GEE GROUP, INC. (NYSEMKT:JOB) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement

GEE Group, Inc., (the Company) entered into an Agreement and Plan
of Merger dated as of March 31, 2017 (the Merger Agreement) by
and among the Company, GEE Group Portfolio, Inc., a Delaware
corporation and a wholly owned subsidiary of the Company, (the
GEE Portfolio), SNI Holdco Inc., a Delaware corporation (SNI
Holdco), Smith Holdings, LLC a Delaware limited liability
company, Thrivent Financial for Lutherans, a Wisconsin
corporation, organized as a fraternal benefits society
(Thrivent), Madison Capital Funding, LLC, a Delaware limited
liability company (Madison) and Ronald R. Smith, in his capacity
as a stockholder (Mr. Smith and collectively with Smith Holdings,
LLC, Thrivent and Madison, the Principal Stockholders) and Ronald
R. Smith in his capacity as the representative of the SNIH
Stockholders (Stockholders Representative). The Merger Agreement
provided for the merger subject to the terms and conditions set
forth in the Merger Agreement of SNI Holdco with and into GEE
Portfolio to which GEE Portfolio would be the surviving
corporation (the Merger). The Merger was consummated on April 3,
2017. As a result of the merger, GEE Portfolio became the owner
50% of the outstanding capital stock of SNI Companies, Inc., a
Delaware corporation and a wholly-owned subsidiary of SNI Holdco
(SNI Companies and collectively with SNI Holdco, the Acquired
Companies).

The aggregate consideration paid for the shares of SNI Holdco
(the Merger Consideration) was $86 million minus the
$20,220,710.88 of Long Term Debt (as defined in the Merger
Agreement) of the Acquired Companies immediately before closing
plus or minus the NWC Adjustment Amount or the difference
in the book value of the Closing Net Working Capital (as defined
in Merger Agreement) of the Acquired Companies as compared to the
Benchmark Net Working Capital (as defined in the Merger
Agreement) of the Acquired Companies of $9.2 million.

On the Closing Date, the Company made the following payments:

The SNIH Stockholders have agreed to indemnify the Company with
respect to the breach of the representations and warranties set
forth in the Merger Agreement. The relative responsibility and
Indemnification Ceiling of each SNIH Stockholder is determined as
set forth in the Merger Agreement. In addition, the
indemnification obligations of the SNIH Stockholders are subject
to certain overall baskets, deductibles and ceilings as set forth
in the Merger Agreement. The Company is entitled to seek set off
or recoupment for indemnification with respect to a respective
SNIH Stockholders 9.5% Notes or stock or other property, as may
be owned by that SNIH Stockholder and held in escrow. $8.6
million in aggregate principal amount of the 9.5% Notes will be
held in escrow by the Escrow Agent against which the Company may
seek set-off in the event of certain indemnification obligations
of the SNIH Stockholders. These 9.5% Notes will be released from
escrow after a period of eighteen months if there are there are
no outstanding claims for indemnification, but not if there are
outstanding claims for indemnification.

The Company has agreed to prepare and file with the Securities
and Exchange Commission a proxy statement for the purpose of
convening a meeting of its stockholders to obtain Requisite
Shareholder Consent (as defined below) to approve the conversion
of shares of Series B Convertible Preferred Stock and 9.5% Notes
into Common Stock and the payment of interest on the 9.5% Notes
in shares of Common Stock in excess of the Conversion Limit (as
defined below).

The Company has agreed to provide the SNIH Stockholders with
certain piggyback and demand registration rights with respect to
the shares of Common Stock that are issuable upon the conversion
of the Series B Convertible Preferred Stock and the 9.5% Notes.

The transaction has been unanimously approved by the board of
directors of the Company and GEE Portfolio, by the Company as
sole stockholder of GEE Portfolio and by each of the Acquired
Companies.

The Company utilized $52,336,000 of the proceeds from its Senior
Credit Agreement (as defined below) to finance the Closing Cash
Payment to the SNIH Stockholders as well as the other cash
payments described above and made at the Closing.

SNI Companies, led by co-founder and current Chairman and CEO Ron
Smith, is a premier provider of recruitment and staffing services
specializing in administrative, finance, accounting, banking,
technology, and legal professions. Through its Staffing Now,
Accounting Now, SNI Technology, SNI Financial, Legal Now, SNI
Energy and SNI Certes divisions, SNI Companies delivers staffing
solutions on a temporary/contract, temp/contract-to hire, full
time and direct hire basis, across a wide range of disciplines
and industries including finance, accounting, banking, technical,
software, tax, human resources, legal, engineering, construction,
manufacturing, natural resources, energy and administrative
professional. SNI Companies has offices in Colorado, Connecticut,
Washington DC, Georgia, Illinois, Iowa, Louisiana, Maryland,
Massachusetts, Minnesota, New Jersey, Pennsylvania, Texas and
Virginia.

