the Common Stock on June
16, 2020). The Smith Note Payment Amount was paid to Mr. Smith on June 30,
2020.
Pursuant to the Repurchase Agreement Mr. Smith also agreed to accept an
aggregate amount equal to $37,346.40 in cash (the "Smith Series C Preferred
Stock Purchase Price") in consideration for the purchase by the Company of the
71,820 shares of Series C Preferred Stock (the "Series C Preferred Stock
Amount") held by him. The Smith Preferred Stock Purchase Price was calculated
based on the following formula: the Smith Series C Preferred Stock Amount,
divided by $1.00, times $0.52 (the closing price on the NYSE American for the
Common Stock on June 16, 2020). The Smith Series C Preferred Stock Purchase
Price was paid to Mr. Smith on June 30, 2020.
2
A copy of the Repurchase Agreement is attached hereto as Exhibit 10.1. The
description of the Repurchase Agreement contained in this Current Report on the
Form 8-K is qualified in its entirety by reference to Exhibit 10.1.
On June 30, 2020, the holders of the remaining $1,000,000 aggregate principal
amount of the 8% Notes converted such 8% Notes to an aggregate of 1,000,000
shares of Series C Preferred Stock which were immediately and simultaneously
converted into 1,000,000 shares of Common Stock at the $1.00 per share
conversion price stated in the 8% Notes and in the Series C Preferred Stock.
These holders also converted an aggregate of 93,246 additional shares of Series
C Preferred Stock issued or issuable to them into a total of 93,246 shares of
Common Stock at the $1.00 per share conversion price stated in the Series C
Preferred Stock. The issuance of the 1,093,246 shares of Common Stock to these
former holders of 8% Notes and Series C Preferred Stock was completed on June
30, 2020.
On June 30, 2020, the Company and Jax Legacy Investment 1, LLC ("Jax Legacy"),
the sole holder of the Company's 10% Convertible Subordinated Notes (the "10%
Notes") entered into a Note Conversion Agreement (the "Note Conversion
Agreement") whereby Jax Legacy agreed to immediately convert the $4,185,000
aggregate principal amount of 10% Notes held by it into 717,839 shares of Common
Stock at the $5.83 per share conversion rate stated in the 10% Notes. The
conversion of the 10% Notes was consummated on June 30, 2020 and the Company
issued 717,839 shares of Common Stock to Jax Legacy on that date.
A copy of the Note Conversion Agreement is attached hereto as Exhibit 10.2. The
description of the Note Conversion Agreement contained in this Current Report on
Form 8-K is qualified in its entirety by reference to Exhibit 10.2.
On June 30, 2020, the Company and Enoch S. Timothy and Dorothy Timothy
(collectively," Timothy") entered into a Note Settlement Agreement (the "Note
Settlement Agreement") pursuant to Timothy agreed to accept an aggregate amount
of $89,194 in cash (the "Timothy Note Settlement Amount") in consideration for
the purchase by the Company of the $1,000,000 aggregate principal amount (the
"Timothy Note Amount") of the Subordinated Promissory Note dated January 20,
2017 (the "Timothy Note"). The Timothy Note Settlement Amount was calculated
based on the following formula: the Timothy Note Amount, divided by $5.83 (the
agreed conversion price at which the Timothy Note would be convertible to Common
Stock), times $0.52 (the closing price on the NYSE American for the Common Stock
on June 16, 2020). The Timothy Note Settlement Amount was paid to Timothy on
June 30, 2020
A copy of the Note Settlement Agreement is attached hereto as Exhibit 10.3. The
description of the Note Settlement Agreement contained in this Current Report on
Form 8-K is qualified in its entirety by reference to Exhibit 10.3.
In connection with the Repurchase Agreement, the Company and the SNI Group
Members entered into a Registration Rights Agreement dated as of June 30, 2020
(the "Registration Rights Agreement"). Pursuant to the terms of the
Registration Rights Agreement, the Company has agreed to file on or prior to
July 31, 2020, an initial registration statement with respect to the resale of
shares of Common Stock currently owned by the SNI Group members that are
"Registrable Securities" (as defined in the Registration Rights Agreement) on or
prior to July 31, 2020. In addition, the Company has agreed that it shall, on
one occasion, on or after September 30, 2020 and upon the written request of the
holders of 51% or more of the Registrable Securities, file a registration
statement with respect to the Registrable Securities held by such holders. The
demanding holders may require, in connection with the registration, that the
such demand registration take the form of an underwritten public offering of
such Registrable Securities. The Registration Rights Agreement also provides
that for a period of three years after the closing date of the Restructuring,
the holders of Registrable Securities shall have piggyback registration rights
with respect to all registration statements filed by the Company (other than
those on Form S-4 or Form S-8).
A copy of the Registration Rights Agreement is attached hereto as Exhibit 10.4.
The description of the Registration Rights Agreement contained in this Current
Report on Form 8-K is qualified in its entirety by reference to Exhibit 10.4.
On June 30, 2020 the Company and MGG entered into the Ninth Amendment dated as
of June 30, 2020 (the "Ninth Amendment") to the Credit Agreement.
3
. . .
Item 2.03 Creation of a Direct Financial Obligation.
The information contained in Item 1.01 of this Form is hereby incorporated by
referenced into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
10.1 Repurchase Agreement for Preferred Stock and Subordinated Notes dated
as of June 30, 2020 with Ronald R. Smith, Thrivent Financial for
Lutherans, Madison Capital Funding LLC, Maurice R. Harrison IV, Peter
Langlois, Vincent Lombardo and Shane Parr
10.2 Note Conversion Agreement dated as of June 30, 2020 by and between GEE
Group, Inc. and JAX Legacy Investment I, LLC
10.3 Note Settlement Agreement dated as of June 27, 2020 by and among GEE
Group, Inc,, Enoch S. Timothy and Dorothy Timothy
10.4 Registration Rights Agreement dated as of June 30, 2020 by and among
GEE Group, Inc. .and Ronald R. Smith, Thrivent Financial for Lutherans
Madison Capital Funding LLC, Maurice R. Harrison IV, Peter Langlois,
Vincent Lombardo and Shane Parr (included as Exhibit B to Exhibit
10.1)
10.5 Ninth Amendment dated as of June 30, 2020 to Revolving Credit, Term
Loan and Security Agreement dated as of March 31, 2017 by and among GEE
Group, Inc., the other Borrowers and Guarantors named therein, the
lenders named therein and MGG Investment Group LP, as administrative
agent, term loan agent and collateral agent for the lenders named
therein
99.1 Press release issued by GEE Group, Inc. dated July 2, 2020
4
© Edgar Online, source Glimpses