ASSET
PURCHASE AGREEMENT
This Asset Purchase
Agreement (this “Agreement”), dated as of January
22, 2021, is entered into by and among Recruiter.com Group, Inc., a
Nevada corporation (“Recruiter”), Recruiter.com
Scouted, Inc., a New York corporation (“Newco”), RLJ Talent Consulting,
Inc., a Delaware corporation (“Scouted”) and Jacqueline Loeb (the
“Scouted
Representative”) solely in her capacity as the Scouted
Representative;
WHEREAS, Scouted is
engaged in operating an online recruitment platform for employers
and job seeking candidates providing staffing and talent
acquisition solutions, and in developing Intellectual Property (as
defined herein) related to staffing and talent acquisition
solutions (the “Business”);
WHEREAS, Scouted
wishes to sell to Newco, and Newco wishes to purchase and assume
from Scouted, certain specified assets and liabilities of the
Business, subject to the terms and conditions set forth
herein;
WHEREAS, it is
intended that the purchase of the Purchased Assets contemplated by
this Agreement shall be reported by the parties as a reorganization
pursuant to Section 368(a)(1)(C) of the Code, and this Agreement
and the documents related hereto shall constitute a “plan of
reorganization” within the meaning of Treasury Regulations
Section 1.368-2(g), and further that the Recruiter Common Stock
received by Scouted in exchange for the Purchased Assets, which
consist of all or substantially all of the assets of Scouted, will
be subsequently distributed in liquidation to the Shareholders
pursuant to a plan of reorganization.
WHEREAS, the board
of directors of each of Recruiter and Newco, and the board of
directors and stockholders of Scouted have approved this Agreement
and the transactions contemplated hereby.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter
set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Article I
DEFINITIONS
In addition to
words and terms defined elsewhere in this Agreement, the following
words and terms have the meanings specified or referred to in this
Article I:
“Accounts Receivable” has the
meaning set forth in Section 2.01(a).
“Action” means any claim, action,
cause of action, demand, lawsuit, arbitration, inquiry, audit,
notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal,
administrative, regulatory or otherwise, whether at law or in
equity.
“Affiliate” of a Person means any
other Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, such Person. The term “control”
(including the terms “controlled by” and “under
common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
“Agreement” has the meaning set
forth in the preamble.
“Ancillary Documents” means the
Joinder Agreement, the Bill of Sale, Executive Employment
Agreement, and the other agreements, instruments and documents
required to be delivered at the Closing.
“Assigned Contracts” has the
meaning set forth in Section 2.01(c).
“Assumed Liabilities” has the
meaning set forth in Section 2.03.
“Balance Sheet” has the meaning set
forth in Section 3.04.
“Balance Sheet Date” has the
meaning set forth in Section 3.04.
“Basket” has the meaning set forth
in Section 8.04(a).
“Benefit Plan” means each pension,
benefit, retirement, compensation, employment, consulting,
profit-sharing, deferred compensation, incentive, bonus,
performance award, membership or profits interest, change in
control, retention, severance, vacation, paid time off, welfare,
fringe-benefit and other similar agreement, plan, policy, program
or arrangement (and any amendments thereto), in each case whether
or not reduced to writing and whether funded or unfunded, including
each “employee benefit plan” within the meaning of
Section 3(3) of ERISA, whether or not tax-qualified and whether or
not subject to ERISA, which is or has been maintained, sponsored,
contributed to, or required to be contributed to by Scouted for the
benefit of any current or former employee, officer, manager,
retiree, independent contractor or consultant of Scouted or any
spouse or dependent of such individual, or under which Scouted or
any of its ERISA Affiliates has or may have any Liability, or with
respect to which Newco or any of its Affiliates would reasonably be
expected to have any Liability, contingent or
otherwise.
“Bill of Sale” has the meaning set
forth in Section 2.06(a)(vi).
“Books and Records” has the meaning
set forth in Section 2.01(m).
“Business” has the meaning set
forth in the recitals.
“Business Day” means any day except
Saturday, Sunday or any other day on which commercial banks located
in New York, New York are authorized or required by Law to be
closed for business.
“Closing” has the meaning set forth
in Section 2.05.
“Closing Date” has the meaning set
forth in Section 2.05.
“Code” means the Internal Revenue
Code of 1986, as amended.
“Contracts” means all contracts,
leases, deeds, mortgages, licenses, instruments, notes,
commitments, undertakings, indentures, joint ventures and all other
agreements, commitments and legally binding arrangements, whether
written or oral, used in the Business.
“Current Assets” means accounts
receivable, inventory and prepaid expenses, but excluding (a) the
portion of any prepaid expense of which Newco will not receive the
benefit following the Closing and (b) deferred Tax
assets.
“Data Protection Programs” means
(a) all Laws, (b) all self-regulatory programs in which Scouted has
enrolled, (c) the Payment Card Industry Data Security Standard, and
(d) all Privacy Policies, in each case relating to privacy, data
protection, and data security.
“Direct Claim” has the meaning set
forth in Section 8.05(c).
“Disclosure Schedules” means the
Disclosure Schedules delivered by Scouted and Recruiter
concurrently with the execution and delivery of this Agreement, as
they may be amended in accordance with Section 5.10.
“Dollars” or “$” means the lawful currency of
the United States.
“Employees” has the meaning set
forth in Section 3.19(a).
“Encumbrance” means any charge,
claim, community property interest, pledge, condition, equitable
interest, lien (statutory or other), option, security interest,
mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“ERISA Affiliate” means all
employers (whether or not incorporated) that would be treated
together with Scouted or any of its Affiliates as a “single
employer” within the meaning of Section 414 of the
Code.
“Exchange Act” means the Securities
Exchange Act of 1934.
“Excluded Assets” has the meaning
set forth in Section 2.02.
“Excluded Liabilities” has the
meaning set forth in Section 2.04.
“FCPA” has the meaning set forth in
Section 3.18(c).
“Financial Statements” has the
meaning set forth in Section 3.04.
“GAAP” means United States
generally accepted accounting principles in effect from time to
time, consistently applied.
“Government Contracts” has the
meaning set forth in Section 3.07(a)(ix).
“Governmental Authority” means any
federal, state, local or foreign government or political
subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulatory
organization (to the extent that the rules, regulations or orders
of such organization or authority have the force of Law), or any
arbitrator, court or tribunal of competent
jurisdiction.
“Governmental Order” means any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental
Authority.
“Holdback Shares” means the number
of shares of Recruiter Common Stock equal to $210,000 divided by
the Share Consideration Price Per Share.
“Indebtedness” means, without
duplication and with respect to Scouted, all (a) indebtedness
for borrowed money; (b) obligations for the deferred purchase price
of property or services, (c) long or short-term obligations
evidenced by notes, bonds, debentures or other similar instruments;
(d) obligations under any interest rate, currency swap or other
hedging agreement or arrangement; (e) capital lease obligations;
(f) reimbursement obligations under any letter of credit,
banker’s acceptance or similar credit transactions; (g)
guarantees made by Scouted on behalf of any third party in respect
of obligations of the kind referred to in the foregoing clauses (a)
through (f); and (h) any unpaid interest, prepayment penalties,
premiums, costs and fees that would arise or become due as a result
of the prepayment of any of the obligations referred to in the
foregoing clauses (a) through (g).
“Indemnified Party” has the meaning
set forth in Section 8.05.
“Indemnifying Party” has the
meaning set forth in Section 8.05.
“Insurance Policies” has the
meaning set forth in Section 3.16.
“Intellectual Property” means all
intellectual property rights and assets, and all rights, interests
and protections that are associated with, similar to, or required
for the exercise of, any of the foregoing, however arising,
pursuant to the Laws of any jurisdiction throughout the world,
whether registered or unregistered, including any and all: (a)
trademarks, service marks, trade names, brand names, logos, trade
dress, design rights and other similar designations of source,
sponsorship, association or origin, together with the goodwill
connected with the use of and symbolized by, and all registrations,
applications and renewals for, any of the foregoing;
(b) internet domain names, whether or not trademarks,
registered in any top-level domain by any authorized private
registrar or Governmental Authority, web addresses, web pages,
websites and related content, accounts with Twitter, Facebook and
other social media companies and the content found thereon and
related thereto, and URLs; (c) works of authorship, expressions,
designs and design registrations, whether or not copyrightable,
including copyrights, author, performer, moral and neighboring
rights, and all registrations, applications for registration and
renewals of such copyrights; (d) inventions, discoveries, trade
secrets, business and technical information and know-how,
databases, data collections and other confidential and proprietary
information and all rights therein; (e) patents (including all
reissues, divisionals, provisionals, continuations and
continuations-in-part, re-examinations, renewals, substitutions and
extensions thereof), patent applications, and other patent rights
and any other Governmental Authority-issued indicia of invention
ownership (including inventor’s certificates, petty patents
and patent utility models); and (f) software and firmware,
including data files, source code, object code, application
programming interfaces, architecture, files, records, schematics,
computerized databases and other related specifications and
documentation.
“Joinder Agreement” has the meaning
set forth in Section 8.04(c).
“Knowledge” means, (a) when used
with respect to Scouted, the actual knowledge of the Scouted
Representative, after due inquiry, and the knowledge that she would
reasonably be expected to obtain in the course of diligently
performing her duties for Scouted, and (b) when used with
respect to Recruiter or Newco, the actual knowledge of Evan Sohn,
after due inquiry, and the knowledge that he would reasonably be
expected to obtain in the course of diligently performing his
duties for Recruiter.
“Law” means any statute, law,
ordinance, regulation, rule, code, order, constitution, treaty,
common law, judgment, decree, other requirement or rule of law of
any Governmental Authority.
“Liabilities” means liabilities,
obligations or commitments of any nature whatsoever, asserted or
unasserted, known or unknown, absolute or contingent, accrued or
unaccrued, matured or unmatured or otherwise.
“Losses” means losses, damages,
liabilities, deficiencies, judgments, interest, awards, penalties,
fines, costs or expenses, including reasonable attorneys’ and
experts’ fees and disbursements.
“Malicious Code” has the meaning
set forth in Section 3.11(c).
“Material Adverse Effect” means any
event, occurrence, fact, condition or change that is, or could
reasonably be expected to become, individually or in the aggregate,
materially adverse to (a) the business, results of operations,
condition (financial or otherwise), or assets of Scouted, Newco, or
Recruiter, as the case may be, or (b) the ability of Scouted,
Newco, or Recruiter to consummate the transactions contemplated
hereby on a timely basis; except any event, occurrence, fact,
condition or change related to (1) any change in the United States
economy or securities or financial markets in general, or any
change in general national economic or financial conditions; (2)
any change that generally affects the market for the Business in
which Scouted operates; (3) the execution, delivery or performance
of this Agreement; (4) any changes in Laws, accounting rules or in
the authoritative interpretations thereof or in regulatory or
interpretative guidance related thereto, (5) acts of war (whether
or not declared), armed hostilities or terrorism, or the escalation
or worsening thereof, or (6) any natural or man-made disaster or
acts of God; provided, that the matters set
forth in clauses (1), (2) and (4) above shall not be excluded if
they have a disproportionate impact on one Party relative to the
other companies in the in which such Party operates.
“Material Contracts” has the
meaning set forth in Section 3.07(a).
“Newco” has the meaning set forth
in the preamble.
“Non-Disclosure Agreement” means
the Non-Disclosure Agreement between Recruiter and
Scouted.
“OFAC” has the meaning set forth in
Section 3.18(d).
“OFAC Prohibited Party” has the
meaning set forth in Section 3.18(d).
“Outside Date” has the meaning set
forth in Section 9.01(d)(ii).
“Party” and “Parties” means each party to this
Agreement or collectively all the parties to this
Agreement.
“Permits” means all permits,
licenses, certifications, accreditations, franchises, approvals,
consents, authorizations, registrations, certificates, grants,
directives, guidelines, policies, requirements, concessions,
variances, exemptions, identification numbers, and similar rights
obtained, or required to be obtained, from any Governmental
Authority.
“Permitted Encumbrances” has the
meaning set forth in Section 3.08(a).
“Person” means an individual,
corporation, partnership, joint venture, limited liability company,
Governmental Authority, unincorporated organization, trust,
association or other entity.
“Personal Information” means
information pertaining to an individual that is regulated by one or
more information privacy or security Laws.
“Personnel” has the meaning set
forth in Section 3.19.
“Privacy Policies” means all
published privacy policies and internal privacy policies and
guidelines maintained or published by Scouted.
“Property Tax Returns” has the
meaning set forth in Section 6.01(a).
“Purchase Price” means the total
consideration of $1,600,000, consisting of (a) $180,000 in cash
(“Cash
Consideration”), and (b) $1,420,000 of Recruiter
Common Stock (“Share
Consideration”), the exact number of shares of which
shall be determined using the average of the daily VWAP for the
five Business Days prior to the Closing Date (the
“Share Consideration Price
Per Share”). The Share Consideration shall be subject
to Section 5.18.
“Purchased Assets” has the meaning
set forth in Section 2.01.
“Real Property” means the real
property owned, leased or subleased by Scouted, together with all
buildings, structures and facilities located thereon.
“Representative” means, with
respect to any Person, any and all directors, managers, officers,
employees, consultants, financial advisors, counsel, accountants,
and other agents of such Person.
“Requisite Scouted Vote” has the
meaning set forth in Section 3.02(b).
“Scouted” has the meaning set forth
in the preamble.
“Scouted Indemnitees” has the
meaning set forth in Section 8.03.
“Scouted Indemnitors” means Scouted
and Scouted Stakeholders who are a party to the Joinder
Agreement.
“Scouted Intellectual Property”
means all Intellectual Property that is owned or purported to be
owned by Scouted, and that is used in or necessary for the conduct
of the Business as currently conducted.
“Scouted IP Agreements” means all
licenses, sublicenses, consent to use agreements, settlements,
coexistence agreements, covenants not to sue, permissions and other
Contracts (including any right to receive or obligation to pay
royalties or any other consideration), whether written or oral,
relating to Intellectual Property to which Scouted is a party,
beneficiary or otherwise bound.
“Scouted IP Registrations” means
all Scouted Intellectual Property that is subject to any issuance
registration, application or other filing by, to or with any
Governmental Authority or authorized private registrar in any
jurisdiction, including registered trademarks, domain names and
registered copyrights, issued and reissued patents and pending
applications for any of the foregoing.
“Scouted Charter Documents” has the
meaning set forth in Section 3.03.
“Scouted Representative” has the
meaning set forth in the preamble.
“Scouted Stakeholder” means any of
Scouted’s stockholders, noteholders, and other recipients of
Recruiter Common Stock.
“Scouted Product” means all
proprietary Software products and related services of Scouted that
are currently being, or at any time in the past five years have
been, offered, licensed, sold, distributed, hosted, maintained,
supported or otherwise provided or made available by or on behalf
of Scouted.
“SEC” means the Securities and
Exchange Commission.
“SEC Reports” has the meaning set
forth in Section 4.07.
“Securities Act” has the meaning
set forth in Section 3.23(a).
“Shareholder” means any Person who
holds shares of capital stock of Scouted.
“Recruiter” has the meaning set
forth in the preamble.
“Recruiter Balance Sheet” has the
meaning set forth in Section 4.09.
“Recruiter Common Stock” means the
common stock, par value $0.0001 per share, of
Recruiter.
“Recruiter Indemnitees” has the
meaning set forth in Section 8.02.
“Software” means any and all
computer software and code, including all new versions, updates,
revisions, improvements and modifications thereof, whether in
source code, object code, or executable code format, including
systems software, application software (including mobile apps),
firmware, middleware, programming tools, scripts, routines,
interfaces, architecture, schematics, records, libraries, and data,
databases and data collections, and all related specifications and
documentation, including developer notes, comments and annotations,
user manuals and training materials relating to any of the
foregoing.
“Tax Return” means any return,
declaration, report, claim for refund, information return or
statement or other document relating to Taxes, in each case, that
is filed or required to be filed with a Governmental Authority,
including any schedule or attachment thereto, and including any
amendment thereof.
