Exhibit 5
0XXXXXXXXXX.XXX, INC.
- AND -
X-XXXXXXX.XXX INC.
-AND-
E-CRUITER ACQUISITION II, INC.
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MERGER AGREEMENT
SEPTEMBER 14, 2001
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XXXXXXX & XXXXXXX LLP COUNSEL FOR 6FIGUREJOBS
XXXXXX-XXXXXXXXX, HILL & XXXXXXXXX LLP, SOLICITORS FOR THE PURCHASER
THIS MERGER AGREEMENT is made as of September 14, 2001
BETWEEN:
0XXXXXXXXXX.XXX, INC., a corporation incorporated pursuant to
the laws of the State of Delaware ("6FigureJobs" or "the
Corporation")
- and -
X-XXXXXXX.XXX INC., a corporation incorporated pursuant to the
laws of Canada (the "Purchaser")
-and-
E-CRUITER ACQUISITION II, INC., a corporation incorporated
pursuant to the laws of the State of Delaware ("Merger Sub")
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law and the Delaware
Business Corporation Act ("Delaware Law"), Purchaser, Merger Sub and 6FigureJobs
intend to enter into a business combination transaction.
B. The Board of Directors of 6FigureJobs (i) has determined that the
Merger (as defined below) is consistent with and in furtherance of the long-term
business strategy of 6FigureJobs and advisable and fair to, and in the best
interests of, 6FigureJobs and its stockholders, (ii) has approved this
Agreement, the Merger and the other transactions contemplated by this Agreement
and (iii) has determined to recommend that the stockholders of 6FigureJobs adopt
and approve this Agreement and approve the Merger.
C. The Board of Directors of Purchaser (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Purchaser and advisable and fair to, and in the best interests of, Purchaser
and its shareholders and (ii) has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement.
D. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Internal Revenue Code of 1986, as amended (the "Code").
E. It is also intended by the parties hereto that the Merger shall be
accounted for as a "purchase."
F. On or prior to Closing, the Corporation and each 6FigureJobs
Shareholder will enter into a letter of transmittal, custody agreement and stock
power, the form of which is attached hereto as Schedule "A" (the "Transmittal
Letter"), which sets forth certain representations, warranties and covenants of
the 6FigureJobs Stockholders.
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G. On or prior to Closing, the Corporation and Optionholders will
enter into a letter of transmittal, in form to be mutually agreeable to the
Corporation and the Purchaser, which shall set forth certain representations,
warranties and covenants of the Optionholders, on terms similar to those set
forth in the Transmittal Letter (the "Optionholder Letter").
THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS
Whenever used in this Agreement, the following words and terms shall have the
meanings set out below:
"1933 ACT" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder by the SEC;
"1934 ACT" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder by the
SEC;
"6FJ COMMON STOCKHOLDERS" means those persons holding shares of
6FigureJobs Common Stock on the Closing Date.
"ACCOUNTS RECEIVABLE" means all accounts receivable, bills
receivable, trade accounts, book debts and insurance claims recorded
as receivable in the Books and Records and any other amount due to
the Corporation, including any refunds and rebates, and the benefit
of all security (including cash deposits), guarantees and other
collateral held by the Corporation;
"ACCREDITED INVESTOR" has the meaning ascribed thereto in Rule 501 of
Regulation D of the 1933 Act;
"AFFILIATE" shall mean, as to any Person, any Person controlling,
controlled by, or under common control with, such Person;
"AGREEMENT" means this Merger Agreement, including all schedules, and
all instruments supplementing or amending or confirming this
Agreement, and references to "ARTICLE" or "SECTION" mean and refer to
the specified Article or Section of this Agreement;
"ASSOCIATE" shall mean (a) a body corporate of which the person
beneficially owns or controls, directly or indirectly, shares or
securities currently convertible into shares carrying more than ten
per cent of the voting rights under all circumstances or by reason of
the occurrence of an event that has occurred and is continuing, or a
currently exercisable option or right to purchase such shares or such
convertible securities;
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(b) a partner of that person acting on behalf of the partnership of
which they are partners;
(c) a trust or estate in which that person has a substantial
beneficial interest or in respect of which he serves as a trustee or
in a similar capacity;
(d) a spouse of that person or an individual who is cohabiting with
that person in a conjugal relationship, having so cohabited for a
period of at least one year;
(e) a child of that person or of the spouse or individual referred to
in paragraph (d); and
(f) a relative of that person or of the spouse or individual referred
to in paragraph (d), if that relative has the same residence as that
person
"BENEFIT PLANS" means all plans, arrangements, agreements, programs,
policies, practices or undertakings, whether oral or written, formal
or informal, funded or unfunded, registered or unregistered to which
the Corporation is or has been a party or by which it is or has been
bound or under which the Corporation has, or will have, any liability
or contingent liability, relating to:
(a) Pension Plans;
(b) Insurance Plans; or
(c) Compensation Plans,
with respect to any of the Employees or former employees (or any
dependants or beneficiaries of any such Employees or former
employees), directors or shareholders of the Corporation, individuals
working on contract with the Corporation or other individuals
providing services to any of them of a kind normally provided by
employees or eligible dependants of such person;
"BOOKS AND RECORDS" means all books and records of the Corporation,
or any of their respective Affiliates or Associates, relating to the
Corporation, including financial, corporate, operations, sales and
purchase books and records, lists of suppliers and customers,
business reports, plans and projections and all other documents,
surveys, plans, files, records, correspondence, and other data and
information, financial or otherwise, including all data and
information stored on computer-related or other electronic media;
"BUSINESS" means the development and sale of web-based
executive-level recruiting services carried on by the Corporation,
and the term "Business" shall include any part of the businesses held
or carried on by the Corporation;
"BUSINESS DAY" means a day, other than a Saturday or Sunday, on which
the principal commercial banks located in Ottawa, Ontario are open
for business during normal banking hours;
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"CLAIMS" means any claim, demand, action, assessment or reassessment,
suit, cause of action, damage, loss, charge, judgment, debt, costs,
liability or expense, including reasonable professional fees and all
costs incurred in investigating or pursuing any of the foregoing or
any proceeding relating to any of the foregoing;
"CLOSING" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares under this Agreement by
consummation of the Merger;
"CLOSING DATE" means October 1, 2001 or such other date as the
Parties may agree in writing as the date upon which the Closing shall
take place;
"CLOSING TIME" means 2 o'clock p.m. Ottawa time on the Closing Date,
or such other time on such date as the Parties may agree in writing
as the time at which the Closing shall take place;
"CODE" means the United States Internal Revenue Code of 1986, as
amended;
"COMMON STOCK EXCHANGE RATIO" shall mean the quotient equal to (i)
(A) $4,000,000, plus the aggregate exercise price of all Options,
minus the Series A Liquidation Preference Per Share times the number
of shares of Series A Preferred Stock issued and outstanding as of
the Effective Time, minus the Series B Liquidation Preference Per
Share times the number of shares of Series B Preferred Stock issued
and outstanding as of the Effective Time, divided by (B) the Merger
Price Per Share, divided by (ii) (A) the number of shares of Common
Stock of 6FigureJobs issued and outstanding at the Effective Time
plus (B) the aggregate number of shares of 6FigureJobs Common Stock
purchasable under Options outstanding as of the Effective Time.
"COMPENSATION PLANS" means all employment benefits relating to bonus,
incentive pay or compensation, performance compensation, deferred
compensation, profit sharing or deferred profit sharing, share
purchase, share option, stock appreciation, phantom stock, vacation
or vacation pay, sick pay, severance or termination pay, employee
loans or separation from service benefits, or any other type of
arrangement providing for compensation or benefits additional to base
pay or salary;
"CONTRACTS" means all contracts, licences, leases, agreements,
commitments, entitlements and engagements to which the Corporation is
a party or by which it is bound or under which the Corporation has,
or will have, any liability or contingent liability, and includes all
quotations, orders or tenders for contracts which remain open for
acceptance and any warranties, guarantees or commitments (express or
implied);
"EFFECTIVE TIME" means 1:58 p.m. Ottawa time on the Closing Date;
"EMPLOYEES" means all persons employed or retained by the
Corporation, including for greater certainty, those employees on
disability leave, parental leave or other absence;
"ENCUMBRANCES" means any pledge, lien, charge, security interest,
lease, title retention agreement, mortgage, restriction, development
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or similar agreement, easement, right-of-way, title defect, option,
adverse claim or encumbrance of any kind or character whatsoever;
"ENVIRONMENT" means the environment or natural environment as defined
in any Environmental Laws and includes air, surface, water, ground
water, land surface, soil, subsurface strata, any sewer system and
the environment in the workplace and disposal of Hazardous
Substances;
"ENVIRONMENTAL APPROVALS" means all approvals, permits, certificates,
licences, authorizations, consents, agreements, instructions or
directions having the force of law, registrations or approvals issued
or required by any Governmental Authority pursuant to Environmental
Laws with respect to the operations, business or assets of the
Corporations;
"ENVIRONMENTAL LAWS" means all Laws relating in full or in part to
the Environment or employee or public health or safety, and includes
those Environmental Laws relating to the storage, generation, use,
handling, manufacture, processing, labelling, advertising, sale,
display, transportation, treatment, Release and disposal of Hazardous
Substances;
"EQUIPMENT CONTRACTS" means all motor vehicle leases, equipment
leases, conditional sales contracts, title retention agreements and
other similar agreements relating to equipment used by the
Corporation;
"ESCROW SHARES" means the number of shares of Purchaser Common Stock
equal to the quotient obtained by dividing $1,000,000 by the Merger
Price Per Share.
"GOVERNMENTAL AUTHORITY" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal or court
or other law, rule or regulation-making entity having or purporting
to have jurisdiction on behalf of any nation, or any province, state
or other geographic or political subdivision of any nation;
"GOVERNMENTAL AUTHORIZATIONS" means all authorizations, approvals,
including Environmental Approvals, orders, consents, directions,
notices, licences, permits, variances, registration or similar rights
issued to or by or required by any Governmental Authority;
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
prohibited substance, dangerous substance or dangerous good as
defined, judicially interpreted or identified in any Environmental
Laws, including any asbestos or asbestos-containing materials;
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated
thereunder;
"INDEPENDENT AUDITORS" means PricewaterhouseCoopers LLP or such other
independent auditing firm as the Parties may otherwise agree;
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"INSURANCE PLANS" means all employment benefits relating to
disability or wage continuation during period of absence from work
(including short term disability, long term disability and workers
compensation), hospitalization, health, medical or dental treatments
or expenses, life insurance, death or survivor's benefits and
supplementary employment insurance, in each case regardless of
whether or not such benefits are insured or self-insured;
"INTELLECTUAL PROPERTY" means registered and unregistered trade-marks
(including the Trade-marks), copyright, and other intellectual
property rights and all rights (proprietary, contractual or
otherwise) in or relating to all trade secrets, confidential and
proprietary information, methods, procedures, know-how and
information;
"LAWS" means all applicable laws (including common law), statutes,
by-laws, rules, regulations, orders, ordinances, protocols, codes,
guidelines, tax treaties, policies, notices, directions and judgments
or other requirements of any Governmental Authority;
"LEASED REAL PROPERTY" means all premises which are leased,
subleased, licensed or otherwise occupied by the Corporation, and the
interest of the Corporation in all plants, buildings, structures,
fixtures, erections, improvements, easements, rights-of-way and other
appurtenances situate on or forming part of such premises, all of
which is listed in Schedule 1.1(a);
"MARKETING INVENTORIES" means all inventories of every kind and
nature and wheresoever situate owned by the Corporation and
pertaining to the Business, including all inventories of operating
supplies, marketing and promotional materials and other materials of
or pertaining to the Business;
"MATERIAL CONTRACT" means any Contract: (i) involving aggregate
payments to or by the Corporations in excess of $50,000; (ii)
involving rights or obligations of the Corporation that may
reasonably extend beyond one year; (iii) which is outside the
ordinary course of business; (iv) which does not or cannot be
terminated without penalty on less than six months notice; or (iv)
which restricts in whole or in part in any material way the scope of
the business or activities of the Corporation or which restricts in
anyway the scope of the business or activities of any of their
Affiliates or Associates;
"MERGER PRICE PER SHARE" means the average last sale price of
Purchaser Common Stock quoted by the NASD on its automated quotation
system for the last ten (10) trading days immediately preceding the
date of this Agreement, which the parties agree shall be $3.09 per
share.
"MERGER SUB" means E-Cruiter Acquisition II, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Purchaser;
"NASD" means the National Association of Securities Dealers, Inc. or
one or more of its subsidiaries, as the context may require, and any
successor to any of them;
"NOTICE" shall have the meaning given in Section 12.3;
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"OPTION EXCHANGE RATIO" shall mean the quotient equal to (i) the
quotient equal to (A) $4,000,000 minus the Series A Liquidation
Preference Per Share times the number of shares of Series A Preferred
Stock issued and outstanding as of the Effective Time, minus the
Series B Liquidation Preference Per Share times the number of shares
of Series B Preferred Stock issued and outstanding as of the
Effective Time, divided by (B) the Merger Price Per Share, divided by
(ii) (A) the number of shares of Common Stock of 6FigureJobs issued
and outstanding at the Effective Time plus (B) the aggregate number
of shares of 6FigureJobs Common Stock purchasable under Options
outstanding as of the Effective Time.
"OPTIONHOLDERS" means those persons holding options to purchase
shares of 6FigureJobs Common Stock pursuant to the Corporation's 1999
Stock Plan.
