EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RECRUITSOFT, INC.,
KANGAROO ACQUISITION CORPORATION
AND
XXXXX XXXXX, INC.
DATED AS OF OCTOBER 21, 2003
TABLE OF CONTENTS
PAGE
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INDEX OF EXHIBITS .................................................................. iv
ARTICLE I THE MERGER ............................................................... 1
1.1 The Merger........................................................ 1
1.2 Effective Time.................................................... 2
1.3 Effect of the Merger.............................................. 3
1.4 Certificate of Incorporation; Bylaws.............................. 3
1.5 Directors and Officers............................................ 4
1.6 Maximum Shares to Be Issued; Effect on Capital Stock.............. 4
1.7 Dissenting Shares................................................. 6
1.8 Surrender of Certificates......................................... 7
1.9 Earn-Out.......................................................... 8
1.10 Additional Recruitsoft Share Consideration........................ 10
1.11 No Further Ownership Rights in Xxxxx Xxxxx Capital Stock.......... 12
1.12 Lost, Stolen or Destroyed Certificates............................ 12
1.13 Tax and Accounting Consequences................................... 12
1.14 Taking of Necessary Action; Further Action........................ 12
ARTICLE II REPRESENTATIONS AND WARRANTIES OF XXXXX XXXXX............................ 12
2.1 Organization of Xxxxx Xxxxx....................................... 12
2.2 Xxxxx Xxxxx Capital Structure..................................... 13
2.3 Subsidiaries...................................................... 14
2.4 Authority......................................................... 14
2.5 Xxxxx Xxxxx Financial Statements.................................. 15
2.6 No Undisclosed Liabilities........................................ 15
2.7 No Changes........................................................ 15
2.8 Tax............................................................... 17
2.9 Restrictions on Business Activities............................... 20
2.10 Title to Properties; Absence of Liens and Encumbrances............ 20
2.11 Intellectual Property............................................. 21
2.12 Agreements, Contracts and Commitments............................. 27
2.13 Related Party Transactions........................................ 28
2.14 Compliance with Laws.............................................. 28
2.15 Litigation........................................................ 28
2.16 Insurance......................................................... 29
2.17 Minute Books...................................................... 29
2.18 Environmental Matters............................................. 29
2.19 Brokers' and Finders' Fees; Third Party Expenses.................. 30
2.20 Employee Matters and Benefit Plans................................ 30
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TABLE OF CONTENTS
(CONTINUED)
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2.21 Employees......................................................... 35
2.22 Governmental Authorization........................................ 35
2.23 Third Party Consents.............................................. 35
ARTICLE III REPRESENTATIONS AND WARRANTIES OF RECRUITSOFT........................... 35
3.1 Organization, Standing and Power.................................. 35
3.2 Authority......................................................... 35
3.3 Recruitsoft Capital Structure; Issuance of Shares................. 36
3.4 Subsidiaries; Investments......................................... 37
3.5 No Conflict....................................................... 38
3.6 Governmental Approvals............................................ 38
3.7 Litigation........................................................ 38
3.8 Intellectual Property............................................. 39
3.9 Interim Operations of Merger Sub.................................. 39
3.10 Financial Statements; Liabilities................................. 39
3.11 Material Contracts and Other Commitments.......................... 40
3.12 Title to Property and Assets; Licenses; Permits................... 40
3.13 Related Party Transactions........................................ 41
3.14 Registration Rights............................................... 41
3.15 Changes........................................................... 41
3.16 Tax Returns, Payments and Elections............................... 42
3.17 Insurance......................................................... 42
3.18 Minute Books...................................................... 42
3.19 Employee Matters.................................................. 42
3.20 Environmental Matters............................................. 43
ARTICLE IV CLOSING CONDITIONS ...................................................... 43
4.1 Xxxxx Xxxxx Closing Conditions.................................... 43
4.2 Recruitsoft Closing Conditions.................................... 44
ARTICLE V ADDITIONAL AGREEMENTS..................................................... 44
5.1 Issuance of Series D Preferred Stock.............................. 44
5.2 Confidentiality................................................... 45
5.3 Employee Benefit Matters.......................................... 46
5.4 401(k) Plan....................................................... 46
5.5 Expenses.......................................................... 46
5.6 Public Disclosure................................................. 46
5.7 FIRPTA Compliance................................................. 47
5.8 Reasonable Efforts................................................ 47
5.9 Additional Documents and Further Assurances....................... 47
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TABLE OF CONTENTS
(CONTINUED)
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5.10 Tax Matters....................................................... 47
ARTICLE VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW....................... 47
6.1 Survival of Representations and Warranties........................ 47
6.2 Escrow Arrangements............................................... 48
ARTICLE VII GENERAL PROVISIONS ..................................................... 55
7.1 Notices........................................................... 55
7.2 Interpretation.................................................... 56
7.3 Counterparts...................................................... 57
7.4 Entire Agreement.................................................. 57
7.5 Severability...................................................... 57
7.6 Other Remedies.................................................... 57
7.7 Specific Performance.............................................. 57
7.8 Governing Law..................................................... 57
7.9 Rules of Construction............................................. 58
7.10 Assignment........................................................ 58
7.11 Absence of Third Party Beneficiary Rights......................... 58
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
--------- -------------
Exhibit A Form of Legal Opinion of Counsel to Xxxxx Xxxxx
Exhibit B Form of Employment and Noncompetition Agreement
Exhibit C Form of Second Amended and Restated Investor Rights Agreement
Exhibit D Form of Legal Opinion of Counsel to Recruitsoft
Exhibit E Form of Series D Preferred Stock Options
Exhibit F Form of Stockholder Certificates
Exhibit G Fifth Amended and Restated Certificate of Incorporation of
Recruitsoft
SCHEDULE DESCRIPTION
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1.2 Xxxxx Xxxxx Employees
1.2(c) Xxxxx Xxxxx Employees to Receive Recruitsoft Series D Preferred
Stock Options
1.6 Xxxxx Xxxxx Stockholders
6.2 Escrow Fund Contributions
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of October 21, 2003 by and among Recruitsoft, Inc., a Delaware
corporation ("RECRUITSOFT"), Kangaroo Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Recruitsoft ("MERGER SUB"), and
Xxxxx Xxxxx, Inc., a Delaware corporation ("XXXXX XXXXX").
RECITALS
A. The Boards of Directors of each of Recruitsoft, Xxxxx Xxxxx
and Merger Sub believe it is in the best interests of each company and their
respective stockholders that Recruitsoft acquire Xxxxx Xxxxx through the
statutory merger of Merger Sub with and into Xxxxx Xxxxx (the "MERGER") and, in
furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement, all of the issued and outstanding shares
of capital stock of Xxxxx Xxxxx ("XXXXX XXXXX CAPITAL STOCK") shall be
extinguished or converted into the right to receive shares of Series D Preferred
Stock of Recruitsoft (the "SERIES D PREFERRED STOCK") as set forth herein, and
all outstanding options (whether vested or unvested) or warrants to acquire
shares of Xxxxx Xxxxx Capital Stock shall be terminated or assumed, as set forth
herein.
C. The Escrow Amount (as defined in Section 1.6(f)) shall be
placed in escrow by Recruitsoft, the release of which shares shall be contingent
upon certain events and conditions, all as set forth in ARTICLE VI hereof.
D. Xxxxx Xxxxx, Recruitsoft and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
E. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section
1.2(a)) and subject to and upon the terms and conditions of this Agreement and
the applicable provisions of the Delaware
General Corporation Law ("DELAWARE LAW"), Merger Sub shall be merged with and
into Xxxxx Xxxxx, the separate corporate existence of Merger Sub shall cease and
Xxxxx Xxxxx shall continue as the surviving corporation and as a wholly-owned
subsidiary of Recruitsoft. Xxxxx Xxxxx as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "SURVIVING CORPORATION."
1.2 Effective Time.
(a) The closing of the Merger (the "CLOSING") will take
place concurrently with the execution and delivery hereof at the offices of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx,
unless another place or time is agreed to by Recruitsoft and Xxxxx Xxxxx. The
date upon which the Closing actually occurs is herein referred to as the
"CLOSING DATE." On the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing the Certificate of Merger (or like instrument) with
the Secretary of State of Delaware (the "CERTIFICATE OF MERGER"), in accordance
with the relevant provisions of Delaware Law (the time of acceptance by the
Secretary of State of Delaware of such filing being referred to herein as the
"EFFECTIVE TIME").
(b) At the Closing, Xxxxx Xxxxx shall deliver or cause to
be delivered to Recruitsoft the following:
(i) a certificate, dated as of the Closing Date
and signed by the Secretary of Xxxxx Xxxxx, certifying that attached thereto
are: (i) a true and complete copy of the resolutions adopted by the Board of
Directors of Xxxxx Xxxxx, (ii) a true and complete copy of the resolutions
adopted by the stockholders of Xxxxx Xxxxx and (iii) true and complete copies of
the most recent Certificate of Incorporation of Xxxxx Xxxxx and the Bylaws of
Xxxxx Xxxxx;
(ii) a good standing certificate for Xxxxx Xxxxx
from the Secretary of State of the State of Delaware, dated as of a date within
three days of the Closing;
(iii) an executed legal opinion from Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, legal counsel to Xxxxx
Xxxxx, in substantially the form attached hereto as Exhibit A;
(iv) with regard to the individuals listed on
Schedule 1.2, executed Employment and Noncompetition Agreements in the form
attached hereto as Exhibit B;
(v) those consents and waivers from third
parties to White Amber's contracts and other instruments required to consummate
the transactions contemplated by this Agreement, as set forth in the Xxxxx Xxxxx
Schedules (as defined in ARTICLE II);
(vi) all other documents, agreements,
certificates, instruments or writings required to be delivered by Xxxxx Xxxxx on
or prior to the Closing Date pursuant to this Agreement or as may be reasonably
requested by any party in order to consummate the transactions contemplated by
this Agreement.
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(c) At the Closing, Recruitsoft shall deliver or cause to
be delivered to Xxxxx Xxxxx the following:
(i) the Closing Share Consideration to the Xxxxx
Xxxxx Stockholders (defined in Section 1.6(f)) entitled to receive the same
subject to satisfaction of Section 1.8 hereof;
(ii) with regard to the individuals listed on
Schedule 1.2, executed Employment and Noncompetition Agreements in the form
attached hereto as Exhibit B to such individuals;
(iii) to Xxxxx Xxxxx a certificate, dated as of
the date of the Closing and signed by the Secretary of Recruitsoft, certifying
that attached thereto are: (i) a true and complete copy of the resolutions
adopted by the Board of Directors of Recruitsoft, (ii) a true and complete copy
of the resolutions adopted by the stockholders of Recruitsoft and (iii) true
and complete copies of the Recruitsoft Charter (defined herein) and the Bylaws
of Recruitsoft;
(iv) to Xxxxx Xxxxx a good standing certificate
for Recruitsoft from the Secretary of State of the State of Delaware, dated as
of a date within three days of the Closing;
(v) to Xxxxx Xxxxx an executed Second Amended
and Restated Investor Rights Agreement (the "RECRUITSOFT INVESTOR RIGHTS
AGREEMENT") in the form attached hereto as Exhibit C;
(vi) to Xxxxx Xxxxx an executed legal opinion
from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC, legal counsel to Recruitsoft, in
substantially the form attached hereto as Exhibit D;
(vii) options in the form attached hereto as
Exhibit E (the "SERIES D PREFERRED STOCK OPTIONS") to the persons listed on
Schedule 1.2(c) to purchase up to that number of shares of Series D Preferred
Stock listed opposite such person's name on such schedule; and
(viii) all other documents, agreements,
certificates or writings required to be delivered by Recruitsoft on or prior to
the Closing Date pursuant to this Agreement or as may be reasonably requested by
any party in order to consummate the transactions contemplated by this
Agreement.
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
each of Xxxxx Xxxxx and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of each of Xxxxx Xxxxx and Merger Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated to be
the same as the Certificate of Incorporation of Merger Sub until thereafter
amended as provided by law and such Certificate of Incorporation; provided,
however, that Article I of the Certificate of Incorporation shall be amended to
read as follows: "The name of this corporation is Xxxxx Xxxxx, Inc."
(b) The Bylaws of the Surviving Corporation shall be
amended and restated to be the same as the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, until thereafter amended, except that
all references to Merger Sub shall be changed to refer to Xxxxx Xxxxx.
1.5 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Bylaws of the
Surviving Corporation.
1.6 Maximum Shares to Be Issued; Effect on Capital Stock. The
maximum number of shares of Series D Preferred Stock to be issued in exchange
for the acquisition by Recruitsoft of all outstanding Xxxxx Xxxxx Capital Stock
shall be equal to the Merger Consideration (as defined in Section 1.6(f)).
Subject to the terms and conditions of this Agreement, as of the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, Xxxxx
Xxxxx or the holder of any shares of the Xxxxx Xxxxx Capital Stock, the
following shall occur:
(a) Conversion of Xxxxx Xxxxx Series C Preferred Stock.
Each share of Xxxxx Xxxxx Series C Preferred Stock (as defined in Section
2.2(a)) issued and outstanding immediately prior to the Effective Time (other
than any shares of Xxxxx Xxxxx Capital Stock to be canceled pursuant to Section
1.6(c) and any Dissenting Shares (as defined and to the extent provided in
Section 1.7(a)) will be canceled and extinguished and be converted automatically
into the right to receive, upon surrender of the certificate representing such
share of Xxxxx Xxxxx Series C Preferred Stock in the manner provided in Section
1.8, that number of shares of Series D Preferred Stock equal to the quotient
obtained by dividing (i) the Recruitsoft Share Consideration by (ii) the
Aggregate Xxxxx Xxxxx Series C Number (as defined in Section 1.6(f)) (the
"EXCHANGE RATIO").
(b) Cancellation of Xxxxx Xxxxx Series A-1 Preferred
Stock, Xxxxx Xxxxx Series B-1 Preferred Stock and Xxxxx Xxxxx Common Stock. Each
share of Xxxxx Xxxxx Series A-1 Preferred Stock, Xxxxx Xxxxx Series B-1
Preferred Stock and Xxxxx Xxxxx Common Stock (each as defined in Section 2.2(a))
issued and outstanding immediately prior to the Effective Time (other than any
shares of Xxxxx Xxxxx Capital Stock to be canceled pursuant to Section 1.6(c)
and any Dissenting Shares (as defined and to the extent provided in Section
1.7(a)) will be canceled and extinguished and shall not be converted into the
right to receive any consideration whatsoever in the Merger.
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(c) Cancellation of Xxxxx Xxxxx-Owned Stock. Each share
of Xxxxx Xxxxx Capital Stock owned by Xxxxx Xxxxx or any direct or indirect
wholly-owned subsidiary of Xxxxx Xxxxx immediately prior to the Effective Time
shall be canceled and extinguished and shall not be converted into the right to
receive any consideration whatsoever in the Merger.
(d) Stock Options and Warrants.
(i) At the Effective Time, all issued and
outstanding warrants and options to purchase Xxxxx Xxxxx Series A-1 Preferred
Stock, Xxxxx Xxxxx Series B-1 Preferred Stock, and Xxxxx Xxxxx Common Stock then
outstanding under White Amber's 2000 Stock Option Plan/Stock Issuance Plan
("WHITE AMBER'S STOCK PLAN") or otherwise shall be cancelled and terminated and
shall not be converted into the right to receive any consideration whatsoever in
the Merger.
(ii) At the Effective Time, all issued and
outstanding warrants to purchase Xxxxx Xxxxx Series C Preferred Stock, whether
vested or unvested, shall be assumed by Recruitsoft (each, an "ASSUMED
WARRANT"). Each Assumed Warrant so assumed by Recruitsoft under this Agreement
shall continue to have, and be subject to, the same terms and conditions set
forth in the agreements governing such Assumed Warrant immediately prior to the
Effective Time, except that (i) such Assumed Warrant shall be exercisable (when
vested) for that number of whole shares of Series D Preferred Stock equal to the
product of the number of shares of Xxxxx Xxxxx Series C Preferred Stock that
were issuable upon exercise of such Assumed Warrants multiplied by the Exchange
Ratio, rounded down to the nearest whole number of shares of Series D Preferred
Stock, and (ii) the per share exercise price for the shares of Series D
Preferred Stock issuable upon exercise of such Assumed Warrant shall be equal to
the quotient obtained by dividing the exercise price per share of Xxxxx Xxxxx
Series C Preferred Stock at which such Assumed Warrant was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent.
(iii) Within 30 business days after the Effective
Time, Recruitsoft will issue to each person who, immediately prior to the
Effective Time, was a holder of an Assumed Warrant a document evidencing the
foregoing assumption of such Assumed Warrant by Recruitsoft.
(e) Fractional Shares. No fraction of a share of Series D
Preferred Stock will be issued, but in lieu thereof, each holder of shares of
Series D Preferred Stock who would otherwise be entitled to a fraction of a
share of Series D Preferred Stock (after aggregating all fractional shares of
Series D Preferred Stock to be received by such holder) shall be entitled to
receive, without any interest, from Recruitsoft an amount of cash (rounded to
the nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) $0.50 (the "DEEMED PRICE").
(f) Definitions.
(i) "AGGREGATE XXXXX XXXXX SERIES C PREFERRED
NUMBER" shall mean that number of shares of Xxxxx Xxxxx Series C Preferred Stock
issued and outstanding immediately
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prior to the Effective Time, plus any shares of Xxxxx Xxxxx Series C Preferred
Stock issuable upon exercise of the Assumed Warrants.
(ii) "CLOSING SHARE CONSIDERATION" shall be
9,460,367 shares of Series D Preferred Stock.
(iii) "ESCROW AMOUNT" shall mean 1,164,356 shares
of Series D Preferred Stock.
(iv) "XXXXX XXXXX STOCKHOLDER" shall mean those
holders of Xxxxx Xxxxx Series C Preferred Stock as listed on Schedule 1.6
attached hereto.
(v) "MERGER CONSIDERATION" shall mean the
Recruitsoft Share Consideration plus the Earn-Out Shares (as defined in Section
1.9(a)), if any, plus the Additional Recruitsoft Share Consideration (as defined
in Section 1.10), if any.