“Taxes” means all federal, state,
local, foreign and other income, gross receipts, sales, use,
production, ad valorem, transfer, documentary, franchise,
registration, profits, license, lease, service, service use,
withholding, payroll, employment, unemployment, estimated, excise,
severance, environmental, stamp, occupation, premium, property
(real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments or similar charges,
together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties
imposed by a Governmental Authority.
“Third Party Claim” has the meaning
set forth in Section 8.05(a).
“Trading Market” means any of the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, the NYSE American, the OTCQB, the
OTCQX, or the OTC Pink Marketplace (or any successors to any of the
foregoing).
“Transaction Expenses” means all
fees and expenses incurred by Scouted and any Affiliate at or prior
to the Closing in connection with the preparation, negotiation and
execution of this Agreement and the Ancillary Documents, and the
performance and consummation of the other transactions contemplated
hereby and thereby.
“Union” has the meaning set forth
in Section 3.19(b).
“VWAP” means, for any date, the
price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, NY time) to 4:02 p.m. (New York, NY time)), (b) if
OTCQB or OTCQX is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is
not then listed or quoted for trading on the OTCQB or OTCQX and if
prices for the Common Stock are then reported by the OTC Pink
marketplace published by OTC Markets, Inc. (or a similar
organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so
reported, or (d) in all other cases, the fair market value of
a share of Common Stock as determined by an independent appraiser
selected in good faith by Recruiter and Scouted, the fees and
expenses of which shall be paid by Recruiter.
“Written Consent” has the meaning
set forth in Section 3.02(b).
Article II
PURCHASE AND SALE
Section 2.01 Purchase and Sale of
Assets. Subject to the terms and conditions set forth
herein, at the Closing, Scouted shall sell, assign, transfer,
convey and deliver to Newco, free and clear of any Encumbrances
other than Permitted Encumbrances, all of Scouted’s right,
title and interest in, to and under the following assets
(collectively, the “Purchased
Assets”):
(a) all
cash, cash equivalents, accounts and notes receivable held by
Scouted of or related to the Business, and any security, claim,
remedy or other right directly related to any of the Purchased
Assets (“Accounts
Receivable”);
(b) all
sales and client relationships, including customer lists and
third-party lists regarding such relationships;
(c) all
Contracts set forth on Schedule 2.01(c) (the
“Assigned
Contracts”);
(d) all
Scouted Intellectual Property, which is listed on Schedule 2.01(d);
(e) all
social media accounts;
(f) all
partnership and vendor agreements as needed to maintain the
Business;
(g) all
training and operating manuals;
(h) all
Permits which are held by Scouted and required for the conduct of
the Business as currently conducted or for the ownership and use of
the Purchased Assets, including, without limitation, those listed
on Schedule
3.18(b), but solely to the extent assignable;
(i) all
rights to any Actions of any nature available to or being pursued
by Scouted to the extent related to the Business, the Purchased
Assets or the Assumed Liabilities, whether arising by way of
counterclaim or otherwise, but specifically excluding any Action
against Scouted or its Affiliates;
(j) all
prepaid expenses, credits, advance payments, claims, security,
refunds, rights of recovery, rights of set-off, rights of
recoupment, deposits, charges, sums and fees relating to any of the
Purchased Assets;
(k) all
of Scouted’s rights under warranties, indemnities and all
similar rights against third parties, other than Affiliates, to the
extent related to any Purchased Assets;
(l) all
insurance benefits, including rights and proceeds, arising from or
relating to the Business, the Purchased Assets or the Assumed
Liabilities, but solely to the extent assignable;
(m)
originals, or where not available, copies, of all books and
records, including, but not limited to, books of account, ledgers
and general, financial and accounting records, machinery and
equipment maintenance files, customer lists, customer purchasing
histories, price lists, distribution lists, supplier lists,
production data, quality control records and procedures, customer
complaints and inquiry files, research and development files,
records and data (including all correspondence with any
Governmental Authority), sales material and records (including
pricing history, total sales, terms and conditions of sale, sales
and pricing policies and practices), strategic plans, internal
financial statements, and marketing and promotional surveys
(“Books and
Records”); and
(n)
all goodwill and the going concern value relating to the Purchased
Assets.
Section 2.02 Excluded Assets.
Notwithstanding the foregoing, the Purchased Assets shall not
include any assets of Scouted which are not set forth in Section
2.01, including, without limitation, the following assets
(collectively, the “Excluded
Assets”):
(a) organizational
documents, Tax Returns, rights to Tax refunds, books of account or
other records having to do with the organization of
Scouted;
(b) securities
of Scouted;
(c) the
lease set forth on Schedule 2.02(c);
and
(d) all
Benefit Plans and assets attributable thereto.
Section 2.03 Assumed Liabilities.
Subject to the terms and conditions set forth herein, Recruiter and
Newco shall assume and agree to pay, perform and discharge only the
following Liabilities of Scouted (collectively, the
“Assumed
Liabilities”), and no other Liabilities:
(a) all
Liabilities in respect of the Assigned Contracts, but only to the
extent that such Liabilities thereunder are required to be
performed after the Closing Date, were incurred in the ordinary
course of business and do not relate to any failure to perform,
improper performance, warranty or other breach, default or
violation by Scouted on or prior to the Closing Date;
and
(b) those
Liabilities of Scouted set forth on Schedule 2.03(b).
Section 2.04 Excluded Liabilities.
Notwithstanding the provisions of Section 2.01 or any other
provision in this Agreement to the contrary, Recruiter and Newco
shall not assume and shall not be responsible to pay, perform or
discharge any Liabilities of Scouted or any of its Affiliates of
any kind or nature whatsoever other than the Assumed Liabilities
(the “Excluded
Liabilities”). Scouted shall, and shall cause each of
its Affiliates to, pay and satisfy in due course all Excluded
Liabilities which they are obligated to pay and satisfy. Without
limiting the generality of the foregoing, the Excluded Liabilities
shall include, but not be limited to, the following:
(a) any
Transaction Expenses or other Liabilities of Scouted arising or
incurred in connection with the negotiation, preparation,
investigation and performance of this Agreement, the Ancillary
Documents and the underlying transactions;
(b) any
Liabilities relating to or arising out of the Excluded
Assets;
(c) any
Liabilities in respect of any pending or threatened Action arising
out of, relating to or otherwise in respect of the operation of the
Business or the Purchased Assets to the extent such Action relates
to such operation on or prior to the Closing Date;
(d) all
other liabilities and obligations arising out of or relating to
Scouted’s ownership or operation of the Business and the
Purchased Assets on or after Closing; and
(e)
any other Liabilities not relating to the Purchased
Assets.
Section 2.05 Closing. Subject to the
terms and conditions of this Agreement, the consummation of the
transactions contemplated by this Agreement (the
“Closing”) shall
take place at 1:00 p.m., New York, NY time, no later than three
Business Days after the last of the conditions to Closing set forth
in Article VII have been satisfied or waived (other than conditions
which, by their nature, are to be satisfied on the Closing Date),
by electronic or other exchange of documents, or at such other time
or on such other date as Scouted and Recruiter may mutually agree
upon in writing (the day on which the Closing takes place being the
“Closing
Date”).
Section 2.06 Closing
Deliverables.
(a) At
or prior to the Closing, Scouted shall deliver to Newco the
following:
(i) An
estimated Closing Date balance sheet (the “Estimated Balance Sheet”)
reflecting the assets and liabilities as of that date.
(ii) a
certificate, dated the Closing Date and signed by a duly authorized
officer of Scouted, certifying that each of the conditions set
forth in Section 7.02(a) and Section 7.02(b) have been
satisfied;
(iii) a
certificate, dated the Closing Date and signed by a duly authorized
officer of Scouted, certifying that (A) attached thereto are true
and complete copies of all resolutions and consents set forth in
Section 3.02 authorizing the execution, delivery and performance of
this Agreement and the Ancillary Documents and the consummation of
the transactions contemplated hereby and thereby, and (B) all such
resolutions and consents are in full force and effect and are all
the resolutions and consents adopted in connection with the
transactions contemplated hereby and thereby;
(iv) Intentionally
deleted;
(v) a
certificate of good standing with respect to Scouted from the
Secretary of State of Delaware;
(vi) a
bill of sale, in customary form satisfactory to the parties hereto
(the “Bill of
Sale”), duly executed by Scouted, transferring the
tangible personal property included in the Purchased Assets to
Newco;
(vii) the
opinion of Scouted’s legal counsel, dated as of the Closing
Date, covering the matters listed on Schedule
2.06(a)(vii);
(viii) the
Ancillary Documents; and
(ix) such
other documents or instruments as Recruiter or Newco reasonably
requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.
(b)
At the Closing, Recruiter and Newco, as applicable, shall deliver
to Scouted (and/or to such other Persons as Scouted may direct) the
following:
(i) the
Cash Consideration;
(ii) the
Share Consideration less the Holdback Shares (subject to Section
2.08 hereof);
(iii) evidence
that the Share Consideration has been issued in book entry form
together with the following legend in addition to the securities
law restrictive legend: “The shares represented by this
certificate are subject to the terms and conditions contained in
this Agreement dated by and among the Company and certain other
parties, a copy of which is on file at the offices of the Company
and is available for inspection.”
(iv) a
certificate, dated the Closing Date and signed by a duly authorized
officer of Recruiter and Newco, certifying that each of the
conditions set forth in Section 7.03(a) and Section 7.03(b) have
been satisfied;
(v) a
certificate, dated the Closing Date and signed by the Secretary or
an Assistant Secretary (or equivalent officer) of Recruiter and
Newco, certifying that attached thereto are true and complete
copies of all resolutions adopted by the board of directors of
Recruiter and Newco authorizing the execution, delivery and
performance of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby,
and that all such resolutions and written authorizations are in
full force and effect and are all the resolutions adopted in
connection with the transactions contemplated hereby and
thereby;
(vi) the
opinion of Nason, Yeager, Gerson, Harris & Fumero, P.A.,
Recruiter and Newco’s counsel, dated as of the Closing Date,
covering the matters listed on Schedule
2.06(b)(vi);
(vii) the
Ancillary Documents; and
(viii) such
other documents or instruments as Scouted reasonably requests and
are reasonably necessary to consummate the transactions
contemplated by this Agreement.
Section 2.07 Purchase Price. The
aggregate purchase price for the Purchased Assets shall be the
Purchase Price, plus the assumption of the Assumed Liabilities. The
Parties agree and acknowledge that the cash portion of the Purchase
Price is solely designed to pay all Liabilities of Scouted other
than the Assumed Liabilities. If as of a future date the
Liabilities and the Assumed Liabilities exceed the cash paid at
Closing, Scouted shall promptly pay such Liabilities.
Section 2.08 Holdback
Shares. One the Closing Date, Recruiter shall subtract
and withhold from the Purchase Price the Holdback Shares (as so
reduced, the “Closing Share
Payment”), which Holdback Shares shall be used to fund
the Scout’s indemnity obligations pursuant to Article VIII.
For avoidance of doubt, Recruiter shall cause its stock transfer
agent to not deliver the Holdback Shares until the later of the 11
month period specified in Section 8.01 or final resolution of any
claims referred to in Section 8.01.
Section 2.09 Intentionally
Deleted.
Section 2.10 Tax
Consequences; Plan of Reorganization; Tax Reporting.
The Parties intend that the purchase of the Purchased Assets
contemplated by this Agreement shall qualify as a tax-free
reorganization pursuant to Section 368(a)(1)(C) of the Code and
that the receipt of all Recruiter Common Stock shall qualify as tax
free consideration for the Purchased Assets pursuant to Section
361(a) of the Code. The Parties shall file all Tax Returns required
by Law consistent with such treatment, except as otherwise required
by final determination of a Tax authority. By executing this
Agreement, the parties hereto adopt this Agreement as a “plan
of reorganization” within the meaning of Section 1.368-2(g)
and 1.368-3(a) of the Treasury Regulations. Notwithstanding the
foregoing, Recruiter makes no representations or warranties to
Scouted regarding the Tax treatment of the transaction contemplated
hereby, or any of the Tax consequences to Scouted, the Shareholders
or other security holders of Scouted, under this Agreement or any
of the other transactions or agreements contemplated hereby.
Scouted acknowledges that it is relying solely on Scouted’s
own Tax advisors in connection with this Agreement and the other
transactions and agreements contemplated hereby. Neither Scouted,
Recruiter, Newco, nor any of their Affiliates, has taken, shall
take or agreed to take any action, or shall refrain from taking any
action, that would reasonably be expected to prevent the
transactions contemplated hereby from constituting a reorganization
qualifying under Section 368(a)(1)(C) of the Code.
Section 2.11 Third
Party Consents. To the extent that Scouted’s
rights under any Assigned Contract, or any other Purchased Asset,
may not be assigned to Newco without the consent of another Person
which has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Scouted, at its
expense, shall use its commercially reasonable efforts to obtain
any such required consent(s) as promptly as possible. If any such
consent shall not be obtained or if any attempted assignment would
be ineffective or would impair Newco’s rights under the
Purchased Asset in question so that Newco would not in effect
acquire the benefit of all such rights, Scouted, to the maximum
extent permitted by law and such Purchased Asset, shall act after
the Closing as Newco’s agent in order to obtain for it the
benefits thereunder and shall cooperate, to the maximum extent
permitted by Law and such Purchased Asset, with Newco in any other
reasonable arrangement designed to provide such benefits to
Newco.
Article III
REPRESENTATIONS AND WARRANTIES OF SCOUTED AND SCOUTED
REPRESENTATIVE
Scouted and the
Scouted Representative represent and warrant to Newco and Recruiter
that the statements contained in this Article III are true and
correct as of the date hereof and will be true and correct on the
Closing Date, subject to such exceptions as are disclosed
(referencing the appropriate section and paragraph numbers) in the
Disclosure Schedule attached to this Agreement as Exhibit B and incorporated
herein by this reference and made a part hereof (the
“Scouted Disclosure
Schedule”).
Section 3.01 Organization and Qualification of
Scouted. Scouted is a corporation duly organized,
validly existing and in good standing under the Laws of the State
of Delaware. Scouted is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business
as currently conducted makes such licensing or qualification
necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
Section 3.02 Authority; Shareholder
Approval
(a) Scouted
has full power and authority to enter into and perform its
obligations under this Agreement and the Ancillary Documents to
which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by
Scouted of this Agreement and any Ancillary Document to which it is
a party and the consummation by Scouted of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Scouted and no other proceedings on
the part of Scouted are necessary to authorize the execution,
delivery and performance of this Agreement or to consummate the
other transactions contemplated hereby. This Agreement has been
duly executed and delivered by Scouted, and (assuming due
authorization, execution and delivery by each other party hereto)
this Agreement constitutes a legal, valid and binding obligation of
Scouted enforceable against Scouted in accordance with its terms.
When each Ancillary Document to which Scouted is or will be a party
has been duly executed and delivered by Scouted (assuming due
authorization, execution and delivery by each other party thereto),
such Ancillary Document will constitute a legal and binding
obligation of Scouted enforceable against it in accordance with its
terms.
(b) Scouted,
pursuant to written consents of the Shareholders (the
“Written
Consent”) and, as of the date hereof, not subsequently
rescinded or modified in any way, has, as of the date hereof,
obtained the consent of the Shareholders required under
Scouted’s Charter Documents (“Requisite Scouted Vote”) approving
this Agreement and the transactions contemplated by this Agreement,
in accordance with the Delaware General Corporation Law. Scouted
has delivered to Newco and Recruiter a copy of the Written Consent
approving this Agreement and the transactions contemplated hereby.
Other than the Written Consent, no other consents of the
Shareholders are required in order to authorize and approve this
Agreement and the transactions contemplated hereby, and no
Shareholder has any dissenters’ or appraisal rights with
respect to the transactions contemplated by this
Agreement.