"OWNED REAL PROPERTY" means all freehold lands which are owned or
purported to be owned, in fee simple, by the Corporation including
all plants, buildings, structures, fixtures, erections, improvements,
easements, rights-of-way and other appurtenances situate on or
forming part of such lands all of which is listed in Schedule 1.1(b);
"PARTIES" means all of the parties to this Agreement;
"PENSION PLANS" means all benefits relating to retirement or
retirement savings including pension plans, pensions or supplemental
pensions, registered retirement savings plans, registered pension
plans and retirement compensation arrangements;
"PERMITTED ENCUMBRANCES" means the Encumbrances listed in Schedule
1.1(c);
"PERSON" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, corporation, limited liability company,
unlimited liability company, Governmental Authority, and a natural
person in such person's capacity as trustee, executor, administrator
or other legal representative;
"PRO RATA" means, with respect to any 6FigureJobs Stockholder or
Optionholder, the percentage equal to the portion of the Purchase
Price actually received by such 6FigureJobs Stockholder or
Optionholder in proportion to the total consideration received by all
6FigureJobs Stockholders and Optionholders in connection with the
Merger, through the time the Claim is finally settled. For purposes
of this definition, shares of Purchaser Common Stock shall be valued
at the Merger Price Per Share, and Escrow Shares shall not be
included unless actually released to a 6FigureJobs Stockholder or
Optionholder.
"PURCHASE PRICE" shall have the meaning given in Section 3.1;
"PURCHASED SHARES" means all of the issued and outstanding shares in
the capital of the Corporation;
"REAL PROPERTY" means the Owned Real Property and the Leased Real
Property;
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"REAL PROPERTY LEASES" means those agreements to lease, leases,
subleases or licences or other occupancy rights pursuant to which the
Corporation uses or occupies the Leased Real Property;
"RELEASE" has the meaning prescribed in any Environmental Laws and
includes any release, spill, leak, pumping, pouring, addition,
emission, emptying, discharge, injection, escape, leaching, disposal,
dumping, deposit, spraying, burial, abandonment, incineration,
seepage, or placement;
"REMEDIAL ORDER" means any administrative complaint, direction, order
or sanction issued, filed, imposed or threatened by any Governmental
Authority pursuant to any Environmental Laws and includes any order
requiring any remediation or clean-up of any Hazardous Substance, or
requiring that any Release or any other activity be reduced, modified
or eliminated or requiring a payment to be made to any Governmental
Authority;
"REQUIRED APPROVALS" means those Governmental Authorizations,
shareholder approval and third Person approvals, consents and notices
referred to in Schedule 1.2(e), including any consents required by
any outstanding contract or commitment of the Corporation that
requires the prior approval of third parties prior to any change of
control of the Corporation resulting from the consummation of the
transactions contemplated by this Agreement;
"SEC" means the Securities and Exchange Commission;
"SECURITIES LAWS" means the 1933 Act, the 1934 Act, the Investment
Company Act, the Advisers Act, the CEA, the securities or "blue sky"
laws of any state or territory of the United States and the rules and
regulations of the NASD and the comparable laws, rules and
regulations in effect in any relevant other country;
"SERIES A LIQUIDATION PREFERENCE PER SHARE" means for each issued and
outstanding share of the Corporation's Series A Preferred Stock, par
value $0.001, an amount equal to (A) $1.00 plus (B) the product of
(i) $0.06 multiplied by (ii) the quotient obtained by dividing the
number of days elapsed from January 1, 2001 through the Closing Date
by 365.
"SERIES B LIQUIDATION PREFERENCE PER SHARE" means for each issued and
outstanding share of the Corporation's Series B Preferred Stock, par
value $0.001, an amount equal to (A) $1.29 plus (B) the product of
(i) $0.08 multiplied by (ii) the quotient obtained by dividing the
number of days elapsed from January 1, 2001 through the Closing Date
by 365.
"SUBSIDIARY" of any Person shall mean a corporation, company or other
entity (i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or
other managing authority) are, or (ii) which does not have
outstanding shares or securities (as may be the case in a
partnership, limited liability company, joint venture, or
unincorporated association), but more than 50% of whose ownership
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interest representing the right to make decisions for such other
entity is, now or hereafter owned or controlled, directly or
indirectly, by such Person.
"TAX RETURNS" includes all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or
required to be filed in respect of Taxes;
"TAXES" includes all taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind whatsoever imposed by
any Governmental Authority, together with all interest, penalties,
fines, additions to tax or other additional amounts imposed by any
Governmental Authority in respect thereof, including those levied on,
or measured by, or in respect of income, gross receipts, profits,
capital, gains, capital gains, transfer, land transfer, sales, goods
and services, harmonized sales, use, value-added, excise, stamp,
withholding, business, franchising, property, employer health,
payroll, employment, health, social services, education and social
security taxes, all surtaxes, all customs duties and import and
export taxes, all license, franchise and registration fees and all
employment insurance, health insurance and other government pension
plan premiums or contributions;
"TRADE-MARKS" means all trade-marks, trade names, brands, trade
dress, business names, Uniform Resource Locators ("URL"), domain
names, tag lines, designs, graphics, logos and other commercial
symbols and indicia of origin, whether registered or not, owned by,
licensed to or used by the Corporation and any goodwill associated
with any of them, including trade-marks, trade names, brands, trade
dress, business names, URL, domain names, tag lines, designs,
graphics, logos and other commercial symbols and indicia of origin
owned by, licensed to or used by the Corporation listed and described
in Schedule 4.21;
1.2 CERTAIN RULES OF INTERPRETATION
In this Agreement and the schedules:
(a) TIME - time is of the essence in the performance of the
Parties' respective obligations;
(b) CURRENCY - unless otherwise specified, all references to
money amounts are to lawful currency of the United States
of America;
(c) HEADINGS - descriptive headings of Articles and Sections
are inserted solely for convenience of reference and are
not intended as complete or accurate descriptions of the
content of such Articles or Sections;
(d) SINGULAR, ETC. - use of words in the singular or plural,
or with a particular gender, shall not limit the scope or
exclude the application of any provision of this Agreement
to such person or persons or circumstances as the context
otherwise permits;
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(e) CONSENT - whenever a provision of this Agreement requires
an approval or consent by a Party to this Agreement and
notification of such approval or consent is not delivered
within the applicable time limited, then, unless otherwise
specified, the Party whose consent or approval is required
shall be conclusively deemed to have withheld its approval
or consent;
(f) CALCULATION OF TIME - unless otherwise specified, time
periods within or following which any payment is to be
made or act is to be done shall be calculated by excluding
the day on which the period commences and including the
day on which the period ends and by extending the period
to the next Business Day following if the last day of the
period is not a Business Day;
(g) BUSINESS DAY - whenever any payment is to be made or
action to be taken under this Agreement is required to be
made or taken on a day other than a Business Day, such
payment shall be made or action taken on the next Business
Day following such day; and
(h) INCLUSION - where the words "including" or "includes"
appear in this Agreement, they mean "including (or
includes) without limitation".
1.3 KNOWLEDGE
Except as specified otherwise in this Agreement, any reference to the knowledge
of any Person shall mean to the best of the knowledge, information and belief of
such Person after reasonable diligence and, with respect to an entity, includes
the actual knowledge of all directors and officers of such Person and its
Subsidiaries.
1.4 ENTIRE AGREEMENT
This Agreement, together with the agreements and other documents to be delivered
pursuant to this Agreement, constitute the entire agreement between the Parties
pertaining to the subject matter of this Agreement and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to that subject matter, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby.
1.5 APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware and the federal laws of the United States of America
applicable in the State of Delaware, and without regard to the conflict of laws
principles applicable in such jurisdiction.
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1.6 ACCOUNTING PRINCIPLES
All references to generally accepted accounting principles mean generally
accepted accounting principles in the United States as at the Closing Date,
applied on a consistent basis.
1.7 SCHEDULES AND EXHIBITS
The schedules and exhibits to this Agreement, are an integral part of this
Agreement. The Schedules shall modify all representations and warranties of
contained in this Agreement. Each party has used its best efforts to reference
the correct Schedule, however the failure to properly reference such schedule
shall not be a breach of a representation or warranty if the party to whom the
disclosure is being made could reasonably ascertain the effect of a disclosure
in a Schedule on other applicable representations and warranties.
ARTICLE 2
THE MERGER
2.1 THE MERGER. At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the applicable provisions of Delaware Law,
Merger Sub shall be merged with and into 6FigureJobs (the "Merger"), the
separate corporate existence of Merger Sub shall cease and 6FigureJobs shall
continue as the surviving corporation. 6FigureJobs as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation"
2.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by filing a certificate
of merger, in such appropriate form as determined by the parties, with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of Delaware Law (the "Delaware Certificate of Merger"). The time of
completion of such filing (or such later time as may be agreed in writing by
6FigureJobs and Purchaser and set forth in such filing) shall be the "Effective
Time" as soon as practicable on or after the Closing.
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall
be as provided in this Agreement and the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of 6FigureJobs and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of 6FigureJobs and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
2.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as
provided by law and such Certificate of Incorporation of
the Surviving Corporation; provided however, that at the
Effective Time Article I of the Certificate of
Incorporation of the Surviving Corporation shall be
amended to read: "The name of the corporation is
0XxxxxxXxxx.xxx, Inc."
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(b) At the Effective Time, the Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be
the Bylaws of the Surviving Corporation until thereafter
amended.
2.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving Corporation
shall be the directors of Merger Sub immediately prior to the Effective Time,
until their respective successors are duly elected or appointed and qualified.
The initial corporate officers of the Surviving Corporation shall be the
corporate officers of Merger Sub immediately prior to the Effective Time, until
their respective successors are duly appointed.
2.6 EFFECT ON STOCK AND OPTIONS. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, 6FigureJobs or the holders of
any of the following securities:
(a) Each Purchased Share issued and outstanding immediately
prior to the Effective Time will be cancelled and
extinguished and automatically converted into the right to
receive common stock, no par value, of Purchaser
("Purchaser Common Stock") according to the terms of this
Section 2.6 upon surrender of the certificate representing
such share of 6FigureJobs Common Stock in the manner
provided in Section 2.7.
(b) Each share of 6FigureJobs Common Stock held by 6FigureJobs
immediately prior to the Effective Time shall be cancelled
and extinguished without any conversion thereof.
(c) Each share of common stock, $0.00l par value per share, of
Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued,
fully paid and nonassessable share of common stock, $0.001
par value per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of the common
stock of Merger Sub shall evidence ownership of such shares
of capital stock of the Surviving Corporation.
(d) Each share of Series A Preferred Stock of 6FigureJobs
issued and outstanding immediately prior to the Effective
Time shall be converted into a number of shares of
Purchaser Common Stock equal to the quotient obtained by
dividing the Series A Liquidation Preference Per Share by
the Merger Price Per Share;
(e) Each share of Series B Preferred Stock of 6FigureJobs
issued and outstanding immediately prior to the Effective
Time shall be converted into a number of shares of
Purchaser Common Stock equal to the quotient obtained by
dividing the Series B Liquidation Preference Per Share by
the Merger Price Per Share;
(f) Each share of 6FigureJobs Common Stock issued and
outstanding immediately prior to the Effective Time shall
be converted into shares of Purchaser Common Stock at the
Common Stock Exchange Ratio. In addition, subject to the
terms of the Escrow Agreement, each share 6FigureJobs
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Common Stock issued and outstanding immediately prior to
the Effective Time may entitle the holder thereof to
receive Escrow Shares, in an amount determined as provided
in Section 2.6(g).
(g) The Escrow Shares shall be allocated to each Optionholder
and 6FJ Common Stockholder pro rata based on the number of
shares of 6FigureJobs Common Stock held by such Person
and/or the number of 6FigureJobs Common Stock purchasable
by such Person under Options held by such Person as of the
Effective Time, as a percentage of the total number of
shares of 6FigureJobs Common Stock held by all 6FJ Common
Stockholders and the number of shares of 6FigureJobs Common
Stock purchasable under all Options at the Effective Time.
(h) No fraction of a share of Purchaser Common Stock will be
issued by virtue of the Merger, but in lieu thereof each
holder of shares of 6FigureJobs Common Stock, Options and
Preferred Stock who would otherwise be entitled to a
fraction of a share of Purchaser Common Stock (after
aggregating all fractional shares of Purchaser Common Stock
that otherwise would be received by such holder) shall
receive from Purchaser an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such
fraction, multiplied by the Merger Price Per Share.
(i) Prior to the Closing Date, Purchaser and the Corporation
will calculate the number of shares of Purchaser Common
Stock issuable to the various holders of the Purchased
Shares and the Optionholders at the Effective Time in
accordance with this Section 2.6 and Section 2.8. The
number of shares of Purchaser Common Stock issuable to the
various holders will be set forth on a schedule delivered
at the Closing.
2.7 TRANSFER AND DELIVERY OF THE PURCHASED SHARES. The 6FigureJobs Stockholders
shall transfer and deliver to the Purchaser the share certificates representing
the Purchased Shares, in each case duly endorsed in blank for transfer, or
accompanied by irrevocable security transfer powers of attorney duly executed in
blank, in either case by the holders of record.