(vi) "RECRUITSOFT SHARE CONSIDERATION" shall be
11,305,206 shares of Series D Preferred Stock.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to
the contrary, any shares of Xxxxx Xxxxx Capital Stock held by a holder who has
demanded and perfected appraisal or dissenters' rights for such shares in
accordance with Delaware Law and who, as of the Effective Time, has not
effectively withdrawn or lost such appraisal or dissenters' rights ("DISSENTING
SHARES") shall not be converted into or represent a right to receive Series D
Preferred Stock pursuant to Section 1.6, but the holder thereof shall only be
entitled to such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if
any holder of shares of Xxxxx Xxxxx Capital Stock who is otherwise entitled to
exercise dissenters' rights under Delaware Law shall effectively withdraw or
lose (through failure to perfect or otherwise) such dissenters' rights, then, as
of the later of the Effective Time and the occurrence of such event, such
holder's shares shall automatically be converted into and represent only the
right to receive Series D Preferred Stock pursuant to Section 1.6 and payment
for any fractional share as provided in Section 1.6, without interest thereon,
upon surrender of the certificate representing such shares.
(c) Xxxxx Xxxxx shall give Recruitsoft (i) prompt notice
of any written demands for the exercise of dissenters' rights in respect of any
shares of Xxxxx Xxxxx Capital Stock, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law (including without limitation
instruments concerning appraisal or dissenters' rights) and received by Xxxxx
Xxxxx and (ii) the opportunity to participate in all negotiations and
proceedings with respect to such demands. Xxxxx Xxxxx shall not, except with the
prior written consent of Recruitsoft,
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voluntarily make any payment with respect to any demands for the exercise of
dissenters' rights in respect of any shares of Xxxxx Xxxxx Capital Stock or
offer to settle or settle any such demands.
1.8 Surrender of Certificates.
(a) Exchange Agent. Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
shall serve as "EXCHANGE AGENT" in the Merger.
(b) Recruitsoft to Provide Series D Preferred Stock.
Promptly after the Effective Time, Recruitsoft shall make available to the
Exchange Agent for exchange in accordance with this ARTICLE I, the Recruitsoft
Share Consideration in exchange for outstanding shares of Xxxxx Xxxxx Capital
Stock; provided that, on behalf of the holders of the Closing Share
Consideration, Recruitsoft shall cause the Exchange Agent to deposit into an
escrow account a number of shares of Series D Preferred Stock equal to the
Escrow Amount. The portion of the Escrow Amount contributed on behalf of each
holder of Xxxxx Xxxxx Capital Stock shall be as set forth on Schedule 6.2
hereof. Distributions of any shares from the Escrow Amount shall be governed by
the terms and conditions of Article VI below. No portion of the Escrow Amount
shall be contributed in respect of any Assumed Warrant.
(c) Exchange Procedures. As soon as practicable after the
Effective Time, Recruitsoft shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Effective Time represented outstanding shares of Xxxxx
Xxxxx Capital Stock and which shares were converted into the right to receive
shares of Series D Preferred Stock pursuant to Section 1.6, (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent, (ii) an executed
Stockholder Certificate in substantially the form attached hereto as Exhibit F
and a Form W-8 or W-9, as applicable and (iii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Series D Preferred Stock. Upon surrender of a Certificate to the
Exchange Agent, together with such letter of transmittal and Stockholder
Certificate, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Series D Preferred Stock (less the number of shares of Series D
Preferred Stock to be deposited in the Escrow Fund (as defined in Section
6.2(a)) on such holder's behalf pursuant to ARTICLE VI hereof), plus cash in
lieu of fractional shares in accordance with Section 1.6(e), to which such
holder is entitled pursuant to Section 1.6, and any dividends or other
distributions to which such holder is entitled pursuant to Section 1.8(d)
(collectively, the "ADDITIONAL PAYMENTS"), and the Certificate so surrendered
shall forthwith be cancelled. As soon as practicable after the Effective Time,
and subject to and in accordance with the provisions of ARTICLE VI hereof,
Recruitsoft shall cause to be distributed to the Escrow Agent (as defined in
Section 6.2(a)) a certificate or certificates representing that number of shares
of Series D Preferred Stock equal to the Escrow Amount, which certificate shall
be registered in the name of the Escrow Agent. Such shares shall be beneficially
owned by the holders on whose behalf such shares were
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deposited in the Escrow Fund and shall be available to compensate Recruitsoft as
provided in ARTICLE VI. From the Closing and until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented shares of
Xxxxx Xxxxx Capital Stock will be deemed from and after the Effective Time, for
all corporate purposes, to represent solely (i) ownership of the number of full
shares of Series D Preferred Stock into which such shares of Xxxxx Xxxxx Capital
Stock shall have been so exchanged and (ii) the right to receive the Additional
Payments, if any.
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions with respect to Series D Preferred Stock
declared or made with a record date after the Effective Time will be paid to the
holder of any unsurrendered Certificate with respect to the shares of Series D
Preferred Stock represented thereby until the holder of record of such
Certificate shall surrender such Certificate in accordance with Section 1.8(c).
Subject to applicable law, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of Series D Preferred Stock issued in exchange therefor, without interest, at
the time of such surrender, the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid with respect to such
whole shares of Series D Preferred Stock.
(e) Transfers of Ownership. If any certificate for shares
of Series D Preferred Stock is to be issued in a name other than that in which
the Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Recruitsoft or any agent designated
by it any transfer or other taxes required by reason of the issuance of a
certificate for shares of Series D Preferred Stock in any name other than that
of the registered holder of the Certificate surrendered, or established to the
satisfaction of Recruitsoft or any agent designated by it that such tax has been
paid or is not payable.
(f) No Liability. Notwithstanding anything to the
contrary in this Section 1.8, none of the Exchange Agent, the Surviving
Corporation or any party hereto shall be liable to a holder of shares of Series
D Preferred Stock or Xxxxx Xxxxx Capital Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.9 Earn-Out. In addition to the Recruitsoft Share Consideration
and Additional Recruitsoft Share Consideration, if any, Recruitsoft shall, if
earned, distribute to the Xxxxx Xxxxx Stockholders pro rata in accordance with
their respective holdings as set forth on Schedule 1.6, the Earn-Out Shares as
incentive consideration (the "EARN-OUT"), subject to the following provisions:
(a) Definitions.
(i) "EARN-OUT GOAL" shall occur if the amount of
Pre-Release Revenue equals or exceeds the amount of Pre-Closing Revenue.
(ii) "EARN-OUT RELEASE DATE" shall mean the one
(1) year anniversary of the Closing Date.
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(iii) "EARN-OUT SHARES" shall mean 1,393,792
shares of Series D Preferred Stock.
(iv) "LEGACY XXXXX XXXXX PRODUCTS" shall refer to
the commercial offerings which Xxxxx Xxxxx owns or licenses prior to the Closing
Date.
(v) "PRE-CLOSING REVENUE" shall mean the US GAAP
revenue generated by Legacy Xxxxx Xxxxx Products under the Capital One Services
contract dated November 29, 2001, in the three month period beginning June 1,
2003, and ending August 31, 2003. For purposes of this Agreement, Pre-Closing
Revenue is defined as $585,000.
(vi) "PRE-RELEASE REVENUE" shall mean the US GAAP
revenue (as calculated in a manner consistent with the Pre-Closing Revenue)
generated by Legacy Xxxxx Xxxxx Products under the Capital One Services contract
dated November 29, 2001 (including any amendments or successor agreements with
Capital One Services thereto), in the three month period beginning June 1, 2004,
and ending August 31, 2004.
(b) Payment of Earn-Out. On the Earn-Out Release Date, if
the Earn-Out Goal has been achieved, Recruitsoft shall issue and instruct the
Exchange Agent to distribute to each Xxxxx Xxxxx Stockholder its pro rata
portion of the Earn-Out Shares (as set forth on Schedule 1.6). If the Earn-Out
Goal is not achieved, Recruitsoft shall have no obligation to issue any Earn-Out
Shares pursuant to this Agreement or so to instruct the Exchange Agent.
(c) Determination of Earn-Out. Recruitsoft shall deliver
to the Stockholder Agent (as defined in Section 6.2(g)) as soon as practicable
and in any event no later than five (5) days prior to the Earn-Out Release Date,
written notice (the "EARN-OUT NOTICE") setting forth (i) the computation of the
amount of Pre-Release Revenue, and (ii) a copy of all of the financial
information used in making such computation. If the Earn-Out is not paid,
Recruitsoft shall be required to maintain financial records supporting the
Pre-Release Revenue, for a period of three (3) months after the Earn-Out Release
Date, for review by the Stockholder Agent. In the event that the Stockholder
Agent disputes Recruitsoft's determination of whether a payment pursuant to
Section 1.9(b) should be, or should have been, made, the Stockholder Agent shall
notify Recruitsoft in writing (an "EARN-OUT PAYMENT DISPUTE NOTICE") of the
amount, nature and basis of such dispute within fifteen (15) days following
delivery of the Earn-Out Notice. The Stockholder Agent and Recruitsoft shall
first endeavor to resolve such dispute among themselves. If the Stockholder
Agent and Recruitsoft are unable to resolve the dispute within fifteen (15)
calendar days following the date that the Earn-Out Payment Dispute Notice was
received by Recruitsoft, the Stockholder Agent and Recruitsoft shall mutually
select an independent auditor to conduct an audit ("AUDIT"). If the parties are
unable to mutually select an auditor as provided above, then the selection of
the auditor shall be submitted to arbitration in accordance with Section 6.2(f)
hereof, and in such case, notwithstanding the foregoing, Recruitsoft shall
maintain the financial records supporting the determination of the Pre-Release
Revenue until such auditor makes a final determination. The auditor shall be
instructed to use its best efforts to resolve the dispute within thirty (30)
days after its appointment and provide a written
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explanation of the decision. The expenses of the Audit shall be paid by
Recruitsoft if the auditor determines that Xxxxx Xxxxx is entitled to the
Earn-Out Shares when Recruitsoft had determined otherwise, or else shall be paid
by the Xxxxx Xxxxx Stockholders. The determination of the auditor as to the
resolution of any dispute shall be binding and conclusive upon Recruitsoft, the
Stockholder Agent and all parties to this Agreement, absent fraud.
(d) Recruitsoft Discretion. Notwithstanding any other
provision of this Agreement, Recruitsoft retains the right, in its sole
discretion, to refuse to enter into any agreement, understanding or arrangement
that might or would affect Pre-Release Revenue if it determines in its good
faith business judgment that it is not in Recruitsoft's interest to do so, and
to run its business and that of Xxxxx Xxxxx in its sole judgment; provided,
however, that Recruitsoft will act in good faith and shall not take any action
the primary purpose of which is to reduce or eliminate the payment obligations
provided for by this Section 1.9 and will not offer products which are intended
to compete with Legacy Xxxxx Xxxxx Products to Capital One prior to the Earn-Out
Release Date.
1.10 Additional Recruitsoft Share Consideration.. In addition to
the Recruitsoft Share Consideration and Earn-Out Shares, if any, Recruitsoft
shall, in accordance with the provisions of this Section 1.10, distribute to the
Xxxxx Xxxxx Stockholders pro rata in accordance with their respective holdings
as set forth on Schedule 1.6 (or their respective assignees) and as set forth
below, certain shares of Series D Preferred Stock (the "ADDITIONAL RECRUITSOFT
SHARE CONSIDERATION") as set forth below.
(a) Calculation. The aggregate Additional Recruitsoft
Share Consideration shall equal the number of shares which were granted to the
individuals set forth on Schedule 1.2(c) hereto pursuant to Series D Preferred
Stock Option Agreements dated October 21, 2003 but never vested due to
termination of the individuals' employment, in accordance with the Series D
Preferred Stock Option Agreements, as measured on the dates set forth below.
Issuance of shares on each date subsequent to the initial Measurement Date
(defined below) shall be calculated with a figure that is cumulative with, and
not in addition to, the earlier date's issuance (for purposes of clarity, a
share that is issued on the initial Measurement Date shall be subtracted out of
the later calculation and not re-issued). Within thirty (30) days following each
of (i) the third anniversary of the Closing Date plus one day (the "ANNIVERSARY
DATE"), and (ii) if prior to the Anniversary Date, the first to occur of (X) an
initial public offering of Recruitsoft's securities or (Y) a consolidation,
business combination, merger or sale of all or substantially all of the assets
of Recruitsoft (each a "MEASUREMENT DATE"), Recruitsoft shall deliver to the
Stockholder Agent a certificate (the "ADDITIONAL CERTIFICATE"), setting out (i)
the Additional Recruitsoft Share Consideration, that is the number of shares of
Series D Preferred Stock underlying the Series D Preferred Stock Options that as
of such Measurement Date have not vested and will not vest pursuant to the terms
of such Series D Preferred Stock Options, (ii) its good faith determination of
the number of shares representing the Additional Recruitsoft Share Consideration
issuable to each Xxxxx Xxxxx Stockholder and (iii) its good faith determination
of the list of current Xxxxx Xxxxx Stockholders (and their respective successors
and assigns) and their respective holdings of Series D Preferred Stock and
Series A Common Stock (the "SERIES D HOLDERS") and their respective addresses.
The Stockholder Agent shall have thirty (30)
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days from the receipt of the Additional Certificate to dispute the determination
of the Additional Recruitsoft Share Consideration and shall, within such thirty
day period, additionally instruct Recruitsoft to issue certificates representing
the Additional Recruitsoft Share Consideration to the Series D Holders. Within
thirty (30) days of the later of the receipt of such instructions from the
Stockholder Agent or, if applicable, the resolution of any dispute as set forth
below, Recruitsoft shall distribute the Additional Recruitsoft Share
Consideration by sending shares to the addresses of the Series D Holders. In the
event that the Stockholder Agent disputes Recruitsoft's determination of the
amount of Additional Recruitsoft Share Consideration, the Stockholder Agent
shall notify Recruitsoft in writing (an "ADDITIONAL DISPUTE NOTICE") of the
basis of such dispute within fifteen (15) days following delivery of the
Additional Certificate. The Stockholder Agent and Recruitsoft shall first
endeavor to resolve such dispute among themselves. If the Stockholder Agent and
Recruitsoft are unable to resolve the dispute within fifteen (15) calendar days
following the date that the Additional Dispute Notice was received by
Recruitsoft, the Stockholder Agent and Recruitsoft shall mutually select an
independent auditor to conduct an audit. If the parties are unable to mutually
select an auditor as provided above, then the selection of the auditor shall be
submitted to arbitration in accordance with Section 6.2(f) hereof. The auditor
shall be instructed to use its best efforts to resolve the dispute within thirty
(30) days after its appointment and provide a written explanation of the
decision. The expenses of such audit shall be paid by the Xxxxx Xxxxx
Stockholders on a pro-rata basis unless a determination is made by the auditor
that more shares representing the Additional Recruitsoft Share Consideration are
owed to the Xxxxx Xxxxx Stockholders than the number set forth in the Additional
Certificate, in which case the fees shall be paid by Recruitsoft. The
determination of the auditor as to the resolution of any dispute shall be
binding and conclusive upon Recruitsoft, the Stockholder Agent and all parties
to this Agreement, absent fraud.
(b) No Liability. Recruitsoft shall have no liability for
the Additional Recruitsoft Share Consideration beyond contacting the Stockholder
Agent, delivering the Additional Certificates and issuing the Additional
Recruitsoft Share Consideration and the certificates therefor to the Series D
Holders in accordance with the instruction of Stockholder Agent and this Section
1.10.
(c) No Fractional Shares. No fractional shares shall be
issued. The pro rata calculation of the Additional Recruitsoft Share
Consideration shall be made and then each Series D Holder's portion shall be
rounded down to the nearest whole share.
(d) Conversion. If any shares of Series D Preferred Stock
have been converted by reason of a reclassification, stock dividend or
distribution, business combination, merger, consolidation, reincorporation,
recapitalization or conversion, then each Xxxxx Xxxxx Stockholder shall be
entitled to receive such number of shares of equity securities to which such
stockholder would otherwise have been entitled had the Additional Recruitsoft
Share Consideration been issued immediately prior to such reclassification,
stock dividend or distribution, business combination, merger, consolidation,
reincorporation, recapitalization or conversion
(e) Deemed Merger Consideration. For purposes of this
Agreement, the Additional Recruitsoft Share Consideration shall be deemed Merger
Consideration.
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1.11 No Further Ownership Rights in Xxxxx Xxxxx Capital Stock. All
shares of Series D Preferred Stock issued pursuant to the Merger upon the
surrender for exchange of shares of Xxxxx Xxxxx Capital Stock in accordance with
the terms hereof (including any cash paid in respect thereof) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Xxxxx Xxxxx Capital Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Xxxxx Xxxxx
Capital Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this ARTICLE I.
1.12 Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Xxxxx Xxxxx Capital Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificates, upon receiving notice from the holder
thereof and upon the making of an affidavit of that fact by such holder, such
shares of Series D Preferred Stock and the Additional Payments, if any;
provided, however, that Recruitsoft may, in its discretion and, as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Recruitsoft or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
1.13 Tax and Accounting Consequences. It is intended by the parties
hereto that the Merger shall constitute a reorganization within the meaning of
Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Income Tax Regulations.
1.14 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any such further action is necessary or reasonably
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Xxxxx Xxxxx and Merger Sub, the
officers and directors of Xxxxx Xxxxx and Merger Sub are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WHITE XXXXX
Xxxxx Xxxxx hereby represents and warrants to Recruitsoft, subject to
such exceptions as are clearly disclosed in the disclosure schedule supplied by
Xxxxx Xxxxx to Recruitsoft which identify the section and subsection of this
Agreement to which such disclosure relates (the "XXXXX XXXXX SCHEDULES") and
dated as of the date hereof, as follows:
2.1 Organization of Xxxxx Xxxxx. Xxxxx Xxxxx is a corporation duly
organized, validly existing and in good standing under Delaware Law. Xxxxx Xxxxx
has the corporate power and
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authority to own its properties and to carry on its business as now being
conducted. Xxxxx Xxxxx is duly qualified to do business and is in good standing
as a foreign corporation in each state or other jurisdiction in which the
failure to be so qualified would have a material adverse effect on the business,
assets (including intangible assets), financial condition, results of operations
or prospects of Xxxxx Xxxxx (hereinafter referred to as a "MATERIAL ADVERSE
EFFECT"). Xxxxx Xxxxx has delivered a true and correct copy of the Certificate
of Incorporation and Bylaws of Xxxxx Xxxxx, each as amended to date, to
Recruitsoft.