The assets acquired primarily consist of accounts receivable,
unbilled revenue, deposit, leases, customer contracts, fixed
assets and other current assets. In addition, the purchase price
for the Acquired Companies includes value derived from goodwill
and the talented sales and recruiting personnel employed by the
Acquired Companies.

A copy of the Merger Agreement is attached hereto as Exhibit
10.1. The description of the Merger Agreement contained in this
Current Report on the Form 8-K is qualified in its entirety by
referenced to Exhibit 10.1.

On April 3, 2017, the Company and Thrivent entered into an
Agreement which restricts Thrivent from converting all or any
portion of its shares of Series B Convertible Preferred Stock to
the extent that after giving effect to such conversion as set
forth in a written election to GEE to convert the Preferred
Stock, Thrivent (together with Thrivents Affiliates, and any
other person or entity acting as a group together with Thrivent
or any of Thrivents Affiliates), would beneficially own Common
Stock in excess of 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock issuable upon conversion of Thrivents
Series B Convertible Preferred Stock (the Beneficial Ownership
Limitation). The Beneficial Ownership Limitation may be waived by
Thrivent, upon not less than 61 days prior notice to the Company
that Thrivent would like to waive the Beneficial Ownership
Limitation with regard to any or all shares of Common Stock
issuable upon conversion of the Series B Convertible Preferred
Stock.

A copy of this Agreement is attached hereto as Exhibit 10.7. The
description of this Agreement contained in this Current Report is
qualified in its entirety by reference to Exhibit 10.7.

The Company will file with the Securities and Exchange Commission
(the SEC) the financial statements and pro forma financial
information required to be filed to Rule 8-04 of Regulation S-X
and Article 11 of Regulation S-X within 71 days after the date on
which this Current Report on Form 8-K was required to be filed
with the SEC.

Item 2.01 Completion of Acquisition of Disposition of
Assets.

The information contained in Item 1.01 of this Form is hereby
incorporated by referenced into this Item 2.01.

Item 2.03 Creation of a Direct Financial
Obligation.