2.8 EMPLOYEE STOCK OPTIONS
Immediately prior to the Effective Time, each outstanding option (an "Option")
to purchase shares of 6FigureJobs Common Stock granted under the Corporation's
1999 Stock Plan, as amended, (the "Stock Option Plan"), whether or not then
exercisable, shall be cancelled by the Corporation and each holder of a
cancelled Option shall be entitled to receive at the Effective Time from the
Purchaser in consideration for the cancellation of each Option to purchase one
share of 6FigureJobs Common Stock a number of shares of Purchaser Common Stock
determined by applying the Option Exchange Ratio, minus a number of shares equal
to the exercise price of such Option divided by the Merger Price Per Share. In
addition, subject to the terms of the Escrow Agreement, each Option to purchase
one share 6FigureJobs Common Stock issued and outstanding immediately prior to
the Effective Time may entitle the holder thereof to receive Escrow Shares, in
an amount determined as provided in Section 2.6(g). The parties acknowledge that
notwithstanding the treatment of the Options set forth in this Section 2.8 and
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elsewhere in this Agreement and the agreements attached as Exhibits and
Schedules hereto, the parties have been and agree that they will continue to
discuss in good faith alternative treatment of the Options, and if after such
discussions they agree to alternative treatment of the Options, this Agreement
and such other agreements will be modified to reflect such alternative
treatment.
2.9 OTHER DOCUMENTS. Each of the 6FigureJobs Stockholders and the Purchaser
shall deliver such other documents as may be necessary to complete the
transactions contemplated by this Agreement.
2.10 PLACE OF CLOSING
The Closing shall take place at the Closing Time at the offices of
Xxxxxx-Xxxxxxxxx, Xxxx & XxXxxxxxx LLP located at Xxxxx 000, 00 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxx, X0X 0X0, or at such other place as may be agreed upon in
writing by the Parties.
2.11 TENDER
Any tender of documents or money under this Agreement may be made upon the
Parties or their respective counsel and money shall be tendered in U.S. dollars
by official bank certified cheque, bank draft or by such other method as the
Parties agree in writing.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
Notwithstanding any provision to the contrary, the aggregate amount payable by
the Purchaser for the Purchased Shares is $5,000,000 (the "Purchase Price").
3.2 ADJUSTMENTS
The Purchase Price shall be subject to adjustment pursuant to paragraph 3.4
herein and the Escrow Agreement (as herein later defined).
3.3 SATISFACTION OF PURCHASE PRICE
At the Closing Time, the Purchaser shall satisfy the Purchase Price by delivery
of Purchaser Common Stock in accordance with the terms of Section 2.6.
3.4 DELIVERY OF THE ESCROW SHARES
3.4.1 At the Closing Time the Parties shall enter into the
escrow agreement as set out in Schedule 3.4.1 (the "Escrow
Agreement").
3.4.2 Pursuant to this Agreement and the Escrow Agreement, the
Escrow Shares shall be placed in escrow and released to
the 6FJ Common Stockholders and Optionholders pending the
meeting of revenue and profit targets as set forth in the
Escrow Agreement or at any other time at the discretion of
the board of directors of the Purchaser. Such revenue and
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profit targets have been determined on the basis of
6FigureJobs's operational budget, a copy of which is
attached as a schedule to the Escrow Agreement.
3.5 SURRENDER PROCEDURES.
(a) Purchaser shall act as its own exchange agent in the
Merger (except for the Escrow Shares).
(b) At or promptly after the Closing, the 6FigureJobs
Stockholders shall transfer and deliver to the Purchaser
the share certificates representing the Purchased Shares,
in each case duly endorsed in blank for transfer, or
accompanied by irrevocable security transfer powers of
attorney duly executed in blank, in either case by the
holders of record.
(c) Each of the 6FigureJobs Stockholders and the Purchaser
shall deliver such other documents as may be necessary to
complete the transactions contemplated by this Agreement.
(d) At or promptly after the Effective Time, Purchaser shall
make available to the 6FigureJobs Stockholders and
Optionholders, the shares of Purchaser Common Stock
issuable pursuant to Section 2.6 and Section 2.8 and cash
in an amount sufficient for payment in lieu of fractional
shares and any dividends or distributions to which holders
of Purchased Shares may be entitled. Each share
certificate evidencing Purchaser Common Stock shall bear a
legend setting forth the restriction on offers, sales,
transfers and other dispositions referred to in the last
sentence of Section 5.5.
3.6 NO FURTHER OWNERSHIP RIGHTS. All shares of Purchaser Common Stock issued 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 the Purchased Shares and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of 6FigureJobs
Common Stock or Preferred 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 cancelled and exchanged as
provided in this Agreement.
3.7 TAX AND ACCOUNTING CONSEQUENCES
(a) 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
Department of the Treasury Income Tax Regulations
("Treasury Regulations").
(b) It is intended by the parties hereto that the Merger shall
be treated as a "purchase" for accounting purposes.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
Except as otherwise provided in the Disclosure Schedules attached hereto, the
Corporation hereby represents and warrants to the Purchaser the matters set out
below.
4.1 INCORPORATION AND REGISTRATION
The Corporation is a corporation duly incorporated and validly existing under
the laws of its jurisdiction of incorporation and has all necessary corporate
power, authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement, to own its property and assets and to carry on
its business as presently conducted. Neither the nature of its business nor the
location or character of the property owned or leased by the Corporation
requires it to be registered, licensed or otherwise qualified as an
out-of-province or foreign corporation in any other jurisdiction other than
those listed opposite its name in Schedule 4.1, where it is duly registered,
licensed or otherwise qualified for such purpose.
4.2 RIGHT TO SELL
The Purchased Shares are not subject to the terms of any agreement to which the
Corporation is a party which would conflict with this Agreement.
4.3 CAPITALIZATION
The authorized and issued share capital of the Corporation is as set forth in
Schedule 4.3, together with a corporate structure diagram illustrating the
issued share capital and shareholders of the Corporation. All of the shares in
the capital of the Corporation have been duly and validly issued and are
outstanding as fully paid and non-assessable shares of the Corporation, as the
case may be. Other than as set forth in Schedule 4.3, (a) no options, warrants
or other rights to purchase shares or other securities of the Corporation, and
no securities or obligations convertible into or exchangeable for shares or
other securities of the Corporation, have been authorized or agreed to be issued
or are outstanding; and (b) all such securities referenced in subsection (a)
shall have been exercised in full or terminated at or prior to the Effective
Time.
4.4 TITLE TO ASSETS
The Corporation is the sole beneficial and legal owner of all of its assets and
interests in assets, real and personal, including all of the assets used in the
Business, with good and valid title, free and clear of all Encumbrances, other
than Permitted Encumbrances. In particular, without limiting the generality of
the foregoing, there has been no assignment, subletting or granting of any
licence (of occupation or otherwise) of or in respect of any of the assets of
the Corporation or any granting of any agreement or right capable of becoming an
agreement or option for the purchase of any of such assets. Except for
co-located assets set forth in Schedule 4.4, all of the assets of the
Corporation are located on the Leased Real Property.
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4.5 DUE AUTHORIZATION AND ENFORCEABILITY
The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been, or will prior to the
Closing Date be, duly authorized by all necessary corporate action on the part
of the Corporation. This Agreement constitutes a valid and binding obligation of
the Corporation enforceable against it in accordance with its terms.
4.6 ABSENCE OF CONFLICTING AGREEMENTS
The Corporation is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, or, to its knowledge, any Law or Governmental Authorization which
would be violated, contravened, breached by, or under which default would occur
or an Encumbrance would be created as a result of the execution and delivery of
this Agreement or any other documents or agreements to be delivered or entered
into under the terms of this Agreement, or the performance by the Corporation of
its obligations provided for under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement, except for any
such violation, contravention, breach or default as would not individually or in
the aggregate have an adverse effect on the financial condition or operations of
the Corporation.
4.7 APPROVALS
(a) Except as disclosed in Schedule 4.7, no approval, order or
consent of or notice to or filing with any Governmental
Authority or other Person is required on the part of the
Corporation in connection with the execution, delivery and
performance of this Agreement or any other documents or
agreements to be delivered under this Agreement or the
performance of the obligations of the Corporation under
this Agreement or any other documents or agreements to be
delivered or entered into under this Agreement.
(b) Schedule 4.7 sets out a complete list of all
notifications, approvals and consents required to be made
or obtained by the Corporation in connection with the
execution, delivery and performance of this Agreement or
any other documents and agreements to be delivered under
this Agreement.
4.8 FINANCIAL STATEMENTS
The Corporation has delivered to the Purchaser unaudited balance sheets of the
Corporation as of December 31, 2000 and as of July 31, 2001, and the related
statements of income and retained earnings for the periods ending on those
respective dates (the "Unaudited Financials"). Prior to the Closing, the
Corporation shall deliver to Purchaser audited financial statements as of
December 31, 2000 (the "Audited Financials"). The Unaudited Financial Statements
and the Audited Financials are hereinafter collectively referred to as the
"Company Financial Statements". The Company Financial Statements have been (or
will be) prepared in accordance with generally accepted accounting principles
consistently followed by the Corporation throughout the periods indicated, and
fairly present (or will fairly present) the financial position of the
17
Corporation as of the respective dates of the balance sheets included in the
Company Financial Statements, and the results of its operations for the
respective periods indicated, provided that the July 31, 2001 financial
statements do not contain footnotes or year-end adjustments required by
generally accepted accounting principles, which, to the knowledge of the
Company, will not be materially adverse in the aggregate. Except as set forth on
Schedule 4.8, as of the date of this Agreement, the Corporation, to its
knowledge, does not have any material liability or obligation of any nature,
except for liabilities or obligations that are reflected on Company Financial
Statements as of July 31, 2001, or in this Agreement and the Disclosure
Schedules. The Corporation is not aware of any facts or circumstances existing
on the date of this Agreement that could reasonably lead to any material
liability or obligation of the Corporation after the Effective Time.
4.9 ABSENCE OF UNDISCLOSED LIABILITIES
Since the date of the most recent of the Company Financial Statements, the
Corporation has not incurred any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) which continue to be outstanding, except
those incurred in the ordinary and usual course of business and which were not,
individually or in the aggregate, materially adverse. The reserves and accrued
liabilities disclosed on or reflected in the Company Financial Statements and
the Books and Records are sufficient in all material respects to provide for the
liabilities in respect of which they have been established.
4.10 ABSENCE OF CHANGES AND UNUSUAL TRANSACTIONS
Except as described in Schedule 4.10, or except as consented to in advance in
writing by the Purchaser, since the date of the most recent of the Company
Financial Statements:
(i) there has not been any material change in the financial
condition, operations or prospects of the Corporation
other than changes in the ordinary and usual course of
business, none of which has been materially adverse;
(ii) there has not been any damage, destruction, loss, labour
dispute, organizing drive, application for certification
or other event, development or condition of any character
(whether or not covered by insurance) materially and
adversely affecting the business, assets, properties or
future prospects of any of the Corporation;
(iii) the Corporation has not transferred, assigned, sold or
otherwise disposed of any of the assets shown or reflected
in the Company Financial Statements or cancelled any debts
or entitlements except, in each case, in the ordinary and
usual course of business;
(iv) the Corporation has not incurred or assumed any obligation
or liability (fixed or contingent) except unsecured
current obligations and liabilities incurred in the
ordinary and usual course of business, none of which has
been materially adverse;
18
(v) the Corporation has not discharged or satisfied any
Encumbrance, or paid any obligation or liability (fixed or
contingent) other than liabilities included in the Company
Financial Statements and liabilities incurred since the
date of the Company Financial Statements in the ordinary
and usual course of business;
(vi) the Corporation has not suffered any cumulative operating
loss or any extraordinary loss, waived or omitted to take
any action in respect of any rights of substantial value,
or entered into any commitment or transaction not in the
ordinary and usual course of business where such loss,
rights, commitment or transaction is or would be material
in relation to the Corporation, as the case may be;
(vii) the Corporation has not granted any bonuses, whether
monetary or otherwise, or made any general wage, salary or
Benefit Plan increases in respect of its Employees or
changed the terms of employment for any Employee except in
the ordinary and usual course of business and consistent
with past practice;
(viii) the Corporation has not hired or dismissed any senior
Employees or hired or dismissed any other Employees other
than in ordinary and usual course of business;
(ix) the Corporation has not mortgaged, pledged, subjected to
lien, granted a security interest in or otherwise
encumbered any of its assets or property, whether tangible
or intangible;
(x) the Corporation has not, directly or indirectly, declared
or paid any dividends or declared or made any other
payments or distributions on or in respect of any of its
shares or, directly or indirectly, purchased or otherwise
acquired any of its shares;
(xi) the Corporation has not, directly or indirectly, paid any
management fees or other amounts (other than salaries and
benefits of employees, the terms of which are disclosed in
Schedule 4.26) to any of the 6FigureJobs Stockholders; and
(xii) the Corporation has not authorized, agreed or otherwise
become committed to do any of the foregoing.
4.11 NON-ARM'S LENGTH TRANSACTIONS
Except as disclosed in Schedule 4.11, no director or officer, former director or
officer, shareholder or Employee of the Corporation, or any other person not
dealing at arm's length (within the meaning of the Code) with the Corporation or
any of the 6FigureJobs Stockholders, has any indebtedness, liability or
obligation to the Corporation, and the Corporation is not indebted or otherwise
19
obligated to or is party to any Contract with any such person, except for
employment arrangements with Employees, the terms of which are disclosed in
Schedule 4.26.