2.2 Xxxxx Xxxxx Capital Structure.
(a) The authorized capital stock of Xxxxx Xxxxx consists
of thirty-eight million, eight hundred thousand (38,800,000) shares of
authorized Common Stock, par value $0.01 per share (the "XXXXX XXXXX COMMON
STOCK"), of which one million six hundred fifty seven thousand one hundred and
eighteen (1,657,118) are issued and outstanding and fifty-nine million, five
hundred ninety thousand, six hundred ninety-two (59,590,692) shares of
authorized Preferred Stock, par value $0.01 per share (the "XXXXX XXXXX
PREFERRED STOCK"), of which (i) six million, one hundred thousand (6,100,000)
are designated as Series A-1 Preferred Stock, all of which are issued and
outstanding (the "XXXXX XXXXX SERIES A-1 PREFERRED STOCK"), (ii) seven million,
seven hundred eighty thousand, two hundred forty (7,780,240) are designated as
Series B-1 Preferred Stock, all of which are issued and outstanding (the "XXXXX
XXXXX SERIES B-1 PREFERRED STOCK"), and (iii) forty-five million, seven hundred
ten thousand, four hundred fifty-two (45,710,452) are designated as Series C
Preferred Stock, of which forty-two million, four hundred eighty-four thousand,
three hundred eighteen (42,484,318) are issued and outstanding (the "XXXXX XXXXX
SERIES C PREFERRED STOCK"). Except as set forth in the immediately preceding
sentence, no shares of capital stock or other equity securities of Xxxxx Xxxxx
are issued or reserved for issuance except as set forth in Section 2.2(b) and
2.2(c) below. The Xxxxx Xxxxx Capital Stock is held of record by the persons,
with the addresses of record and in the amounts set forth on the Xxxxx Xxxxx
Schedules. All outstanding shares of Xxxxx Xxxxx Capital Stock are, and at the
Closing will be, duly authorized, validly issued, fully paid and non assessable
and not subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of Xxxxx Xxxxx or any agreement to which Xxxxx Xxxxx is
a party or by which it is bound. None of the outstanding Xxxxx Xxxxx Capital
Stock or other securities of Xxxxx Xxxxx were issued in violation of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or any applicable
state blue sky laws.
(b) Xxxxx Xxxxx has reserved a total of (i) seven
million, one hundred thousand (7,100,000) shares of Xxxxx Xxxxx Common Stock for
issuance under White Amber's Stock Plan of which options to purchase three
million, seven hundred one thousand, seven hundred and ninety nine (3,701,799)
shares of Xxxxx Xxxxx Common Stock are outstanding, and three million, three
hundred thirty three thousand, two hundred and one (3,333,201) shares are
available for such grants as of the date hereof, (ii) twenty one thousand, three
hundred and ninety two (21,392) shares of Xxxxx Xxxxx Common Stock for future
issuance pursuant of the exercise of warrants of Xxxxx Xxxxx, and (iii) two
million, seven hundred twenty thousand, nine hundred sixty three (2,720,963)
shares of White
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Amber Series C Preferred Stock for future issuance pursuant to the exercise of
warrants of Xxxxx Xxxxx.
(c) Except for the outstanding warrants or options to
purchase Xxxxx Xxxxx Common Stock and Series C Preferred Stock as set forth
above, as of the Effective Time, there are no other options, warrants, calls,
rights, commitments or agreements of any character, written or oral, to which
Xxxxx Xxxxx is a party or by which it is bound obligating Xxxxx Xxxxx to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of Xxxxx Xxxxx or
obligating Xxxxx Xxxxx to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights with
respect to Xxxxx Xxxxx. There are no voting trusts, proxies, or other agreements
or understandings with respect to the capital stock of Xxxxx Xxxxx.
2.3 Subsidiaries. Xxxxx Xxxxx does not have and has never had any
subsidiaries or affiliated companies and does not otherwise own and has never
otherwise owned any shares of capital stock or any interest in, or control,
directly or indirectly, any other corporation, partnership, association, joint
venture or other business entity.
2.4 Authority. Subject only to the filing and recordation of
appropriate merger documents as required by Delaware Law, Xxxxx Xxxxx has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. Prior to the execution of the
Agreement, the stockholders of Xxxxx Xxxxx have approved and adopted this
Agreement and the transactions contemplated hereby as provided by Delaware Law
and White Amber's Certificate of Incorporation and Bylaws. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Xxxxx Xxxxx, subject only to the filing and recordation of appropriate merger
documents as required by Delaware Law. This Agreement has been duly executed and
delivered by Xxxxx Xxxxx and constitutes the valid and binding obligation of
Xxxxx Xxxxx, enforceable in accordance with its terms except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and (b)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. Subject only to filing and
recordation of appropriate merger documents as required by Delaware Law, the
execution and delivery of this Agreement by Xxxxx Xxxxx does not, and, as of the
Closing, the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any benefit under (any
such event, a "CONFLICT") (i) any provision of the Certificate of Incorporation
or Bylaws of Xxxxx Xxxxx, or (ii) assuming that all consents, approvals,
authorizations and other actions described in (y) or (z) below have been made or
complied with, any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance,
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rule or regulation applicable to Xxxxx Xxxxx or its properties or assets, where
such Conflict would be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Xxxxx Xxxxx. No consent, waiver,
approval, order or authorization of, or registration, declaration or filing
with, any court, tribunal, judicial or arbitral body, regulatory or
administrative agency or commission, or other national, federal, state, county,
municipal, local or foreign governmental authority, instrumentality, agency or
commission ("GOVERNMENTAL ENTITY") or any third party (so as not to trigger any
Conflict), is required by or with respect to Xxxxx Xxxxx in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (w) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, (x) such filings as are required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX XXX"),
if any, (y) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as shall have been obtained prior to the
Closing, and (z) such other consents, waivers, authorizations, filings,
approvals and registrations which are set forth on Schedule 2.4.
2.5 Xxxxx Xxxxx Financial Statements. Schedule 2.5 sets forth
White Amber's (i) audited balance sheets as of December 31, 2002, and the
related audited statements of operations, cash flows and stockholders equity
(deficit) for the two fiscal years then ended and (ii) White Amber's unaudited
balance sheet as of September 30, 2003 (the "BALANCE SHEET") and the related
unaudited statement of operations, cash flow and stockholder's equity (deficit)
for the nine-month period then ended (collectively, the "XXXXX XXXXX FINANCIAL
STATEMENTS"). The Xxxxx Xxxxx Financial Statements have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto). The Xxxxx Xxxxx Financial Statements, including the notes
thereto, present fairly the financial condition and operating results and cash
flows of Xxxxx Xxxxx as of the dates and during the periods indicated therein
(subject, in the case of any unaudited interim financial statements, to normal
and recurring year-end adjustments which were not and are not expected
individually or in the aggregate, to be material and to the extent they may not
include footnotes or may be condensed or summary statements). The cash, cash
equivalents and investment balances as of the Closing Date shall not be less
than $2.5 million after including a reduction for any incurred and accrued but
unpaid transaction expenses that relate directly to the Closing.
2.6 No Undisclosed Liabilities. Xxxxx Xxxxx does not have any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in financial
statements in accordance with GAAP), that in the aggregate exceeds $25,000, and
which (i) has not been reflected or reserved against in the Balance Sheet, or
(ii) has arisen other than in the ordinary course of White Amber's business and
consistent with past practices since August 31, 2003. Xxxxx Xxxxx does not have
any outstanding payables, whether reflected on Xxxxx Xxxxx Financial Statements
or not, which (i) exceed $50,000 or (ii) are more than 60 days past due.
2.7 No Changes.
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(a) Since September 30, 2003, and except as contemplated
by or as disclosed in this Agreement, there has not been, occurred or arisen
any:
(i) transaction by Xxxxx Xxxxx except in the
ordinary course of business as conducted on that date and consistent with past
practices;
(ii) amendments or changes to the Certificate of
Incorporation or Bylaws of Xxxxx Xxxxx;
(iii) investment in or steps taken by Xxxxx Xxxxx
to incorporate any subsidiary;
(iv) capital expenditure or commitment by Xxxxx
Xxxxx of $25,000 in any individual case or $50,000 in the aggregate;
(v) destruction of, damage to or loss of any
material assets, business or customer of Xxxxx Xxxxx (whether or not covered by
insurance);
(vi) labor trouble or claim of wrongful discharge
or other unlawful labor practice or action;
(vii) change in accounting methods or practices
(including any change in depreciation or amortization policies or rates) by
Xxxxx Xxxxx;
(viii) revaluation by Xxxxx Xxxxx of any of its
assets;
(ix) declaration, setting aside or payment of a
dividend or other distribution with respect to the capital stock of Xxxxx Xxxxx,
or any direct or indirect redemption, purchase or other acquisition by Xxxxx
Xxxxx of any of its capital stock or interests;
(x) increase of the salary or other compensation
payable or to become payable by Xxxxx Xxxxx to any of its officers, directors,
employees or advisors, or the declaration, payment or commitment or obligation
of any kind for the payment of a bonus or other additional salary or
compensation to any such person except as otherwise contemplated by this
Agreement;
(xi) resignation or termination of employment of
any key officer of Xxxxx Xxxxx;
(xii) sale, lease, license or other disposition of
any of the assets or properties of Xxxxx Xxxxx, except in the ordinary course of
business as conducted on that date and consistent with past practices;
(xiii) amendment or termination of any material
contract, agreement or license other than as disclosed on Schedule 2.12 of the
Xxxxx Xxxxx Schedules to which Xxxxx Xxxxx is a party or by which it is bound;
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(xiv) loan by Xxxxx Xxxxx to any person or entity,
incurring by Xxxxx Xxxxx of any indebtedness, guaranteeing by Xxxxx Xxxxx of any
indebtedness, issuance or sale of any debt securities of Xxxxx Xxxxx or
guaranteeing of any debt securities of others, except for advances to employees
for travel and business expenses in the ordinary course of business, consistent
with past practices;
(xv) any satisfaction or discharge of any lien,
claim or encumbrance or payment of any obligation by Xxxxx Xxxxx, except in the
ordinary course of business and that is not material to the assets, properties,
financial condition, operating results or business of Xxxxx Xxxxx (as such
business is presently conducted and as it is proposed to be conducted);
(xvi) waiver or release of any material right or
claim of Xxxxx Xxxxx, including any write-off of provisions for uncollectible
accounts receivable of Xxxxx Xxxxx;
(xvii) commencement or notice or, to White Amber's
knowledge, threat of commencement of any lawsuit or proceeding against or
investigation of Xxxxx Xxxxx or its affairs;
(xviii) notice of any claim of ownership by a third
party of any Xxxxx Xxxxx Intellectual Property (as defined in Section 2.11(a))
or of infringement by Xxxxx Xxxxx of any third party's Intellectual Property
Rights (as defined in Section 2.11(a));
(xix) issuance or sale by Xxxxx Xxxxx of any
shares of capital stock, or securities exchangeable, convertible or exercisable
therefor, or of any other of its securities;
(xx) change in pricing or royalties set or
charged by Xxxxx Xxxxx to its customers or licensees or in pricing or royalties
set or charged by persons who have licensed Intellectual Property to Xxxxx
Xxxxx;
(xxi) any material adverse change in the assets,
liabilities, financial condition, operations, business prospects, employee
relations, customer or supplier relations or operating results of Xxxxx Xxxxx
from that reflected in the Xxxxx Xxxxx Financial Statements;
(xxii) event or condition of any character that has
or could reasonably be expected to have a Material Adverse Effect on Xxxxx
Xxxxx;
(xxiii) negotiation or agreement by Xxxxx Xxxxx or
any officer or employees thereof to do any of the things described in the
preceding clauses (i) through (xxii) (other than negotiations with Recruitsoft
and its representatives regarding the transactions contemplated by this
Agreement) or
(b) Xxxxx Xxxxx has not at any time made payments for
political contributions or made any bribes, kickback payments or other illegal
payments.
2.8 Tax.
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(a) Definition of Taxes. For the purposes of this
Agreement, "TAX" or, collectively, "TAXES," means (i) any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts, (ii) any liability for the payment of any
amounts of the type described in clause (i) of this Section 2.8(a) as a result
of being a member of an affiliated, consolidated, combined or unitary group for
any period, and (iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) of this Section 2.8(a) as a result of any
express or implied obligation to indemnify any other person or as a result of
any obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
or transferor entity. References to Xxxxx Xxxxx are to Xxxxx Xxxxx and each of
its subsidiaries.
(b) Tax Returns and Audits.
(i) As of the Closing, Xxxxx Xxxxx will have
prepared and filed on a timely basis, all required federal, state, local and
foreign returns, estimates, information statements and reports ("RETURNS") due
to be filed on or before the Closing (taking into account any extension of such
due date) relating to any and all Taxes concerning or attributable to Xxxxx
Xxxxx or its operations and such Returns are true, correct and complete and have
been completed in accordance with applicable law.
(ii) As of the Closing, Xxxxx Xxxxx: (a) will
have timely paid all Taxes it is required to pay, except to the extent a reserve
for Taxes has been established on the Balance Sheet, as adjusted for the
ordinary conduct of business since the date of such Balance Sheet and (b) will
have withheld with respect to its employees and paid over to the appropriate Tax
authorities all federal and state income taxes, Taxes pursuant to the Federal
Insurance Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act
and other Taxes required to be withheld.
(iii) Xxxxx Xxxxx has not been delinquent in the
payment of any Tax claimed to be due and payable by any taxing authority nor is
there any Tax deficiency outstanding, proposed or assessed against Xxxxx Xxxxx,
nor has Xxxxx Xxxxx executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax which waiver or
extension is still in effect.
(iv) No audit or other examination of any Return
of Xxxxx Xxxxx is presently in progress, nor has Xxxxx Xxxxx been notified of
any request for such an audit or other examination.
(v) As of the date of the Balance Sheet, Xxxxx
Xxxxx did not have any liabilities for unpaid Taxes which had not been accrued
or reserved against on the Balance Sheet in accordance with GAAP, whether
asserted or unasserted contingent or otherwise, and Xxxxx Xxxxx has no knowledge
of any basis for the assertion of any such liability attributable to Xxxxx
Xxxxx, its
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assets or operations. Since the date of the Balance Sheet, Xxxxx Xxxxx has not
incurred any liability for Taxes other than in the ordinary course of business.
(vi) Xxxxx Xxxxx has provided or made available
to Recruitsoft copies of all federal and state income and all state sales and
use Tax Returns for all periods as requested by Recruitsoft.
(vii) There are (and as of immediately following
the Closing there will be) no liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS") on the assets of Xxxxx
Xxxxx relating to or attributable to Taxes, other than Liens for Taxes not yet
due and payable.
(viii) Xxxxx Xxxxx has no knowledge of any basis
for the assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of Xxxxx Xxxxx.
(ix) As of the Closing, there will not be any
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of Xxxxx
Xxxxx or other person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162 (other than 162(a)) of the Code.
(x) Xxxxx Xxxxx has not filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Xxxxx Xxxxx.
(xi) Xxxxx Xxxxx is not, and has not been at any
time, a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
(xii) No adjustment relating to any Returns filed
by Xxxxx Xxxxx has been proposed, formally or informally, by any Tax authority
to Xxxxx Xxxxx.
(xiii) Xxxxx Xxxxx has (a) never been a member of
an affiliated group (within the meaning of Code Section 1504(a)) filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Xxxxx Xxxxx), (b) never been a party to any Tax sharing,
indemnification or allocation agreement, nor does Xxxxx Xxxxx owe any amount
under any such agreement, (c) no liability for the Taxes of any person (other
than Xxxxx Xxxxx or any of its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise and (d) never been a party to
any joint venture, partnership or, to the knowledge of Xxxxx Xxxxx, other
agreement that could be treated as a partnership for Tax purposes.
(xiv) Xxxxx Xxxxx has not constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock intended to qualify for tax-free treatment under
-19-
Section 355 of the Code. Xxxxx Xxxxx has not engaged in a transaction that is
the same or substantially similar to one of the types of transactions that the
Internal Revenue Service has determined to be a tax avoidance transaction and
identified by notice, regulation, or other form of published guidance as a
listed transaction, as set forth in Treas. Reg. Section 1.6011-4(b)(2).
(xv) Xxxxx Xxxxx uses the accrual method of
accounting for income Tax purposes. Xxxxx Xxxxx will not be required to include
any income or gain or exclude any deduction or loss from Taxable income as a
result of any change in method of accounting under Section 481(c) of the Code.
(xvi) Neither Xxxxx Xxxxx nor any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from constituting a reorganization qualifying under Section 368(a) of the Code.
Neither Xxxxx Xxxxx nor any of its affiliates is aware of any agreement, plan or
other circumstance that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code.
2.9 Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which Xxxxx Xxxxx is a party or otherwise binding upon Xxxxx Xxxxx which has or
reasonably would be expected to have the effect of prohibiting or impairing any
business practice (including, without limitation, the licensing of any product)
material to Xxxxx Xxxxx, any acquisition of property (tangible or intangible) by
Xxxxx Xxxxx or the conduct of business by Xxxxx Xxxxx. For the purposes of the
foregoing, selling, licensing or otherwise distributing any of its own products
(including any third party products included in White Amber's products) to any
class of customers, in any geographic area, during any period of time or in any
segment of the market shall constitute a material business practice of Xxxxx
Xxxxx.