Section 3.03 No
Conflicts; Consents. Except as set forth in
Schedule 3.03, the
execution, delivery and performance by Scouted of this Agreement
and the Ancillary Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby,
do not and will not: (i) conflict with or result in a violation or
breach of, or default under, any provision of the certificate of
incorporation, bylaws or other organizational documents of Scouted
(“Scouted Charter
Documents”); (ii) conflict with or result in a
violation or breach of any provision of any Law or Governmental
Order applicable to Scouted, the Business or the Purchased Assets;
(iii) require the consent, notice or other action by any
Person under, conflict with, result in a violation or breach of,
constitute a default or an event that, with or without notice or
lapse of time or both, would constitute a default under, result in
the acceleration of or create in any party the right to accelerate,
terminate, modify or cancel any Contract to which Scouted is a
party or by which Scouted or the Business is bound or to which any
of the Purchased Assets are subject (including any Assigned
Contract); or (iv) result in the creation or imposition of any
Encumbrance other than Permitted Encumbrances on the Purchased
Assets. Except as set forth in Schedule 3.03, no consent,
approval, Permit, Governmental Order, declaration or filing with,
or notice to, any Governmental Authority is required by or with
respect to Scouted in connection with the execution, delivery and
performance of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and
thereby.
Section 3.04 Financial Statements.
Complete copies of Scouted’s unaudited financial statements
consisting of the balance sheet of Scouted at December 31, 2020 and
the related statements of income and retained earnings,
shareholders’ equity and cash flow for the year (the
“Financial
Statements”) are attached as Exhibit C. The Financial
Statements are based on the books and records of Scouted and, to
the Knowledge of Scouted, fairly present in all material respects
the financial position of Scouted as of the respective dates they
were prepared and the results of the operations of Scouted for the
periods indicated. The balance sheet of Scouted as of December 31,
2019 is referred to herein as the “Balance Sheet” and the date
thereof as the “Balance Sheet
Date”.
Section 3.05 Undisclosed Liabilities.
Scouted has no Liabilities, except (a) those which are adequately
reflected or reserved against in the Balance Sheet as of the
Balance Sheet Date, (b) those which have been incurred in the
ordinary course of business consistent with past practice since the
Balance Sheet Date and which are not, individually or in the
aggregate, material in amount, or (c) those set forth in
Schedule
3.05.
Section 3.06 Absence of Certain Changes, Events and
Conditions. Except as set forth in Schedule 3.06, since the
Balance Sheet Date, and other than in the ordinary course of
business consistent with past practice, there has not been, with
respect to Scouted’s Business, any:
(a) event,
occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect;
(b) amendment
of the Scouted Charter Documents;
(c) material
change in any method of accounting or accounting practice of
Scouted, except as required by GAAP or disclosed in the notes to
the Financial Statements;
(d) material
change in Scouted’s cash management practices and its
policies, practices and procedures with respect to collection of
accounts receivable, establishment of reserves for uncollectible
accounts, accrual of accounts receivable, inventory control,
prepayment of expenses, payment of trade accounts payable, accrual
of other expenses, deferral of revenue and acceptance of customer
deposits;
(e) entry
into any Contract that would constitute a Material Contract except
with Recruiter or Newco;
(f) transfer,
assignment, sale, or other disposition of any of the Purchased
Assets shown or reflected in the Balance Sheet or cancellation of
any debts, entitlements or claims, or amendment, termination or
waiver of any rights constituting Purchased Assets, other than to
Recruiter or an Affiliate thereof;
(g) transfer,
assignment, or grant of any license or sublicense of any material
rights under or with respect to any Scouted Intellectual Property
or Scouted IP Agreements;
(h) material
damage, destruction, or loss of any Purchased Assets (whether or
not covered by insurance);
(i)
capital investment in, or any loan to, any other
Person;
(j) acceleration,
termination, material modification to, or cancellation of any
Material Contract or Permit;
(k) material
capital expenditures which would constitute an Assumed
Liability;
(l) imposition
of any Encumbrance upon any of the Purchased Assets, other than any
Permitted Encumbrance;
(m) (i)
grant of any bonuses, whether monetary or otherwise, or increase in
any wages, salary, severance, pension, or other compensation or
benefits in respect of its current or former employees, officers,
directors, managers, independent contractors, or consultants, other
than (A) as provided for in any written agreements , (B) a
distribution of the Purchase Price to any current or former
employees, officers, directors, managers, independent contractors,
or consultants of Scouted, (C) as required by applicable Law, or
(D) in the ordinary course of business and consistent with past
practice, (ii) change in the terms of employment for any employee
or any termination of any employees for which the aggregate costs
and expenses exceed $10,000 per annum, or (iii) action to
accelerate the vesting or payment of any compensation or benefit
for any current or former employee, officer, manager, independent
contractor, or consultant;
(n) hiring
or promoting any person as or to (as the case may be) an officer or
hiring or promoting any employee below officer except to fill a
vacancy in the ordinary course of business;
(o) adoption,
modification, or termination of any: (i) employment, severance,
retention, or other agreement with any current or former employee,
officer, director, manager, independent contractor, or consultant,
except in the ordinary course of business and consistent with past
practice, or (ii) Benefit Plan collective bargaining or other
agreement with a union, in each case whether written or
oral;
(p) loan
to (or forgiveness of any loan to), or entry into any other
transaction with, any of its Shareholders or current or former
officers, directors and employees (other than the payment of
compensation to employees in the ordinary course of business and
consistent with past practice);
(q) abandonment
or discontinuance of the Business;
(r) adoption
of any plan of merger, consolidation, reorganization, liquidation,
or dissolution, or filing of a petition in bankruptcy under any
provisions of federal bankruptcy Law or state insolvency Law or
consent to the filing of any bankruptcy or insolvency petition
against it under any similar Law;
(s) purchase,
lease or other acquisition of the right to own, use, or lease any
property or assets, except for purchases of inventory or supplies
in the ordinary course of business consistent with past practice;
or
(t)
any Contract to do any of the foregoing, or any action or omission
that would result in any of the foregoing.
Section 3.07 Material
Contracts.
(a) Schedule
3.07(a) lists each of the following Contracts of Scouted
affecting the Business (x) by which any of the Purchased Assets are
bound or affected or (y) to which Scouted is a party or by which it
is bound in connection with the Business or the Purchased Assets
(the “Material
Contracts”):
(i) all
Scouted IP Agreements;
(ii) each
Contract of Scouted involving aggregate consideration in a twelve
(12) month period in excess of $25,000 and which, in each case,
cannot be cancelled by Scouted without penalty or without more than
90 days’ notice;
(iii) all
Contracts that require Scouted to purchase its total requirements
of any product or service from a third party or that contain
“take or pay” provisions;
(iv) all
Contracts that provide for the indemnification by Scouted of any
Person or the assumption of any Tax, environmental, or other
Liability of any Person;
(v) all
Contracts that relate to the acquisition or disposition of any
business, a material amount of stock or other equity or assets of
any other Person or any real property (whether by merger, sale of
stock, sale of assets, or otherwise);
(vi) all
broker, distributor, dealer, agency, sales promotion, market
research, marketing consulting, and advertising Contracts to which
Scouted is a party;
(vii) all
employment Contracts and Contracts with independent contractors or
consultants (or similar arrangements) to which Scouted is a party
and which contain any severance provisions, or are not cancellable
without material penalty or without more than 90 days’
notice;
(viii) except
for Contracts relating to trade receivables and the PPP Loan, all
Contracts relating to Indebtedness (including, without limitation,
guarantees) of Scouted;
(ix) all
Contracts with any Governmental Authority to which Scouted is a
party (“Government
Contracts”);
(x) all
Contracts that limit or purport to limit the ability of Scouted to
compete in any line of business or with any Person or in any
geographic area or during any period of time;
(xi) any
Contracts to which Scouted is a party that provide for any joint
venture, partnership, or similar arrangement by
Scouted;
(xii)
all Contracts for the sale of any of the Purchased Assets or for
the grant to any Person of any option, right of first refusal or
preferential or similar right to purchase any of the Purchased
Assets;
(xiii) all
powers of attorney with respect to the Business or any Purchased
Asset;
(xiv) all
collective bargaining agreements or Contracts with any union to
which Scouted is a party; and
(xv) any
other Contract that is material to the Purchased Assets or the
operation of the Business and not previously disclosed pursuant to
this Section 3.07.
(b) Each
Material Contract is valid and binding on Scouted in accordance
with its terms and is in full force and effect. Except as set forth
in Schedule
3.07(b), none of Scouted or, to Scouted’s Knowledge,
any other party thereto is in breach of or default under (or is
alleged to be in breach of or default under) in any material
respect, or has provided or received any notice of any intention to
terminate, any Material Contract. No event or circumstance has
occurred that, with notice or lapse of time or both, would
constitute an event of default under any Material Contract or
result in a termination thereof or would cause or permit the
acceleration or other changes of any right or obligation or the
loss of any benefit thereunder. Complete and correct copies of each
Material Contract (including all modifications, amendments and
supplements thereto and waivers thereunder) have been made
available to Newco. Except as set forth in Schedule 3.07(b), there are no
material disputes pending or, to Scouted’s Knowledge,
threatened under any Contract included in the Purchased
Assets.
Section 3.08 Title
to Purchased Assets
(a) Scouted
has good and valid title to, or a valid leasehold interest in, all
of the Purchased Assets. All such Purchased Assets (including
leasehold interests) are free and clear of Encumbrances except for
the following (collectively referred to as “Permitted
Encumbrances”):
(i) liens
for Taxes not yet due and payable;
(ii) mechanics,
carriers’, workmen’s, repairmen’s or other like
liens arising or incurred in the ordinary course of business
consistent with past practice or amounts that are not delinquent
and which are not, individually or in the aggregate, material to
the Business or the Purchased Assets;
(iii) easements,
rights of way, zoning ordinances and other similar encumbrances
affecting Real Property which are not, individually or in the
aggregate, material to the Business or the Purchased Assets, which
do not prohibit or interfere with the current operation of any Real
Property and which do not render title to any Real Property
unmarketable; or
(iv) liens
arising under original purchase price conditional sales contracts
and equipment leases with third parties entered into in the
ordinary course of business consistent with past practice which are
not, individually or in the aggregate, material to the
Business.
(b)
Schedule 3.08(b) lists the
street address of each parcel of Real Property used in or necessary
for the conduct of the Business as currently
conducted.
Section 3.09 Condition and Sufficiency of
Assets. The Purchased Assets are sufficient for the
continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing and
constitute all of the rights, property and assets necessary to
conduct the Business as currently conducted.
Section 3.10 Intellectual
Property.
(a) Each
Scouted IP Agreement is valid and binding on Scouted in accordance
with its terms and is in full force and effect. Neither Scouted
nor, to Scouted’s Knowledge, any other party thereto is in
breach of or default under (or, to Scouted’s Knowledge, is
alleged to be in breach of or default under), or, to
Scouted’s Knowledge, has provided or received any notice of
breach or default of or any intention to terminate, any Scouted IP
Agreement.
(b) Except
as set forth in Schedule
3.10(b), Scouted is the sole and exclusive legal and
beneficial, and with respect to Scouted IP Registrations, record,
owner of all right, title and interest in and to Scouted
Intellectual Property, and, to Scouted’s Knowledge, has the
valid right to use all other Intellectual Property used in or
necessary for the conduct of the Business as currently conducted,
in each case, free and clear of Encumbrances other than Permitted
Encumbrances.
(c) The
consummation of the transactions contemplated hereunder will not
result in the loss or impairment of or payment of any additional
amounts with respect to, nor require the consent of any other
Person in respect of, Scouted’s right to own, use or hold for
use any Intellectual Property as owned, used or held for use in the
conduct of the Business as currently conducted.
(d) To
Scouted’s Knowledge, Scouted’s rights in Scouted
Intellectual Property are valid, subsisting and
enforceable.
(e) To
Scouted’s Knowledge, the conduct of the Business as currently
and formerly conducted, and the products, processes and services of
Scouted, have not infringed, misappropriated, diluted or otherwise
violated the Intellectual Property or other rights of any Person.
To Scouted’s Knowledge, no Person has infringed,
misappropriated, diluted or otherwise violated, or is currently
infringing, misappropriating, diluting or otherwise violating, any
Scouted Intellectual Property.
(f) There
are no Actions (including any oppositions, interferences or
re-examinations) settled, pending or, to Scouted’s Knowledge,
threatened (including in the form of offers to obtain a license):
(i) alleging any infringement, misappropriation, dilution or
violation of the Intellectual Property of any Person by Scouted in
connection with the Business; (ii) challenging the validity,
enforceability, registrability or ownership of any Scouted
Intellectual Property or Scouted’s rights with respect to any
Scouted Intellectual Property; or (iii) by Scouted or any other
Person alleging any infringement, misappropriation, dilution or
violation by any Person of Scouted Intellectual Property. Scouted
is not subject to any outstanding or prospective Governmental Order
(including any motion or petition therefor) that does or would
restrict or impair the use of any Scouted Intellectual
Property.
Section 3.11 Conformance with Specifications;
Defects; Malicious Code.
(A) All
Scouted Products conform in all material respects to all applicable
warranties in all Contracts with customers.
(B) To
the Knowledge of Scouted, none of the Scouted Products contain any
bug, defect or error that materially adversely affects the
functionality or performance of such Scouted Product against its
applicable specifications.
(C) To
the Knowledge of Scouted, none of the Scouted Products, and no
other Software used in the provision of any Scouted Product or
otherwise in the operation of its business, contains any
“time bomb,” “Trojan horse,” “back
door,” “worm,” virus, malware, spyware, or other
device or code (“Malicious
Code”) designed or intended to, or that could
reasonably be expected to, (i) disrupt, disable, harm or otherwise
impair the normal and authorized operation of, or provide
unauthorized access to, any computer system, hardware, firmware,
network or device on which any Scouted Product or such other
Software is installed, stored or used, or (ii) damage, destroy or
prevent the access to or use of any data or file without the
user’s consent. Scouted has taken reasonable steps designed
to prevent the introduction of Malicious Code into Scouted
Products.
Section 3.12 IT
Systems.
(A) To
the Knowledge of Scouted, Scouted’s information technology
systems are reasonably sufficient for the needs of Scouted’s
business as currently conducted, including as to capacity,
scalability, and ability to process current and anticipated peak
volumes in a timely manner. Scouted’s information technology
are in sufficiently good working condition to perform all
information technology operations and include sufficient licensed
capacity (whether in terms of authorized sites, units, users, seats
or otherwise) for all Software, in each case as necessary for the
conduct of Scouted’s business as currently
conducted.
(B) To
the Knowledge of Scouted, in the last three years, there has been
no material unauthorized access, use, intrusion or breach of
security, or material failure, breakdown, performance reduction or
other adverse event affecting any Scouted systems, that has
resulted in or could reasonably be expected to result in any: (i)
substantial disruption of or interruption in or to the use of such
Scouted systems or the conduct of Scouted’s business; (ii)
material loss, destruction, damage or harm of or to Scouted or its
operations, personnel, property or other assets; or (iii) material
liability of any kind to Scouted. Scouted has taken reasonable
actions, consistent with applicable industry best practices in
Scouted’s industry, to protect the integrity and security of
Scouted systems and the data and other information stored
thereon.
(C) Scouted
maintains commercially reasonable back-up and data recovery, and
procedures and has acted in material compliance
therewith.
Section 3.13 Privacy Policies To the
Knowledge of Scouted, Scouted has complied with all Scouted privacy
policies and with all applicable Laws and Contracts to which it is
a party relating to: (i) the privacy of customers or users of the
Scouted Products, any website, product or service operated by or on
behalf of Scouted; and (ii) the collection, storage, hosting,
disclosure, transmission, transfer, disposal, other processing or
security of any Customer Data or Personal Information by Scouted or
by third parties having authorized access to the records of
Scouted, with respect to each of (i) and (ii) in all material
respects. To the Knowledge of Scouted, no claims have been asserted
or, are threatened against Scouted alleging a violation of any
Person’s privacy, confidentiality or other rights under any
Scouted Privacy Policy, under any Contract, or under any Law
relating to any Customer Data or Personal Information. With respect
to any Customer Data and Personal Information, Scouted has taken
commercially reasonable measures (including implementing and
monitoring compliance with respect to technical and physical
security) designed to safeguard such data against loss and against
unauthorized access, use, modification, disclosure or other misuse.