4.12 ABSENCE OF GUARANTEES
Except as described in Schedule 4.12, the Corporation has not given or agreed to
give, or is a party to or bound by, any guarantee, surety or indemnity in
respect of any indebtedness or other obligation of any Person, or any other
commitment by which the Corporation is, or are contingently, responsible for any
such indebtedness or other obligation.
4.13 OPERATING BUSINESSES
The Business is carried on exclusively by the Corporation. All assets used in or
necessary to carry on the Business are owned by the Corporation, or leased or
licensed by the Corporation from Persons acting at arm's length from the
6FigureJobs Stockholders and the Corporation.
4.14 MAJOR SUPPLIERS
(a) A comprehensive listing of all suppliers of goods and
services to the Corporation (including suppliers of goods
and services to their respective customers, which are
arranged for by the Corporation), where the value of the
goods or services supplied exceeded $25,000, in each case
individually or in the aggregate, during the 12 month
period ending April 30, 2001 is attached as Schedule 4.14.
(b) True and complete copies of all Contracts with those
suppliers of goods and services for the Business (or for
customers of the Business) referred to in subsection
4.14(a) have been made available to the Purchaser. The
Corporation has not received any oral and/or written
communication that that any of such Contracts will not be
honoured in the ordinary and usual course of business
consistent with the past experience of the Business.
(c) Except as disclosed in Schedule 4.14, the Corporation is
not subject to any Contract under which any of them has
made any commitment or is subject to any obligation or
would suffer any penalty (financial or otherwise) as a
result of a failure to acquire, or arrange for the
acquisition of, a specified minimum volume of products or
services.
(d) Except as disclosed in Schedule 4.14, the Corporation is
not subject to any Contract involving a commitment of
exclusivity whereby its ability, or the ability of its
Affiliates, to acquire goods or services from any Person
would be restricted in any manner.
(e) To the knowledge of the Corporation, none of the suppliers
included in the list referred to in subsection 4.14(a) has
any intention to change its relationship or the terms upon
which it conducts business with the Corporation, including
as a result of the transactions contemplated by this
Agreement.
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4.15 CONDITION OF ASSETS
The fixed assets, machinery, equipment, fixtures, furniture, furnishings and
vehicles owned or used or held by the Corporation, including any of the
foregoing which are in storage or in transit, and other tangible property and
facilities used by the Corporation, whether located in or on the premises of the
Corporations or elsewhere, are in good condition, repair and (where applicable)
proper working order, having regard to their use and age and such assets have
been reasonably maintained.
4.16 ACCOUNTS RECEIVABLE
The Accounts Receivable (a) represent bona fide sales actually made or services
actually performed in the ordinary course of business, (b) are reflected
properly on the books and records of the Corporation, and (c) are not subject to
any defence, counterclaim or set off.
4.17 BUSINESS IN COMPLIANCE WITH LAW
In all material respects, the business and operations of the Corporation have
been and are now conducted in compliance with all Laws of each jurisdiction in
which the Corporation carries on or has carried on business, and the Corporation
has not received any notice of any alleged violation of any such Laws.
4.18 GOVERNMENTAL AUTHORIZATIONS
Schedule 4.18 sets forth a complete list of the Governmental Authorizations
issued to or required by the Corporation to enable it to carry on business in
compliance, in all material respects, with all Laws. The Governmental
Authorizations listed in Schedule 4.18 are, in all material respects, in full
force and effect in accordance with their terms, and there have been no material
violations of them and no proceedings are pending or, to the knowledge of the
Corporation, threatened, which could result in their revocation or limitation.
4.19 GOVERNMENTAL ASSISTANCE
Except as disclosed in Schedule 4.19, the Corporation has not received any
grants or other forms of assistance, including loans with interest below market
rates or guarantees of any loans, from any Governmental Authority that have not
been fully repaid or reimbursed and satisfied, and the Corporation is not a
party to any Contract or understanding with respect to any such grant or form of
assistance.
4.20 RESTRICTIVE COVENANTS
Except as disclosed in Schedule 4.20, and as set forth in license agreements
supplied to the Purchaser in due diligence, the Corporation is not party to or
bound or affected by any Contract or document limiting the freedom of the
Corporation to compete in any line of business, acquire goods and services from
any supplier, sell goods and services to any customer, or transfer or move any
of its assets or operations, or which would materially adversely affect the
business practices, operations or conditions of the Corporation, materially
adversely affect the Purchaser, or the continued operation of their businesses,
after the Closing.
21
4.21 INTELLECTUAL PROPERTY
(a) Schedule 4.21 sets forth a complete list and brief
description of all Intellectual Property owned by the
Corporation (including Trade-marks) that have been
registered or for which applications for registration have
been filed by or on behalf of the Corporation
(collectively, the "Owned Intellectual Property") and all
Intellectual Property licensed to the Corporation (the
"Licensed Intellectual Property") except for commercially
available software licensed by the Corporation, for which
the usage rights are licensed subject to the terms of the
applicable, standard form license agreements.
(b) Except as disclosed in Schedule 4.21, the Corporation has
the exclusive right to use and is the exclusive owner of
all right, title and interest in and to all Owned
Intellectual Property (with no breaks in the chain of
title). The Owned Intellectual Property and the Licensed
Intellectual Property are all Intellectual Property used
in or necessary to carry on the Business as currently
conducted. All Licensed Intellectual Property is being
used by the Corporation solely in accordance with a
licence from or the express consent of the rightful owner
of such Intellectual Property, and all such licences and
consents are in full force and effect.
(c) All rights to Owned or Licensed Intellectual Property are
in full force and effect and have not been used, enforced
or licensed or failed to be used, enforced or licensed in
a manner that would result in the abandonment,
cancellation or unenforceability of or any loss of rights
in any of such Intellectual Property.
(d) Except as disclosed in Schedule 4.21, the Corporation has
no knowledge of any claim of adverse ownership, invalidity
or other opposition to or conflict with any Owned or
Licensed Intellectual Property nor of any pending or
threatened action, litigation, investigation, claim,
opposition, complaint, grievance or proceeding of any
nature or kind against any of them relating to such
Intellectual Property.
(e) Except as disclosed in Schedule 4.21, to the knowledge of
the Corporation:
(i) the use of any of the Intellectual Property
owned or licensed by the Corporation;
(ii) any activity in which the Corporation is or has
been engaged;
(iii) any product or service which the Corporation
sells, provides, produces or uses, or has sold,
provided, produced or used; and
(iv) any process, method, advertising, or material
that the Corporation employ or has employed in
the marketing or sale of any such product or
service,
does not breach, violate, infringe or interfere with any
proprietary, contractual or other rights of any Person
relating to Intellectual Property.
22
(f) Except as disclosed in Schedule 4.21, the Corporation has
no knowledge of any breach, violation, infringement or
interference with the Intellectual Property owned or
licensed by the Corporation.
4.22 EQUIPMENT CONTRACTS
Schedule 4.22 sets forth a complete list of all Equipment Contracts involving
aggregate payments in excess of $10,000 per annum, together with a description
of the assets to which the Equipment Contracts relate. The Equipment Contracts
listed in Schedule 4.22 are all those used to earn the revenue shown on the
Company Financial Statements. All of the Equipment Contracts are in full force
and effect and no default exists on the part of the Corporation, or, to the
knowledge of the Corporation and, on the part of any of the other parties
thereto. The entire interest of the Corporation under each of the Equipment
Contracts is held by them free and clear of any Encumbrances, other than
Permitted Encumbrances, and all payments due under the Equipment Contracts have
been duly and punctually paid.
4.23 OWNED REAL PROPERTY. The Corporation does not have now, and has never had,
any Owned Real Property.
4.24 LEASED REAL PROPERTY
(a) Schedule 4.24 sets forth a complete list of the Leased
Real Property (by reference to municipal address) and Real
Property Leases (by reference to all relevant documents
including details of parties to the Real Property leases
and dates of documents as well as details of annual rent
payable, any discounts or associated premiums, current
terms, renewal rights, security deposits or prepaid rent,
and area of premises). True copies of all the Real
Property Leases have been provided or made available to
the Purchaser. The Real Property Leases have not been
altered or amended and are in full force and effect.
(b) There are no agreements or understandings between the
landlord and tenant, or sublandlord and subtenant, in
respect of any Leased Real Property other than as
contained in the Real Property Leases, pertaining to the
rights and obligations of the parties to the Real Property
Leases relating to the use and occupation of the Leased
Real Property.
(c) Except for the Real Property Leases listed in Schedule
4.24, the Corporation is not a party to or bound by any
other leases, subleases, agreements to lease, licenses or
occupancy agreements pertaining to real property.
(d) All interests held by the Corporation as lessee or
occupant under the Real Property Leases are free and clear
of all Encumbrances other than Permitted Encumbrances.
(e) All payments required to be made by the Corporation
pursuant to the Real Property Leases have been duly paid
and none of the Corporation is otherwise in default in
meeting any of its obligations under any of the Real
Property Leases.
23
(f) None of the landlords, sublandlords, tenants or subtenants
under any of the Real Property Leases, is in default in
meeting any of its obligations under Real Property Leases
to which it is a party.
(g) The Corporation does not have any option, right of first
refusal or other contractual right relating to the Leased
Real Property which is not provided under the Real
Property Leases.
(h) To the knowledge of the Corporation, no event exists
which, but for the passing of time or the giving of
notice, or both, would constitute a default by any party
to any of the Real Property Leases and no party to any
Real Property Lease is claiming any such default or taking
any action purportedly based upon any such default.
4.25 ENVIRONMENTAL MATTERS
To the Corporation's knowledge:
(a) There are no Environmental Approvals.
(b) All operations of the Corporation have been and are now in
compliance with all Environmental Laws. There has been no
Release by the Corporation of any Hazardous Substance into
the Environment.
(c) Neither the Corporation nor any of its operation has been
or is now the subject of any Remedial Order, nor does the
Corporation have any knowledge of any investigation or
evaluation commenced as to whether any such Remedial Order
is necessary nor, to their knowledge, has any threat of
any such Remedial Order been made nor, to their knowledge,
are there any circumstances which could reasonably result
in the issuance of any such Remedial Order.
(d) The Corporation has never been prosecuted for or convicted
of any offence under Environmental Laws, nor has the
Corporation been found liable in any proceeding to pay any
fine, penalty, damages, amount or judgment to any person
as a result of any Release or threatened Release of any
Hazardous Substance into the Environment or as the result
of the breach of any Environmental Law and to the
knowledge of the Corporation, there is no basis for any
such proceeding or action.
(e) The Corporation does not have any knowledge of any
Hazardous Substance in, on or under the Leased Real
Property or any other assets of the Corporation.
4.26 EMPLOYMENT MATTERS
(a) Schedule 4.26 (Part A) sets forth a complete list of all
Employees, whose current wages, salaries or hourly rates
of pay, and bonus (whether monetary or otherwise) exceed
$40,000 U.S., together with their titles, service dates
and material terms of employment including current wages,
salaries or hourly rates of pay, and bonus (whether
monetary or otherwise) paid since the beginning of the
most recently completed fiscal year (including the date of
24
payment if paid since May 31, 2001) or payable to each
such Employee, and the date upon which each such Employee
was first hired by the Corporation. Except as disclosed in
Schedule 4.26, no Employee is on disability leave,
pregnancy or parental leave, extended leave of absence or
receiving benefits pursuant to the Laws.
(b) Except for those written employment contracts with
salaried Employees identified in Schedule 4.26 (Part B),
there are no written contracts of employment entered into
with any Employees or any oral contracts of employment
which are not terminable on the giving of reasonable
notice in accordance with applicable law.
(c) There are no written or oral change of control provisions
or Contracts with any of the Employees which provide for
any rights of Employees contingent upon or affected by a
change of control of the Corporation or the sale of any or
all of their assets.
(d) Schedule 4.26 (Part C) sets out a complete list of all
independent contractors with whom the Corporation has
entered into any Contract, together with a list of all
Contracts with them.
(e) Except for the Benefit Plans, there are no employment
policies or plans which are binding upon the Corporation.
(f) The Corporation has been and is being operated in
compliance in all material respects with all Laws relating
to employees, including employment standards, occupational
health and safety, human rights, labour relations and pay
equity.
(g) There are no Claims or complaints nor, to the knowledge of
the Corporation, are there any threatened Claims or
complaints, against the Corporation pursuant to any Laws
relating to employees, including employment standards,
human rights, labour relations, occupational health and
safety, worker's compensation or pay equity. To the
knowledge of the Corporation, nothing has occurred which
might lead to a Claim or complaint against the Corporation
under any such Laws. There are no outstanding decisions or
settlements or pending settlements which place any
obligation upon the Corporation to do or refrain from
doing any act.
(h) All current assessments under workers' compensation
legislation in relation to the Corporation have been paid
or accrued and the Corporation has not been subject to any
special or penalty assessment under such legislation which
has not been paid.
4.27 COLLECTIVE AGREEMENTS
(a) The Corporation is not a party, either directly or by
operation of law, to any collective agreement, letters of
understanding, letters of intent or other written
communication with any trade union or association which
may qualify as a trade union, which would cover any of the
Employees of the Corporation.
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(b) There are no outstanding or, to the knowledge of the
Corporation, threatened labour tribunal proceedings of any
kind, including any proceedings which could result in
certification of a trade union as bargaining agent for
Employees of the Corporation, and there have not been any
such proceedings within the last two years.
(c) To the knowledge of the Corporation, there are no
threatened or apparent union organizing activities
involving any Employees of the Corporation.
(d) The Corporation does not have any serious labour problems
that might materially affect the value of the Corporation
or lead to an interruption of its operations at any
location.