2.10 Title to Properties; Absence of Liens and Encumbrances.
(a) Xxxxx Xxxxx owns no real property, nor has it ever
owned any real property. Schedule 2.10(a) of the Xxxxx Xxxxx Schedules sets
forth a list of all real property currently leased by Xxxxx Xxxxx, the name of
the lessor and the date of the lease and each amendment thereto. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) by Xxxxx Xxxxx or, to the
knowledge of Xxxxx Xxxxx, any other party.
(b) Xxxxx Xxxxx has good and valid title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets used or held for use in its business, free and
clear of any Liens, except as reflected in Xxxxx Xxxxx Financial Statements or
in Schedule 2.10(b) of the Xxxxx Xxxxx Schedules and except for liens for taxes
not yet due and payable and such imperfections of title and encumbrances, if
any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
-20-
2.11 Intellectual Property.
(a) Definitions. For all purposes of this Agreement, the
following terms shall have the following respective meanings:
(i) "TECHNOLOGY" shall mean any or all of the
following: (1) works of authorship including, without limitation, computer
programs, algorithms, routines, source code and executable code embodied in
software and documentation provided for use therewith ("SOFTWARE"); (2)
inventions (whether or not patentable) and improvements; (3) proprietary and
confidential information, including technical data and customer and supplier
lists, trade secrets, know how and techniques; and (4) proprietary databases,
data compilations and collections.
(ii) "INTELLECTUAL PROPERTY RIGHTS" shall mean
any or all of the following and all rights in, arising out of, or associated
therewith: (1) all United States and foreign patents and utility models and
applications therefor and all reissues, divisions, re-examinations, renewals,
extensions, provisionals, continuations and continuations-in-part thereof, and
equivalent or similar rights anywhere in the world in inventions and discoveries
including without limitation invention disclosures ("PATENTS"); (2) all trade
secrets and other rights in know-how and confidential or proprietary information
("TRADE SECRETS"); (3) all copyrights, copyrights registrations and applications
therefor and all other rights corresponding thereto throughout the world
("COPYRIGHTS"); (4) all industrial designs and any registrations and
applications therefor throughout the world; (5) all rights in World Wide Web
addresses ("WWW") and domain names and applications and registrations therefor
("INTERNET PROPERTIES"); (6) all rights in trade names, trade dress, logos,
common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor and all goodwill associated therewith
throughout the world ("TRADEMARKS"); and (7) any corresponding or equivalent
foreign rights to any of the foregoing anywhere in the world.
(iii) "XXXXX XXXXX INTELLECTUAL PROPERTY" shall
mean any Intellectual Property Rights including Xxxxx Xxxxx Registered
Intellectual Property Rights (as defined in Section 2.11(c)) that are owned by,
or exclusively licensed to, Xxxxx Xxxxx.
(iv) "XXXXX XXXXX TECHNOLOGY" shall mean any
Technology that is owned by, or exclusively licensed to, Xxxxx Xxxxx.
(v) "REGISTERED INTELLECTUAL PROPERTY RIGHTS"
shall mean all United States, international and foreign: (1) Patents; (2)
registered Trademarks, applications to register Trademarks, including
intent-to-use applications, or other governmental registrations or applications
related to Trademarks; (3) Copyrights registrations and applications to register
Copyrights; and (4) any other Technology that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any state, government or Governmental Entity at any time.
(b) Schedule 2.11(b) of the Xxxxx Xxxxx Schedules
contains a complete and accurate list (by name and version number) of all
products, Internet Properties, Software and/or
-21-
standard service offerings of Xxxxx Xxxxx or any of its subsidiaries (i) that
are material to the business of Xxxxx Xxxxx which have been sold, distributed or
otherwise disposed of in the five (5) year period preceding the date hereof or
(ii) for which Xxxxx Xxxxx or any of its subsidiaries currently allocate
material development or marketing resources with the intent to sell, distribute
or otherwise dispose of within the next twelve (12) months (collectively, "XXXXX
XXXXX PRODUCTS").
(c) Schedule 2.11(c) of the Xxxxx Xxxxx Schedules lists
all Registered Intellectual Property Rights owned by, filed in the name of, or
applied for, by Xxxxx Xxxxx or any of its subsidiaries as of the date of this
Agreement (the "XXXXX XXXXX REGISTERED INTELLECTUAL PROPERTY RIGHTS") and lists
any pending proceedings or actions before any court, tribunal (including the
United States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any of Xxxxx Xxxxx Intellectual Property. Each
item of Xxxxx Xxxxx Registered Intellectual Property Rights is currently in
compliance with all payment of filing, examination and maintenance fees and
proofs of use and, to White Amber's knowledge, is valid and subsisting. All
necessary documents and certificates in connection with such Xxxxx Xxxxx
Registered Intellectual Property Rights required to be filed on or prior to the
date of this Agreement have been filed with the PTO, the United States Copyright
Office or the relevant patent, copyright, trademark or other authorities in
foreign jurisdictions, as the case may be, for the purposes of perfecting,
prosecuting and maintaining the Registered Intellectual Property Rights. As of
the Closing Date, there are no actions that must be taken by Xxxxx Xxxxx or its
subsidiaries within one hundred and twenty (120) days of the Closing Date in
order to obtain, perfect, preserve, renew or maintain the Registered
Intellectual Property Rights, including the payment of any registration,
maintenance or renewal fees or the filing of any responses to PTO office
actions, documents, applications or certificates. Xxxxx Xxxxx has not claimed
"small business status" in any U.S. Patent application.
(d) In each case in which Xxxxx Xxxxx or any of its
subsidiaries have acquired or purported to acquire ownership of any Xxxxx Xxxxx
Intellectual Property from any person, Xxxxx Xxxxx or such subsidiary has
obtained a valid and enforceable assignment sufficient to irrevocably transfer
all rights in and to such Xxxxx Xxxxx Intellectual Property (including the right
to seek past and future damages with respect thereto) to Xxxxx Xxxxx or such
subsidiary. To the maximum extent provided for, by, and in accordance with,
applicable laws and regulations, Xxxxx Xxxxx or each such subsidiary has
recorded each such assignment of a Registered Intellectual Property Right
assigned to Xxxxx Xxxxx or each such subsidiary with the PTO, the United States
Copyright Office or equivalent authorities outside the United States.
(e) Neither Xxxxx Xxxxx nor any of its subsidiaries has
any knowledge of any facts or circumstances that would render any Xxxxx Xxxxx
Intellectual Property invalid or unenforceable, nor is Xxxxx Xxxxx aware that
Xxxxx Xxxxx or any of its subsidiaries have taken, or failed to take, any action
in the application for or prosecution of any Xxxxx Xxxxx Registered Intellectual
Property that would render such Xxxxx Xxxxx Registered Intellectual Property
invalid or unenforceable. To White Amber's knowledge, no person is infringing or
misappropriating any Xxxxx Xxxxx Intellectual Property. Xxxxx Xxxxx has not
received formal or written notice from any person claiming that the operation or
any act, product, technology or service (including products,
-22-
technology or service (including products, technology or services currently
under development) of Xxxxx Xxxxx infringes or misappropriates any Intellectual
Property Right of any person or constitutes unfair competition or trade
practices under the laws of any jurisdiction (nor does Xxxxx Xxxxx or its
subsidiaries have knowledge of any reasonable basis therefor).
(f) Xxxxx Xxxxx and each of its subsidiaries have taken
all necessary and appropriate steps to protect White Amber's and its
subsidiaries' rights in confidential information and Trade Secrets of Xxxxx
Xxxxx or provided by any other person to Xxxxx Xxxxx. All use, disclosure or
appropriation of confidential information owned by Xxxxx Xxxxx or any of its
subsidiaries by or to a third party has been pursuant to the terms of a written
agreement between Xxxxx Xxxxx or its subsidiary and such third party. Without
limiting the foregoing, Xxxxx Xxxxx and each of its subsidiaries have and
enforce, a policy requiring each employee, consultant and contractor to execute
proprietary information, confidentiality and assignment agreements materially
similar to the form set forth in Schedule 2.11(f) of the Xxxxx Xxxxx Schedules,
and all current and former employees, consultants and contractors of Xxxxx Xxxxx
and each of its subsidiaries who have created or modified any Xxxxx Xxxxx
Technology or Xxxxx Xxxxx Intellectual Property have executed such an agreement
assigning all of such employees', consultants' and contractors' rights in and to
Xxxxx Xxxxx Technology and Xxxxx Xxxxx Intellectual Property to Xxxxx Xxxxx or
such subsidiary.
(g) All Xxxxx Xxxxx Intellectual Property and Xxxxx Xxxxx
Technology will be fully transferable, alienable or licensable by Recruitsoft
without restriction and without payment of any kind to any third party.
(h) Each item of Xxxxx Xxxxx Intellectual Property is
free and clear of any Liens and encumbrances, except for non-exclusive licenses
granted to end-user customers in the ordinary course of business. Xxxxx Xxxxx is
the exclusive owner or exclusive licensee of all Xxxxx Xxxxx Technology and
Xxxxx Xxxxx Intellectual Property. Without limiting the generality of the
foregoing, (i) Xxxxx Xxxxx is the exclusive owner of all registrations for
Trademarks and Internet Properties used by Xxxxx Xxxxx in connection with the
operation or conduct of the business of Xxxxx Xxxxx, including the sale,
distribution or provision of any Xxxxx Xxxxx Products and the operation of any
WWW sites by Xxxxx Xxxxx; (ii) Xxxxx Xxxxx owns exclusively all Copyrighted
works that are incorporated into Xxxxx Xxxxx Products or which Xxxxx Xxxxx
otherwise purports to own; and (iii) to the extent any Patents would be
infringed by any Xxxxx Xxxxx Products related to the business of Xxxxx Xxxxx,
Xxxxx Xxxxx is the exclusive owner of such Patents.
(i) Neither Xxxxx Xxxxx nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license of or right to use,
or authorized the retention of any exclusive rights to use or joint ownership
of, any Technology or Intellectual Property Right that is or was Xxxxx Xxxxx
Technology or Xxxxx Xxxxx Intellectual Property that is or was material to Xxxxx
Xxxxx, to any other person, or permitted White Amber's or its subsidiary's
rights in such Xxxxx Xxxxx Technology and Xxxxx Xxxxx Intellectual Property to
lapse or enter the public domain.
-23-
(j) All Technology, other than generally available
software that is licensed to Xxxxx Xxxxx, that is necessary to the conduct of
White Amber's business as presently conducted or has been developed as of the
date of this Agreement for products intended to be sold, distributed or
otherwise disposed of within the next twelve (12) months by Xxxxx Xxxxx was
written and created solely by either (i) employees of Xxxxx Xxxxx acting within
the scope of their employment or (ii) by third parties who have validly and
irrevocably assigned all of their rights, including Intellectual Property Rights
therein, to Xxxxx Xxxxx.
(k) Except with respect to generally available software
that is licensed to Xxxxx Xxxxx, Xxxxx Xxxxx Technology and Xxxxx Xxxxx
Intellectual Property constitutes all the Technology, Intellectual Property
Rights and Xxxxx Xxxxx Registered Intellectual Property Rights used in the
conduct of the business of Xxxxx Xxxxx as it currently is conducted on the date
of this Agreement or identified as of the date of this Agreement for products to
be sold, distributed or otherwise disposed of within twelve (12) months. Xxxxx
Xxxxx, including, without limitation, the operation, design, license,
development, manufacture, use, import, distribution and sale of Xxxxx Xxxxx
Products.
(l) The operation of the business of Xxxxx Xxxxx and each
subsidiary of Xxxxx Xxxxx as it is currently conducted on the date of this
Agreement or identified as of the date of this Agreement for products to be
sold, distributed or otherwise disposed of within twelve (12) months by Xxxxx
Xxxxx and each such subsidiary, including but not limited to the design,
development, use, import, branding, advertising, promotion, marketing,
manufacture and sale of Xxxxx Xxxxx Products does not and will not when
conducted by Recruitsoft (including following any merger of Xxxxx Xxxxx into
Recruitsoft) in substantially the same manner following the Closing, infringe or
misappropriate any Intellectual Property Right of any person, violate any right
of any person (including any right to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any jurisdiction.
(m) No Xxxxx Xxxxx Technology, Xxxxx Xxxxx Intellectual
Property or Xxxxx Xxxxx Product is subject to any proceeding or outstanding
decree, order, judgment or settlement agreement or stipulation that restricts in
any manner the use, transfer or licensing thereof by Xxxxx Xxxxx or any of its
subsidiaries or may affect the validity, use or enforceability of such Xxxxx
Xxxxx Intellectual Property.
(n) Schedule 2.11(n)(i) of the Xxxxx Xxxxx Schedules
lists all inbound contracts, licenses and agreements to which Xxxxx Xxxxx is a
party with respect to any Technology or Intellectual Property Rights, other than
inbound "shrink-wrap," "click-wrap" and similar publicly available commercial
binary code end-user licenses, and Schedule 2.11(n)(ii) of the Xxxxx Xxxxx
Schedules lists outbound IP Contracts, other than White Amber's standard
"shrink-wrap" or "click-wrap" binary code end-user licenses (such inbound and
outbound contracts collectively, the "IP CONTRACTS"). All IP Contracts are in
full force and effect. Neither Xxxxx Xxxxx nor any of its subsidiaries is in
breach or default of nor has Xxxxx Xxxxx nor its subsidiaries materially failed
to perform under any of the IP Contracts and, to White Amber's knowledge: (1) no
other party to any
-24-
such IP Contract is in material breach thereof or has materially failed to
perform thereunder; and (2) there are no disputes regarding the scope of or
performance under such IP Contracts, including with respect to any payments to
be made or received by Xxxxx Xxxxx thereunder. The consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension of any IP
Contracts or entitle the other party or parties to such IP Contracts to
terminate such IP Contracts. Except as disclosed under Schedule 2.11(n)(iii),
following the Closing Date, Xxxxx Xxxxx will be permitted to exercise all of
White Amber's and each of its subsidiaries' rights under the IP Contracts to the
same extent Xxxxx Xxxxx and each of its subsidiaries would have been able to had
the transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which Xxxxx Xxxxx or such subsidiary would otherwise be
required to pay.
(o) Schedule 2.11(o) of the Xxxxx Xxxxx Schedules lists
all IP Contracts in which Xxxxx Xxxxx or any of its subsidiaries have agreed to,
or have assumed, any obligation or duty to warrant, indemnify, reimburse, hold
harmless, guaranty or otherwise assume or incur any obligation or liability or
provide a right of rescission with respect to the infringement or
misappropriation by Xxxxx Xxxxx or such other person of the Intellectual
Property Rights of any person other than Xxxxx Xxxxx.
(p) Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment of any contracts or
agreements to which Xxxxx Xxxxx is a party to Recruitsoft, by operation of law
or otherwise, will result in (i) Recruitsoft's granting to any person any right
or license to any Technology or Intellectual Property Right owned by, or
licensed to, either of them which are beyond the right or license granted by
Xxxxx Xxxxx under such contracts or agreements; (ii) Recruitsoft's being bound
by, or subject to, any non-compete or other restriction on the operation or
scope of their respective businesses which are beyond the non-compete or other
restrictions by which Xxxxx Xxxxx is bound; or (iii) Recruitsoft's being
obligated to pay any royalties or other amounts to any person in excess of those
payable by Xxxxx Xxxxx prior to the Closing.
(q) Xxxxx Xxxxx and each of its subsidiaries have the
right to use, pursuant to valid licenses, all data (including personal data of
third parties), all software development tools, library functions, operating
systems, data bases, compilers and all other third-party Software that are used
in the operation of Xxxxx Xxxxx and each of its subsidiaries or that are
required to create, modify, compile, operate or support any software that is
Xxxxx Xxxxx Technology or is incorporated into any Xxxxx Xxxxx Product. Without
limiting the foregoing, no open source or public library software subject to
terms that require disclosure of source code to licensees or distribution
without charge, including any version of any software licensed pursuant to any
GNU public license, was used in the development or modification of any software
that is or was Xxxxx Xxxxx Technology or is incorporated into any Xxxxx Xxxxx
Product in each case in a manner that would require Xxxxx Xxxxx to disclose
source code of Xxxxx Xxxxx proprietary Software to licensees or to distribute
Xxxxx Xxxxx proprietary Software without charge.
-25-
(r) No person who has licensed any Technology or
Intellectual Property Rights to Xxxxx Xxxxx or any of its subsidiaries has
ownership rights or license rights to improvements made by or for Xxxxx Xxxxx or
any such subsidiary in such Technology or Intellectual Property Rights which are
necessary for the business of Xxxxx Xxxxx.
(s) No government funding, facilities of a university,
college, other educational institution or research center or funding from third
parties was used in the development of any Xxxxx Xxxxx Technology or Xxxxx Xxxxx
Intellectual Property owned by Xxxxx Xxxxx.
(t) Neither Xxxxx Xxxxx nor any of its subsidiaries has
received any opinion of counsel that any third party patent applies to any Xxxxx
Xxxxx Product.
(u) Neither Xxxxx Xxxxx nor any subsidiary has collected
any personally identifiable information from any third parties except as
described on Schedule 2.11(u) of the Xxxxx Xxxxx Schedules. Xxxxx Xxxxx and each
subsidiary have complied with all applicable laws and their respective internal
privacy policies relating to (i) the privacy of users of their products and
services and all internet websites owned, maintained or operated by Xxxxx Xxxxx
or any of its subsidiaries; and (ii) the collection, storage and transfer of any
personally identifiable information collected by Xxxxx Xxxxx or any of its
subsidiaries or by third parties having authorized access to the records of
Xxxxx Xxxxx or any of its subsidiaries. The execution, delivery and performance
of this Agreement comply with all applicable laws relating to privacy and with
White Amber's and each subsidiary's privacy policies. Copies of all current and
prior privacy policies of Xxxxx Xxxxx and each subsidiary, including the privacy
policies included in White Amber's Internet website, are attached as Schedule
2.11(u) of the Xxxxx Xxxxx Schedules. Each such privacy policy and all materials
distributed or marketed by Xxxxx Xxxxx or any of its subsidiaries have at all
times made all disclosures to users or customers required by applicable laws and
none of such disclosures made or contained in any such privacy policy or in any
such materials have been inaccurate, misleading or deceptive or in violation of
any applicable laws.