To the Knowledge of Scouted, there has been no unauthorized access
to or other misuse of any Customer Data and Personal Information.
Scouted has not received any complaint from any Person (including
any action letter or other inquiry from any Governmental Authority)
regarding Scouted’s collection, storage, hosting, disclosure,
transmission, transfer, disposal, other processing or security of
Customer Data or Personal Information. To the Knowledge of Scouted,
there have been no facts or circumstances that would require
Scouted to give notice to any customers, suppliers, consumers or
other similarly situated Persons of any actual or perceived data
security breaches pursuant to an applicable Law requiring notice of
such a breach.
Section 3.14 Accounts Receivable. The
Accounts Receivable reflected on the Balance Sheet and the Accounts
Receivable arising after the date thereof (a) have arisen from bona
fide transactions entered into by Scouted involving the sale of
goods or the rendering of services in the ordinary course of
business consistent with past practice; (b) constitute only valid,
undisputed claims of Scouted not subject to claims of set-off or
other defenses or counterclaims other than normal discounts entered
into in the ordinary course of business consistent with past
practice; and (c) are collectible in the ordinary course of
business. The reserve for bad debts shown on the Balance Sheet or,
with respect to accounts receivable arising after the Balance Sheet
Date, on the accounting records of Scouted have been determined in
accordance with past practices, consistently applied, subject to
normal year-end adjustments and the absence of disclosures normally
made in footnotes.
Section 3.15 Data
Protection.
(a) Except
as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect,
Scouted has adopted, and is, and during the 24 month period prior
to the date hereof has been, in compliance with, commercially
reasonable policies and procedures that apply to the Business with
respect to privacy, data protection, security, and the collection
and use of Personal Information gathered or accessed in the course
of the operations of the Business.
(b)
Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, during
the 24 month period prior to the date hereof, (i) to
Scouted’s Knowledge, there has been no loss, damage, or
unauthorized access, use, modification, or other misuse of any
Personal Information maintained, collected, stored or processed by
or on behalf of Scouted, and (ii) no Person has made any claim or
commenced any action with respect to loss, damage, or unauthorized
access, use, modification, or other misuse of any such Personal
Information or otherwise relating to the collection or use of any
such Personal Information.
(c) Except
as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect,
Scouted and its Privacy Policies, are, and during the 24 month
period prior to the date hereof have been, in compliance with all
Data Protection Programs and all contractual commitments that
Scouted has entered into with respect to Personal Information.
Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (i)
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not violate
any Privacy Policy as it currently exists or as it existed at any
time during which any Personal Information was collected or
obtained by Scouted and (ii) upon the Closing, Newco will own
and continue to have the right to use all such Personal Information
on identical terms and conditions as Scouted enjoyed immediately
prior to the Closing.
Section 3.16 Insurance. Schedule 3.16 sets forth a
true and complete list of all current policies or binders of fire,
liability, product liability, umbrella liability, real and personal
property, workers’ compensation, vehicular, directors’
and officers’ liability, fiduciary liability, data privacy
and cybersecurity, and other casualty and property insurance
maintained by Scouted and relating to the Business (including
without limitation as they relate to its employees, officers,
managers and directors of Scouted), the Purchased Assets and the
Assumed Liabilities (collectively, the “Insurance Policies”) and true and
complete copies of such Insurance Policies have been made available
to Newco. Such Insurance Policies are in full force and effect and
shall be maintained in full force and effect by Scouted through the
Closing Date. Scouted has not received any written notice of
cancellation of, premium increase with respect to, or alteration of
coverage under, any of such Insurance Policies. All premiums due on
such Insurance Policies have either been paid or, if due and
payable prior to Closing, will be paid prior to Closing in
accordance with the payment terms of each Insurance Policy. The
Insurance Policies do not provide for any retrospective premium
adjustment or other experience-based liability on the part of
Scouted. All such Insurance Policies (a) are valid and binding in
accordance with their terms; (b) are provided by carriers who are
financially solvent; and (c) have not been subject to any lapse in
coverage. Except as set forth in Schedule 3.16, there are no
claims related to the Business, Purchased Assets or Assumed
Liabilities pending under any such Insurance Policies as to which
coverage has been questioned, denied or disputed or in respect of
which there is an outstanding reservation of rights. Scouted is not
in default under, and has not otherwise failed to comply with, any
provision contained in any such Insurance Policy. The Insurance
Policies are of the type and in the amounts customarily carried by
Persons conducting a business similar to the Business and are
sufficient for compliance with all applicable Laws and Contracts to
which Scouted is a party or by which it is bound.
Section 3.17 Legal
Proceedings; Governmental Orders.
(a) Except
as set forth in Schedule
3.17, there are no Actions pending or, threatened (i)
against or by Scouted relating to or affecting the Business, the
Purchased Assets or the Assumed Liabilities; or (ii) against
or by Scouted that challenge or seek to prevent, enjoin or
otherwise delay the transactions contemplated by this Agreement. No
event has occurred or circumstances exist that may give rise to, or
serve as a basis for, any such Action.
(b) There
are no outstanding Governmental Orders and no unsatisfied
judgments, penalties or awards relating to or affecting the
Business or the Purchased Assets.
Section 3.18 Compliance With Laws;
Permits.
(a) To
Scouted’s Knowledge, Scouted has complied in all material
respects, and is now complying in all material respects, with all
Laws applicable to it, the Business as currently conducted or the
ownership and use of the Purchased Assets.
(b) All
Permits required for Scouted to conduct the Business as currently
conducted or for the ownership and use of the Purchased Assets have
been obtained by it and are valid and in full force and effect. All
fees and charges with respect to such Permits as of the date hereof
have been paid in full. Schedule 3.18(b) lists all
current Permits issued to Scouted which are related to the conduct
of the Business as currently conducted or the ownership and use of
the Purchased Assets, including the names of the Permits and their
respective dates of issuance and expiration. No event has occurred
that, with or without notice or lapse of time or both, would
reasonably be expected to result in the revocation, suspension,
lapse or limitation of any Permit set forth in Schedule 3.18(b).
(c) Since
January 1, 2018, none of Scouted or any of its directors, or
officers, or to the Knowledge of Scouted, any of its other
Representatives or any Person performing services for Scouted, has,
in connection with or acting on behalf of Scouted, directly or
indirectly, (i) used corporate funds for any unlawful contribution,
gift, entertainment, or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful
payment to any official, officer, employee, or representative of
any Governmental Authority; or (iii) made any bribe, payoff,
rebate, influence payment, kickback, or other unlawful payment.
Scouted is, to the extent applicable, in compliance with any
applicable Law, whether foreign or domestic, governing corrupt
practices, money laundering, anti-bribery, or anticorruption,
including the Foreign Corrupt Practices Act of 1977 (the
“FCPA”). Since
January 1, 2018, Scouted has not, in connection with or relating to
the Business, Purchased Assets or Assumed Liabilities received any
written notice alleging any such violation or made any voluntary or
involuntary disclosure to a Governmental Authority, or conducted
any internal investigation concerning any actual or alleged
violation of the FCPA.
(d)
Scouted is in compliance in all material respects with all Laws
relating to imports, exports, and economic sanctions, including all
Laws administered and enforced by the U.S. Treasury
Department’s Office of Foreign Assets Control
(“OFAC”). Since
January 1, 2017, Scouted has not been a party to any Contract, nor
has Scouted been engaged in, any transaction or other business,
directly or indirectly, with any Governmental Authority or other
Person that appears on any list of OFAC-sanctioned parties
(including any Person that appears on OFAC’s Specially
Designated Nationals and Blocked Persons List), is owned or
controlled by such a Person, or is located or organized in any
country or territory that is subject to comprehensive OFAC
sanctions (an “OFAC
Prohibited Party”). Neither Scouted nor any of the
directors, or officers of Scouted is an OFAC Prohibited Party or is
a target of material sanctions in any other jurisdiction in which
Scouted has business operations or arrangements. To the Knowledge
of Scouted, no proceeds from the sale of Scouted Common Stock or
other securities was provided to or used for the benefit of any
OFAC Prohibited Party. For the purposes of the definition of
“OFAC Prohibited Party,” the term
“control,” when used with respect to any specified
Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and
“controlled” have correlative meanings.
The representations
and warranties made in this Section 3.18 do not apply to matters
covered by, Section 3.19 (Employment Matters), and Section 3.20
(Taxes).
Section 3.19 Employment
Matters.
(a) With
respect to the Business, Schedule 3.19(a) sets
forth a list of all persons who are employees (“Employees”), independent
contractors, or consultants, of Scouted (each, together with the
Employees, collectively, “Personnel”) as of the date hereof,
including any Personnel who are on a leave of absence of any
nature, paid or unpaid, authorized or unauthorized, and sets forth
for each such individual the following: (i) name; (ii) title or
position (including whether full or part time); (iii) hire date;
(iv) current annual base compensation rate; (v) commission,
bonus, or other incentive-based compensation; and (vi) a
description of the fringe benefits provided to each such individual
as of the date hereof, including without limitation paid time off
and severance benefits. Except as set forth in Schedule 3.19(a), as of the
date hereof and the Closing Date, all compensation, including
wages, commissions, and bonuses, payable to all Personnel of
Scouted for services performed on or prior to the date hereof has
been paid in full (or accrued in full on Scouted’s financial
statements) and there are no outstanding agreements,
understandings, or commitments of Scouted with respect to any
compensation, commissions or bonuses.
(b) Scouted
is not, and has not been for the past three years, a party to,
bound by, or negotiating any collective bargaining agreement or
other Contract with a union, works council or labor organization
(collectively, “Union”), and there is not, and has
not been for the past three years, any Union representing or
purporting to represent any employee of Scouted, and no Union or
group of employees is seeking or has sought to organize employees
for the purpose of collective bargaining. To Scouted’s
Knowledge, there has never been, nor has there been any threat of,
any strike, slowdown, work stoppage, lockout, concerted refusal to
work overtime or other similar labor disruption or dispute
affecting Scouted or any of its employees. Scouted has no duty to
bargain with any Union.
(c)
To Scouted’s Knowledge, (i) Scouted is and has been in
compliance in all material respects with all applicable Laws
pertaining to employment and employment practices to the extent
they relate to employees or any other Personnel of the Business,
including all Laws relating to labor relations, equal employment
opportunities, fair employment practices, employment
discrimination, harassment including sexual harassment,
retaliation, reasonable accommodation, disability rights or
benefits, immigration, wages, hours, overtime compensation, child
labor, hiring, promotion and termination of employees, working
conditions, meal and break periods, privacy, health and safety,
workers’ compensation, leaves of absence and unemployment
insurance; (ii) all individuals characterized and treated by
Scouted as independent contractors or consultants are properly
treated as independent contractors under all applicable Laws; and
(iii) all employees of Scouted classified as exempt under the Fair
Labor Standards Act and state and local wage and hour laws are
properly classified in all material respects. There are no Actions
against Scouted pending or threatened to be brought or filed, by or
with any Governmental Authority or arbitrator in connection with
the employment of any current or former applicant, employee,
consultant, volunteer, intern, or independent contractor of
Scouted, including, without limitation, any claim relating to
unfair labor practices, employment discrimination, harassment,
retaliation, equal pay, wage and hours or any other
employment-related matter arising under applicable
Laws.
(d) Scouted
has never been a party to any Government Contract.
Section 3.20 Taxes.
(a) All
Tax Returns required by Law to be filed on or before the Closing
Date by Scouted have been, or will be, timely filed (taking into
account all applicable extensions). All Taxes required by Law to be
paid by Scouted (whether or not shown on any Tax Return) have been,
or will be, timely paid.
(b) Scouted
has withheld and paid each Tax required by Law to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, customer, shareholder
or other party, and complied with all information reporting and
backup withholding provisions of applicable Law.
(c) No
written claim has been made by any taxing authority in any
jurisdiction where Scouted does not file Tax Returns alleging that
Scouted is, or may be, subject to Tax by that jurisdiction and, to
Scouted’s Knowledge, no such claim has been
threatened.
(d) No
extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of Scouted, which such
extension or waiver remains in effect.
(e) Schedule
3.20(e) sets forth:
(i) those
years for which examinations of Scouted by the taxing authorities
have been completed; and
(ii) those
taxable years for which examinations of Scouted by taxing
authorities are presently being conducted.
(f) All
deficiencies asserted, or assessments made, against Scouted as a
result of any examinations by any taxing authority have been fully
paid or otherwise resolved.
(g)
Scouted is not a party to any Action by any taxing authority. There
are no pending or, to the Knowledge of Scouted, threatened Actions
by any taxing authority.
(h) Scouted
has delivered to Newco copies of all federal, state, local and
foreign income, franchise and similar Tax Returns, examination
reports, and statements of deficiencies assessed against, or agreed
to by, Scouted for all Tax periods ending on or after December 31,
2015.
(i) There
are no Encumbrances for Taxes (other than for current Taxes not yet
due and payable) upon the Purchased Assets.
(j) Scouted
is not a party to, or bound by, any Tax indemnity, Tax sharing or
Tax allocation agreement, other than commercial Contracts the
principal purposes of which are unrelated to Taxes and which are
set forth on Schedule
3.20(j).
(k) No
private letter rulings, technical advice memoranda or similar
agreement or rulings have been requested, entered into or issued by
any taxing authority, in each case, with respect to
Scouted.
(l) Scouted
has no Liability for Taxes of any Person (other than Scouted), as
transferee or successor, by contract (other than commercial
Contracts the principal purposes of which are unrelated to Taxes)
or otherwise;
(m) Scouted
is not a “foreign person” as that term is used in
Treasury Regulations Section 1.1445-2.
(n) Intentionally
deleted.
(o) None
of the Purchased Assets is (i) required to be treated as being
owned by another Person pursuant to the so-called “safe
harbor lease” provisions of former Section 168(f)(8) of
the Code, (ii) subject to Section 168(g)(1)(A) of the Code,
(iii) subject to a disqualified leaseback or long-term agreement as
defined in Section 467 of the Code, or (iv) tax-exempt use
property within the meaning of Section 168(h) of the
Code.
(p) Schedule
3.20(p) sets forth all jurisdictions outside the United
States in which Scouted is subject to Tax, is engaged in business
or has a permanent establishment.
Section 3.21 Related Party
Transactions. Except as set forth in Schedule 3.21 and except with
respect to the Scouted Charter Documents, no executive officer, or
director of Scouted or any Person owning five percent or more of
Scouted common stock (or any of such Person’s immediate
family members or Affiliates or associates), is a party to any
Contract with or binding upon Scouted or any of its assets, rights
or properties or has any interest in any property owned by Scouted
or has engaged in any transaction with any of the foregoing within
the last 18 months.
Section 3.22 Brokers. No Person,
broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any Ancillary
Document based upon arrangements made by or on behalf of
Scouted.
Section 3.23 Investment
Representations. With respect to Scouted receiving
Recruiter Common Stock hereunder:
(a) Scouted
understands that the shares of Recruiter Common Stock it is
acquiring hereunder are “restricted securities” and
have not been registered under the Securities Act of 1933, as
amended (the “Securities
Act”) or any applicable state securities Law and is
acquiring such shares as principal for its own account and not with
a view to or for distributing or reselling such shares or any part
thereof in violation of the Securities Act or any applicable state
securities Law, has no present intention of distributing any of
such shares in violation of the Securities Act or any applicable
state securities Law and has no direct or indirect arrangement or
understandings with any other Persons to distribute or regarding
the distribution of such shares in violation of the Securities Act
or any applicable state securities Law. Each stock certificate
representing the shares of Recruiter Common Stock received pursuant
to this Agreement shall bear a restrictive legend evidencing the
transfer restrictions set forth herein.