4.28 BENEFIT PLANS
(a) Schedule 4.28 sets forth a complete list of the Benefit
Plans.
(b) Current and complete copies of all written Benefit Plans
or, where oral, written summaries of the material terms of
them, have been provided or made available to the
Purchaser together with current and complete copies of all
documents relating to the Benefit Plans, including: all
documents establishing, creating or amending any of the
Benefit Plans; all trust agreements, funding agreements;
insurance contracts, and the most recent financial
statements and accounting statements and reports; all
booklets, summaries, manuals and written communications of
a general nature distributed or made available to any
Employees or former employees concerning any Benefit
Plans.
(c) Each Benefit Plan is, and has been, established,
registered (where required), qualified, administered and
invested, in compliance with (i) the terms thereof, and
(ii) all Laws; and the Corporation has not received, in
the last six years, any notice from any Person questioning
or challenging such compliance (other than in respect of
any claim related solely to that Person).
(d) All obligations to or under the Benefit Plans (whether
pursuant to their terms or any Laws) have been satisfied,
and there are no outstanding defaults or violations under
the Benefits Plans by the Corporation nor do the
6FigureJobs Stockholders or the Corporation have any
actual knowledge, without further enquiry or
investigation, of any default or violation by any other
party to any Benefit Plan.
(e) There have been no improvements, increases or changes to,
or promised improvements, increases or changes to, the
benefits provided under any Benefit Plan. None of the
Benefit Plans provides for benefit increases or the
acceleration of or an increase in funding obligations that
are contingent upon or will be triggered by the entering
into of this Agreement or the completion of the
transactions contemplated by this Agreement.
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(f) All employer or employee payments, contributions or
premiums required to be remitted, paid to or in respect of
each Benefit Plan have been paid or remitted in a timely
fashion in accordance with the terms of that Benefit Plan
and all Laws, and no Taxes, penalties or fees are owing or
exigible under any Benefit Plan, and there are no
liabilities or contingent liabilities in respect of any
Benefit Plans that have been discontinued.
(g) There is no proceeding, action, investigation, suit or
claim (other than routine claims for payment of benefits)
pending or, to the knowledge of the Corporation,
threatened involving any Benefit Plan or its assets, and
no facts exist which could reasonably be expected to give
rise to any such proceeding, action, suit or Claim (other
than routine claims for benefits).
(h) No event has occurred respecting any registered Benefit
Plan which would entitle any person (without the consent
of the Corporation) to wind-up or terminate any Benefit
Plan, in whole or in part, or which could otherwise
reasonably be expected to adversely affect the tax status
of any such plan.
(i) The Corporation has not received, or applied for, any
payment of surplus or any payments as a result of the
demutalization of the insurer of any Benefit Plan out of
or in respect of any Benefit Plan.
(j) The Corporation has not taken any contribution or premium
holidays under any Benefit Plan and there have been no
withdrawals or transfers of assets from any Benefit Plan.
(k) All employee data necessary to administer each Benefit
Plan is in the possession of the Corporation and is
complete, correct and in a form which is sufficient for
the proper administration of the Benefit Plan in
accordance with its terms and all Laws.
(l) None of the Benefit Plans provide benefits beyond
retirement or other termination of service to Employees or
former employees or to the beneficiaries or dependants of
such employees, except as required by applicable Laws,
including but not limited to the Consolidated Omnibus
Reconciliation Act of 1985.
(m) None of the Benefit Plans require or permit a retroactive
increase in premiums or payments, or require additional
payments or premiums on the termination of any Benefit
Plan or insurance contract in respect thereof, and the
level of insurance reserves, if any, under any insured
Benefit Plan, to the best of the Corporation's knowledge,
is reasonable and sufficient to provide for all incurred
but unreported claims.
4.29 INSURANCE
The Corporation maintains the policies of insurance set forth in Schedule 4.29,
copies of which have been provided to the Purchaser. All such policies of
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insurance are in full force and effect and the Corporation is not in default, as
to the payment of premium or otherwise, under the terms of any such policy.
4.30 MATERIAL CONTRACTS
Schedule 4.30 sets forth a complete list of the Material Contracts. The Material
Contracts are all in full force and effect unamended and no default exists under
any of the Material Contracts on the part of the Corporation or, to the
knowledge of the Corporation, on the part of any other party to such Contracts.
The Corporation has the capacity, including the necessary personnel, equipment
and supplies, to perform all of their respective obligations under the Material
Contracts. Current and complete copies of the Material Contracts have been
delivered or made available to the Purchaser and there are no current or pending
negotiations with respect to the renewal, repudiation or amendment of any such
Contract.
4.31 LITIGATION
Except as disclosed in Schedule 4.31, there is no action, suit, litigation,
investigation, claim, complaint, grievance or proceeding, including appeals and
applications for review, in progress or, to the knowledge of the Corporation,
pending or threatened against or relating to the Corporation before any court,
Governmental Authority, commission, board, bureau, agency or arbitration panel
which, if determined adversely to the Corporation, would,
(a) materially and adversely affect the properties, business,
future prospects or financial condition of the
Corporation;
(b) enjoin, restrict or prohibit the transfer of all or any
part of the Purchased Shares or any of the other
transactions contemplated by this Agreement; or
(c) to the knowledge of the Corporation, prevent the
6FigureJobs Stockholders from fulfilling all of their
obligations set out in this Agreement or arising from this
Agreement,
and the Corporation has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success. Except as disclosed in such Schedule 4.31, there is not
presently outstanding against the Corporation any judgment, decree, injunction,
rule or order of any court, Governmental Authority, commission, board, bureau,
agency or arbitrator.
4.32 TAX MATTERS
Except as disclosed in Schedule 4.32:
(a) The Corporation is not, and has never been, a member of an
affiliated group, within the meaning of Section 1504(a) of
the Code, and neither the Corporation nor any entity whose
liabilities the Corporation has succeeded has ever filed a
consolidated United States federal income tax return with
(or been included in a consolidated return or) an
affiliated group;
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(b) The Corporation has filed or caused to be filed all tax
returns and reports required to have been filed by or for
them on or before the Closing Date, and all information
set forth in such returns or reports is accurate and
complete in all material respects;
(c) No tax return or report of the Corporation contains any
position which is, or could be subject to, penalties under
the Code Section 6662 or corresponding provision of state,
local or foreign tax law;
(d) The Corporation has paid all taxes due and payable by
them;
(e) The Corporation is in material compliance with, and their
records contain all information and documents (including,
without limitation, properly completed United States
Internal Revenue Services Forms W-9) necessary to comply
with, all applicable information tax reporting and tax
withholding requirements;
(f) There are no unpaid taxes, additions to tax, penalties, or
interest payable by the Corporation or any other person
that are or could become a lien on any assets, or
otherwise adversely affect the business, properties, or
financial condition of the Corporation;
(g) The Corporation has collected or withheld all amounts
required to be collected or withheld by them for any
taxes, and all such amounts have been paid to the
appropriate governmental agencies or set aside in
appropriate accounts for future payment when due;
(h) The balance sheet of the Corporation fully and properly
reflects, as of the Closing Date, the liabilities of the
Corporation for all accrued taxes for all periods ending
on or before the Closing Date;
(i) The Corporation has not granted (nor is subject to) any
waiver currently in effect of the period of limitations
for the assessment or collection of tax, no unpaid tax
deficiency has been asserted against or with respect to
the Corporation by any taxing authority, and there is no
pending examination, administrative or judicial
proceeding, or deficiency or refund litigation with
respect to any taxes or tax returns of the Corporation;
(j) The Corporation have not made or entered into, nor holds
any assets subject to, a consent filed pursuant to Section
341(f) of the Code and the regulations there under or a
"safe harbour lease" subject to former Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended before
the Tax Reform Act of 1984, and the Treasury Regulations
thereunder;
(k) The Corporation is not required to include in income any
amount from an adjustment pursuant to Section 481 of the
Code or the Treasury Regulations thereunder or any similar
provision of state law;
29
(l) The Corporation is not a party to, nor obligated under,
any agreement or other arrangement providing for the
payment of any amount that is or would be non-deductible
under Section 280G of the Code;
(m) The Corporation has not distributed to their stockholders
or security holders stock or securities of a controlled
corporation in a transaction to which Section 355(a) of
the Code applies;
(n) There are no outstanding rulings or requests for rulings
from any taxing authority that are, or if issued would be,
binding on the Corporation;
(o) The Corporation is not, nor have they been at any time
within the last five years, a "United States real property
holding corporation" for the purposes of Section 897 of
the Code;
(p) The Corporation does not have and has not had any
permanent establishment, nor are otherwise subject to
taxation, in any country other than the United States;
(q) Schedule 4.32 attached hereto describes all material tax
elections, consents, and agreements made by or affecting
the Corporation that would be effective after the Closing,
lists all material types of taxes paid and tax returns
filed by or on behalf of the Corporation, expressly
indicates each tax with respect to which the Corporation
is or has been included in a consolidated, unitary, or
combined return and describes the status of all
examinations, administrative or judicial proceedings, and
litigation with respect to taxes of the Corporation
4.33 BOOKS AND RECORDS
All Books and Records have been delivered or made available to the Purchaser.
Such Books and Records, together with the Company Financial Statements, fairly
and correctly set out and disclose in all respects the financial position of the
Corporation and all financial transactions to which the Corporation is or was a
party have been accurately recorded in such Books and Records.
4.34 CORPORATE RECORDS
(a) The certification of incorporation and by-laws for the
Corporation, including any and all amendments, have been
delivered or made available to the Purchaser and such
certificate of incorporation and by-laws as so amended are
in full force and effect unamended.
(b) The corporate records and minute books for the Corporation
have been delivered or made available to the Purchaser.
The minute books include minutes prepared in customary
form and detail of all meetings of the directors and
shareholders for each of the Corporation held to date and
resolutions passed by the directors or shareholders on
consent. The share certificate books, registers of
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shareholders, registers of transfers and registers of
directors of each of the Corporation are complete and
accurate.
4.35 MANAGEMENT RECOMMENDATION LETTERS
The Purchaser has been provided with copies of all management recommendation
letters received by the Corporation or their boards of directors from any
auditor of the Corporation during the last three years.
4.36 TRADE ALLOWANCES
The Material Contracts contain all provisions concerning discounts, allowances,
volume rebates, customer vouchers or coupons, preferential terms, customer
credits or similar reductions in price or other trade terms that have a material
effect on the Corporation.
4.37 BANK ACCOUNTS, ETC.
Schedule 4.37 sets forth a complete list of every financial institution in which
the Corporation maintain any depository account, trust account or safe deposit
box, details of all such accounts and safe deposit boxes and the names of all
persons authorized to draw on or who have access to such accounts or safe
deposit boxes.
4.38 NO BROKER
Other than the engagement of Riverside Advisors by 6FigureJobs, each party to
this Agreement has carried on all negotiations relating to this Agreement and
the transactions contemplated by this Agreement directly and without
intervention on his, her or its behalf of any other party in such manner as to
give rise to any valid claim for a brokerage commission, finder's fee or other
like payment against the Purchaser or the Corporation. With respect to Riverside
Advisors, a fee of $190,000 plus three percent (3%) of the value of the Escrow
Shares actually released to the 6FigureJobs Stockholders and Optionholders based
on the Merger Price Per Share shall be paid by the Purchaser in cash (the
"Broker Fee"), provided that as a condition of closing to the parties, Riverside
Advisors agrees that such payment constitutes full and complete payment of
outstanding fees (excluding reimbursable expenses if any).
4.39 ANTITRUST
Any waiting period applicable to the transactions contemplated herein under the
HSR Act, shall have been terminated or shall have expired.
4.40 FULL DISCLOSURE
The Corporation has made available to the Purchaser all information, including
financial, marketing, sales and operational information on a historical basis,
relating to the Corporation which would be material to a purchaser of the
Corporation. All information which the Corporation has provided or made
available to the Purchaser in connection with the transactions contemplated by
this Agreement is true and correct in all material respects and no material fact
31
or facts have been omitted from that information which would make such
information, in light of the circumstances in which such information was
provided, misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the 6FigureJobs Stockholders the
matters set out below.
5.1 INCORPORATION
The Purchaser is a corporation duly incorporated and validly existing under the
laws of Canada and has all necessary corporate power to own its property and
assets and to carry on its business as presently conducted.
5.2 DUE AUTHORIZATION
The Purchaser has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Purchaser.
5.3 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms.
5.4 CAPITALIZATION
The authorized capital stock of Purchaser consists of (i) unlimited shares of
Purchaser Common Stock, of no par value, of which 14,954,837 shares are issued
and outstanding as of September 1, 2001, and (ii) no shares of preferred stock,
of no par value (the "Purchaser Preferred Stock"), of which no shares are issued
and outstanding as of the date hereof. As of September 1, 2001, 2,790,056 shares
of Purchaser Common Stock were reserved for issuance under Purchaser's 1999
Employee and Director Stock Option Plan (the "Purchaser Stock Plan") and
outstanding options granted outside of the Purchaser Stock Plan. As of September
1, 2001, 1,216,655 shares of Purchaser Common Stock were subject to outstanding
options granted under the Purchaser Stock Plan and 21,693 shares of Purchaser
Common Stock were subject to outstanding options granted outside of the
Purchaser Stock Plan. As of September 1, 2001, 458,184 shares of Purchaser
Common Stock were reserved for issuance pursuant to outstanding warrants issued
by Purchaser. As of September 1, 2001, Purchaser did not hold any shares of
Purchaser Common Stock in its treasury. All of the outstanding shares of
Purchaser Common Stock and Purchaser Preferred Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. All of
the shares of Purchaser Common Stock to be issued in connection with the Merger
have been duly authorized and, upon consummation of the Merger, will be validly
32
issued, fully paid, nonassessable and free of preemptive rights, and such
issuance is in compliance with the Investment Canada Act and all applicable
United States securities laws.