(v) Neither Xxxxx Xxxxx, any subsidiary nor any other
person acting on their behalf has disclosed, delivered or licensed to any
person, agreed to disclose, deliver or license to any person, or permitted the
disclosure or delivery to any escrow agent or other person of, any Xxxxx Xxxxx
Source Code. No event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time, or both) would reasonably be
expected to, result in the disclosure or delivery by Xxxxx Xxxxx or any
subsidiary or any person acting on their behalf to any person of any Xxxxx Xxxxx
Source Code. Schedule 2.11(v) of the Xxxxx Xxxxx Schedules identifies each
contract pursuant to which Xxxxx Xxxxx or any subsidiary has deposited, or is or
may be required to deposit, with an escrow agent or any other person, any Xxxxx
Xxxxx Source Code, and describes whether the execution of this Agreement or the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, in and of itself, would reasonably be expected to result in the
release from escrow of any Xxxxx Xxxxx Source Code. As used in this Section
2.11(v), "XXXXX XXXXX SOURCE CODE" means, collectively, any software source
code, any material portion or aspect
-26-
of software source code, or any material proprietary information or algorithm
contained in or relating to any software source code, of any Xxxxx Xxxxx
Products.
2.12 Agreements, Contracts and Commitments.
(a) Xxxxx Xxxxx does not have, is not a party to nor is
it bound by:
(i) any collective bargaining agreements;
(ii) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;
(iii) any fidelity or surety bond or completion
bond;
(iv) any lease of personal property having
aggregate payment obligations or receivables individually in excess of $25,000;
(v) any agreement of indemnification or
guaranty;
(vi) any agreement, contract or commitment
containing any covenant limiting the freedom of Xxxxx Xxxxx to engage in any
line of business or to compete with any person;
(vii) any agreement, contract or commitment
relating to capital expenditures and involving future payments in excess of
$25,000 individually or $50,000 in the aggregate;
(viii) any agreement, contract or commitment
relating to the disposition or acquisition of assets or any interest in any
business enterprise outside the ordinary course of White Amber's business;
(ix) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit, including guaranties referred to
in clause (v) hereof;
(x) any purchase order or contract for the
purchase of raw materials involving $25,000 or more;
(xi) any construction contract;
(xii) any material distribution, joint marketing
or development agreement;
-27-
(xiii) any agreement, contract or commitment
pursuant to which Xxxxx Xxxxx has granted or may grant in the future, to any
party a source-code license or option or other right to use or acquire
source-code; or
(xiv) any other agreement, contract or commitment
that involves $25,000 or more and is not cancelable without penalty within
thirty (30) days.
Schedule 2.12(a) of the Xxxxx Xxxxx Schedules sets forth a list of
White Amber's top five (5) customers according to revenue for the fiscal year
ended December 31, 2002, and each customer with which Xxxxx Xxxxx currently has
an agreement that Xxxxx Xxxxx in good faith expects to be one of White Amber's
top five (5) customers for the fiscal year ending December 31, 2003, and a list
of all effective agreements between such customer and Xxxxx Xxxxx.
(b) Except for such alleged breaches, violations and
defaults, and events that would constitute a breach, violation or default with
the lapse of time, giving of notice, or both, all of which are noted in Schedule
2.12(b) of the Xxxxx Xxxxx Schedules, Xxxxx Xxxxx has not breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any agreement, contract or commitment
required to be set forth on Schedule 2.12(a), Schedule 2.11(n)(i) or Schedule
2.11(n)(ii) of the Xxxxx Xxxxx Schedules (any such agreement, contract or
commitment, a "CONTRACT"). Each Contract is in full force and effect and is not
subject to any default thereunder of which Xxxxx Xxxxx has knowledge by any
party obligated to Xxxxx Xxxxx pursuant thereto.
2.13 Related Party Transactions. No employee, officer, stockholder
or director of Xxxxx Xxxxx or member of his or her immediate family is indebted
to Xxxxx Xxxxx, nor is Xxxxx Xxxxx indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary
for services rendered, (ii) reimbursement for reasonable expenses incurred on
behalf of Xxxxx Xxxxx, and (iii) for other standard employee benefits made
generally available to all employees including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
Xxxxx Xxxxx, nor does any such person have any interest in any material asset or
right of Xxxxx Xxxxx. To White Amber's knowledge, no officer, director, or
stockholder or any member of their immediate families is, directly or
indirectly, interested in any contract with Xxxxx Xxxxx (other than such
contracts as relate to any such person's ownership of capital stock or other
securities of Xxxxx Xxxxx).
2.14 Compliance with Laws. Xxxxx Xxxxx has complied in all material
respects with, is not in material violation of, and has not received any notices
of violation with respect to, any foreign, federal, state or local statute, law
or regulation, except where any such violations or failures to comply would not,
individually or in the aggregate, have a Material Adverse Effect.
2.15 Litigation. There is no action, suit or proceeding of any
nature pending or, to White Amber's knowledge, threatened against Xxxxx Xxxxx,
its properties or any of its officers or directors, in their respective
capacities as such. There is no investigation pending or, to White Amber's
knowledge, threatened against Xxxxx Xxxxx, its properties or any of its officers
or directors
-28-
by or before any Governmental Entity and to White Amber's knowledge, there is no
reasonable basis for any of the foregoing. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending or threatened
involving (a) the prior employment of any of White Amber's employees, or their
use in connection with White Amber's business of any information allegedly
proprietary to any of their former employers, or (b) negotiations by Xxxxx Xxxxx
with potential investors in Xxxxx Xxxxx. Schedule 2.15 of the Xxxxx Xxxxx
Schedules sets forth, with respect to any such pending or threatened action,
suit, proceeding or investigation, the forum, the parties thereto, the subject
matter thereof and the amount of damages claimed or other remedy requested. No
Governmental Entity has at any time challenged or questioned the legal right of
Xxxxx Xxxxx to manufacture, offer or sell any of its products in the present
manner or style thereof.
2.16 Insurance. The insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, employees, officers and
directors of Xxxxx Xxxxx contain provisions which are reasonable and customary
in White Amber's industry, and there is no claim by Xxxxx Xxxxx pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and Xxxxx Xxxxx is
otherwise in material compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance coverage).
Xxxxx Xxxxx has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
2.17 Minute Books. The minute books of Xxxxx Xxxxx made available
to Recruitsoft are the only minute books of Xxxxx Xxxxx and contain a reasonably
accurate summary of all meetings of directors (including committees thereof) and
stockholders or actions by written consent since the time of incorporation of
Xxxxx Xxxxx.
2.18 Environmental Matters.
(a) Hazardous Material. Xxxxx Xxxxx has not: (i) operated
any underground storage tanks at any property that Xxxxx Xxxxx has at any time
owned, operated, occupied or leased; or (ii) illegally released in violation of
applicable law any material amount of any substance that has been designated by
any Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws (a "HAZARDOUS MATERIAL"), but excluding office
and janitorial supplies properly and safely maintained. No Hazardous Materials
have been released in violation of any applicable law, as a result of the
actions of Xxxxx Xxxxx, or, to White Amber's knowledge, as a result of any
actions of any third party or otherwise, in, on or under any property, including
the land and the improvements, ground water and surface water thereof, that
Xxxxx Xxxxx has at any time owned, operated, occupied or leased.
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(b) Hazardous Materials Activities. Xxxxx Xxxxx has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has Xxxxx Xxxxx disposed of, transported, sold,
or manufactured any product containing a Hazardous Material (any or all of the
foregoing being collectively referred to as "HAZARDOUS MATERIALS ACTIVITIES") in
violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Xxxxx Xxxxx currently holds all
environmental approvals, permits, licenses, clearances and consents (the
"ENVIRONMENTAL PERMITS") necessary for the conduct of White Amber's Hazardous
Material Activities and other businesses of Xxxxx Xxxxx as such activities and
businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to White Amber's knowledge, threatened concerning any Environmental
Permit, Hazardous Material or any Hazardous Materials Activity of Xxxxx Xxxxx.
Xxxxx Xxxxx is not aware of any fact or circumstance which could involve Xxxxx
Xxxxx in any environmental litigation or impose upon Xxxxx Xxxxx any
environmental liability.
2.19 Brokers' and Finders' Fees; Third Party Expenses. Xxxxx Xxxxx
has not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.20 Employee Matters and Benefit Plans.
(a) Definitions.
(i) "COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended and as codified in Section 4980B
of the Code and Section 601 et. seq. of ERISA;
(ii) "XXXXX XXXXX EMPLOYEE PLAN" shall mean any
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind, whether written or unwritten,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by Xxxxx Xxxxx or any ERISA
Affiliate for the benefit of any Employee, or with respect to which Xxxxx Xxxxx
or any ERISA Affiliate has or may have any liability or obligation, including
all International Employee Plans;
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(iii) "DOL" shall mean the Department of Labor;
(iv) "EMPLOYEE" shall mean any current or former
or retired employee, consultant or director of Xxxxx Xxxxx or any ERISA
Affiliate;
(v) "ERISA AFFILIATE" shall mean each subsidiary
of Xxxxx Xxxxx and any other person or entity under common control with Xxxxx
Xxxxx or any of its subsidiaries within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(vi) "EMPLOYEE AGREEMENT" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visa, work permit or other agreement, contract or understanding
between Xxxxx Xxxxx or any ERISA Affiliate and any Employee;
(vii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave
Act of 1993, as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean
each Xxxxx Xxxxx Employee Plan that has been adopted or maintained by Xxxxx
Xxxxx or any ERISA Affiliate, whether informally or formally, or with respect to
which Xxxxx Xxxxx or any ERISA Affiliate will or may have any liability, for the
benefit of Employees who perform services outside the United States;
(x) "IRS" shall mean the Internal Revenue
Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "Pension
Plan" which is a "multiemployer plan," as defined in Section 3(37) of ERISA;
(xii) "PENSION PLAN" shall mean each Xxxxx Xxxxx
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Schedule 2.20(b) of the Xxxxx Xxxxx
Schedules contains an accurate and complete list of each Xxxxx Xxxxx Employee
Plan and each Employee Agreement. Neither Xxxxx Xxxxx nor any ERISA Affiliate
has any plan or commitment to establish any new Xxxxx Xxxxx Employee Plan or
Employee Agreements, to modify any Xxxxx Xxxxx Employee Plan or Employee
Agreements (except to the extent required by law or to conform any such Xxxxx
Xxxxx Employee Plan or Employee Agreement to the requirements of any applicable
law, in each case as previously disclosed to Recruitsoft in writing, or as
required by this Agreement), or to adopt or enter in any Xxxxx Xxxxx Employee
Plan or Employee Agreement.
(c) Documents. Xxxxx Xxxxx has provided to Recruitsoft
correct and complete copies of: (i) all documents embodying each Xxxxx Xxxxx
Employee Plan and each Employee
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Agreement including (without limitation) all amendments thereto and all related
trust documents, administrative service agreements, group annuity contracts,
group insurance contracts, and policies pertaining to fiduciary liability
insurance covering the fiduciaries for each Xxxxx Xxxxx Employee Plan; (ii) the
most recent annual actuarial valuations, if any, prepared for each Xxxxx Xxxxx
Employee Plan; (iii) the three (3) most recent annual reports (Form Series 5500
and all schedules and financial statements attached thereto), if any, required
under ERISA or the Code in connection with each Xxxxx Xxxxx Employee Plan; (iv)
if Xxxxx Xxxxx Employee Plan is funded, the most recent annual and periodic
accounting of Xxxxx Xxxxx Employee Plan assets; (v) the most recent summary plan
description together with the summary(ies) of material modifications thereto, if
any, required under ERISA with respect to each Xxxxx Xxxxx Employee Plan; (vi)
all IRS determination, opinion, notification and advisory letters, and all
applications and correspondence to or from the IRS or the DOL with respect to
any such application or letter; (vii) all communications material to any
Employee or Employees relating to any Xxxxx Xxxxx Employee Plan and any proposed
Xxxxx Xxxxx Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to Xxxxx Xxxxx; (viii) all written correspondence to or from
any governmental agency relating to any Xxxxx Xxxxx Employee Plan; (ix) all
COBRA forms and related notices (or such forms and notices as required under
comparable law); (x) the three (3) most recent plan years discrimination tests
for each Xxxxx Xxxxx Employee Plan; and (xi) all registration statements, annual
reports (Form 11-K and all attachments thereto) and prospectuses prepared in
connection with each Xxxxx Xxxxx Employee Plan.
(d) Employee Plan Compliance. Xxxxx Xxxxx and its ERISA
Affiliates have performed in all material respects all obligations required to
be performed by them under, are not in default or violation of, and have no
knowledge of any default or violation by any other party to each Xxxxx Xxxxx
Employee Plan, and each Xxxxx Xxxxx Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA or the Code. Any Xxxxx Xxxxx Employee Plan
intended to be qualified under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code (i) has either applied for,
prior to the expiration of the requisite period under applicable Treasury
Regulations or IRS pronouncements, or obtained a favorable determination,
notification, advisory and/or opinion letter, as applicable, as to its qualified
status from the IRS or still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for such letter and
to make any amendments necessary to obtain a favorable determination, and (ii)
incorporates or has been amended to incorporate all provisions required to
comply with the Tax Reform Act of 1986 and subsequent legislation. For each
Xxxxx Xxxxx Employee Plan that is intended to be qualified under Section 401(a)
of the Code there has been no event, condition or circumstance that has
adversely affected or is likely to adversely affect such qualified status. No
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to any Xxxxx Xxxxx Employee Plan. There are no
actions, suits or claims pending, or, to the knowledge of Xxxxx Xxxxx,
threatened or reasonably anticipated (other than routine claims for benefits)
against any Xxxxx Xxxxx Employee
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Plan or against the assets of any Xxxxx Xxxxx Employee Plan. Each Xxxxx Xxxxx
Employee Plan can be amended, terminated or otherwise discontinued after the
Closing in accordance with its terms, without liability to Recruitsoft, Xxxxx
Xxxxx or any of its ERISA Affiliates (other than ordinary administration
expenses). There are no audits, inquiries or proceedings pending or, to the
knowledge of Xxxxx Xxxxx or any ERISA Affiliates, threatened by the IRS or DOL,
or any other Governmental Entity with respect to any Xxxxx Xxxxx Employee Plan.
Neither Xxxxx Xxxxx nor any ERISA Affiliate is subject to any penalty or tax
with respect to any Xxxxx Xxxxx Employee Plan under Section 502(i) of ERISA or
Sections 4975 through 4980 of the Code. Xxxxx Xxxxx and each ERISA Affiliate
have timely made all contributions and other payments required by and due under
the terms of each Xxxxx Xxxxx Employee Plan.
(e) No Pension or Welfare Plans. Neither Xxxxx Xxxxx nor
any ERISA Affiliate has ever maintained, established, sponsored, participated
in, or contributed to, any (i) Pension Plan which is subject to Title IV of
ERISA or Section 412 of the Code, (ii) Multiemployer Plan, (iii) "multiple
employer plan" as defined in ERISA or the Code, or (iv) a "funded welfare plan"
within the meaning of Section 419 of the Code. No Xxxxx Xxxxx Employee Plan
provides health benefits that are not fully insured through an insurance
contract.
(f) No Post-Employment Obligations. No Xxxxx Xxxxx
Employee Plan or Employment Arrangement provides, or reflects or represents any
liability to provide, retiree life insurance, retiree health or other retiree
employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and neither of Xxxxx Xxxxx nor
Subsidiary has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided with
retiree life insurance, retiree health or other retiree employee welfare
benefits, except to the extent required by statute.
(g) Health Care Compliance. Neither Xxxxx Xxxxx nor any
ERISA Affiliate has, prior to the Closing and in any material respect, violated
any of the health care continuation requirements of COBRA, the requirements of
FMLA, the requirements of the Health Insurance Portability and Accountability
Act of 1996, the requirements of the Women's Health and Cancer Rights Act of
1998, the requirements of the Newborns' and Mothers' Health Protection Act of
1996, or any amendment to each such act, or any similar provisions of state law
applicable to its Employees.
(h) Past Acquisitions. Neither Xxxxx Xxxxx nor any ERISA
Affiliate is currently obligated to provide an Employee with any compensation or
benefits pursuant to an agreement (e.g., an acquisition agreement) with a former
employer of such Employee.
(i) Effect of Transaction.
(i) The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Xxxxx Xxxxx Employee Plan, Employee
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Agreement, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any Employee.
(ii) No payment or benefit which will or may be
made by Xxxxx Xxxxx or its ERISA Affiliates with respect to any Employee or any
other "disqualified individual" (as defined in Code Section 280G and the
regulations thereunder) will be characterized as a "parachute payment," within
the meaning of Section 280G(b)(2) of the Code.
(j) Employment Matters. Xxxxx Xxxxx: (i) is in compliance
in all material respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, threatened or
reasonably anticipated claims or actions against Xxxxx Xxxxx under any worker's
compensation policy or long-term disability policy. Neither Xxxxx Xxxxx nor any
ERISA Affiliate has direct or indirect liability with respect to any
misclassification of any person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employer.
(k) Labor. No work stoppage or labor strike against Xxxxx
Xxxxx or any ERISA Affiliate is pending, threatened or reasonably anticipated.
Xxxxx Xxxxx does not know of any activities or proceedings of any labor union to
organize any Employees. There are no actions, suits, claims, labor disputes or
grievances pending, or, to the knowledge of Xxxxx Xxxxx, threatened or
reasonably anticipated relating to any labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to Xxxxx
Xxxxx. Neither Xxxxx Xxxxx nor any of its subsidiaries has engaged in any unfair
labor practices within the meaning of the National Labor Relations Act. Xxxxx
Xxxxx is not presently, nor has it been in the past, a party to, or bound by,
any collective bargaining agreement or union contract with respect to Employees
and no collective bargaining agreement is being negotiated with respect to
Employees. Neither Xxxxx Xxxxx nor any of its Subsidiaries have incurred any
material liability or material obligation under the Worker Adjustment and
Retraining Notification Act or any similar state or local law which remains
unsatisfied.