On April 3, 2017, the Company issued and paid to certain SNIH
Stockholders as part of the Merger Consideration an aggregate of
$12,5 million in aggregate principal amount of its 9.5% Notes.
The 9.5% Notes mature on October 3, 2021 (the Maturity Date). The
9.5% Notes are convertible into shares of the Companys Common
Stock at a conversion price equal to $5.83 per share (subject to
adjustment as provided in the 9.5% Note upon any stock dividend,
stock combination or stock split or upon the consummation of
certain fundamental transactions) (the Conversion Price) ;
provided, however, that unless and until such time as the
Company has received Requisite Stockholder Approval (as
hereinafter defined) the Company shall not be permitted to make
any interest payment in shares of Common Stock to the extent that
such issuance would cause the Company to exceed the Conversion
Limit. Interest on the 9.5% Notes accrues at the rate of 9.5% per
annum and shall be paid quarterly in arrears on June 30,
September 30, December 31 and March 31, beginning on June 30,
2017, on each conversion date with respect to the 9.5% Notes (as
to that principal amount then being converted), and on the
Maturity Date (each such date, an Interest Payment Date). At the
option of the Company, interest may be paid on an Interest
Payment Date either in cash or in shares of Common Stock of the
Company, which Common Stock shall be valued at the average daily
VWAP of the Common Stock for the 20 trading days immediately
prior to such Interest Payment Date provided, however,
that unless and until such time as the Company has received
Requisite Stockholder Approval the Company shall not be permitted
to make any interest payment in shares of Common Stock to the
extent that such issuance would cause the Company to exceed the
Conversion Limit. For purposes of the 9.5% Notes and the Companys
Series B Convertible Preferred Stock, the term Requisite
Stockholder Approval means approval by the stockholders of the
Company in compliance with Section 712 of the NYSE MKT Company
Guide and Regulation 14A under the Securities Exchange Act of
1934, as amended, of the issuance of shares of Common Stock that
would constitute more than 19.99% of the Common Stock outstanding
immediately prior to the closing date of the Merger (the
Conversion Limit) upon (i) the conversion of the Companys Series
B Convertible Preferred Stock, and/or (ii) the conversion of the
9.5% Notes and/or (iii) the payment of interest on the 9.5% Notes
in shares of Common Stock and/or (iv) any other issuance of
Common Stock in connection with the issuance of the 9.5% Notes.
All or any portion of the 9.5% Notes may be redeemed by the
Company for cash at any time on or after April 3, 2018 that the
average daily VWAP of the Companys Common Stock reported on the
principal trading market for the Common Stock exceeds the then
applicable Conversion Price for a period of 20 trading days. The
redemption price shall be an amount equal to 50% of the then
outstanding principal amount of the 9.5% Notes being redeemed,
plus accrued and unpaid interest thereon. Except as otherwise
provided in the 9.5% Notes, the Company may not prepay any
portion of the principal amount of any 9.5% Note without the
prior written consent of the holder thereof. Any prepayments of
the 9.5% Notes shall be made on a pro rata basis to all holders
of 9.5% Notes based on the aggregate principal amount of 9.5%
Notes held by such holders. The Company shall be required to
prepay the 9.5% Notes together with accrued and unpaid interest
thereon upon the consummation by the Company of any Change of
Control. For purposes of the 9.5% Notes, a Change of Control of
the Company shall mean any of the following: (A) the Company
effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions or (B) the
consummation of any transaction (including, without limitation,
any merger or consolidation), the result of which is that any
person or entity together with their affiliates, becomes the
beneficial owner, directly or indirectly, of more than 50% of the
Common Stock of the Company. Thrivent is restricted in its 9.5%
Note from converting all or any portion of its 9.5% Note into
shares of Common Stock to the extent that after giving effect to
such conversion Thrivent (together with its affiliates and any
other person or entity acting as a group together with the
Thrivent or any of Thrivents affiliates) would beneficially own
Common Stock in excess of 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of
the Notes (the Beneficial Ownership Limitation) The Beneficial
Ownership Limitation may be waived by Thrivent, upon not less
than 61 days prior notice to the Company that Thrivent would like
to waive the Beneficial Ownership Limitation with regard to any
or all shares of Common Stock issuable upon conversion of its
9.5% Note. Each of the 9.5% Notes is subject to the right by the
Company to the extent provided in the Merger Agreement, to set
off any amounts payable to the holders of the 9.5% Notes against
amounts owing by the SNIH Stockholders to the Company or the
other Buyer Indemnified Parties. Each of the 9.5% Notes is
subordinated in payment to the obligations of the Company to the
lenders parties to that certain Revolving Credit, Term Loan and
Security Agreement, dated as of March 31, 2017 by and among the
Company, the Companys subsidiaries named as borrowers therein
(collectively with the Company, the Borrowers), the senior
lenders named therein and PNC Bank, National Association, as
administrative agent and collateral agent (the Agent) for the
senior lenders (the Senior Credit Agreement), to those certain
Subordination and Intercreditor Agreements, each dated as of
March 31, 2017 by and among the Company, the Borrowers, the Agent
and each of the holders of the 9.5% Notes.

None of the 9.5% Notes issued to the SNIH Stockholders are
registered under the Securities Act of 1933, as amended (the
Securities Act). Each of the SNIH Stockholders who received 9.5%
Notes is an accredited investor. The issuance of the 9.5% Notes
to such SNIH Stockholders is exempt from the registration
requirements of the Act in reliance on an exemption from
registration provided by Section 4(2) of the Act.

A copy of the Form of 9.5% Note is filed as Exhibit 4.1 hereto.
Copies of the Subordination Agreements with each of the holders
of the 9.5% Notes are filed as Exhibits, 10.1, 10.2, 10.3, 10.4,
10.5 and 10.6 hereto. The descriptions of each of the 9.5% Notes
and the Subordination Agreements contained in this Current Report
on the Form 8-K are qualified in their entirety by reference to
Exhibits 4.1 and 10.1, 10.2, 10.3, 10.4, 10.5, and 10.6,
respectively.

Item 3.02 Unregistered Sales of Equity
Securities.

The information contained in Item 1.01 and in Item 5.03 of this
Form is hereby incorporated by referenced into this Item 3.02.