(b) As
of the date Scouted acquires Recruiter Common Stock, Scouted will
be: (i) an “accredited investor” as defined in Rule
501(a) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the
Securities Act.
(c) Scouted,
either alone or together with its Representatives, has such
knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of
the investment in the Recruiter Common Stock, and has so evaluated
the merits and risks of such investment. Scouted is able to bear
the economic risk of an investment in the Recruiter Common Stock
and, at the present time, is able to afford a complete loss of such
investment.
(d) Scouted
is not acquiring the shares of Recruiter issuable to Scouted
hereunder as a result of any advertisement, article, notice, or
other communication regarding the stock published in any newspaper,
magazine, or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.
(e) Scouted
has been given the opportunity to ask questions of, and receive
answers from, Recruiter concerning the terms and conditions herein
and to obtain such additional information necessary to verify the
accuracy of same as Scouted reasonably desires in order to evaluate
the acquisition of the Recruiter Common Stock. Scouted acknowledges
it does not desire to receive any further information from
Recruiter in order to make its acquisition of the Recruiter Common
Stock. Scouted has received no representations or warranties from
Recruiter, its employees, agents, or attorneys in making this
investment decision other than as set forth in this
Agreement.
Section 3.24 Cash
and Accounts Receivable. As of the date of this
Agreement, Scouted has $0.00 in cash and the accounts receivable
set forth on Schedule
3.24.
Article IV
REPRESENTATIONS AND WARRANTIES OF RECRUITER AND NEWCO
Recruiter and Newco
represent and warrant to Scouted that the statements contained in
this Article IV are true and correct as of the date hereof and will
be true and correct as of the Closing Date, subject to such
exceptions as are disclosed (referencing the appropriate section
and paragraph numbers) in the Disclosure Schedule attached to this
Agreement as Exhibit
D and incorporated herein by this reference and made a part
hereof (the “Recruiter
Disclosure Schedule”).
Section 4.01 Organization and Qualification of
Recruiter and Newco. Each of Recruiter and Newco is a
corporation, as applicable, duly organized, validly existing and in
good standing under the Laws of the State of Nevada and New York,
respectively, and each has full power and authority to own, operate
or lease the properties and assets now owned, operated or leased by
it and to carry on its business as it has been and is currently
conducted. Schedule
4.01 sets forth each jurisdiction in which Recruiter or
Newco is licensed or qualified to do business, and Recruiter and
Newco are duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or
leased by it or the operation of its business as currently
conducted makes such licensing or qualification necessary, except
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect.
Section 4.02 Authority
(a) Each
of Recruiter and Newco has full power and authority to enter into
and perform its obligations under this Agreement and the Ancillary
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance by each of Recruiter and Newco of this Agreement and
any Ancillary Document to which they are a party and the
consummation by each of Recruiter and Newco of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Recruiter and Newco and no other
proceedings on the part of Recruiter and Newco are necessary to
authorize the execution, delivery and performance of this Agreement
or to consummate the other transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Recruiter
and Newco, and (assuming due authorization, execution and delivery
by each other party hereto) this Agreement constitutes a legal,
valid and binding obligation of each of Recruiter and Newco
enforceable against Recruiter and Newco in accordance with its
terms. When each Ancillary Document to which Recruiter or Newco is
or will be a party has been duly executed and delivered by
Recruiter or Newco (assuming due authorization, execution and
delivery by each other party thereto), such Ancillary Document will
constitute a legal and binding obligation of Recruiter and Newco
enforceable against it in accordance with its terms.
(b) Each
of Recruiter and Newco, pursuant to a meeting or written consent in
lieu of a meeting of the board of directors and, as of the date
hereof, not subsequently rescinded or modified in any way, has, as
of the date hereof, obtained the affirmative vote or consent of the
board of directors approving this Agreement and the transactions
contemplated by this Agreement. Each of Recruiter and Newco has
delivered to Scouted a copy of the consent approving this Agreement
and the transactions contemplated hereby. Other than the consent of
the board of directors, no other consents are required in order to
authorize and approve this Agreement and the transactions
contemplated hereby, and no shareholder of Recruiter or Newco has
any dissenters’ or appraisal rights with respect to the
transactions contemplated by this Agreement.
Section 4.03 No
Conflicts; Consents. The execution, delivery and
performance by Recruiter and Newco of this Agreement and the
Ancillary Documents to which they are a party, and the consummation
of the transactions contemplated hereby and thereby, do not and
will not: (a) conflict with or result in a violation or breach
of, or default under, any provision of the certificate of
incorporation, bylaws or other organizational documents of
Recruiter or Newco, as applicable; (b) conflict with or result in a
violation or breach of any provision of any Law or Governmental
Order applicable to Recruiter or Newco; or (c) require the consent,
notice or other action by any Person under any Contract to which
Recruiter or Newco is a party. Except as set forth in Schedule 4.03, no consent,
approval, Permit, Governmental Order, declaration or filing with,
or notice to, any Governmental Authority is required by or with
respect to Recruiter or Newco in connection with the execution,
delivery and performance of this Agreement and the Ancillary
Documents and the consummation of the transactions contemplated
hereby and thereby, except for the filing of Form D with the SEC
and compliance with all applicable state securities
Laws.
Section 4.04 No
Prior Newco Operations. Newco was formed solely for
the purpose of purchasing the Purchased Assets hereunder and has
not engaged in any business activities or conducted any operations
other than in connection with the transactions contemplated
hereby.
Section 4.05 Brokers. Except as set
forth in Schedule 4.05, no Person,
broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any Ancillary
Document based upon arrangements made by or on behalf of Recruiter
or Newco.
Section 4.06 Legal
Proceedings; Governmental Orders.
(a) Except
as set forth in Schedule
4.06, there are no Actions pending or, threatened (a)
against or by Recruiter or Newco affecting any of their properties
or assets; or (b) against or by Recruiter or Newco that challenges
or seeks to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement. No event has occurred or
circumstances exist that may give rise to, or serve as a basis for,
any such Action.
(b) There
are no material outstanding Governmental Orders and no material
unsatisfied judgments, penalties, or awards against Recruiter or
Newco or any of their properties or assets.
Section 4.07 SEC
Reports. During the last two years, Recruiter has
timely filed all periodic reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to
the reporting requirements of the Exchange Act and the rules and
regulations promulgated thereunder (the “SEC Reports”). Each of the SEC
Reports, as of the respective dates thereof (or, if amended or
superseded by a filing or submission, as the case may be, prior to
the Closing Date, then on the date of such filing or submission, as
the case may be) (a) did not contain any untrue statement of a
material fact nor omit to state a material fact necessary in order
to make the statements made therein, in light of the circumstances
under which they were made, not misleading and (b) complied in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable
to such SEC Report.
Section 4.08 Sarbanes-Oxley.
Recruiter is in material compliance with all requirements of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the
Closing Date.
Section 4.09 Financial Statements. To
the Knowledge of Recruiter, the consolidated financial statements
of Recruiter included in the SEC Reports (a) complied in all
material respects with the applicable accounting rules and
regulations of the SEC with respect thereto as were in effect at
the time of filing and (b) have been prepared in accordance with
GAAP throughout the periods involved and, except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, present fairly, in all
material respects, the consolidated financial position of Recruiter
as of the dates indicated therein, and the consolidated results of
its operations and cash flows for the periods therein specified in
accordance with GAAP and Regulation S-X of the SEC, subject, in the
case of unaudited financial statements, to normal, immaterial
year-end audit adjustments. Recruiter has no Liabilities except (i)
those which are adequately reflected or reserved against in
Recruiter’s most recent balance sheet included in the SEC
Reports (the “Recruiter
Balance Sheet”), (ii) those which have been incurred
in the ordinary course of business consistent with past practice
since the date of the Recruiter Balance Sheet and which are not,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect on Recruiter, or (iii) those
disclosed in SEC Reports.
Section 4.10 Capitalization. The
authorized capital stock of Recruiter consists, immediately prior
to the Closing (unless otherwise noted), of the following:
250,000,000 shares of Recruiter Common Stock, of which 5,602,484
shares of Recruiter Common Stock are issued and outstanding, and
10,000,000 shares of preferred stock par value $0.0001 per share
(the “Preferred
Stock”), of which 1,311,152 shares of Preferred Stock
are issued and outstanding. Recruiter has 3,270,000 shares of
Recruiter Common Stock for issuance to officers, directors,
employees and consultants of Recruiter pursuant to its 2017 Equity
Incentive Plan duly adopted by the board of directors and approved
by the Recruiter stockholders (the “Stock Plan”). Of such shares of
Recruiter Common Stock under the Stock Plan, 2,062,665 shares have
been issued or underlie outstanding stock options granted under the
Stock Plan, and 1,207,335 shares of Recruiter Common Stock remain
available for issuance to officers, directors, employees and
consultants pursuant to the Stock Plan. Except as set forth on
Schedule 4.10,
there are no Contracts or other obligations relating to the issued
or unissued capital stock of Recruiter, or obligating Recruiter to
issue, grant or sell any shares of capital stock of, or other
equity interests in, or securities convertible into equity
interests in, Recruiter, or that materially affect the rights of
the holder of Recruiter Common Stock. Each outstanding share of
capital stock of Recruiter is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Recruiter
is free and clear of all Encumbrances of any nature whatsoever,
other than restrictions under the Securities Act and applicable
state securities Laws. None of the outstanding equity securities or
other securities of Recruiter was issued in violation of the
Securities Act, except for any sales or issuances the claim for
which has been barred by Section 13 of the Securities
Act.
Section 4.11 Absence of Certain Changes and
Events. Except as disclosed in the SEC Reports or on
Schedule 4.11,
since the filing of its Annual Report on Form 10-K for the fiscal
year ended December 31, 2019, Recruiter has conducted its business
only in the ordinary course of business and there has not been any
Material Adverse Effect on Recruiter, and no event has occurred or
circumstance exists that may result in a Material Adverse Effect on
Recruiter, nor has there been:
(a)
(i) any declaration, accrual, set aside or payment of any dividend
or any other distribution in respect of any shares of capital stock
of Recruiter, or (ii) any repurchase, redemption or other
acquisition by Recruiter of any shares of capital stock or other
securities;
(b) any
sale, issuance or grant, or authorization of the issuance of, (i)
any capital stock or other security of Recruiter, (ii) any option,
warrant or right to acquire any capital stock or any other security
of Recruiter, or (iii) any instrument convertible into or
exchangeable for any capital stock or other security of
Recruiter;
(c) any
amendment, to the certificate of incorporation or bylaws of
Recruiter, or any merger, consolidation, share exchange, business
combination, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction involving
Recruiter;
(d) any
change of the methods of accounting or accounting practices of
Recruiter in any material respect; and
(e) any
agreement or commitment to take any of the actions referred to in
clauses (a) through (d) above; provided, that Recruiter
through the Closing Date has outstanding warrants, options,
debentures and preferred stock that may require Recruiter to issue
shares of Common Stock.
Section 4.12 Compliance With Laws;
Permits.
(a) Recruiter
and Newco have complied, and are now complying, in all material
respects with all Laws applicable to each or their business,
properties, or assets.
(b) Except
as disclosed on Schedule
4.12(b), all Permits required for Recruiter and Newco to
conduct their business have been obtained by them and are valid and
in full force and effect. All fees and charges with respect to such
Permits as of the date hereof have been paid in full. No event has
occurred that, with or without notice or lapse of time or both,
would reasonably be expected to result in the revocation,
suspension, lapse, or limitation of any Permit except as set forth
in Schedule 4.12(b).
(c) Since
January 1, 2018, none of Recruiter or any of its directors or
officers, or to the Knowledge of Recruiter, any of its other
Representatives or any Person performing services for Recruiter,
has, in connection with or acting on behalf of Recruiter, directly
or indirectly, (i) used corporate funds for any unlawful
contribution, gift, entertainment, or other unlawful expense
relating to political activity; (ii) made any direct or indirect
unlawful payment to any official, officer, employee, or
representative of any Governmental Authority; or (iii) made any
bribe, payoff, rebate, influence payment, kickback, or other
unlawful payment. Recruiter is, to the extent applicable, in
material compliance with any applicable Law, whether foreign or
domestic, governing corrupt practices, money laundering,
anti-bribery, or anticorruption, including the FCPA. Since January
1, 2018, Recruiter has not, in connection with or relating to the
business of Recruiter, received any written notice alleging any
such violation or made any voluntary or involuntary disclosure to a
Governmental Authority, or conducted any internal investigation
concerning any actual or alleged violation of the
FCPA.
(d)
Recruiter is in compliance in all material respects with all Laws
relating to imports, exports, and economic sanctions, including all
Laws administered and enforced by OFAC. Since April 1, 2016,
Recruiter has not been a party to any Contract, nor has Recruiter
been engaged in, any transaction or other business, directly or
indirectly, with any OFAC Prohibited Party. Neither Recruiter nor
any of the directors, or officers of Recruiter is an OFAC
Prohibited Party or is a target of material sanctions in any other
jurisdiction in which Recruiter has business operations or
arrangements.
Section 4.13 Recruiter Common Stock.
The shares of Recruiter Common Stock issuable have been duly
authorized, and upon consummation of the transactions contemplated
hereby, will be validly issued, fully paid and non-assessable,
subject to compliance with applicable securities Laws and certain
provisions of this Agreement.
Article V
COVENANTS
Section 5.01 Conduct of Business Prior to the
Closing. From the date hereof until the Closing,
except as otherwise provided in this Agreement, required by
applicable Law, or consented to in writing by Recruiter or Newco
(which consent shall not be unreasonably conditioned, withheld or
delayed), Scouted shall (x) conduct the Business in the
ordinary course of business consistent with past practice; and
(y) use commercially reasonable efforts to maintain and
preserve intact its current Business organization, operations and
franchise and to preserve the rights, franchises, goodwill and
relationships of its employees, lenders, suppliers, regulators and
others having relationships with the Business. Without limiting the
foregoing, from the date hereof until the Closing Date, Scouted
shall:
(a) preserve
and maintain all Permits required for the conduct of the Business
as currently conducted or the ownership and use of the Purchased
Assets;
(b) pay
the debts, Taxes and other obligations of the Business when
due;
(c) continue
to collect Accounts Receivable included in the Current Assets in a
manner consistent with past practice;
(d) maintain
the properties and assets included in the Purchased Assets in the
same condition as they were on the date of this Agreement, subject
to reasonable wear and tear;
(e) continue
in full force and effect without material modification all
Insurance Policies, except as required by applicable
Law;
(f) defend
and protect the properties and assets included in the Purchased
Assets from infringement or usurpation;
(g) perform
all of its obligations under all Assigned Contracts;
(h) maintain
the Books and Records in accordance with past
practice;
(i) comply
in all material respects with all Laws applicable to the conduct of
the Business or the ownership and use of the Purchased Assets;
and
(j)
not take or permit any action which, if taken or permitted prior to
the date hereof, would have been required to be listed on
Schedule
3.06.
Section 5.02 Access
to Information.
(a) From
the date hereof until the Closing, Scouted shall (a) afford Newco
and its Representatives reasonable access to and the right to
inspect all of the Real Property, properties, assets, premises,
Books and Records, Assigned Contracts and other documents and data
related to the Business; (b) furnish Newco and its Representatives
with such financial, operating and other data and information
related to the Business as Newco or any of its Representatives may
reasonably request; and (c) instruct the Representatives of Scouted
to cooperate with Newco in its investigation of the Business. Any
investigation pursuant to this Section 5.02 shall be conducted in
such manner as not to interfere unreasonably with the conduct of
the Business.
Section 5.03 Notice
of Certain Events.