(l) International Employee Plan. Neither Xxxxx Xxxxx nor
any ERISA Affiliate currently, nor has it ever had the obligation to, maintain,
establish, sponsor, participate in, or contribute to any International Employee
Plan.
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2.21 Employees. To the best of White Amber's knowledge, no employee
of Xxxxx Xxxxx (i) is in violation of any term of any employment contract,
patent disclosure agreement, non-competition agreement, or any restrictive
covenant to a former employer relating to the right of any such employee to be
employed by Xxxxx Xxxxx because of the nature of the business conducted or
presently proposed to be conducted by Xxxxx Xxxxx or to the use of trade secrets
or proprietary information of others and (ii) has given notice to Xxxxx Xxxxx,
nor is Xxxxx Xxxxx otherwise aware, that any employee intends to terminate his
or her employment with Xxxxx Xxxxx.
2.22 Governmental Authorization. Xxxxx Xxxxx possesses all material
consents, licenses, permits, grants or other authorizations issued to Xxxxx
Xxxxx by a governmental entity (i) pursuant to which Xxxxx Xxxxx currently
operates or holds any interest in any of its properties or (ii) which is
required for the operation of its business or the holding of any such interest,
other than such consents, licenses, permits, grants or authorizations the
failure to obtain which would not, either individually or in the aggregate, have
a Material Adverse Effect (herein collectively called "XXXXX XXXXX
AUTHORIZATIONS"), which Xxxxx Xxxxx Authorizations are in full force and effect
and constitute all Xxxxx Xxxxx Authorizations required to permit Xxxxx Xxxxx to
operate or conduct its business or hold any interest in its properties or
assets. Xxxxx Xxxxx believes it can, without undue burden or expense, obtain any
similar authority for the conduct of its business as presently planned to be
concluded.
2.23 Third Party Consents. No consent or approval is needed from
any person or entity in order to consummate any of the transactions contemplated
by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RECRUITSOFT
Recruitsoft hereby represents and warrants to Xxxxx Xxxxx, subject to
such exceptions as are clearly disclosed in the disclosure schedule supplied by
Recruitsoft to Xxxxx Xxxxx which identify the section and subsection of this
Agreement to which such disclosure relates (the "RECRUITSOFT SCHEDULES") and
dated as of the date hereof, as follows:
3.1 Organization, Standing and Power. Recruitsoft is a corporation
duly organized, validly existing and in good standing under Delaware Law.
Recruitsoft has the corporate power and authority to own its properties and to
carry on its business as now being conducted. Recruitsoft is duly qualified to
do business and in good standing as a foreign corporation in each state in which
the failure to be so qualified would have a Material Adverse Effect on
Recruitsoft. Recruitsoft has delivered a true and correct copy of the
Recruitsoft Charter (defined below) and Bylaws of Recruitsoft, each as amended
to date, to Xxxxx Xxxxx. Merger Sub is a corporation duly organized, validly
existing and in good standing under Delaware Law.
3.2 Authority. Recruitsoft has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and
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delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Recruitsoft. This Agreement has been duly executed and delivered by
Recruitsoft and constitutes the valid and binding obligation of Recruitsoft,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
3.3 Recruitsoft Capital Structure; Issuance of Shares.
(a) The authorized capital stock of Recruitsoft consists
of two hundred seventy four million, two hundred twenty nine thousand, seven
hundred sixty-two (274,229,762) shares of authorized Common Stock, par value
$0.00001 per share (the "RECRUITSOFT COMMON STOCK"), of which (i) two hundred
fifty million (250,000,000) shares have been designated Class A Common Stock
(the "CLASS A COMMON STOCK"), of which three hundred sixty-seven thousand, eight
hundred fifteen (367,815) are issued and outstanding, and (ii) twenty four
million, two hundred twenty-nine thousand, seven hundred sixty-two (24,229,762)
shares have been designated Class B Common Stock (the "CLASS B COMMON STOCK"),
all of which are issued and outstanding, and seventy-nine million, three hundred
eighty-three thousand, six hundred ninety-six (79,383,696) shares of authorized
Preferred Stock, par value $0.00001 per share (the "RECRUITSOFT PREFERRED
STOCK"), of which (w) six million, three hundred fifty thousand, four hundred
(6,350,400) are designated as Series A Preferred, none of which are issued and
outstanding (the "SERIES A PREFERRED STOCK"), (x) seven million, one hundred
thirty-two thousand, four hundred forty-one (7,132,441) are designated as Series
B Preferred, all of which are issued and outstanding (the "SERIES B PREFERRED
STOCK"), (y) fifty-one million, nine hundred sixty-two thousand, nine hundred
thirty-one (51,962,931) are designated as Series C Preferred, all of which are
issued and outstanding (the "SERIES C PREFERRED STOCK"), and (z) thirteen
million, nine hundred thirty-seven thousand, nine hundred twenty-four
(13,937,924) are designated as Series D Preferred Stock, none of which are
issued and outstanding prior to the Closing. Except as set forth in the
immediately preceding sentence, no shares of capital stock or other equity
securities of Recruitsoft are issued, reserved for issuance except as set forth
in Section 3.3(b) below. The rights, privileges and preferences of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock are as set forth in the Fifth Amended and Restated Certificate
of Incorporation of Recruitsoft (the "RECRUITSOFT CHARTER"), as provided to
Xxxxx Xxxxx and attached hereto as Exhibit G. All outstanding shares of
Recruitsoft capital stock are, and at the Closing will be, duly authorized,
validly issued, fully paid and non assessable and not subject to preemptive
rights created by statute, the Recruitsoft Charter or Bylaws of Recruitsoft or
any agreement to which Recruitsoft is a party or by which it is bound. None of
the outstanding shares of Recruitsoft capital stock or other securities of
Recruitsoft were issued in violation of the Securities Act, or any applicable
state blue sky laws.
(b) In addition, Recruitsoft has reserved (x) an
aggregate of nineteen million, four hundred twenty six thousand, ninety two
(19,426,092) shares of Recruitsoft Class A Stock for issuance pursuant to
Recruitsoft's 1999 Stock Plan and 1999 Viasite Stock Plan, of which fourteen
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million, three hundred seventy-seven thousand, four hundred thirty-nine
(14,377,439) shares are issuable pursuant to outstanding options, and four
million, eight hundred thirty thousand, eight hundred thirty-eight (4,830,838)
remain available for grant, (y) an aggregate of one million, two hundred
thirty-eight thousand, nine hundred twenty-six (1,238,926) shares of Series D
Preferred Stock for issuance under the 2003 Series D Preferred Stock Plan, and
(z) an aggregate of four million, four hundred thirty-eight thousand, two
hundred ninety-three (4,438,293) shares of Recruitsoft Class A Stock pursuant to
exercise of warrants to Communicade Inc., FMR Corp., Beauschesne, Xxxxxxx &
Xxxxxx Inc. and Planet Enlightenment Corp. Except for (i) the conversion
privileges of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, (ii) the options and warrants
described in this subsection above and contemplated by this Agreement, (iii) the
exchange rights of the Class A and Class B Preferred Exchangeable Shares of
0000-0000 Xxxxxx Inc., and (iv) the rights of first refusal provided in the
Recruitsoft Investor Rights Agreement, there are no other options, warrants,
calls, rights, commitments or agreements of any character, written or oral, to
which Recruitsoft is a party or by which it is bound obligating Recruitsoft to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of Recruitsoft or
obligating Recruitsoft to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights with
respect to Recruitsoft. There are no voting trusts, proxies, or other agreements
or understandings with respect to the capital stock of Recruitsoft.
(c) The shares of Series D Preferred Stock to be issued
pursuant to the Merger have been duly authorized by all necessary corporate
action and, when issued in accordance with the terms and provisions of this
Agreement, will be validly issued, fully paid and non-assessable.
(d) Set forth on Schedule 3.3(d) the Recruitsoft
Schedules is the capitalization of Recruitsoft on a fully-diluted, as converted
basis (including the exchange of the Class A and Class B Preferred Exchangeable
Shares of 0000-0000 Xxxxxx Inc.) as of immediately following the Closing.
3.4 Subsidiaries; Investments. Recruitsoft does not presently own
or control, directly or indirectly, any interest in any other corporation,
association, or other business entity. Recruitsoft is not a participant in any
joint venture, partnership, or similar arrangement. Each subsidiary of
Recruitsoft is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, possesses all requisite corporate
power and authority and all material licenses, permits and authorizations
necessary to own its properties and to carry on its business as now being
conducted and as presently proposed to be conducted and is qualified to do
business in every jurisdiction in which its ownership of property of the conduct
of business requires to be so qualified, except where the failure to obtain such
qualification would not have a Material Adverse Effect. All of the outstanding
shares of capital stock of each such subsidiary are validly issued, fully paid
and nonassessable, and, except for the Class A and Class B Preferred
Exchangeable Shares of 0000-0000 Xxxxxx Inc., all such shares are owned by
Recruitsoft, free and clear of any lien, and are not subject to any option or
right to purchase any such shares. Except for the Class A and Class B Preferred
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Exchangeable Shares of 0000-0000 Xxxxxx Inc., neither Recruitsoft nor any such
subsidiary owns or holds the right to acquire any shares of stock or any other
security or interest in any other person or entity.
3.5 No Conflict. Neither the execution and delivery of this
Agreement and the Recruitsoft Investor Rights Agreement by Recruitsoft, nor the
consummation by Recruitsoft of the transactions contemplated hereby, nor
compliance by Recruitsoft with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of the Recruitsoft Charter or Bylaws
of Recruitsoft, (ii) constitute or result in a default under, or require any
consent pursuant to, or result in the creation of any lien on any material asset
of any Recruitsoft under, any contract of Recruitsoft, where such default or
lien, or any failure to obtain such consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Recruitsoft and
its subsidiaries, taken as a whole.
3.6 Governmental Approvals. No consent, waiver, approval, order or
authorization of, or registration declaration or filing with, any Governmental
Entity or any third party is required by or with respect to Recruitsoft in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws, if any, (ii)
such consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as shall have been obtained prior to the Closing, (iii)
such consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings the failure to obtain which would not either materially
delay the ability of Recruitsoft to consummate the Merger or have a Material
Adverse Effect on Recruitsoft and its subsidiaries, taken as a whole.
3.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against Recruitsoft that questions
the validity of this Agreement or the Recruitsoft Investor Rights Agreement, or
the right of Recruitsoft to enter into any such agreement or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in a Material Adverse Effect, financially or
otherwise, or any change in the current equity ownership of Recruitsoft.
Recruitsoft is not subject to any arbitration proceedings under collective
bargaining agreements or otherwise or, to Recruitsoft's knowledge, any
governmental investigation or inquiry and, to Recruitsoft's knowledge, there is
no reasonable basis for any of the foregoing. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending or threatened
involving (a) the prior employment of any of Recruitsoft's employees, or their
use in connection with Recruitsoft's business of any information allegedly
proprietary to any of their former employers, or (b) negotiations by Recruitsoft
with potential investors in Recruitsoft. Recruitsoft is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by Recruitsoft currently pending or that Recruitsoft
intends to initiate.
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3.8 Intellectual Property. Either Recruitsoft or its subsidiary,
Recruitsoft (Canada) Inc. will own all patents, patent applications, if any,
licenses, trademarks, service marks, trade names, inventions, processes,
formulae, trade secrets, franchises, copyrights and other proprietary rights
(collectively, "RECRUITSOFT INTELLECTUAL PROPERTY RIGHTS") employed in or
necessary for the operation of its business as now conducted with no known
infringement of or conflict with the rights of others. Such ownership and title
are exclusive and not subject to termination without Recruitsoft's consent. To
Recruitsoft's knowledge, the conduct of its business does not infringe or
conflict with any intellectual property rights of any third party. Recruitsoft
has entered into a Software Distribution License Agreement, dated November 24,
1999, with Recruitsoft (Canada) Inc. and a Software Development Cost Sharing
Agreement dated November 24, 1999 with Recruitsoft (Canada) Inc. which
collectively provide for the transfer to Recruitsoft of the Internet Recruit
Recruitment Program and Technology, each as defined therein. There are no
outstanding options, licenses, or agreements of any kind relating to the
foregoing Recruitsoft Intellectual Property Rights, nor is Recruitsoft bound by
or a party to any options, licenses or agreements of any kind with respect to
the intellectual property rights of any other person or entity. Recruitsoft is
not aware of any third party that has misappropriated or is infringing or
violating any of its Recruitsoft Intellectual Property Rights. Recruitsoft has
not received any communications alleging that Recruitsoft has violated or, by
conducting its business as proposed, would violate any of the intellectual
property rights of any other person or entity, and there have been no claims
made against Recruitsoft asserting the invalidity or unenforceability or any of
the Recruitsoft Intellectual Property Rights. Recruitsoft does not believe it is
or will be necessary to use any inventions of any of its employees (or persons
it currently intends to hire) made prior to their employment by Recruitsoft.
Recruitsoft has no patents. The transactions contemplated by this Agreement
shall have no material adverse effect on Recruitsoft's right, title and interest
in and to Recruitsoft Intellectual Property Rights.
3.9 Interim Operations of Merger Sub. Merger Sub was formed by
Recruitsoft solely for the purpose of engaging in the transactions contemplated
by this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated by this Agreement. Merger Sub has no
liabilities and, except for a subscription agreement pursuant to which all of
its authorized capital stock was issued to Recruitsoft, is not a party to any
agreement other than this Agreement and agreements with respect to the
appointment of registered agents and similar matters.
3.10 Financial Statements; Liabilities. Recruitsoft commenced
operations in May 1999. Recruitsoft's financial statements (balance sheet,
statement of operations, and statements of stockholders' equity and cash flows)
at and for the period ended August 31, 2003, (the "RECRUITSOFT FINANCIAL
STATEMENTS"), are complete and correct in all material respects, are consistent
with the books and records of Recruitsoft, and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. The Financial Statements fairly present the
financial condition and operating results of Recruitsoft as of the dates, and
for the period, indicated therein.
Except as set forth in the Financial Statements or on Schedule 3.10,
Recruitsoft has no material obligations or liabilities, other than (i) liability
under the Recruitsoft's office lease,
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(ii) liabilities incurred in the ordinary course of business subsequent to the
August 31, 2003 balance sheet, none of which is a liability resulting from a
breach of contract or breach of warranty or claim of infringement of an
intellectual property right of a third party and none of which, individually or
in the aggregate, is material to the financial condition of Recruitsoft, and
(iii) obligations under contracts and commitments incurred in the ordinary
course of business, and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, individually or
in the aggregate, are not material to the financial condition of Recruitsoft,
exclusive of obligations for salaries accrued since August 31, 2003 but not yet
due, and recurring trade payables not greater than $100,000 in the aggregate
incurred in the normal course of business.
3.11 Material Contracts and Other Commitments. Except as set forth
on the Recruitsoft Schedules and except for agreements explicitly contemplated
hereby (collectively, the "RECRUITSOFT CONTRACTS"), there are no agreements,
instruments or contracts to which Recruitsoft is a party or by which it is
bound, other than (i) contracts for the purchase of supplies and services that
were entered into in the ordinary course of business and do not involve the
payment of more than $250,000 in cash, goods, or services, (ii) sales contracts
entered into in the ordinary course of business that do not involve the annual
receipt of more than $250,000 in cash, goods, or services, (iii) consulting
agreements with customers of Recruitsoft entered into in the ordinary course of
business, and (iv) contracts terminable at will by Recruitsoft on no more than
sixty (60) days notice without cost or liability to Recruitsoft and are not
material to the conduct of Recruitsoft's business. All of the Recruitsoft
Contracts are valid, binding and in full force and effect in all material
respects and enforceable by Recruitsoft in accordance with their respective
terms in all material respects, subject to the effect of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium, usury or other
laws of general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies. Recruitsoft is not in
material default under any of such Recruitsoft Contracts. To the knowledge of
Recruitsoft, no other party to any of the Recruitsoft Contracts is in material
default thereunder.
3.12 Title to Property and Assets; Licenses; Permits.
(a) Recruitsoft owns its property and assets free and
clear of all mortgages, liens, loans and encumbrances, except such encumbrances
and liens that arise in the ordinary course of business and do not materially
impair Recruitsoft's ownership or use of such property or assets. With respect
to the property and assets it leases, Recruitsoft is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
(b) Recruitsoft has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, or financial condition of Recruitsoft, and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as presently planned to be conducted. Recruitsoft is not in
default in any material respect under any of such franchises, permits, licenses
or other similar authority.
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3.13 Related Party Transactions. No employee, officer, stockholder
or director of Recruitsoft or member of his or her immediate family is indebted
to Recruitsoft, nor is Recruitsoft indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary
for services rendered, (ii) reimbursement for reasonable expenses incurred on
behalf of Recruitsoft, and (iii) for other standard employee benefits made
generally available to all employees including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
Recruitsoft, nor does any such person have any interest in any material asset or
right of Recruitsoft. To Recruitsoft's knowledge, no officer, director, or
stockholder or any member of their immediate families is, directly or
indirectly, interested in any contract with Recruitsoft (other than such
contracts as relate to any such person's ownership of capital stock or other
securities of Recruitsoft).
3.14 Registration Rights. Except as provided in the Investor Rights
Agreement dated as of January 25, 2000, as amended and superceded by the Amended
and Restated Investor Rights Agreement dated January 19, 2001, and as amended
and superceded by the Recruitsoft Investor Rights Agreement, Recruitsoft has not
granted or agreed to grant any registration rights, including piggyback rights,
to any person or entity.