On April 3, 2017, the Company agreed to issue to certain SNIH
Stockholders upon receipt of duly executed letters of transmittal
as part of the Merger Consideration, an aggregate of
approximately 5,926,000 shares of its Series B Convertible
Preferred Stock to certain of the SNIH Stockholders as part of
the Merger Consideration. The Series B Convertible Preferred
Stock has a liquidation preference equal to $4.86 per share and
ranks senior to all Junior Securities (including the Companys
Common Stock) with respect to any distribution of assets upon
liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary. In the event that the Company declares
or pays a dividend or distribution on its Common Stock, whether
such dividend or distribution is payable in cash, securities or
other property, including the purchase or redemption by the
Company or any of its subsidiaries of shares of Common Stock for
cash, securities or property, the Company is required to
simultaneously declare and pay a dividend on the Series B
Convertible Preferred Stock on a pro rata basis with the Common
Stock determined on an as-converted basis assuming all Shares had
been converted as of immediately prior to the record date of the
applicable dividend or distribution. Except as set forth in the
Resolution Establishing Series (as defined below) as may be
required by Illinois law, the holders of the Series B Convertible
Preferred Stock have no voting rights. to the Resolution
Establishing Series, without the prior written consent of holders
of not less than a majority of the then total outstanding Shares
of Series B Convertible Preferred Stock, voting separately as a
single class, the Company shall not create, or authorize the
creation of, any additional class or series of capital stock of
the Company (or any security convertible into or exercisable for
any class or series of capital stock of the Company) that ranks
pari passu with or superior to the Series B Convertible Preferred
Stock in relative rights, preferences or privileges (including
with respect to dividends, liquidation or voting). Each share of
Series B Convertible Preferred Stock shall be convertible at the
option of the holder thereof into one share of Common Stock at an
initial conversion price equal to $4.86 per share, each as
subject to adjustment in the event of stock splits, stock
combinations, capital reorganizations, reclassifications,
consolidations, mergers or sales, as set forth in the Resolution
Establishing Series: provided, however, that unless and
until such time as the Company has received Requisite Stockholder
Approval a holder of Shares of Series B Convertible Preferred
Stock shall not be permitted to effect any conversion of any
shares of Series B Preferred Stock to the extent that the shares
of Common Stock issuable upon such conversion when taken together
with the shares of Common Stock previously issued with respect to
(i) prior conversions of shares of Series B Convertible Preferred
Stock, and/or (ii) prior conversions of any 9.5% Notes and/or
(iii) the payment of dividends on any 9.5% Notes in shares of
Common Stock and/or (iv) otherwise in connection with the
issuance of the 9.5% Notes would result in the issuance of shares
of Common Stock that exceed the Conversion Limit.

None of the shares of Series B Preferred Stock issued to the SNIH
Stockholders are registered under the Securities Act. Each of the
SNIH Stockholders who received shares of Series B Preferred Stock
is an accredited investor. The issuance of the shares of Series B
Preferred Stock to such SNIH Stockholders is exempt from the
registration requirements of the Act in reliance on an exemption
from registration provided by Section 4(2) of the Act.

Item 5.03 Amendment of Articles of Incorporation

On April 3, 2015, the Company filed a Statement of Resolution
Establishing its Series B Convertible Preferred Stock with the
State of Illinois. (the Resolution Establishing Series). to the
Resolution Establishing Series, the Company designated 5,950,000
of its authorized preferred stock as Series B Convertible
Preferred Stock, without par value. A description of the terms of
the Series B Convertible Preferred Stock is set forth in Item
3.02. The information in Item 3.02 of this Form is hereby
incorporated by reference into this Item 5.03.

A copy of the Statement of Resolution Establishing Series B
Convertible Preferred Stock is filed as Exhibit 3.1 hereto. The
description of the Series B Convertible Preferred Stock contained
in this Current Report on Form 8-L is qualified in its entirety
by reference to Exhibit 3.1.

Item 9.01 Financial Statements and Exhibits.

About GEE GROUP, INC. (NYSEMKT:JOB)

GEE Group Inc., formerly General Employment Enterprises, Inc., is a provider of specialized staffing solutions. The Company operates through two segments: contract staffing services and direct hire placement. The Company’s professional staffing services provide information technology, engineering, medical and accounting professionals to clients on either a regular placement basis or a temporary contract basis. The Company’s industrial staffing business provides weekly temporary staffing for light industrial clients, primarily in Ohio. The Company and its subsidiaries provide professional placement services specializing in the placement of information technology, engineering, and accounting professionals, and medical data entry assistants (medical scribes) specializing in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics, for direct hire and contract staffing, and temporary staffing services in light industrial staffing.

GEE GROUP, INC. (NYSEMKT:JOB) Recent Trading Information

GEE GROUP, INC. (NYSEMKT:JOB) closed its last trading session up +0.10 at 5.91 with 8,492 shares trading hands.