(a) From
the date hereof until the Closing, Scouted shall promptly notify
Recruiter, and Recruiter shall promptly notify Scouted, in writing
of:
(i) any
fact, circumstance, event or action the existence, occurrence or
taking of which (A) has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect,
(B) has resulted in, or could reasonably be expected to result in,
any representation or warranty made by any Party hereunder not
being true and correct, or (C) has resulted in, or could reasonably
be expected to result in, the failure of any of the conditions set
forth in Section 7.02 or Section 7.03, as applicable, to be
satisfied;
(ii) any
notice or, to Scouted’s or Recruiter’s Knowledge, as
the case may be, any other communication, from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement;
(iii) any
notice or, to Scouted’s or Recruiter’s Knowledge, as
the case may be, any other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement; and
(iv) any
Actions (A) commenced against Scouted, Recruiter or Newco, as
applicable, (B) with respect to Scouted and to Scouted’s
Knowledge, threatened against, relating to or involving or
otherwise affecting Scouted that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant
to Section 3.06 or that relates to the consummation of the
transactions contemplated by this Agreement, and (C) with respect
to Recruiter and/or Newco and to the Knowledge of Recruiter,
threatened against, relating to or involving or otherwise affecting
Recruiter and/or Newco that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant
to Section 4.06 or that relates to the consummation of the
transactions contemplated by this Agreement.
(b) A
Party’s receipt of information pursuant to this Section 5.03
shall not be deemed to amend or supplement the Disclosure
Schedules.
Section 5.04 Employees and Employee
Benefits.
(a) Prior
to the Closing Date, Newco shall extend offers of at-will
employment to Employees of the Business, and offers to engage those
Personnel of the Business, exclusive of Employees, for certain
consultant or independent contractor services, on such terms and
conditions as set forth as Exhibit E (“Offer Letters”). The persons
listed on Schedule
5.04(a) hereto shall be retained by Newco for the positions
and for such period of time after the Closing Date as are listed on
such schedule.
(b) Scouted
shall be solely responsible for, and Recruiter and Newco shall have
no obligations whatsoever for, any compensation or other amounts
payable to any current or former Personnel of the Business,
including, without limitation, hourly pay, commission, bonus,
salary, accrued vacation, fringe, pension or profit sharing
benefits or severance pay for any period relating to the service
with Scouted at any time on or prior to the Closing Date and
Scouted shall pay all such amounts to all entitled persons as and
when due.
(c) Scouted
shall remain solely responsible for the satisfaction of all claims
for medical, dental, life insurance, health accident or disability
benefits brought by or in respect of current or former Personnel of
the Business or the spouses, dependents or beneficiaries thereof,
which claims relate to events occurring on or prior to the Closing
Date. Scouted also shall remain solely responsible for all
worker’s compensation claims of any current or former
Personnel of the Business which relate to events occurring on or
prior to the Closing Date. Scouted shall pay, or cause to be paid,
all such amounts to the appropriate persons as and when
due.
(d) Effective
as soon as practicable following the Closing Date, Scouted, or any
applicable Affiliate, shall effect a transfer of assets and
liabilities (including outstanding loans) from the defined
contribution retirement plan that it maintains, to the defined
contribution retirement plan maintained by Newco, with respect to
those eligible Personnel of the Business who become employed by
Newco, or an Affiliate of Newco, in connection with the
transactions contemplated by this Agreement. Any such transfer
shall be in an amount sufficient to satisfy Section 414(l) of
the Code. Upon the transfer of assets and liabilities into
Newco’s plan, all transferred account balances from
Scouted’s plan shall become fully vested.
Section 5.05 Confidentiality.
Recruiter and Newco acknowledges and agrees that the Non-Disclosure
Agreement remains in full force and effect and, in addition,
covenants and agrees to keep confidential, in accordance with the
provisions of the Non-Disclosure Agreement, information provided to
Recruiter and Newco pursuant to this Agreement. If this Agreement
is, for any reason, terminated prior to the Closing, the
Non-Disclosure Agreement and the provisions of this Section 5.05
shall nonetheless continue in full force and effect.
Section 5.06 Governmental Approvals and
Consents.
(a) Each
party hereto shall, as promptly as possible, (i) make, or cause or
be made, all filings and submissions required under any Law
applicable to such party or any of its Affiliates; and (ii) use
reasonable best efforts to obtain, or cause to be obtained, all
consents, authorizations, orders and approvals from all
Governmental Authorities that may be or become necessary for its
execution and delivery of this Agreement and the performance of its
obligations pursuant to this Agreement and the Ancillary Documents.
Each party shall cooperate fully with the other party and its
Affiliates in promptly seeking to obtain all such consents,
authorizations, orders and approvals. The parties hereto shall not
willfully take any action that will have the effect of delaying,
impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.
(b)
Each party hereto shall use reasonable best efforts to give all
notices to, and obtain all consents from, all third parties that
are described in Section 5.06(a).
(c) Without
limiting the generality of the parties’ undertakings pursuant
to Sections 5.06 (a) and (b) above, each of the Parties hereto
shall use all reasonable best efforts to:
(i) respond
to any inquiries by any Governmental Authority regarding antitrust
or other matters with respect to the transactions contemplated by
this Agreement or any Ancillary Document;
(ii) avoid
the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this
Agreement or any Ancillary Document; and
(iii) in
the event any Governmental Order adversely affecting the ability of
the parties to consummate the transactions contemplated by this
Agreement or any Ancillary Document has been issued, to have such
Governmental Order vacated or lifted.
(d) All
analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals made by or on
behalf of any party before any Governmental Authority or the staff
or regulators of any Governmental Authority, in connection with the
transactions contemplated hereunder (but, for the avoidance of
doubt, not including any interactions between Scouted and
Governmental Authorities in the ordinary course of business, any
disclosure which is not permitted by Law or any disclosure
containing confidential information) shall be disclosed to the
other Parties hereunder in advance of any filing, submission or
attendance, it being the intent that the parties will consult and
cooperate with one another, and consider in good faith the views of
one another, in connection with any such analyses, appearances,
meetings, discussions, presentations, memoranda, briefs, filings,
arguments, and proposals. Each Party shall give notice to the other
Parties with respect to any meeting, discussion, appearance or
contact with any Governmental Authority or the staff or regulators
of any Governmental Authority, with such notice being sufficient to
provide the other Parties with the opportunity to attend and
participate in such meeting, discussion, appearance or
contact.
(e) Notwithstanding
the foregoing, nothing in this Section 5.06 shall require, or be
construed to require, Recruiter or Newco or any of their Affiliates
to agree to (i) sell, hold, divest, discontinue or limit, before or
after the Closing Date, any assets, businesses or interests of
Recruiter, Newco or any of their respective Affiliates; (ii) any
conditions relating to, or changes or restrictions in, the
operations of any such assets, businesses or interests which, in
either case, could reasonably be expected to result in a Material
Adverse Effect or materially and adversely impact the economic or
business benefits to Recruiter or Newco of the transactions
contemplated by this Agreement; or (iii) any material modification
or waiver of the terms and conditions of this
Agreement.
Section 5.07 Intentionally
deleted.
Section 5.08 Closing Conditions. From
the date hereof until the Closing, each party hereto shall use
reasonable best efforts to take such actions as are necessary to
expeditiously satisfy the closing conditions set forth in Article
VII hereof.
Section 5.09 Public
Announcements. Unless otherwise required by
applicable Law, by Recruiter in connection with a financing or
stock exchange requirements (based upon the reasonable advice of
counsel), no party to this Agreement shall make any public
announcements in respect of this Agreement or the transactions
contemplated hereby (except that, prior to the Closing (i) after
giving Scouted prior written notice of such intended disclosure and
a reasonable opportunity to review, Recruiter may disclose the
execution of this Agreement and file a copy in any SEC Reports, in
a press release announcing the execution of this Agreement, and in
connection with an application to be listed on any national
securities exchange, and (ii) Recruiter may discuss the transaction
contemplated hereby in a conference call discussing its potential
acquisition of the Business and in discussions in meetings with
investors, provided such discussions are consistent with the
disclosures made under clause (i) above) or otherwise communicate
with any news media without the prior written consent of the other
party (which consent shall not be unreasonably withheld or
delayed), and the parties shall cooperate as to the timing and
contents of any such announcement. Notwithstanding the foregoing
and any other agreement between Recruiter and Scouted, Recruiter
shall have no limitations in providing confidential information to
prospective lenders who are subject to customary confidentiality
requirements.
Section 5.10 Supplemental
Disclosures. Scouted or Recruiter and Newco may
supplement or amend, from time to time, their respective Disclosure
Schedules (including by adding additional disclosure schedules
relating to matters covered in Article III or Article IV, as
applicable) to properly reflect matters, if any, arising after the
date hereof or, in the case of matters that are based on the
Knowledge of Scouted or Recruiter and/or Newco, matters, if any, of
which Scouted or Recruiter and/or Newco, as applicable, first
acquires such Knowledge after the date hereof. The amending party
shall reasonably highlight the changes in the Disclosure Schedules
comprising supplements or amendments made pursuant to this Section
5.10. In the event that the changes to the Disclosure Schedules
resulting from such supplements and amendments give rise to a
Material Adverse Effect, then the non-amending party may terminate
this Agreement without liability on the part of the non-amending
party to any other party hereto. In order to terminate this
Agreement pursuant to this Section 5.10, the non-amending party
must give notice of such termination to the amending party within
10 Business Days following receipt from Scouted of such
supplemented or amended Disclosure Schedules. In the event that a
party terminates this Agreement pursuant to this Section 5.10, such
termination shall be such terminating party’s sole remedy
hereunder and no party hereto shall have any further liability or
obligation to any other party hereto, except as otherwise provided
in this Agreement.
Section 5.11 Books
and Records.
(a) In
order to facilitate the resolution of any claims made against or
incurred by Scouted prior to the Closing, or for any other
reasonable purpose, for a period of seven years after the Closing,
Newco shall:
(i) retain
the Books and Records (including Personnel files) relating to
periods prior to the Closing in a manner reasonably consistent with
the prior practices of Scouted; and
(ii) upon
reasonable notice, afford Scouted’s Representatives
reasonable access (including the right to make, at Scouted’s
expense, photocopies), during normal business hours, to such Books
and Records.
(b)
Neither Recruiter nor Newco shall be obligated to provide Scouted
or any other party with access to any Books and Records (including
Personnel files) pursuant to this Section 5.11 where such access
would violate any Law.
Section 5.12 Intentionally
deleted.
Section 5.13 Subsequent Collections.
From and after the Closing, if Scouted or any of its Affiliates
receives or collects any funds relating to any Accounts Receivable
or any other Purchased Asset, Scouted or its Affiliate shall remit
such funds to Newco within five Business Days after its receipt
thereof. From and after the Closing, if Newco or its Affiliate
receives or collects any funds relating to any Excluded Asset,
Newco or its Affiliate shall remit any such funds to Scouted or its
designee within five Business Days after its receipt
thereof.
Section 5.14 Tax
Certificates. If any taxing authority asserts that
Scouted is liable for any Tax, Scouted shall promptly pay any and
all such amounts and shall provide evidence to Newco that such
liabilities have been paid in full or otherwise
satisfied.
Section 5.15 Further Assurances.
Following the Closing, each of the Parties hereto shall, and shall
cause their respective Affiliates to, execute and deliver such
additional documents, instruments, conveyances and assurances and
take such further actions as may be reasonably required to carry
out the provisions hereof and give effect to the transactions
contemplated by this Agreement and the Ancillary
Documents.
Section 5.16 Bulk
Sales Laws. The parties hereby waive compliance with
the provisions of any bulk sales, bulk transfer or similar Laws of
any jurisdiction that may otherwise be applicable with respect to
the sale of any or all of the Purchased Assets.
Section 5.17 Employment Agreement.
Newco will make an employment offer to Jacqueline Loeb pursuant to
the employment agreement in the form attached as Exhibit F hereto (the
“Executive Employment
Agreement”).
Article VI
CERTAIN TAX MATTERS
Section 6.01 Certain Tax
Matters.
(a) Scouted
will be responsible for preparing and filing property (whether real
or personal) and similar Tax Returns (“Property Tax Returns”) with
respect to the Purchased Assets for Tax periods ending on or before
the Closing Date, and will make all payments required with respect
to each such Tax Return. Newco will be responsible for preparing
and filing all Property Tax Returns for the Purchased Assets for
all periods commencing after the Closing Date and will make all
payments required with respect to each such Tax Return. In the case
of any Property Tax Return that covers a period that begins on or
before the Closing Date and ends after the Closing Date (a
“Straddle
Period”), the Taxes payable (i) by Scouted, shall be
equal to the product of all such Taxes multiplied by a fraction,
the numerator of which is the number of days in the Straddle Period
from the commencement of the Straddle Period through and including
the Closing Date, and the denominator of which is the number of
days in the entire Straddle Period and (ii) by Newco, shall be
equal to the product of all such Taxes multiplied by a fraction,
the numerator of which is the number of days in the Straddle Period
from the day following the Closing Date through and including the
last day of the Straddle Period, and the denominator of which is
the number of days in the entire Straddle Period. Newco and Scouted
shall timely pay, or reimburse the other, for any Taxes properly
payable by such party for a Straddle Period pursuant hereto. Newco
and Scouted shall cooperate, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax
Returns pursuant to this Agreement and any audit, Action or other
proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon a party’s request) the provision of
records and information which are reasonably relevant to any such
audit, Action or other proceeding, making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder, and timely
notification of receipt of any notice of an audit or notice of
deficiency relating to any Tax or Tax Return with respect to which
the non-recipient may have Liability hereunder.
(b)
Scouted shall pay all sales or use Taxes, recording, registration
and conveyance Taxes and fees, and similar transfer Taxes arising
from or relating to the transactions contemplated in this
Agreement, and Scouted shall file or cause to be filed all
necessary Tax Returns and other documentation with respect to such
Taxes. To the extent practicable, Scouted shall deliver all of the
Purchased Assets through electronic delivery or in another manner
reasonably calculated and legally permitted to minimize or avoid
the incurrence of transfer and sales Taxes if such method of
delivery does not adversely affect the condition, operability or
usefulness of any Purchased Asset. For the avoidance of doubt,
Scouted shall be solely responsible for any and all income, gross
receipts, and similar Taxes of Scouted for all periods (whether
before or after the Closing), and Scouted shall be solely
responsible for preparing and filing all Tax Returns relating
thereto. At the reasonable request of Newco, Scouted will certify
to Newco that Scouted has paid all such income, gross receipts and
similar Taxes and has prepared and filed all such Tax
Returns.
Article VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to Obligations of All
Parties. The obligations of each party to consummate
the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) This
Agreement shall have been duly adopted by the Requisite Scouted
Vote as of the date hereof.
(b) This
Agreement shall have been approved by Beyond Digital Five Limited,
pursuant to that certain Convertible Note Side Letter by and
between Scouted and Beyond Digital Five Limited dated February 25,
2019.
(c) No
Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this
Agreement illegal, otherwise restraining or prohibiting
consummation of such transactions or causing any of the
transactions contemplated hereunder to be rescinded following
completion thereof.
Section 7.02 Conditions to Obligations of Recruiter
and Newco. The obligations of Recruiter and Newco to
consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or Recruiter’s or Newco’s
waiver, at or prior to the Closing, of each of the following
conditions:
(a) Other
than the representations and warranties of Scouted contained in the
first sentence of Section 3.01, Section 3.02, Section 3.03, Section
3.23, and Section 3.24, the representations and warranties of
Scouted contained in this Agreement and the Ancillary Documents
shall be true and correct in all respects (in the case of any
representation or warranty qualified by materiality or Material
Adverse Effect) or in all material respects (in the case of any
representation or warranty not qualified by materiality or Material
Adverse Effect) on and as of the Closing Date with the same effect
as though made at and as of such date (except those representations
and warranties that address matters only as of a specified date,
the accuracy of which shall be determined as of that specified date
in all respects). The representations and warranties of Scouted
contained in the first sentence of Section 3.01, Section 3.02,
Section 3.03, Section 3.23, and Section 3.24 shall be true and
correct in all respects on and as of the date hereof and on and as
of the Closing Date with the same effect as though made at and as
of such date (except those representations and warranties that
address matters only as of a specified date, the accuracy of which
shall be determined as of that specified date in all
respects).