3.15 Changes.
(a) Since August 31, 2003, and except as contemplated by
or as disclosed in this Agreement, there has not been, occurred or arisen any:
(i) material adverse change in the assets,
liabilities, financial condition, operations, business prospects, employee
relations, customer or supplier relations or operating results of Recruitsoft
from that reflected in the Recruitsoft Financial Statements;
(ii) investment in or steps taken by Recruitsoft
to incorporate any subsidiary;
(iii) damage, destruction or loss, whether or not
covered by insurance, that would constitute a Material Adverse Effect;
(iv) waiver by Recruitsoft of a valuable right or
of a material debt owed to it;
(v) satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by Recruitsoft, except in the
ordinary course of business and that is not material to the assets, properties,
financial condition, operating results or business of Recruitsoft (as such
business is presently conducted and as it is proposed to be conducted);
(vi) change or amendment to a material contract
or arrangement by which Recruitsoft or any of its assets or properties is bound
or subject;
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(vii) loans or guarantees made by Recruitsoft to
or for the benefit of its employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;
(viii) change in any compensation arrangement or
agreement with any key employee;
(ix) sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets; or
(x) resignation or termination of employment of
any key officer of Recruitsoft.
(b) Recruitsoft has not at any time made payments for
political contributions or made any bribes, kickback payments or other illegal
payments.
3.16 Tax Returns, Payments and Elections. Recruitsoft has filed all
Tax Returns and reports (including information returns and reports) as required
by law. These Tax Returns and reports are true and correct in all material
respects. Recruitsoft has paid all Taxes it is required to pay, except to the
extent a reserve for Taxes has been established on the Recruitsoft Financial
Statements, as adjusted for the ordinary conduct of business since the date of
the Recruitsoft Financial Statements. The provision for Taxes of Recruitsoft as
shown in the Financial Statements is adequate for Taxes due or accrued as of the
date thereof. Recruitsoft has not elected pursuant to the Code, to be treated as
a Subchapter S corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the Code.
3.17 Insurance. Recruitsoft has in full force and effect fire and
casualty insurance policies, with extended coverage, in customary amounts
(subject to reasonable deductibles) and that Recruitsoft believes is sufficient
for its business as conducted and as proposed to be conducted.
3.18 Minute Books. The minute books of Recruitsoft for 2003 made
available to Xxxxx Xxxxx contain minutes of all meetings of directors and
stockholders since December 31, 2002 and reflect all transactions referred to in
such minutes accurately in all material respects.
3.19 Employee Matters. Recruitsoft is not aware that any officer or
key employee, or that any group of key employees, currently intends to terminate
their employment with Recruitsoft. The employment of each officer and employee
of Recruitsoft is terminable at the will of Recruitsoft. Recruitsoft is not a
party to or bound by any currently effective employment contract, deferred
compensation arrangement, bonus plan, profit sharing plan, retirement agreement
or other employee compensation plan or agreement. Recruitsoft is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of
Recruitsoft, has sought to represent any of the employees, representatives or
agents of Recruitsoft. To Recruitsoft's knowledge, no employee or consultant of
Recruitsoft is in violation of any term of
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any employment contract proprietary information agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, Recruitsoft because of the nature of the business to be conducted by
Recruitsoft; and to Recruitsoft's knowledge, the continued employment by
Recruitsoft of its present employees, and the performance of Recruitsoft's
contracts with its independent contractors, will not result in any such
violation. Recruitsoft has complied in all material respects with all applicable
state and federal equal employment opportunity laws and with other laws related
to employment.
3.20 Environmental Matters. To its knowledge, Recruitsoft is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to the best of its knowledge,
no material expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
ARTICLE IV
CLOSING CONDITIONS
4.1 Xxxxx Xxxxx Closing Conditions.
(a) Stockholder Approval. Prior to the execution of the
Agreement, the stockholders of Xxxxx Xxxxx shall have approved and adopted this
Agreement and the transactions contemplated hereby as provided by Delaware Law
and White Amber's Certificate of Incorporation and Bylaws.
(b) Performance. Xxxxx Xxxxx shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
(c) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Xxxxx Xxxxx, and Xxxxx Xxxxx shall have received all such
counterparts and certified or other copies of such documents as White Xxxxx xxx
reasonably request.
(d) No Legal Proceedings. No proceeding challenging this
Agreement or the transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing or seeking damages in connection
therewith shall have been instituted or threatened by any person or entity.
(e) Qualifications. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with this Agreement or
the execution, delivery and performance by Xxxxx Xxxxx of this Agreement shall
be duly obtained and effective as of the Closing.
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4.2 Recruitsoft Closing Conditions.
(a) Stockholder Approval. Prior to the execution of the
Agreement, the stockholders of Recruitsoft have approved and adopted this
Agreement, the Recruitsoft Charter and the transactions contemplated hereby as
provided by Delaware Law and Recruitsoft's Charter and Bylaws.
(b) Performance. Recruitsoft shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
(c) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Recruitsoft, and Recruitsoft shall have received all such
counterparts and certified or other copies of such documents as Recruitsoft may
reasonably request.
(d) Recruitsoft Charter. The Recruitsoft Charter shall
have been filed with the Delaware Secretary of State.
(e) No Legal Proceedings. No proceeding challenging this
Agreement or the transactions contemplated hereby or seeking to prohibit, alter,
prevent or materially delay the Closing or seeking damages in connection
therewith shall have been instituted or threatened by any person or entity.
(f) Qualifications. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful issuance
and sale of the Series D Preferred Stock pursuant to this Agreement or the
execution, delivery and performance by Recruitsoft of this Agreement and the
Recruitsoft Investor Rights Agreement shall be duly obtained and effective as of
the Closing.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Issuance of Series D Preferred Stock
(a) The shares of Series D Preferred Stock to be issued
pursuant to the Merger have not been registered under the Securities Act, in
reliance upon exemptions from registration provided by Rule 506 and/or Section
4(2) under the Securities Act. The certificates for shares of Series D Preferred
Stock to be issued pursuant to the Merger shall bear appropriate legends to
identify such shares as being "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act and to comply with applicable state
securities laws. The Series D Preferred Stock being offered and sold pursuant to
this Agreement in reliance upon such exemptions from
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registration is based in part upon the representations of each Xxxxx Xxxxx
Stockholder contained in the Stockholder Certificate attached hereto as Exhibit
F.
(b) Restrictive Legends: Stop Transfer Instructions. Each
certificate representing shares of Series D Preferred Stock issued pursuant to
ARTICLE I shall bear a legend substantially in the form set forth below, which
legend shall be removed by delivery of substitute certificates upon the second
anniversary of the Effective Time or, for shares sold by a stockholder, at such
earlier time as requested by a stockholder after a registration statement with
respect to the shares represented by such certificate has become effective. The
sale or transfer of such shares of Series D Preferred Stock may only be made (A)
if there is then in effect a registration statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement, (B) in conformity with the provisions of Rule 144 under
the Securities Act or (C) pursuant to the receipt by Recruitsoft of an opinion
in form and substance reasonably satisfactory to Recruitsoft from counsel
reasonably satisfactory to Recruitsoft to the effect that such transfer may be
made without registration under the Securities Act. Notwithstanding the
provisions of (A), (B) and (C) above, no such registration statement,
conformance with Rule 144 or opinion of counsel shall be necessary for a
transfer by a Xxxxx Xxxxx Stockholder which is a partnership to a limited or
general partner of such partnership or a retired partner of such partnership who
retires after the date hereof, or to the estate of any such partner or retired
partner or the transfer by gift, will or intestate succession of any partner to
such partner's spouse or lineal descendents or ancestors, if (i) a certificate
to such effect has been provided to Recruitsoft and its transfer agent and (ii)
the transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were an original stockholder of Xxxxx Xxxxx
hereunder.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES
MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE
DISPOSED OF, DIRECTLY OR INDIRECTLY, IN THE ABSENCE OF SUCH
REGISTRATION UNLESS (I) THERE IS AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT (II)
SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OF THE ACT OR (III)
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT."
Recruitsoft may instruct its transfer agent to stop the transfer of any shares
of Series D Preferred Stock issued pursuant to ARTICLE I unless Recruitsoft
shall have been provided evidence of compliance with the restrictions set forth
in such legend reasonably satisfactory to Recruitsoft.
5.2 Confidentiality. Each of the parties hereto hereby agrees to
maintain the confidentiality of the information obtained pursuant to the
negotiation and execution of this Agreement, in accordance with the provisions
of the Confidentiality and Nondisclosure Agreement between Recruitsoft and Xxxxx
Xxxxx dated as of July 18, 2003 (the "CONFIDENTIALITY AGREEMENT").
Notwithstanding anything herein or in the Confidentiality Agreement to the
contrary,
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each party (and its representatives, agents and employees) may consult any tax
advisor regarding the tax treatment and the tax structure of the transactions
contemplated hereby and may disclose to any person, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated
hereby and all materials (including opinions and other tax analyses) that are
provided relating to such treatment or structure. For the avoidance of doubt,
the parties acknowledge and agree that the tax treatment and tax structure of
any Transaction does not include the name of any party to the Transaction or any
sensitive business information (including, without limitation, the name and
other specific information about any party's intellectual property or other
proprietary assets) unless such information is necessary to understand the
purported or claimed federal income tax treatment of the Transaction.
5.3 Employee Benefit Matters. As of the Effective Time, each
employee of Xxxxx Xxxxx who is employed by Recruitsoft after the Effective Time
(each a "CONTINUING EMPLOYEE"), shall be eligible to either: (i) participate in
Recruitsoft benefit plans, (ii) participate in Xxxxx Xxxxx benefit plans that
are continued by Recruitsoft, or (iii) a combination of (i) and (ii) so that
each Continuing Employee is eligible for benefits that are substantially similar
in the aggregate to those of similarly situated employees of Recruitsoft (it
being understood that equity incentives may vary). Each Continuing Employee
shall, to the extent permitted by law and applicable tax qualification
requirements, and subject to any generally applicable break in service or
similar rule, receive credit for purposes of vacation, eligibility to
participate and vesting under Recruitsoft's benefit program for years of service
with Xxxxx Xxxxx prior to the Effective Time. Subject to the approval of any
insurance carrier and to the extent consistent with law and applicable tax
qualification requirements, Recruitsoft shall make commercially reasonable
efforts to cause any and all pre-existing condition limitations, eligibility
waiting periods and evidence of insurability requirements under any Recruitsoft
group health plans to be waived with respect to such Continuing Employees (and
their eligible dependents) and to provide them with credit for any co-payments
and deductibles prior to the Effective Time for purposes of satisfying any
applicable deductible, out-of-pocket, or similar requirements under any
Recruitsoft benefit programs in which they are eligible to participate
immediately after the Effective Time.
5.4 401(k) Plan. Effective no later than the day immediately
preceding the Closing Date, Xxxxx Xxxxx shall have terminated any and all group
severance, separation or salary continuation plans, programs or arrangements and
any and all plans intended to include a Code Section 401(k) arrangement
(collectively, the "XXXXX XXXXX PLANS").
5.5 Expenses. The reasonable legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties ("THIRD
PARTY EXPENSES") incurred by Xxxxx Xxxxx in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby shall be borne and paid by Xxxxx Xxxxx.
5.6 Public Disclosure. No disclosure (whether or not in response
to an inquiry) of the existence or nature of this Agreement shall be made by any
party hereto unless approved by duly authorized officers of both Recruitsoft and
Xxxxx Xxxxx prior to release, provided that such
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approval shall not be unreasonably withheld and subject in any event to
Recruitsoft's obligation to comply with applicable securities law.
5.7 FIRPTA Compliance. On the Closing Date, Xxxxx Xxxxx shall
deliver to Recruitsoft a properly executed statement in a form reasonably
acceptable to Recruitsoft for purposes of satisfying Recruitsoft's obligations
under Treasury Regulation Section 1.1445-2(c)(3).
5.8 Reasonable Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use its reasonable
efforts to take promptly, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals
(including, but not limited to, those required under the Contracts) in a manner
that does not materially alter the underlying obligations of the parties and to
effect all necessary registrations and filings, and to remove any injunctions or
other impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement;
provided that Recruitsoft shall not be required to agree to any divestiture by
Recruitsoft or Xxxxx Xxxxx or any of Recruitsoft's subsidiaries or Affiliates of
shares of capital stock or of any business, assets or property of Recruitsoft or
its subsidiaries or Affiliates or Xxxxx Xxxxx or its Affiliates, or the
imposition of any material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such assets, properties and
stock.
5.9 Additional Documents and Further Assurances. Each party
hereto, at the request of the other party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or reasonably desirable for effecting completely and promptly the
consummation of this Agreement and the transactions contemplated hereby.
5.10 Tax Matters. Each party hereto shall use its reasonable
efforts to cause the Merger to qualify, and will not knowingly take any action,
cause any action to be taken, fail to take any action or cause any action to
fail to be taken which action or failure to act would reasonably be likely to
prevent the Merger from qualifying as a reorganization under the provisions of
Section 368(a) of the Code. Following the Effective Time, none of the Surviving
Corporation, Recruitsoft or any of their affiliates shall knowingly take any
action, cause any action to be taken, fail to take any action or cause any
action to fail to be taken, which action or failure to act would reasonably be
likely to cause the Merger to fail to qualify as a reorganization under Section
368(a) of the Code.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
6.1 Survival of Representations and Warranties. White Amber's
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement (each as
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modified by Xxxxx Xxxxx Schedules) shall survive the Merger and continue until
the one year anniversary of the Closing Date (the "EXPIRATION DATE").
6.2 Escrow Arrangements.
(a) Escrow Fund. At the Effective Time White Amber's
Stockholders will be deemed to have received and consented to the deposit with
the Escrow Agent of the Escrow Amount (plus any additional shares as may be
issued upon any stock split, stock dividend or recapitalization effected by
Recruitsoft after the Effective Time), without any act required on the part of
any stockholder. As soon as practicable after the Effective Time, the Escrow
Amount, without any act required on the part of any stockholder, will be
deposited with U.S. Bank, N.A. as Escrow Agent (the "ESCROW AGENT"), such
deposit to constitute an escrow fund (the "ESCROW FUND") to be governed by the
terms set forth herein and at Recruitsoft's cost and expense. The portion of the
Escrow Amount contributed on behalf of each Xxxxx Xxxxx Stockholder shall be as
set forth on Schedule 6.2 hereof. The Escrow Amount shall be contributed
entirely out of the shares of Series D Preferred Stock issuable upon the Merger
in respect of Xxxxx Xxxxx Capital Stock. The Escrow Fund is available to
compensate Recruitsoft and its affiliates for any claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses, and expenses of investigation and defenses (hereinafter
individually a "LOSS" and collectively "LOSSES") incurred by Recruitsoft, its
officers, directors, or affiliates (including the Surviving Corporation)
directly or indirectly as a result of (i) any inaccuracy or breach of a
representation or warranty of Xxxxx Xxxxx contained in ARTICLE II herein, (ii)
any failure by Xxxxx Xxxxx to perform or comply with any covenant contained
herein, (iii) any third party claims alleging that Xxxxx Xxxxx does not own all
intellectual property in and to the work product referenced in Schedule 2.11(d),
(iv) any claim by Micro Notes Consultants, Inc. ("MICRO NOTES") that Xxxxx Xxxxx
does not own all intellectual property in and to the work product or otherwise
have sufficient rights with respect to any other deliverables created by Micro
Notes for Xxxxx Xxxxx or (v) any claim by Xxx Xxxxxxx alleging that Xxxxx Xxxxx
has any liability to Xx. Xxxxxxx in repect of taxes owed by him in connection
with that certain payment made to Xx. Xxxxxxx as described on Schedules
2.8(b)(ix) and 2.20(i) of the Xxxxx Xxxxx Schedules. Recruitsoft and Xxxxx Xxxxx
each acknowledge that such Losses, if any, would relate to unasserted contingent
liabilities existing at the Effective Time, which if resolved at the Effective
Time would have led to a reduction in the aggregate Merger Consideration.
Recruitsoft may not receive any shares from the Escrow Fund unless and until
Officer's Certificates (as defined in Section 6.2(d)) identifying Losses, the
aggregate amount of which exceed $50,000 have been delivered to the Escrow Agent
as provided in paragraph (e); in such case, Recruitsoft may recover from the
Escrow Fund only its Losses in excess of $50,000. The liability of the Xxxxx
Xxxxx Stockholders shall be several but not joint. Recruitsoft shall not be
entitled to any recourse against Xxxxx Xxxxx for Losses other than by way of the
Escrow Fund except for fraud, bad faith, misrepresentation or willful
misconduct.
(b) Escrow Period; Distribution upon Termination of
Escrow Periods. Subject to the following requirements, the Escrow Fund shall be
in existence immediately following the Effective Time and shall terminate at
5:00 p.m. Pacific Time on the Expiration Date (the "ESCROW
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PERIOD"); provided that the Escrow Period shall not terminate with respect to
such amount (or some portion thereof), that together with the aggregate amount
remaining in the Escrow Fund is necessary in the reasonable judgment of
Recruitsoft (subject to reduction as may be determined by arbitration of the
matter as provided in Section 6.2(f) hereof in the event of the objection of the
Stockholder Agent in the manner provided in Section 6.2(e) hereof) to satisfy
any unsatisfied Losses concerning facts and circumstances existing prior to the
termination of such Escrow Period and to the extent specified in any Officer's
Certificate delivered to the Escrow Agent prior to termination of such Escrow
Period. As soon as all such claims have been resolved, the Escrow Agent shall
transfer to the Xxxxx Xxxxx Stockholders, pursuant to written instructions by
Recruitsoft, the remaining portion of the Escrow Fund not required to satisfy
such claims, such remaining portion to be transferred no later than thirty (30)
days after the resolution of such claims. If no claims exist as of the
Expiration Date, the Escrow Agent shall authorize the release of the full amount
of the Escrow Fund within ten (10) days of the Expiration Date. Deliveries of
Escrow Amount to Xxxxx Xxxxx Stockholders pursuant to this Section 6.2(b) shall
be made in proportion to their respective original contributions to the Escrow
Fund as provided on Schedule 6.2 hereof.
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard
the Escrow Fund during the Escrow Period, shall treat such fund as a trust fund
in accordance with the terms of this Agreement and not as the property of
Recruitsoft and shall hold and dispose of the Escrow Fund only in accordance
with the terms hereof or pursuant to joint written instructions from Recruitsoft
and the Stockholder Agent.