5.5 SEC DOCUMENTS; PURCHASER FINANCIAL STATEMENTS
Purchaser has furnished the Corporation with a true and complete copy of each
statement, quarterly and other report pursuant to Section 13 or 15(d) of the
1934 Act filed by Purchaser with the SEC since December 1999 (the "Purchaser SEC
Documents"), which are all the documents (other than preliminary material) that
Purchaser was required to file with the SEC under the 1934 Act since such date.
As of their respective filing dates, the Purchaser SEC Documents complied in all
materials respects and to the Purchaser's knowledge with the requirements of the
1934 Act and none of the Purchaser SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Purchaser SEC Document provided to the
Corporation prior to the Effective Time. The financial statements of Purchaser
included in the Purchaser SEC Documents (the "Purchaser Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) and fairly present the consolidated financial position of Purchaser
and its consolidated subsidiaries at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal, recurring audit adjustments).
There has been no change in Purchaser's accounting policies except as described
in the notes to the Purchaser Financial Statements.
5.6 ABSENCE OF CONFLICTING AGREEMENTS
The Purchaser is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, Law or Governmental Authorization which would be violated,
contravened, breached by, or under which any default would occur or an
Encumbrance would be created as a result of the execution and delivery by it of
this Agreement or the performance by it of any of its obligations provided for
under this Agreement.
5.7 APPROVALS; RESTRICTIONS
Except for the filings and/or notices required (a) under the HSR Act or the
Securities Laws, (b) under a foreign anti-trust or trade regulation law, (c) to
be made with: (i) the NASD and/or its Nasdaq SmallCap Market, (ii) the Boston
Stock Exchange, and (iii) each state securities or "blue sky" authority which
may have jurisdiction, or (d) to be filed by the Purchaser pursuant to the
Investment Canada Act, no approval, order or consent of or filing with any
Governmental Authority is required on the part of the Purchaser in connection
with the execution, delivery and performance of this Agreement or any other
documents or agreements to be delivered under this Agreement or the performance
of the Purchasers' obligations under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement. Such filings
33
shall be accomplished in a timely manner, except where failure to accomplish
such filing would not reasonably be expected to have a material adverse change
in the assets (tangible or otherwise), business, financial condition or
prospects of the Corporation or on 6FigureJobs Stockholders. The Purchaser
Common Stock will be of the same class as is currently registered under the 1934
Act and the Purchaser will use commercially reasonable efforts to ensure that
the Purchaser Common Stock is listed for trading on the Nasdaq SmallCap Market.
The shares of Purchaser Common Stock to be issued hereunder will constitute
"restricted securities" within the meaning of the federal securities laws of the
United States and may not be offered, sold, transferred or otherwise disposed of
by any other person except in strict compliance with all applicable provisions
of such laws, the rules and regulations thereunder and all state and Canadian
securities laws, rules and regulations. There are no other restrictions on the
securities being issued except as provided in the Escrow Agreement.
5.8 LITIGATION
There is no action, suit, litigation, investigation, claim, complaint, grievance
or proceeding, including appeals and applications for review, in progress or, to
the knowledge of the Purchaser pending or threatened against or relating to the
Purchaser before any court, Governmental Authority, commission, board, bureau,
agency or arbitration panel, which, if determined adversely to the Purchaser
would:
(a) prevent the Purchaser from paying to the 6FigureJobs
Stockholders the Purchase Price;
(b) enjoin, restrict or prohibit the transfer of all or any
part of the Purchased Shares contemplated by this
Agreement; or
(c) prevent the Purchaser from fulfilling all of its
obligations set out in this Agreement or arising from this
Agreement,
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success.
5.9 NO BROKER
The Purchaser has carried on all negotiations relating to this Agreement and the
transactions contemplated by this Agreement directly and without the
intervention on their behalf of any other party in such manner as to give rise
to any valid claim for a brokerage commission, finder's fee or other like
payment against any of the 6FigureJobs Stockholders.
5.10 SHARES.
All Purchased Shares issued in the transaction shall be fully-paid and
non-assessable shares of Common Stock of the Purchaser.
34
5.11 EXPERIENCE.
The Purchaser has carefully reviewed the representations concerning the
Corporation contained in this Agreement and has made detailed inquiry concerning
the Company, its business and its personnel; the officers of the Corporation
have made available to the Purchaser any and all written information which it
has requested and have answered to the Purchaser's satisfaction all inquiries
made by the Purchaser as of the date of this Agreement. The Purchaser has
sufficient knowledge and experience in finance and business that it is capable
of evaluating the risks and merits of this transaction, and the Purchaser is
able financially to bear the risks thereof.
5.12 MERGER SUB.
Merger Sub is a wholly-owned subsidiary of Purchaser and Purchaser shall cause
Merger Sub to perform as provided in this Agreement.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 NON-WAIVER
No investigations made by or on behalf of the Purchaser at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by the Corporation. No waiver of any condition
or other provision, in whole or in part, shall constitute as a waiver of any
other condition or provision (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
6.2 NATURE AND SURVIVAL
(a) All representations, warranties and covenants contained in
this Agreement on the part of each of the Parties shall
survive the Closing, the execution and delivery under this
Agreement of any share or security transfer instruments or
other documents of title to any of the Purchased Shares
and the payment of the consideration for the Purchased
Shares.
(b) The representations and warranties of the Corporation
contained in Article 4 shall survive the Closing as
follows:
(i) the representations and warranties contained in
Sections 4.1, 4.2, 4.3, 4.4 and 4.5 shall
survive for the statute of limitations period
applicable to such provisions;
(ii) all representations and warranties relating to
Taxes, including Section 4.32, shall survive
until the date which is 90 days following the
expiration of all periods allowed for objecting
or appealing the determination of any
proceedings relating to any assessment or
reassessment of the Corporation, as the case
may be, by any taxing authority in respect of
any taxation period ending on or prior to the
35
Closing or in which the Closing occurs unless a
bona fide notice of a Claim shall have been
made in writing before the expiry of such
period, in which case the representation and
warranty to which such notice applies shall
survive in respect of that Claim until the
final determination or settlement of the Claim;
(iii) all representations and warranties relating to
environmental matters, including Section 4.25,
shall survive until the expiry of three years
after the Closing Date, unless a bona fide
notice of a Claim shall have been given in
writing before the expiry of such period, in
which case the representation and warranty to
which such notice relates shall survive in
respect of that Claim until final determination
or settlement of such Claim; and
(iv) representations and warranties as to all other
matters shall survive until one year from the
date of this Agreement, unless a bona fide
notice of a Claim shall have been given in
writing before the expiry of such period, in
which case the representation and warranty to
which such notice relates shall survive in
respect of that Claim until final determination
or settlement of such Claim.
(c) The representations and warranties of the Purchaser
contained in Article 5 shall survive the Closing as
follows:
(i) the representations and warranties contained in
Sections 5.1, 5.2 and 5.3 shall survive for the
statute of limitations period applicable to
such provisions;
(ii) all other representations and warranties shall
survive until one year from the date of this
Agreement, unless a bona fide notice of a Claim
shall have been given in writing before the
expiry of that period, in which case the
representation and warranty to which such
notice relates shall survive in respect of that
Claim until final determination or settlement
of such Claim.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of the Purchased Shares
under this Agreement shall be subject to the satisfaction of, or compliance
with, at or before the Closing Time, each of the following conditions precedent
(each of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by it in whole or in part).
7.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF CORPORATION AT THE CLOSING TIME
All of the representations and warranties of the Corporation made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
and the Purchaser shall have received a certificate from the CEO of the
36
Corporation, to the best of his or her knowledge, information and belief, the
truth and correctness in all material respects of such representations and
warranties.
7.2 PERFORMANCE OF OBLIGATIONS
The Corporation shall have performed or complied with, in all material respects,
all their obligations and covenants under this Agreement.
7.3 RECEIPT OF CLOSING DOCUMENTATION
All documentation relating to the due authorization and completion of the sale
and purchase of the Purchased Shares under this Agreement and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by each of the Corporation shall be satisfactory to the Purchaser, acting
reasonably, and the Purchaser shall have received copies of all such
documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated by this Agreement
and the taking of all corporate proceedings in connection with such transactions
in compliance with these conditions, in form (as to certification and otherwise)
and substance satisfactory to the Purchaser.
7.4 OPINION OF COUNSEL FOR CORPORATION
The Purchaser shall have received an opinion dated the Closing Date from counsel
for the Corporation, Xxxxxxx & Xxxxxxx LLP, in form and substance acceptable to
the Purchaser and its counsel, acting reasonably.
7.5 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS
The Required Approvals shall have been obtained at or before the Closing Time on
terms acceptable to the Purchaser, acting reasonably.
7.6 NO PROCEEDINGS
There shall be no injunction or restraining order issued preventing, and no
claim, action, suit, litigation or proceeding, judicial or administrative, or
investigation against any Party pending by any Person, or pending or threatened
by any Governmental Authority, for the purpose of enjoining or preventing, the
consummation of the transactions contemplated by this Agreement or otherwise
claiming that this Agreement or the consummation of those transactions is
improper or would give rise to proceedings under any Laws.
7.7 SUBSTANTIAL DAMAGE
No substantial damage by fire or other hazard to the assets or business of the
Corporation shall have occurred prior to the Closing Time.
7.8 NO LAWS
No Laws shall have been enacted, introduced or announced which would be
reasonably likely to materially and adversely affect the Corporation or the
Business carried on by them.
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7.9 NO MATERIAL CHANGE
There shall have been no material adverse change in the assets (tangible or
otherwise), business, financial condition or prospects of the Corporation since
the date of this Agreement.
7.10 DIRECTORS AND OFFICERS OF THE CORPORATIONS
There shall have been delivered to the Purchaser on or before the Closing Time,
the resignations of all individuals who are currently directors or officers of
the Corporation (except to the extent that the Corporation has been notified to
the contrary by the Purchaser) and duly executed comprehensive releases from
each such individual in favour of the Corporation.
7.11 EMPLOYMENT AGREEMENTS
Xxxxxxxxxxx X. Xxxxxx and Xxxx Xxxxxxxxx shall each have executed and delivered
an employment agreement with 6FigureJobs in substantially the form attached as
Schedule 7.11.
7.12 TRANSFER AND DELIVERY OF THE PURCHASED SHARES
The 6FigureJobs Stockholders shall have provided the Purchaser with the share
certificates representing the Purchased Shares, in each case duly endorsed in
blank for transfer, or accompanied by irrevocable security transfer powers of
attorney duly executed in blank, in either case by the holders of record.
7.13 THE FORM AND LEGALITY OF MATTERS
The form and legality of all matters incidental to this Agreement shall be
subject to the reasonable approval of the solicitors of the Purchaser.
7.14 AUDITS
An audit of the Corporation's financial statements for the period ended December
31, 2000, shall be conducted by Xxxxxxx Xxxxxxxxxx and Company LLC, and the
results of such audit shall be satisfactory to the Purchaser.
7.15 CORPORATE RECORDS
The 6FigureJobs Stockholders shall have delivered to the Purchaser all corporate
records of the Corporation including, but not limited to all financial
statements, books, records, contracts and facilities records, but excluding all
records related to the transactions contemplated by this Agreement.
7.16 SATISFACTORY COMPLETION OF DUE DILIGENCE
Purchaser and its representatives (including, without limitation, attorneys,
agents and accountants) shall have completed their due diligence review of the
business and affairs, assets and liabilities and condition of the Corporation,
and shall not have discovered any information previously unknown to them that
38
could reasonably be expected to have a material adverse effect on the
Corporation.
7.17 SECURITIES LAWS
Purchaser shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the sale and
issuance of the Purchased Shares have been met.
7.18 LETTER OF TRANSMITTAL
Purchaser shall have received Transmittal Letters and Optionholder Letters from
those 6FigureJobs Stockholders voting in favour of the transaction and the
Optionholders receiving Purchaser Common Stock hereunder at the Closing.
7.19 6FIGUREJOBS STOCKHOLDER APPROVAL
The stockholders of 6FigureJobs shall have approved this Agreement in accordance
with the Certificate of Incorporation of 6FigureJobs and as provided by Delaware
Law.
7.20 BROKER FEE
Riverside Advisors shall have agreed with the Parties that the payment of the
Broker Fee constitutes full and complete payment of outstanding fees (excluding
reimbursable expenses, if any).
7.21 DISCLOSURE SCHEDULES
6FigureJobs shall have delivered to the Purchaser Disclosure Schedules that
qualify and set forth matters required by the representations and warranties
contained in Article 4 of this Agreement in form and substance reasonably
satisfactory to the Purchaser.
If any of the foregoing conditions in this Article has not been fulfilled by
Closing, the Purchaser may terminate this Agreement by notice in writing to the
Corporation, in which event the Purchaser will be released from all obligations
under this Agreement, and unless the Purchaser can show that the condition
relied upon could reasonably have been performed by the Corporation, the
Corporation and all 6FigureJobs Stockholders will also be released from all
obligations under this Agreement. The Purchaser may, however, waive compliance
with any condition in whole or in part if it sees fit to do so, without
prejudice to its rights of termination in the event of non-fulfilment of any
other condition, in whole or in part, or to its rights to recover damages for
the breach of any representation, warranty, covenant or condition contained in
this Agreement.