(b)
Scouted shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by
this Agreement and each of the Ancillary Documents to be performed
or complied with by it prior to or on the Closing Date;
provided,
that, with respect
to agreements, covenants and conditions that are qualified by
materiality, Scouted shall have performed such agreements,
covenants and conditions, as so qualified, in all
respects.
(c) From
the date of this Agreement, there shall not have occurred any
Material Adverse Effect with respect to Scouted, nor shall any
event or events have occurred that, individually or in the
aggregate, with or without the lapse of time, could reasonably be
expected to result in a Material Adverse Effect with respect to
Scouted.
(d) Scouted
shall have delivered each of the closing deliverables set forth in
Section 2.06(a).
(e) All
approvals, consents and waivers listed on Schedule 3.03 shall have been
received, and executed counterparts thereof shall have been
delivered to Newco at or prior to the Closing.
(f) All
outstanding convertible promissory notes or similar debt
instruments issued or payable by Scouted shall have been satisfied
or fully converted or the holders thereof shall have provided their
written consent to the consummation of the transactions
contemplated by this Agreement and written waiver of any claims
they may assert against Newco and Recruiter arising therefrom, as
of the Closing Date.
(g) Recruiter
has received all approvals, consents and waivers required from (i)
the holders of Recruiter’s Series D Convertible Preferred
Stock to avoid breaching Section 4(t) of or otherwise breaching the
Securities Purchase Agreement between Recruiter and the holders of
its Series D Convertible Preferred Stock dated March 31, 2019 upon
issuance of the Note and from (ii) the holders of Recruiter’s
12.5% Original Issue Discount Senior Subordinated Secured
Convertible Debentures (the “Debentures”) and such
other party(ies) as may be required under any transaction documents
entered into in connection with the Debentures so that upon
issuance of the Note the Company does not incur any Event of
Default (as defined in the Debentures) under the
Debentures.
Section 7.03 Conditions to Obligations of
Scouted. The obligations of Scouted to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment or Scouted’s waiver, at or prior to the Closing,
of each of the following conditions:
(a) Other
than the representations and warranties of Recruiter and Newco
contained in the first sentence of Section 4.01, Section 4.02,
Section 4.05, and Section 4.10, the representations and warranties
of Recruiter and Newco contained in this Agreement and the
Ancillary Documents shall be true and correct in all respects (in
the case of any representation or warranty qualified by materiality
or Material Adverse Effect) or in all material respects (in the
case of any representation or warranty not qualified by materiality
or Material Adverse Effect) as of the Closing Date with the same
effect as though made at and as of such date (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects). The representations and
warranties of Recruiter and Newco contained in the first sentence
of Section 4.01, Section 4.02, Section 4.05, and Section 4.10 shall
be true and correct in all respects on and as of the Closing Date
with the same effect as though made at and as of such
date.
(b)
Recruiter and Newco shall have duly performed and complied in all
material respects with all agreements, covenants and conditions
required by this Agreement and each of the Ancillary Documents to
be performed or complied with by them prior to or on the Closing
Date; provided,
that, with respect
to agreements, covenants and conditions that are qualified by
materiality, Recruiter and Newco shall have performed such
agreements, covenants and conditions, as so qualified, in all
respects.
(c) All
approvals, consents and waivers that are listed on Schedule 4.03 shall have been
received, and executed counterparts thereof shall have been
delivered to Scouted at or prior to the Closing.
(d) Newco
shall have delivered each of the closing deliverables set forth in
Section 2.06(b).
Article VIII
INDEMNIFICATION
Section 8.01 Survival. Subject to the
limitations and other provisions of this Agreement, the
representations and warranties contained herein shall survive the
Closing and shall remain in full force and effect until the date
that is 11 months from the Closing Date (the “Expiration Date”). All covenants
and agreements of the parties contained herein (other than this
Article VIII) shall terminate on the Closing Date and shall
thereafter be of no further force and effect. Notwithstanding the
foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by
notice from the Indemnified Party to the Indemnifying Party prior
to the Expiration Date shall not thereafter be barred by the
expiration of the relevant representation or warranty and such
claims shall survive until finally resolved. The Holdback Shares
shall be cancelled or released as appropriate using the Share
Consideration Price Share
Section 8.02 Indemnification by Scouted and the
Scouted Indemnitors. Subject to the other terms and
conditions of this Article VIII, Scouted and each Scouted
Indemnitor shall severally and not jointly (based on their pro rata
percentage of Share Consideration (the “Indemnity Pro Rata Percentage”))
indemnify and defend each of Recruiter and Newco and each of their
Affiliates and their respective Representatives (collectively, the
“Recruiter
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
the Recruiter Indemnitees based upon, arising out of, with respect
to or by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of Scouted contained in this Agreement or in any certificate or
instrument delivered by or on behalf of Scouted pursuant to this
Agreement, as of the date such representation or warranty was made
or as if such representation or warranty was made on and as of the
Closing Date (except for representations and warranties that
expressly relate to a specified date, the inaccuracy in or breach
of which will be determined with reference to such specified
date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation
to be performed by Scouted pursuant to this Agreement;
(c)
any Excluded Asset or any Excluded Liability;
(d) any
Third Party Claim based upon, resulting from or arising out of the
business, operations, properties, assets or obligations of Scouted
or any of its Affiliates (other than the Purchased Assets or
Assumed Liabilities) conducted, existing or arising on or prior to
the Closing Date; or
(e) any
Transaction Expenses or Indebtedness of Scouted outstanding as of
the Closing to the extent not paid or satisfied by Scouted at or
prior to the Closing.
Section 8.03 Indemnification By Recruiter and
Newco. Subject to the other terms and conditions of
this Article VIII, Recruiter and Newco, jointly and severally,
shall indemnify and defend Scouted and the Scouted Indemnitors
(collectively, the “Scouted
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
Scouted Indemnitees based upon, arising out of, with respect to or
by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of Recruiter and Newco contained in this Agreement or in any
certificate or instrument delivered by or on behalf of Recruiter or
Newco pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or
warranty was made on and as of the Closing Date (except for
representations and warranties that expressly relate to a specified
date, the inaccuracy in or breach of which will be determined with
reference to such specified date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation
to be performed by Recruiter or Newco pursuant to this
Agreement;
(c) any
Assumed Liability; or
(d) any
Third Party Claim based upon, resulting from or arising out of the
operation of the Business or the ownership of the Purchased Assets
following the Closing Date.
Section 8.04 Certain Limitations. The
indemnification provided for in Section 8.02 and Section 8.03 shall
be subject to the following limitations:
(a) Scouted
and the Scouted Indemnitors shall not be liable to the Recruiter
Indemnitees for indemnification under Section 8.02 until the
aggregate amount of all Losses in respect of the Recruiter
Indemnitees are entitled to indemnification under Section 8.02
exceeds $10,000 (the “Basket”), in which event Scouted
and the Scouted Indemnitors shall be required to pay or be liable
for all Losses as if there was no Basket.
(b) Notwithstanding
anything herein to the contrary, the indemnification obligation of
Recruiter and Newco shall not exceed $320,000, and the
indemnification obligation of any Scouted Indemnitor shall not
exceed such Scouted Indemnitor’s Indemnity Pro Rata
Percentage of $320,000.
(c)
Notwithstanding anything herein to contrary, the liability of
Scouted and the Scouted Indemnitors shall be limited to the value
of the Recruiter Common Stock issued under this Agreement or
transferred to the Scouted Indemnitors based on the Share
Consideration Price Per Share. In no event shall Scouted or the
Scouted Indemnitors be required to pay or be liable pursuant to
Section 8.02 for an amount exceeding the value of the number of
shares of the Recruiter Common Stock based on the Share
Consideration Price Per Share issued pursuant to this Agreement to
Scouted or transferred to any Recruiter Indemnitors under a Joinder
Agreement executed by Scouted and each Scouted Indemnitor, the form
of which is attached as Exhibit H (the
“Joinder
Agreement”). Under the Joinder Agreement, Scouted
shall transfer the Recruiter Common Stock issued pursuant to this
Agreement to each Scouted Indemnitor who shall agree to indemnify
Newco and Recruiter in accordance with the terms of Section 8.02
hereof on a pro rata basis based on a fraction in which the
numerator is the number of shares of Recruiter Common Stock
transferred to such Scouted Indemnitor and the denominator is the
number of shares of Recruiter Common Stock issued under this
Agreement. For clarification, assuming $100,000 of Losses and 10
recipients of the Recruiter Common Stock issued under this
Agreement (including the Scouted Indemnitors), each of whom
received 10% of such Recruiter Common Stock, under the Joinder
Agreement each such Person shall be liable for up to $10,000 of
such Losses based on the Share Consideration Price Per Share of the
Recruiter Common Stock received by such Person. Each of Recruiter
and Newco agree to enforce the indemnification provisions contained
herein in a manner that is consistent with such Joinder
Agreement.
(d) Each
Indemnified Party must act promptly to avoid or mitigate any Losses
which it or any other Indemnified Party may suffer in consequence
of any fact, matter or circumstance giving rise to a claim for
indemnification under this Agreement or likely to give rise to a
claim for indemnification under this Agreement and no Indemnified
Party shall be entitled to recover under this Agreement to the
extent of any Losses that could have been avoided but for the
Indemnified Party’s failure to avoid or mitigate such
Losses.
Section 8.05 Indemnification
Procedures. The party making a claim under this
Article VIII is referred to as the “Indemnified Party”, and the party
against whom such claims are asserted under this Article VIII is
referred to as the “Indemnifying Party”.
(a)
Third Party Claims.
If any Indemnified Party receives notice of the assertion or
commencement of any Action made or brought by any Person who is not
a party to this Agreement or an Affiliate of a party to this
Agreement or a Representative of the foregoing (a
“Third Party
Claim”) against such Indemnified Party with respect to
which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall
give the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than 10 days after receipt of
such notice of such Third Party Claim. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying
Party of its indemnification obligations, except and only to the
extent that the Indemnifying Party is prejudiced. Such notice by
the Indemnified Party shall describe the Third Party Claim in
reasonable detail, shall include copies of all material written
evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be
sustained by the Indemnified Party. The Indemnifying Party shall
have the right to participate in, or by giving written notice to
the Indemnified Party, to assume the defense of any Third Party
Claim at the Indemnifying Party’s expense and by the
Indemnifying Party’s own counsel, such counsel to be
reasonably satisfactory to the Indemnified Party, and the
Indemnified Party shall cooperate in good faith in such defense. In
the event that the Indemnifying Party assumes the defense of any
Third Party Claim, subject to Section 8.05(b), it shall have the
right to take such action as it deems necessary to avoid, dispute,
defend or appeal any such Third Party Claim in the name and on
behalf of the Indemnified Party. The Indemnified Party shall have
the right to participate in the defense of any Third Party Claim
with counsel selected by it subject to the Indemnifying
Party’s right to control the defense thereof. The fees and
disbursements of such counsel shall be at the expense of the
Indemnified Party, provided, that if in the reasonable
opinion of counsel to the Indemnified Party, there exists a
conflict of interest between the Indemnifying Party and the
Indemnified Party that cannot be waived; the Indemnifying Party
shall be liable for the reasonable fees and expenses of counsel to
the Indemnified Party. If the Indemnifying Party elects not to
compromise or defend such Third Party Claim, fails to promptly
notify the Indemnified Party in writing of its election to defend
as provided in this Agreement, or fails to diligently prosecute the
defense of such Third Party Claim, the Indemnified Party may,
subject to Section 8.05(b), pay, compromise, defend such Third
Party Claim and seek indemnification for any and all Losses based
upon, arising from or relating to such Third Party Claim. Scouted,
on the one hand, and Recruiter and Newco, on the other hand, shall
cooperate with each other in all reasonable respects in connection
with the defense of any Third Party Claim, including making
available records relating to such Third Party Claim and
furnishing, without expense (other than reimbursement of actual
out-of-pocket expenses) to the defending party, management
employees of the non-defending party as may be reasonably necessary
for the preparation of the defense of such Third Party Claim. In no
event shall the Indemnifying Party also be liable for local counsel
selected at the request of the Indemnified Party. If
indemnification is sought against Scouted or the Scouted
Indemnitors, the Scouted Representative may direct the control of
the Third Party Claim.
(b) Settlement
of Third Party Claims. Notwithstanding any other provision
of this Agreement, the Indemnifying Party shall not enter into
settlement of any Third Party Claim without the prior written
consent of the Indemnified Party, except as provided in this
Section 8.05(b). If a firm offer is made to settle a Third Party
Claim without leading to liability or the creation of a financial
or other obligation on the part of the Indemnified Party and
provides, in customary form, for the unconditional release of each
Indemnified Party from all liabilities and obligations in
connection with such Third Party Claim, the Indemnifying Party may
settle the Third Party Claim upon the terms set forth in such firm
offer to settle such Third Party Claim. If the Indemnified Party
has assumed the defense pursuant to Section 8.05(a) (including,
without limitation, where the Indemnified Party is defending
pursuant to Section 8.05(a)), it shall not agree to any settlement
without the written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld or
delayed).
(c)
Direct Claims. Any
Action by an Indemnified Party on account of a Loss which does not
result from a Third Party Claim (a “Direct Claim”) shall be asserted
by the Indemnified Party giving the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 30
days after the Indemnified Party becomes aware of such Direct
Claim. The failure to give such prompt written notice shall not,
however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying
Party is prejudiced. Such notice by the Indemnified Party shall
describe the Direct Claim in reasonable detail, shall include
copies of all material written evidence thereof and shall indicate
the estimated amount, if reasonably practicable, of the Loss that
has been or may be sustained by the Indemnified Party. The
Indemnifying Party shall have 30 days after its receipt of such
notice to respond in writing to such Direct Claim. The Indemnified
Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give
rise to the Direct Claim, and whether and to what extent any amount
is payable in respect of the Direct Claim and the Indemnified Party
shall assist the Indemnifying Party’s investigation by giving
such information and assistance (including access to
Scouted’s premises and personnel and the right to examine and
copy any accounts, documents or records) as the Indemnifying Party
or any of its professional advisors may reasonably request. If the
Indemnifying Party does not so respond within such 30 day period,
the Indemnifying Party shall be deemed to have rejected such claim,
in which case the Indemnified Party shall be free to pursue such
remedies as may be available to the Indemnified Party on the terms
and subject to the provisions of this Agreement.
Section 8.06 Payments.
(a) Once
a Loss is agreed to by the Indemnifying Party or finally
adjudicated to be payable pursuant to this Article VIII by a
non-appealable judgment issued by a court of competent
jurisdiction, indemnification payments made pursuant to Section
8.02 shall be satisfied, at the election of the Scouted
Indemnitors, against the Share Consideration, based on the Share
Consideration Price Per Share, or by wire transfer of immediately
available funds by Scouted and the Scouted Indemnitors to an
account designated in writing by the Recruiter Indemnitee.
Indemnification payments made pursuant to Section 8.03 shall be
satisfied by wire transfer of immediately available funds by
Recruiter Indemnifying Party to an account designated in writing by
the Scouted Representative.
(b) Any
amount payable by Scouted to a Recruiter Indemnitee with respect to
a Loss shall be reduced by the amount of any net insurance proceeds
(i.e., insurance payments less deductible and premiums, including
the amount of any increase in future premiums assessed under such
policies of insurance) actually received by the Recruiter
Indemnitee with respect to the Loss, and Recruiter and Newco agree
to use their reasonable best efforts to collect any insurance
proceeds to which Recruiter and/or Newco may be entitled in respect
of any Loss.
Section 8.07 Tax
Treatment of Indemnification Payments. All
indemnification payments made under this Agreement shall be treated
by the Parties as an adjustment to the Purchase Price for Tax
purposes, unless otherwise required by Law.
Section 8.08 Exclusive Remedy.