(ii) With respect to any shares of Series D
Preferred Stock or other equity securities issued or distributed by Recruitsoft
(including shares issued upon a stock split) (the "NEW SHARES") in respect of
Series D Preferred Stock in the Escrow Fund which have not been released from
the Escrow Fund as of the time of such issuance and distribution by Recruitsoft,
White Amber's Stockholders will be deemed to have received and consented to the
deposit with the Escrow Agent of such New Shares without any act required on the
part of any stockholder. New Shares issued in respect of shares of Series D
Preferred Stock which have been released from the Escrow Fund as of the time of
such issuance or distribution by Recruitsoft shall not be added to the Escrow
Fund but shall be distributed to the record holders thereof. Cash dividends
issued in respect of shares of Series D Preferred Stock shall not be added to
the Escrow Fund but shall be distributed to the record holders thereof.
(iii) Each Xxxxx Xxxxx Stockholder shall be
entitled to control the vote of the shares of Series D Preferred Stock
contributed to the Escrow Fund by, or on behalf of, such Xxxxx Xxxxx Stockholder
(and on any voting securities added to the Escrow Fund in respect of such shares
of Series D Preferred Stock), and the Escrow Agent in whose name the shares are
held shall vote such shares on all matters as instructed by the respective White
Amber Stockholders in writing.
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(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time
on or before the last day of the Escrow Period of a certificate signed by any
officer of Recruitsoft (an "OFFICER'S CERTIFICATE"): (A) stating that
Recruitsoft has paid or properly accrued or reasonably anticipates that it will
have to pay or accrue Losses for which it is entitled compensation or
reimbursement pursuant thereto, and (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, the date each such
item was paid or properly accrued in accordance with GAAP, or the basis for such
reasonably anticipated Loss, and the nature of the misrepresentation, breach of
warranty or covenant to which such item is related, the Escrow Agent shall,
subject to the provisions of Section 6.2(e) hereof, transfer to Recruitsoft out
of the Escrow Fund, as promptly as practicable, shares of Series D Preferred
Stock held in the Escrow Fund in an amount equal to such Losses; provided,
however, that to the extent an Officer's Certificate alleges only the basis for
an anticipated Loss, no amount shall be distributed until such Loss is actually
paid or accrued under GAAP. Payments of shares from the Escrow Fund will be made
pro rata in proportion to each White Amber Stockholders' original contributions
to the Escrow Fund as set forth on Schedule 6.2.
(ii) For the purposes of determining the number
of shares of Series D Preferred Stock to be delivered to Recruitsoft out of the
Escrow Fund pursuant to Section 6.2(d)(i) hereof, the shares of Series D
Preferred Stock shall be valued at the Deemed Price.
(e) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Stockholder Agent and for a period of thirty (30) days
after such delivery, the Escrow Agent shall make no transfer to Recruitsoft of
any Escrow Amounts pursuant to Section 6.2(d) hereof unless the Escrow Agent
shall have received written authorization from the Stockholder Agent to make
such transfer. After the expiration of such thirty (30)-day period, the Escrow
Agent shall transfer cash and/or shares of Series D Preferred Stock from the
Escrow Fund in accordance with Section 6.2(d) hereof, provided that no such
transfer may be made if the Stockholder Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent prior to the expiration of such
thirty (30)-day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case the Stockholder Agent shall object
in writing to any claim or claims made in any Officer's Certificate as provided
in Section 6.2(e) hereof, the Stockholder Agent and Recruitsoft shall attempt in
good faith to agree upon the rights of the respective parties with respect to
each of such claims. If the Stockholder Agent and Recruitsoft should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and distribute shares of Series D
Preferred Stock from the Escrow Fund in accordance with the terms thereof.
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(ii) If no such agreement can be reached after
good faith negotiation, either Recruitsoft or the Stockholder Agent may demand
arbitration of the matter unless the amount of the damage or loss is at issue in
pending litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to arbitration;
and in either such event the matter shall be settled by arbitration conducted by
three arbitrators in accordance with the Commercial Arbitration Rules then in
effect of the American Arbitration Association (the "AAA"). Recruitsoft and the
Stockholder Agent shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator; provided, however, that (i) failing
such agreement within ninety (90) days of delivery of the Officer's Certificate
(or failure to select a mutually agreed upon arbitrator), the third arbitrator
shall be appointed in accordance with the AAA Rules and (ii) if either the
Stockholder's Agent or Recruitsoft fails to timely designate an arbitrator, the
claim shall be resolved with the participation of the one arbitrator timely
designated. The arbitrators shall set a limited time period and establish
procedures designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrators, to
discover relevant information from the opposing parties about the subject matter
of the dispute. The arbitrators shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including attorneys
fees and costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 6.2(e) hereof, the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in San Francisco, California under the rules then in
effect of the American Arbitration Association. For purposes of this Section
6.2(f), in any arbitration hereunder in which any claim or the amount thereof
stated in the Officer's Certificate is at issue, Recruitsoft shall be deemed to
be the prevailing party in the event that the arbitrators award Recruitsoft at
least $10,000; otherwise, the stockholders of White Amber as represented by the
Stockholder Agent shall be deemed to be the prevailing party. The non-prevailing
party to an arbitration shall pay its own expenses, the fees of each arbitrator,
the administrative costs of the arbitration, and the expenses, including without
limitation, reasonable attorneys' fees and costs, incurred by the other party to
the arbitration.
(g) Stockholder Agent; Power of Attorney.
(i) In the event that the Merger is approved,
effective upon such vote, and without further act of any stockholder, Venrock
Associates shall be appointed as agent and attorney-in-fact (the "STOCKHOLDER
AGENT") for each White Amber Stockholder (except such stockholders, if
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any, as shall have perfected their appraisal or dissenters' rights under
Delaware Law), for and on behalf of White Amber Stockholders, to give and
receive notices and communications, to distribute the Redistribution Shares and
otherwise act in accordance with Section 1.10 to authorize delivery to
Recruitsoft of shares of Series D Preferred Stock from the Escrow Fund in
satisfaction of claims by Recruitsoft, to object to such deliveries, to agree
to, negotiate, enter into settlements and compromises of, and demand arbitration
and comply with orders of courts and awards of arbitrators with respect to such
claims or claims or other issues regarding the Additional Recruitsoft Share
Consideration, and to take all actions necessary or appropriate in the judgment
of Stockholder Agent for the accomplishment of the foregoing. Such agency may be
changed by the White Amber Stockholders from time to time upon not less than
thirty (30) days prior written notice to Recruitsoft; provided that the
Stockholder Agent may not be removed unless holders of a two-thirds interest of
the Escrow Fund agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of Stockholder Agent may be filled by
approval of the holders of a majority in interest of the Escrow Fund or if the
Escrow Fund has been distributed, of the Additional Recruitsoft Share
Consideration, if any. No bond shall be required of the Stockholder Agent, and
the Stockholder Agent shall not receive compensation for its services. Notices
or communications to or from the Stockholder Agent shall constitute notice to or
from each of the White Amber Stockholders.
(ii) The Stockholder Agent shall not be liable
for any act done or omitted hereunder as Stockholder Agent while acting in good
faith and in the exercise of reasonable judgment. The White Amber Stockholders
on whose behalf the Escrow Amount was contributed to the Escrow Fund shall
severally on a pro rata basis (based on the Recruitsoft Share Consideration to
which such stockholders are entitled) indemnify the Stockholder Agent and hold
the Stockholder Agent harmless against any loss, liability or expense incurred
without gross negligence or willful misconduct on the part of the Stockholder
Agent and arising out of or in connection with the acceptance or administration
of the Stockholder Agent's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Stockholder Agent.
(h) Actions of the Stockholder Agent. A decision, act,
consent or instruction of the Stockholder Agent shall constitute a decision of
all the stockholders for whom a portion of the Escrow Amount otherwise issuable
to them are deposited in the Escrow Fund and shall be final, binding and
conclusive upon each of such stockholders, and the Escrow Agent and Recruitsoft
may rely upon any such decision, act, consent or instruction of the Stockholder
Agent as being the decision, act, consent or instruction of each every such
White Amber Stockholder. The Escrow Agent and Recruitsoft are hereby relieved
from any liability to any person for any acts done by them in accordance with
such decision, act, consent or instruction of the Stockholder Agent.
(i) Third-Party Claims. In the event Recruitsoft becomes
aware of a third-party claim which Recruitsoft reasonably believes may result in
a demand against the Escrow Fund, Recruitsoft shall notify the Stockholder Agent
of such claim in accordance with Section 6.2(e), and the Stockholder Agent, as
representative for the White Amber Stockholders, shall be entitled, at his
expense, to participate in any defense of such claim. Recruitsoft shall have the
right in its sole discretion to control the defense of all such claims and to
settle any such claim; provided, however,
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that no settlement of any such claim with third-party claimants in excess of
$50,000 in a single matter shall permit any claim against the Escrow Fund,
except with the consent of the Stockholder Agent, which consent shall not be
unreasonably withheld. Except with the written consent of the Stockholder Agent,
Recruitsoft will not, in the defense of a third party claim, consent to the
entry of any judgment or enter into any settlement (i) which does not include as
a term thereof the giving to the indemnifying party by the third party of a
release from all liability with respect to such suit, claim, action, or
proceeding; and (ii) unless there is no finding or admission of (A) any
violation of applicable laws by the indemnifying party, (B) any liability on the
part of the indemnifying party or (C) any violation of the rights of any person
and no effect on any other claims of a similar nature that may be made by the
same third party against the indemnifying party. In the event that the
Stockholder Agent has consented to any such settlement and acknowledged that the
claim is a valid claim against the Escrow Fund, the Stockholder Agent shall be
deemed to have agreed to the claim by Recruitsoft against the Escrow Fund in an
amount equal to such settlement.
(j) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for
the performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an authorized
officer of Recruitsoft and the Stockholder Agent, and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed in good faith to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be liable for any act done
or omitted hereunder as Escrow Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith, provided that
the Escrow Agent has exercised reasonable care in the selection of such counsel.
(ii) The Escrow Agent is hereby expressly
authorized to disregard any and all warnings given by any of the parties hereto
or by any other person, excepting only orders or process of courts of law, and
is hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any such
order, judgment or decree of any court, the Escrow Agent shall not be liable to
any of the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in any
respect on account of the identity, authority or rights of the parties executing
or delivering or purporting to execute or deliver this Agreement or any
documents or papers deposited or called for hereunder absent gross negligence,
bad faith or willful misconduct.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent absent gross
negligence, bad faith or willful misconduct.
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(v) In performing any duties under the
Agreement, the Escrow Agent shall not be liable to any party for damages,
losses, or expenses, except for gross negligence, bad faith or willful
misconduct on the part of the Escrow Agent. The Escrow Agent shall not incur any
such liability for (A) any act or failure to act made or omitted in good faith,
or (B) any action taken or omitted in reliance upon any instrument, including
any written statement of affidavit provided for in this Agreement that the
Escrow Agent shall in good faith believe to be genuine, nor will the Escrow
Agent be liable or responsible for forgeries, fraud, impersonations, or
determining the scope of any representative authority. In addition, the Escrow
Agent may consult with the legal counsel in connection with Escrow Agent's
duties under this Agreement and shall be fully protected in any act taken,
suffered, or permitted by him/her in good faith in accordance with the advice of
counsel provided that the Escrow Agent has exercised reasonable care in the
selection of such counsel. The Escrow Agent is not responsible for determining
and verifying the authority of any person acting or purporting to act on behalf
of any party to this Agreement.
(vi) If any controversy arises between the
parties to this Agreement, or with any other party, concerning the subject
matter of this Agreement, its terms or conditions, the Escrow Agent will not be
required to determine the controversy or to take any action regarding it. The
Escrow Agent may hold all documents and shares of Series D Preferred Stock and
may wait for settlement of any such controversy by final appropriate legal
proceedings. In such event, the Escrow Agent will not be liable for damage.
Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and shares of Series D Preferred Stock held in escrow,
except all costs, expenses, charges and reasonable attorney fees incurred by the
Escrow Agent due to the interpleader action and which the parties jointly and
severally agree to pay. Upon initiating such action, the Escrow Agent shall be
fully released and discharged of and from all obligations and liability imposed
by the terms of this Agreement.
(vii) The parties and their respective successors
and assigns agree jointly and severally to indemnify and hold Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation, counsel fees, and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with the performance of his/her duties under this Agreement, including but not
limited to any litigation arising from this Agreement or involving its subject
matter.
(viii) The Escrow Agent may resign at any time upon
giving at least thirty (30) days written notice to the parties; provided,
however, that no such resignation shall become effective until the appointment
of a successor escrow agent which shall be accomplished as follows: the parties
shall use their best efforts to mutually agree on a successor escrow agent
within thirty (30) days after receiving such notice. If the parties fail to
agree upon a successor escrow agent within such time, the Escrow Agent shall
have the right to appoint a successor escrow agent authorized to do business in
the State of California. The successor escrow agent shall execute and
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deliver an instrument accepting such appointment and it shall, without further
acts, be vested with all the estates, properties, rights, powers, and duties of
the predecessor escrow agent as if originally named as escrow agent. The Escrow
Agent shall be discharged from any further duties and liability under this
Agreement.
(k) Fees. All fees of the Escrow Agent for performance of
its duties hereunder shall be paid by Recruitsoft. It is understood that the
fees and usual charges agreed upon for services of the Escrow Agent shall be
considered compensation for ordinary services as contemplated by this Agreement.
In the event that the conditions of this Agreement are not promptly fulfilled,
or if the Escrow Agent renders any service not provided for in this Agreement,
or if the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated by Recruitsoft for such extraordinary services
and reimbursed for all costs, attorney's fees, and expenses occasioned by such
default, delay, controversy or litigation.
ARTICLE VII
GENERAL PROVISIONS
7.1 Notices. All notices and other communications hereunder shall
be in writing, shall be effective when received, and shall in any event be
deemed to have been received (i) when delivered, if delivered personally or by
commercial delivery service, (ii) three (3) business days after deposit with
U.S. Mail, if mailed by registered or certified mail (return receipt requested),
(iii) one (1) business day after the business day of deposit with Federal
Express or similar overnight courier for next day delivery (or, two (2) business
days after such deposit if deposited for second business day delivery), if
delivered by such means, or (iv) one (1) business day after delivery by
facsimile transmission with copy by U.S. Mail, if sent via facsimile plus mail
copy (with acknowledgment of complete transmission), to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Recruitsoft or Merger Sub, to:
Recruitsoft, Inc.
182 Second Street
5th Floor
San Francisco, CA 94105
Attention: Chief Executive Officer
Facsimile No.: (415) 538-9069
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
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950 Page Mill Road
Palo Alto, California 94304
Attention: Mark A. Bertelsen, Esq.
Facsimile No.: (650) 493-6811
(b) if to White Amber, to:
White Amber, Inc.
2001 Marcus Avenue
Suite S160
Lake Success, NY 11042
Attention: Louis M. Cofini
Facsimile No.: (516) 616-5024
with a copy to:
Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP
220 West 42nd Street, 20th Floor
New York, NY 10036
Attention: Kenneth R. McVay, Esq.
Facsimile No.: (877) 881-3007
(c) if to the Escrow Agent:
U.S. Bank, N.A. One California Street, Suite 2550 San
Francisco, CA 94111 Attention: Sheila K. Soares
Facsimile No.: (415) 273-4591
(d) if to the Stockholder Agent:
Venrock Associates
30 Rockefeller Plaza, Room 5508
New York, NY 10112
Attention: Mike Brooks
Facsimile No.: (212) 649-5788
7.2 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "INCLUDE," "INCLUDES" and "INCLUDING" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The word "AGREEMENT" when used herein shall be deemed in each case
to mean any contract, commitment or other agreement, whether oral or written,
that is legally binding. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"THE BUSINESS OF" an entity, such reference shall be deemed to include the
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business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
7.4 Entire Agreement. This Agreement, the White Amber Schedules,
the Recruitsoft Schedules, the Recruitsoft Charter, the Recruitsoft Investor
Rights Agreement and the documents and instruments and other agreements among
the parties hereto referenced herein: (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder.
7.5 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
7.6 Other Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
7.7 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
7.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof; provided that issues involving the corporate governance of any of
the parties hereto shall be governed by their respective jurisdictions of
incorporation. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court within the State of Delaware, in
connection with any matter based upon or
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arising out of this Agreement or the matters contemplated herein, other than
issues involving the corporate governance of any of the parties hereto, agrees
that process may be served upon them in any manner authorized by the laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction and
such process.
7.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
7.10 Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other party. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without prior written approval
of the other party; provided, however, that Recruitsoft may assign this
Agreement to a successor entity or successor in interest of Recruitsoft without
written consent provided that if such assignment occurs on or before the
termination of Recruitsoft's obligations pursuant to this Agreement, such
successor shall agree in writing to undertake Recruitsoft's obligations as set
forth in this Agreement. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
7.11 Absence of Third Party Beneficiary Rights. No provisions of
this Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner of any party hereto or any other person or entity
unless specifically provided otherwise herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized respective officers as of the date first written
above.
RECRUITSOFT, INC.
By: /s/ Louis Tetu
--------------------------------------
Name: Louis Tetu
--------------------------------
Title: Chief Executive Officer
--------------------------------
KANGAROO ACQUISITION CORPORATION
By: /s/ Jean Lavigueur
--------------------------------------
Name: Jean Lavigueur
--------------------------------
Title: President
--------------------------------
WHITE AMBER, INC.
By: /s/ Louis Cofini
--------------------------------------
Name: Louis Cofini
--------------------------------
Title: President and Chief Executive
Officer
--------------------------------
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SOLELY AS TO ARTICLE VI:
U.S. BANK, N.A.
By: /s/ Sheila Soares
---------------------------------------
Name: Sheila Soares
STOCKHOLDER AGENT
Venrock Associates
By: /s/ Anthony B. Evnin
-----------------------------------
Name: Anthony B. Evnin
-------------------------------------
Title: General Partner
-------------------------------------
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