ARTICLE 8
CORPORATION'S CONDITIONS PRECEDENT
The obligations of the Corporation to complete the sale of the Purchased Shares
under this Agreement shall be subject to the satisfaction of or compliance with,
39
at or before the Closing Time, each of the following conditions precedent (each
of which is acknowledged to be inserted for the exclusive benefit of the
Corporation and may be waived by the Corporation, in whole or in part).
8.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF THE PURCHASER AT THE CLOSING TIME
All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
and the Corporation shall have received a certificate from an officer of the
Purchaser confirming to the best of his or her knowledge, information and
belief, the truth and correctness in all material respects of such
representations and warranties.
8.2 PERFORMANCE OF OBLIGATIONS
The Purchaser shall have performed or complied with, in all respects, all its
obligations and covenants under this Agreement.
8.3 RECEIPT OF CLOSING DOCUMENTATION
All documentation relating to the due authorization and completion of the sale
and purchase of the Purchased Shares under this Agreement and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by the Purchaser of its obligations under this Agreement, shall be satisfactory
to the Corporation, acting reasonably, and the Corporation shall have received
copies of all extra documentation or other evidence as they may reasonably
request in order to establish the consummation of the transactions contemplated
by this Agreement and the taking of all corporate proceedings in connection with
such transactions in compliance with these conditions in form (as to
certification and otherwise) and substance satisfactory to the Corporation.
8.4 CONSENTS, AUTHORIZATIONS AND REGISTRATIONS
The Required Approvals shall have been obtained at or before the Closing Time on
terms acceptable to the Corporation, acting reasonably.
8.5 NO PROCEEDINGS
There shall be no injunction or restraining order issued preventing, and no
pending or threatened claim, action, suit, litigation or proceeding, judicial or
administrative, or investigation against any Party by any Person, for the
purpose of enjoining or preventing, the consummation of the transactions
contemplated by this Agreement or otherwise claiming that this Agreement or the
consummation of those transactions is improper or would give rise to proceedings
under any Laws.
8.6 OPINION OF COUNSEL FOR PURCHASER
The Corporation shall have received an opinion dated as of the Closing Date from
counsel to the Purchaser, Xxxxxx-Xxxxxxxxx, Xxxx & XxXxxxxxx LLP, in form and
substance acceptable to the Corporation and its counsel, acting reasonably.
40
8.7 SECURITIES LAWS
Corporation shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the
transaction have been met, including the form and substance of any information
statement or other disclosure document provided to the stockholders and/or
optionholders of 6FigureJobs in connection with the transactions contemplated by
this Agreement.
8.8 6FIGUREJOBS STOCKHOLDER APPROVAL
The stockholders of 6FigureJobs shall have approved this Agreement in accordance
with the Certificate of Incorporation of 6FigureJobs and as provided by Delaware
Law.
8.9 REGISTRATION RIGHTS
Purchaser shall have executed and delivered to counsel for the Corporation a
Registration Rights Agreement in the form attached hereto as Schedule 8.9 with
respect to the Purchaser Common Stock being issued in the transaction.
8.10 BROKER FEE
Riverside Advisors shall have agreed with the Parties that the payment of the
Broker Fee constitutes full and complete payment of outstanding fees (excluding
reimbursable expenses, if any).
8.11 TAX-FREE REORGANIZATION
The Corporation shall have received a favorable opinion of tax counsel or from
its certified public accountants that the transactions contemplated by this
Agreement qualify as a tax-free reorganization in accordance with Section 368 of
the Code, and shall have received certain representations and warranties from
the Purchaser in form and substance satisfactory to the Corporation with respect
to the tax-free treatment of the Merger pursuant to Treasury Regulations Section
1.367.
8.12 EMPLOYMENT AGREEMENTS
The Surviving Corporation and the Purchaser shall each have executed and
delivered an employment agreement with each of Xxxxxxxxxxx X. Xxxxxx and Xxxx
Xxxxxxxxx in substantially the form attached as Schedule 7.11.
41
8.13 SATISFACTORY COMPLETION OF DUE DILIGENCE
The Corporation and its representatives (including, without limitation,
attorneys, agents and accountants) shall have completed their due diligence
review of the business and affairs, assets and liabilities and condition of the
Purchaser, and shall not have discovered any information previously unknown to
them that could reasonably be expected to have a material adverse effect on the
Purchaser.
8.14 DISCLOSURE SCHEDULES
The Purchaser shall have accepted the Disclosure Schedules prepared by
6FigureJobs to qualify and set forth the matters required by the representations
and warranties contained in Article 4 of this Agreement, in form and substance
reasonably satisfactory to 6FigureJobs.
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 CONDUCT OF BUSINESS PRIOR TO CLOSING
During the period from the date of this Agreement to the Closing Time, the
Corporation will do the following:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE - Except as
otherwise expressly contemplated under this Agreement,
conduct its business in the ordinary and usual course,
consistent with past practice and regular customer service
and business policies and not, without the prior written
consent of the Purchaser, enter into any transaction or
Contract which, if effected before the date of this
Agreement, would constitute a breach of the
representations, warranties or covenants of the
Corporation contained in this Agreement.
(b) MAINTAIN GOOD RELATIONS - Use all reasonable efforts to
maintain good relations with the Employees, its customers
and suppliers.
(c) CONTINUE INSURANCE - Continue in force all policies of
insurance maintained by or for the benefit of the
Corporation and give all notices and present claims under
all insurance policies in a timely fashion.
(d) PERFORM OBLIGATIONS - Comply in all material respects with
all Laws affecting the operation of the Corporation.
(e) PREVENT CERTAIN CHANGES - Not, without the prior written
consent of the Purchaser, take any of the actions, do any
of the things or perform any of the acts described in
Section 4.10.
42
(f) APPROVALS - Co-operate with the Purchaser and use all
reasonable efforts and diligently pursue obtaining the
Required Approvals.
9.2 ACCESS FOR INVESTIGATION
(a) The Corporation shall permit the Purchaser and its
representatives, on reasonable notice to the Corporation,
between the date of this Agreement and the Closing Time,
without interference to the ordinary conduct of the
Business, to have reasonable access during normal business
hours to (i) the Real Property; (ii) all other locations
where Books and Records or other material relevant to the
Business are stored; (iii) all the Books and Records; and
(iv) the properties and assets used in the Business. The
Corporation shall furnish to the Purchaser copies of Books
and Records (subject to any confidentiality agreements or
covenants relating to any Books and Records) as the
Purchaser shall from time to time reasonably request to
enable confirmation of the matters warranted in Article 4.
Without limiting the generality of the foregoing, it is
agreed that the accounting representatives of the
Purchaser shall be afforded reasonable opportunity to make
a full investigation of all aspects of the financial
affairs of the Corporation.
(b) Notwithstanding subsection (a), the Corporation shall not
be required to disclose any information, records, files or
other data to the Purchaser where prohibited by Laws or
confidentiality obligations, or where the information,
records, files or other data would be subject to
attorney-client privilege.
9.3 CONFIDENTIALITY
(a) Prior to the Closing, the Purchaser shall keep
confidential all information disclosed to it by the
Corporation or their agents relating to the Corporation,
except information which:
(i) is or becomes generally available to the
public;
(ii) the Purchaser received from an independent
third Person, who had obtained the information
lawfully and was under no obligation of
secrecy, or
(iii) the Purchaser can show was in its possession
before receipt of such information from the
Corporation or their agents.
If this Agreement is terminated without completion of the
transactions contemplated by this Agreement, the Purchaser
shall (A) promptly return all documents, work papers and
other written material (including all copies) obtained
from the Corporation or their agents in connection with
this Agreement and not previously made public, and shall
continue to maintain the confidence of all such
information, and (B) not solicit, offer or otherwise
attempt to entice the Employees to leave the employ of
6FigureJobs to work for the Purchaser for a period of one
43
(1) year from the date of termination of the transactions
contemplated by this Agreement.
(b) After the Closing, the Corporation shall, and shall cause
their Affiliates, Associates and agents to, keep
confidential all non-public, confidential or proprietary
information relating to the Business, the Corporation and
this Agreement and transactions contemplated by this
Agreement, except information which:
(i) is or becomes generally available to the
public; or
(ii) the Corporation received after Closing from an
independent third Person, who had obtained the
information lawfully and was under no
obligation of secrecy; or
(iii) which is required to be disclosed in any tax
filing, by legal process or by applicable law,
or which is disclosed to attorneys,
accountants, other advisors and equity owners
of an entity, provided that the recipients of
the information are under a duty of
confidentiality with respect thereto.
9.4 ACTIONS TO SATISFY CLOSING CONDITIONS
Each of the Parties shall take all such actions as are within its power to
control, and shall use its reasonable efforts to cause other actions to be taken
which are not within its power to control, so as to ensure compliance with each
of the conditions and covenants set forth in Articles 7, 8 and 9 which are for
the benefit of any other Party.
9.5 INVESTMENT CANADA NOTIFICATION; U.S. SECURITIES FILINGS
The Purchaser shall file the notification required to be filed by the Purchaser
under the Investment Canada Act in respect of the transaction contemplated under
this Agreement within 10 days following the Closing, and shall timely complete
all filings required under U.S. federal securities laws or the securities laws
of any state thereof.
9.6 STUB PERIOD RETURNS
The Purchaser shall cause to be prepared and filed on a timely basis all Tax
Returns for the Corporation for any period which ends on or before the Closing
Date and for which Tax Returns have not been filed as of such date. The
Purchaser shall also cause to be prepared and filed on a timely basis all Tax
Returns of the Corporation for periods beginning before and ending after the
Closing Date.
9.7 POST EFFECTIVE TIME OPERATION.
The Purchaser shall solely be responsible for all acts and omissions of the
Surviving Corporation after the Effective Time.
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9.8 NON-INTERFERENCE
The Purchaser hereby covenants and agrees that after the Closing Date, the
management of the Corporation shall be allowed to manage the business
independently and without interference or limitation, to the extent that at
least 75% of the budgeted revenues and profits, as described in the budget
attached as a Schedule to the Escrow Agreement, are achieved. If revenues or
profits fall short of budget by 25% or greater in any given quarter, the
Purchaser reserves the right to assist the management of the Corporation in
making reasonable adjustments to the expenses of the Corporation accordingly.
9.9 TAX MATTERS
The Purchaser recognizes that in order for the 6FigureJobs
Stockholders to receive tax-free treatment in the Merger, the Purchaser must
satisfy the active business requirements set forth in Treasury Regulations
Section 1.367(a)-3(c)(3), along with other requirements set forth in Treasury
Regulations Section 1.367(a), and in connection therewith covenants and agrees
as follows:
(a) the Purchaser shall cooperate with the Corporation's efforts to
satisfy the reporting requirements set forth in Treasury Regulations Section
1.367(a)-3(c)(6), including reporting of information required thereby;
(b) the Purchaser shall cooperate with the obligations of the
Corporation's stockholders that hold five percent (5%) or more of the
outstanding voting capital stock of the Corporation (the "Five Percent
Stockholders") to enter into gain recognition agreements with the Internal
Revenue Service pursuant to Treasury Regulations Sections
1.367(a)-3(c)(1)(iii)(B) and 1.367(a)-8 and satisfy their continuing obligations
pursuant to such gain recognition agreements, including the provision of
information to the Five Percent Stockholders if the Purchaser makes a
disposition that causes the Five Percent Stockholders to recognize gain pursuant
to such gain recognition agreements; and
(c) the Purchaser shall not dispose of the Corporation's assets,
either through an asset or stock sale, in a transaction that causes the Five
Percent Stockholders to recognize gain pursuant to Treasury Regulations Sections
1.367(a)-3(c)(iii)(B) and 1.367(a)-8 until such time as all shares of Purchaser
Common Stock received by the 6FigureJobs Stockholders and Optionholders in
connection with the Merger have been registered with the SEC or are otherwise
freely transferable on the open market.
ARTICLE 10
INDEMNIFICATION
10.1 MUTUAL INDEMNIFICATION FOR BREACHES OF COVENANTS AND WARRANTY, ETC.
The Corporation and the Purchaser agree (the Party or Parties so covenanting and
agreeing to indemnify another Party being referred to as the "Indemnifying
Party" and the Party so to be indemnified being referred to as the "Indemnified
Party") to indemnify and save harmless, on an after-tax basis, the Indemnified
45
Party effective as and from the Closing Time, from and against all Claims that
may be made or brought against the Indemnified Party, or that it may suffer or
incur, directly or indirectly as a result of or in connection with any
non-fulfilment of any covenant or agreement on the part of the Indemnifying
Party under this Agreement or any incorrectness in or breach of any
representation or warranty of the Indemnifying Party contained in this Agreement
or in any certificate or other document furnished by the Indemnifying Party
pursuant to this Agreement. The foregoing obligations of indemnification shall
be subject to the following procedures and limitations:
(a) In case an Indemnifying Party shall object in writing to
any claim or claims for indemnification, the Indemnified
Party and the Indemnifying Party shall attempt in good
faith for fifteen (15) days to agree upon the rights of
the respective parties with respect to each of such
claims.
(b) If no agreement can be reached after good faith
negotiation during such fifteen (15)-day period, either
the Indemnified Party or the Indemnifying Party may, by
written notice to the other party, demand submission of
the matter to arbitration or to some other
mutually-agreeable form of alternative dispute resolution
(together or in the alternative, "ADR") to take place in
Ottawa, Ontario. Unless the parties mutually agree in
writing to some alternative form of ADR, arbitration of
the matter shall be conducted in accordance with the
commercial rules then in effect of the Canadian
Arbitration Association (except as otherwise specified in
this Section 10.1 and except for those rules which require
using the American Arbitration Association) using an
arbitrator who is an experienced commercial litigator and
admitted before the bar of any state of the United States.
The dispute shall be determined by one (1) arbitrator
acceptable to both parties, which arbitrator shall be
selected within twenty (20) days of filing by a party of
notice of intention to arbitrate. If, by the end of said
twenty (20) day period, the parties have not agreed on one
(1) arbitrator to be acceptable, then either party may
request the American Arbitration Association to appoint
the arbitrator pursuant to this Section 10.1 and the
commercial rules then in effect of the American
Arbitration Association. Arbitrators shall be compensated
for their services at the standard hourly rate charged in
their private professional activities. The parties
acknowledge that the federal and state courts situated in
Connecticut shall have jurisdiction and venue over the
parties for the purpose of enforcing this Section 10.1.
The United States Federal Rules of Civil Procedure shall
apply with respect to any arbitration hereunder, and to
the extent practicable any hearing with respect to a
single matter shall be held on consecutive hearing days.
The arbitrator(s) shall follow substantive rules of law
and shall make its award in strict conformity with this
Agreement. All parties agree to be bound by the results of
this arbitration; judgement upon the award so rendered may
be entered and enforced in any court of competent
jurisdiction, subject to Section 10.1(e).
(c) the requirement that the Indemnifying Party shall, in
respect of any Claim made by any third person, be afforded
an opportunity at its sole expense to resist, defend and
compromise such Claim;
46
(d) the limitation that, for any Claims made hereunder, the
Indemnifying Party shall not be required to pay any such
amount until the aggregate amount of such Claims exceeds
$50,000 and then only to the extent such Claims exceed
$50,000;
(e) the limitation that, for Claims made in connection with
any representation or warranty contained in Sections 4.1,
4.2, 4.3, 4.4 and 4.5 and/or Article 5, the Corporation
and the 6FigureJobs Stockholders in the aggregate, on the
one hand, and the Purchaser, on the other hand, shall not,
absent fraud, be required to pay any amount in excess of
the Purchase Price, as further set forth in Section 10.4;
(f) the limitation that, for Claims made in connection with
any representation or warranty contained in Article 4,
other than those made in Sections 4.1, 4.2, 4.3, 4.4 and
4.5, the aggregate liability of the Corporation and the
6FigureJobs Stockholders for such Claims will not exceed,
absent fraud, the Escrow Shares plus $500,000, as further
set forth in Section 10.4;
(g) the indemnification rights set forth in this Article 10
shall be the sole and exclusive remedy of the Indemnified
Party, and is in lieu of any other claim or right that the
Indemnified Party may otherwise have under applicable law
or otherwise and the liability of any 6FigureJobs
Stockholder or Optionholder for indemnification claims
hereunder shall be several and not joint; and
(h) for all purposes of this Article 10, the Shareholder
Representative shall act on behalf of the Corporation in
administering Claims by the Purchaser, including, without
limitation, for purposes of determining whether to dispute
that the Corporation is in fact liable under this Article
10 for a Claim asserted by the Purchaser, determining
whether to assume the defense of third party claims, and
administering the Escrow Agreement for the benefit of the
6FigureJobs Stockholders and Optionholders.
10.2 [INTENTIONALLY DELETED]
10.3 INDEMNIFICATION PROCEDURES FOR THIRD PERSON CLAIMS
(a) In the case of Claims made by a third Person with respect
to which indemnification is sought, the Party seeking
indemnification shall give Notice promptly, and in any
event within 20 days, to the other Party of any such
Claims made upon it. In the event of a failure to give
such notice, such failure shall not preclude the Party
seeking indemnification from obtaining such
indemnification but its right to indemnification may be
reduced to the extent that such delay prejudiced the
defence of the Claim or increased the amount of liability
or cost of defence and provided that, notwithstanding
anything else contained in this Agreement, no Claim for
indemnity in respect of the breach of any representation
or warranty contained in this Agreement may be made unless
Notice of such Claim has been given prior to the expiry of
the survival period applicable to such representation and
warranty pursuant to Section 6.2. The provisions of
Sections 10.1(a) and 10.1(b) shall also apply to any third
person Claims such that the Indemnifying Party shall have
47
an opportunity to object to the defense of any third
person Claim in accordance with such provisions.
(b) The Indemnifying Party shall have the right, by Notice to
the Indemnified Party given not later than 30 days after
receipt of the Notice described in subsection (a), to
assume the control of the defence, compromise or
settlement of the Claim, provided that such assumption
shall, by its terms, be without cost to the Indemnified
Party.
(c) Upon the assumption of control of any Claim by the
Indemnifying Party as set out in subsection (b), the
Indemnifying Party shall diligently proceed with the
defence, compromise or settlement of the Claim at its sole
expense, including if necessary, employment of counsel
reasonably satisfactory to the Indemnified Party and, in
connection therewith, the Indemnified Party shall
co-operate fully, but at the expense of the Indemnifying
Party with respect to any out-of-pocket expenses incurred,
to make available to the Indemnifying Party all pertinent
information and witnesses under the Indemnified Party's
control, make such assignments and take such other steps
as in the opinion of counsel for the Indemnifying Party
are reasonably necessary to enable the Indemnifying Party
to conduct such defence. Any compromise or settlement of
the Claim by the Indemnifying Party shall be subject to
the consent of the Indemnified Party, such consent not to
be unreasonably withheld. The Indemnified Party shall also
have the right to participate in the negotiation,
settlement or defence of any Claim at its own expense.
(d) The final determination of any Claim pursuant to this
Section, including all related costs and expenses, will be
binding and conclusive upon the parties as to the validity
or invalidity, as the case may be, of such Claim against
the Indemnifying Party.
If the Indemnifying Party does not assume control of a Claim as
permitted in subsection(b), the Indemnified Party shall be entitled
to make such settlement of the Claim as in its sole discretion may
appear advisable, and such settlement or any other final
determination of the Claim shall be binding upon the Indemnifying
Party.
10.4 RECOVERY FOR INDEMNIFICATION CLAIMS
In the event that Purchaser is entitled to indemnification from the Corporation,
the 6FigureJobs Stockholders or Optionholders pursuant to the terms of this
Agreement for any Claims, such indemnification shall only be recovered in the
following manner and order of priority:
(a) By deducting the amount of such Claims from the Escrow
Shares by instructing the Escrow Agent to return a number
of Escrow Shares to the Purchaser equal to the value of
such Claim based on the value per share provided in
Section 10.4(e) below;
(b) For any Claims other than Claims made in connection with
any representation or warranty contained in Sections 4.1,
4.2, 4.3, or 4.4, if the value of the Escrow Shares is not
48
sufficient to satisfy such Claims, any amounts beyond the
value of the Escrow Shares shall be recoverable from the
6FigureJobs Stockholders and Optionholders, Pro Rata, in
an aggregate amount not to exceed $500,000, by requesting
from the 6FigureJobs Stockholders and Optionholders the
return of their Pro Rata portion of a sufficient number of
shares of Purchaser Common Stock received at the Closing
Date, based on the value per share provided in Section
10.4(e) below;
(c) For any Claims made in connection with any representation
or warranty contained in Sections 4.1, 4.2, 4.3, or 4.4,
if the value of the Escrow Shares is not sufficient to
satisfy such Claims, any amounts beyond the value of the
Escrow Shares shall be recoverable from the 6FigureJobs
Stockholders and Optionholders, Pro Rata, in an aggregate
amount not to exceed the total of (i) $4,000,000 plus (ii)
the product of the Merger Price Per Share times the number
of Escrow Shares actually released to the 6FigureJobs
Stockholders and Optionholders pursuant to the Earn-Out
provisions of the Escrow Agreement minus (iii) the amount
of any claims recovered pursuant to Section 10.4(a) and
10.4(b) above, by requesting from the 6FigureJobs
Stockholders and Optionholders the return of their Pro
Rata portion of a sufficient number of shares of Purchaser
Common Stock received at the Closing Date, based on the
value per share provided in Section 10.4(e) below;
(d) In no event shall the Purchaser be entitled to a
cumulative recovery for any and all Claims hereunder in
excess of $5,000,000, which amount shall be recoverable
only from the Escrow Shares and the Purchaser Common Stock
received in connection with the Merger; and
(e) Except as specifically provided above, for purposes of
determining the value of Escrow Shares or Purchaser Common
Stock to satisfy any Claims hereunder, such shares shall
be valued at the greater of (i) the Merger Price Per Share
and (ii) the average last sale price of Purchaser Common
Stock for the last ten (10) trading days immediately
preceding the date such Claim is finally settled.
ARTICLE 11
TERMINATION
11.1 TERMINATION (a) Certain of the Parties may terminate this
Agreement as provided below:
(i) The Parties may terminate this Agreement by their mutual written
consent at any time prior to the Closing;
(ii) Purchaser may terminate this Agreement by giving written notice
to the Corporation at any time prior to the Closing (A) in the event the
Corporation has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Purchaser has notified the
Corporation of the breach, and the breach has continued without cure for a
period of 10 days after the notice of breach, (B) if the Closing shall not have
occurred on or before October 30, 2001, by reason of the failure of any
condition precedent of Purchaser (unless the failure results primarily from
49
Purchaser itself breaching any representation, warranty, or covenant contained
in this Agreement), or (C) Purchaser has failed to obtain Required Approvals;
and
(iii) Corporation may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing (A) in the event Purchaser
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, Corporation or the 6FigureJobs
Stockholders have notified Purchaser of the breach, and the breach has continued
without cure for a period of 10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before October 30, 2001, by reason of the
failure of any condition precedent of Corporation hereof (unless the failure
results primarily from any of Corporation or the 6FigureJobs Stockholders
themselves breaching any representation, warranty, or covenant contained in this
Agreement), or (C) Corporation has failed to obtain Required Approvals.
(b) Effect of Termination. If any Party properly terminates this
Agreement pursuant to Section 11.1(a) hereof, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach).
ARTICLE 12
GENERAL
12.1 PUBLIC NOTICES
All public notices to third Persons and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
co-ordinated by the Corporation, on the one hand, and the Purchaser, on the
other hand, and no Party shall act unilaterally in this regard without the prior
approval of the other Parties, such approval not to be unreasonably withheld,
except where required to do so by law or by the applicable regulations or
policies of any Governmental Authority or any stock exchange in circumstances
where prior consultation with the other Parties is not practicable.
12.2 EXPENSES
Each Party shall be responsible for and pay their own respective legal,
accounting, and other professional advisory fees, costs and expenses incurred in
connection with the purchase and sale of the Purchased Shares and the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this Agreement and any other costs and expenses
incurred, provided that the Surviving Corporation shall pay (a) the reasonable
expenses of the Corporation's accountants and attorneys associated with the
transaction, not to exceed $30,000, and (b) the reasonable expenses incurred by
the Corporation, not to exceed $25,000, to prepare audited financial statements
as of December 31, 2000, and to perform limited procedures on the Corporation's
balance sheet as of the date of Closing.
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12.3 NOTICES
Any notice or other writing required or permitted to be given under this
Agreement or for the purposes of this Agreement (a "Notice") shall be in writing
and shall be sufficiently given if delivered, or if sent by prepaid registered
mail or if transmitted by facsimile or other form of recorded communication
tested prior to transmission to such Party:
(a) in the case of a Notice to the Corporation:
Shareholder Representative
000 Xxxx Xxxx
Xxxxxx, XX 00000
with copies to:
Xxxxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
(b) in the case of a Notice to the Purchaser.:
X-XXXXXXX.XXX INC.
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx, XX X0X 0X0
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: 000 000 0000
with a copy to:
Xxxxxx-Xxxxxxxxx, Hill & XxXxxxxxx LLP
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000 0000
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the Notice in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
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shall be deemed to have been given and received on the first Business Day after
its transmission.
12.4 [INTENTIONALLY DELETED]
12.5 ASSIGNMENT
Neither party may assign this Agreement without the written consent of the other
party.
12.6 FURTHER ASSURANCES
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
12.7 COUNTERPARTS
This Agreement may be executed by the Parties in separate counterparts each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
12.8 ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the Parties
hereto and their respective successors and permitted assigns.
[Signature Page Follows]
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IN WITNESS OF WHICH the Parties have duly executed this Agreement as of the date
first set forth above.
SIGNED, SEALED & DELIVERED
0XXXXXXXXXX.XXX, INC.
PER: /s/ XXXXXXXXXXX X. XXXXXX
-------------------------------------
NAME: XXXXXXXXXXX X. XXXXXX
TITLE: CEO AND PRESIDENT
X-XXXXXXX.XXX INC.
PER: /s/ XXXXXXX X. XXXXXXXXX
-------------------------------------
NAME: XXXXXXX X. XXXXXXXXX
TITLE: CEO AND PRESIDENT
E-CRUITER ACQUISITION II, INC.
PER: /s/ XXXXXXX X. XXXXXXXXX
-------------------------------------
NAME: XXXXXXX X. XXXXXXXXX
TITLE: DIRECTOR
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