Commencing on the Closing Date, this Article VIII shall provide the
sole and exclusive remedy for any and all Losses sustained or
incurred by an Indemnified Party pursuant to this Agreement except
as a result of fraud by an Indemnifying Party; provided, however, that nothing
contained in this Article VIII shall prevent any party from seeking
equitable remedies (including specific performance and injunctive
relief).
Section 8.09 Scouted
Representative.
(a) Scouted
and the Scouted Stakeholders hereby appoint Jacqueline Loeb, in her
capacity as the Scouted Representative, as agent and
attorney-in-fact for and on behalf of Scouted and the Scouted
Stakeholders to give and receive notices and communications, to
authorize payment to any Indemnified Party in satisfaction of
claims by any Indemnified Party, to object to such payments, to
agree to, negotiate, enter into settlements and compromises of, and
initiate actions and comply with orders of courts with respect to
such claims, to assert, negotiate, enter into settlements and
compromises of, and initiate actions and comply with orders of
courts with respect to, any other claim by any Indemnified Party
against Scouted or any Scouted Stakeholder or by Scouted or any
such Scouted Stakeholder against any Indemnified Party or any
dispute between any Indemnified Party and Scouted or any such
Scouted Stakeholder, in each case relating to this Agreement or the
transactions contemplated hereby or thereby, to execute any and all
agreements and certificates contemplated by this Agreement, and to
take all other actions that are necessary or appropriate in the
judgment of the Scouted Representative for the accomplishment of
the foregoing or specifically mandated by the terms of this
Agreement. No bond shall be required of the Scouted Representative,
and the Scouted Representative shall not receive any compensation
for her services.
(b) The
Scouted Representative shall not be liable for any act done or
omitted hereunder as Scouted Representative while acting in good
faith and in the exercise of reasonable judgment, even though such
act or omission constitutes negligence on the part of such Scouted
Representative. For the avoidance of any doubt, nothing in this
Section 8.09(b) shall in
any way impact any Liability that the Scouted Representative may
have in her capacity as a stockholder of Scouted. The Scouted
Representative shall only have the duties expressly stated in this
Agreement and shall have no other duty, express or implied. The
Scouted Representative may engage attorneys, accountants and other
professionals and experts. The Scouted Representative may in good
faith rely conclusively upon information, reports, statements and
opinions prepared or presented by such professionals, and any
action taken by the Scouted Representative based on such reliance
shall be deemed conclusively to have been taken in good faith and
in the exercise of reasonable judgment. The Scouted Stakeholders
shall indemnify the Scouted Representative and hold the Scouted
Representative harmless against any Losses incurred without gross
negligence or bad faith on the part of the Scouted Representative
and arising out of or in connection with the acceptance or
administration of the Scouted Representative’s duties
hereunder, including the reasonable fees and expenses of any legal
counsel or other professionals and advisors retained by the Scouted
Representative (“Scouted
Representative Expenses”). Following Closing, the
Scouted Representative shall have the right to recover Scouted
Representative Expenses from any deferred payments in accordance
with the terms hereof prior to any distribution to any Scouted
Stakeholder, and prior to any such distribution. A decision, act,
consent or instruction of the Scouted Representative, including an
amendment or waiver of any provision of this Agreement, shall
constitute a decision of Scouted and the Scouted Stakeholders and
shall be final, binding and conclusive upon Scouted and the
Stakeholders.
(c) Release
of Holdback Shares. Within five (5) business days after the
Expiration Date, Recruiter shall release the remaining Holdback
Shares to Scouted.
Article IX
TERMINATION
Section 9.01 Termination. This
Agreement may be terminated at any time prior to the
Closing:
(a) by
the mutual written consent of Scouted and Newco;
(b) by
Newco by written notice to Scouted if:
(i) neither
Recruiter nor Newco is then in material breach of any provision of
this Agreement and there has been a material breach, inaccuracy in,
or failure to perform any representation, warranty, covenant or
agreement made by Scouted pursuant to this Agreement that would
give rise to the failure of any of the conditions specified in
Article VII and such breach, inaccuracy, or failure has not been
cured by Scouted within 10 Business Days of Scouted’s receipt
of written notice of such breach from Recruiter.
(c) by
Scouted by written notice to Recruiter and Newco if:
(i) Scouted
is not then in material breach of any provision of this Agreement
and there has been a material breach, inaccuracy in, or failure to
perform any representation, warranty, covenant or agreement made by
Recruiter or Newco pursuant to this Agreement that would give rise
to the failure of any of the conditions specified in Article VII
and such breach, inaccuracy, or failure has not been cured by
Recruiter or Newco within 10 Business Days of their receipt of
written notice of such breach from Scouted;
(d) by
Newco or Scouted by written notice to the other if:
(i) there
shall be any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or
any Governmental Authority shall have issued a Governmental Order
restraining or enjoining the transactions contemplated by this
Agreement, and such Governmental Order shall have become final and
non-appealable; or
(ii) the
Closing has not occurred by January 31, 2021 (the
“Outside
Date”);
Provided, however, that the right to
terminate this Agreement pursuant to this Section 9.01(d) shall not
be available to any party (or any Affiliate of such party) whose
breach of any provision of this Agreement results in or causes the
failure of the transactions contemplated hereby to be consummated
on or before such time.
Section 9.02 Effect
of Termination. In the event of the termination of
this Agreement in accordance with this Article IX, this Agreement
shall forthwith become void and there shall be no liability on the
part of any party hereto except:
(a) as
set forth in this Article IX, Section 5.02(b) and Article X hereof;
and
(b) that
nothing herein shall relieve any party hereto from liability for
any willful breach of any provision hereof.
Article X
MISCELLANEOUS
Section 10.01 Expenses. Except as
otherwise expressly provided herein, all costs and expenses,
including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the Party incurring such costs and expenses, whether or not
the Closing shall have occurred.
Section 10.02 Notices. All notices,
requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if
sent by a nationally recognized overnight courier (receipt
requested); or (c) on the date sent by e-mail of a PDF document
(with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after
normal business hours of the recipient Such communications must be
sent to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice
given in accordance with this Section 10.02):
|
If to
Scouted:
|
15 West
53rd
Street
Suite
30E
New York, NY
10019
E-mail:
Attention:
Jacqueline Loeb
|
|
with a copy (which
shall not constitute notice) to:
|
Paradigm Counsel
LLP
2625 Middlefield
Road, #800
Palo Alto, CA
94306
Attention: Andrew
Zeif, Esq.
Email:
|
|
If to
Recruiter:
|
100 Waugh Drive, Suite 300
Houston, Texas 77007
Email:
Attention: Evan Sohn
|
|
|
|
|
with a copy (which
shall not constitute notice) to:
|
Nason, Yeager,
Gerson, Harris & Fumero, P.A.
3001 PGA Boulevard,
Suite 305
Palm Beach Gardens,
Florida 33410
E-mail:
Attention: Michael
Harris, Esq.
|
Section 10.03 Interpretation. For
purposes of this Agreement, (a) the words “include,”
“includes” and “including” shall be deemed
to be followed by the words “without limitation”;
(b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,”
“hereby,” “hereto” and
“hereunder” refer to this Agreement as a whole. Unless
the context otherwise requires, references herein: (x) to Articles,
Sections, Disclosure Schedules and Exhibits mean the Articles and
Sections of, and Disclosure Schedules and Exhibits attached to,
this Agreement; (y) to an agreement, instrument or other document
means such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted
by the provisions thereof and (z) to a statute means such statute
as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement
shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting
an instrument or causing any instrument to be drafted. The
Disclosure Schedules and Exhibits referred to herein shall be
construed with, and as an integral part of, this Agreement to the
same extent as if they were set forth verbatim herein.
Section 10.04 Headings. The headings
in this Agreement are for reference only and shall not affect the
interpretation of this Agreement.
Section 10.05 Severability. If any
term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
Section 10.06 Entire
Agreement. This Agreement and the Ancillary Documents
constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and
therein, and supersede all prior and contemporaneous understandings
and agreements, both written and oral, with respect to such subject
matter. In the event of any inconsistency between the statements in
the body of this Agreement and those in the Ancillary Documents,
the Exhibits and Disclosure Schedules (other than an exception
expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control.
Section 10.07 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted
assigns. Neither party may assign its rights or obligations
hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld or delayed. No
assignment shall relieve the assigning party of any of its
obligations hereunder.
Section 10.08 No
Third-party Beneficiaries. Except as provided in
Article VIII, this Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns and
nothing herein, express or implied, is intended to or shall confer
upon any other Person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
Section 10.09 Amendment and Modification;
Waiver. This Agreement may only be amended, modified
or supplemented by an agreement in writing signed by Recruiter,
Newco, and Scouted at any time prior to the Closing. Any failure of
Recruiter or Newco, on the one hand, or Scouted, on the other hand,
to comply with any obligation, covenant, agreement or condition
herein may be waived by Scouted (with respect to any failure by
Recruiter or Newco) or by Recruiter or Newco (with respect to any
failure by Scouted), respectively, only by a written instrument
signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other
failure.
Section 10.10 Governing Law; Submission to
Jurisdiction; Waiver of Jury Trial.
(a) This
Agreement and all matters related to the transactions contemplated
herein shall be governed by and construed in accordance with the
internal laws of the State of Nevada without giving effect to any
choice or conflict of law provision or rule (whether of the State
of Nevada or any other jurisdiction).
(b) Any
legal suit, action, or proceeding arising out of or based upon this
Agreement, the Ancillary Documents, or the transactions
contemplated hereby or thereby shall be instituted exclusively in
the federal or state courts located in New York County, New York
and each Party irrevocably submits to the exclusive jurisdiction of
such courts in any such suit, action or proceeding. The Parties
irrevocably and unconditionally waive any objection to the laying
of venue of any suit, action or any proceeding in such courts and
irrevocably waive and agree not to plead or claim in any such court
that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
(c) Each
Party acknowledges and agrees that any controversy which may arise
under this Agreement or the Ancillary Documents is likely to
involve complicated and difficult issues and, therefore, each such
Party irrevocably and unconditionally waives any right it may have
to a trial by jury in respect of any legal action arising out of or
relating to this Agreement, the Ancillary Documents, or the
transactions contemplated hereby or thereby. Each Party to this
Agreement certifies and acknowledges that (A) no representative of
any other Party has represented, expressly or otherwise, that such
other Party would not seek to enforce the foregoing waiver in the
event of a legal action, (B) such Party has considered the
implications of this waiver, (C) such Party makes this waiver
voluntarily, and (D) such Party has been induced to enter into this
Agreement by, among other things, the mutual waivers and
certifications in this Section 10.10(c).
(d) Specific
Performance. The Parties agree that irreparable damage would
occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the Parties shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy to which they are entitled at law or in equity,
without having to plead or prove irreparable harm or lack of
adequate remedy at law and without having to post a bond or other
security.
(e)
Attorneys’ Fees. In
the event that any Party institutes any legal suit, action, or
proceeding against the other party(ies) arising out of or relating
to this Agreement, the Ancillary Documents or any of the
transactions contemplated hereunder, the prevailing Party in the
suit, action or proceeding shall be entitled to receive, in
addition to all other damages to which it may be entitled, the
costs incurred by such Party in conducting the suit, action, or
proceeding, including attorneys’ fees and expenses and court
costs.
(f) Counterparts.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement
delivered by e-mail or other means of electronic transmission shall
be deemed to have the same legal effect as delivery of an original
signed copy of this Agreement.
[Signature Page
Follows]
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly
authorized.
|
Scouted Inc.
By:____________________________
Name: Jacqueline
Loeb
Title: Chief
Executive Officer
|
|
Recruiter.com Group, Inc.
By:____________________________
Name: Evan
Sohn
Title: Chief
Executive Officer
|
|
|
|
Recruiter.com Scouted, Inc.
By:_____________________________
Name: Evan
Sohn
Title: Chief
Executive Officer
|
EXHIBIT
A
PROMISSORY
NOTE
EXHIBIT
B
SCOUTED DISCLOSURE
SCHEDULE
EXHIBIT
C
FINANCIAL
STATEMENTS
EXHIBIT
D
RECRUITER
DISCLOSURE SCHEDULE
EXHIBIT
E
OFFER
LETTERS
EXHIBIT
F
EXECUTIVE
EMPLOYMENT AGREEMENT
EXHIBIT
H
JOINDER
AGREEMENT
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (this
“Agreement”),
dated as of May 10, 2021, is entered into by and among
Recruiter.com Group, Inc., a Nevada corporation
(“Recruiter”),
Recruiter.com-Onewire Inc., a Nevada corporation
(“Newco”),
OneWire Holdings, LLC, a Delaware limited liability company
(“Onewire”) and
Eric Stutzke (the “Onewire
Representative”), solely in his capacity as the
Onewire Representative;
WHEREAS, Onewire is engaged in
operating an online recruitment platform for employers and job
seeking candidates providing staffing and talent acquisition
solutions, and in developing Intellectual Property (as defined
herein) related to staffing and talent acquisition solutions (the
“Business”);
WHEREAS, Onewire wishes to sell to
Newco, and Newco wishes to purchase and assume from Onewire,
certain specified assets and Liabilities of the Business, subject
to the terms and conditions set forth herein;
WHEREAS, it is intended that (i)
the purchase of the Purchased Assets contemplated by this Agreement
shall be reported by the Parties as a reorganization pursuant to
Section 368(a)(1)(C) of the Code, and this Agreement and the
documents related hereto shall constitute a “plan of
reorganization” within the meaning of Treasury Regulations
Section 1.368-2(g), and (ii) the Recruiter Common Stock received by
Onewire in exchange for the Purchased Assets, which consist of all
or substantially all of the assets of Onewire, will be subsequently
distributed in liquidation to the Shareholders pursuant to a Plan
of Complete Liquidation and Dissolution attached hereto as
Exhibit A (the
“Plan of
Liquidation”); and
WHEREAS, the board of directors of
Recruiter, and the board of directors and Stockholders of Onewire
have approved this Agreement and the other Transaction Documents
and the transactions contemplated hereby and
thereby.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto agree as
follows:
Article I
DEFINITIONS
In addition to words and terms
defined elsewhere in this Agreement, the following words and terms
have the meanings specified or referred to in this Article
I:
“2020 Base Revenue Amount” has the
meaning set forth in Section 2.09(b).
“Accounts Receivable” has the
meaning set forth in Section 2.01(b).
“Action” means any claim, action,
cause of action, demand, lawsuit, arbitration, inquiry, audit,
notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal,
administrative, regulatory or otherwise, whether at law or in
equity.
“Affiliate” of a Person means any
other Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, such Person. The term “control”
(including the terms “controlled by” and “under
common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
“Agreement” has the meaning set
forth in the preamble.
“Ancillary Documents” means the the
Bill of Sale, Executive Employment Agreement, the Onewire
Disclosure Schedule, the Newco Disclosure Schedule, the Plan of
Liquidation, the Offer Letters, the Estimated Working Capital
Statement and the other agreements, instruments and documents
required to be delivered at the Closing.
“Assigned Contracts” has the
meaning set forth in Section 2.01(c).
“Assumed Liabilities” has the
meaning set forth in Section 2.03.
“Balance Sheet” has the meaning set
forth in Section 3.04.
“Balance Sheet Date” has the
meaning set forth in Section 3.04.
“Basket” has the meaning set forth
in Section 8.04(a).
“Benefit Plan” means each pension,
benefit, retirement, compensation, employment, consulting,
profit-sharing, deferred compensation, incentive, bonus,
performance award, membership or profits interest, change in
control, retention, severance, vacation, paid time off, welfare,
fringe-benefit and other similar agreement, plan, policy, program
or arrangement (and any amendments thereto), in each case whether
or not reduced to writing and whether funded or unfunded, including
each “employee benefit plan” within the meaning of
Section 3(3) of ERISA, whether or not tax-qualified and whether or
not subject to ERISA, which is or has been maintained, sponsored,
contributed to, or required to be contributed to by Onewire for the
benefit of any current or former employee, officer, manager,
retiree, independent contractor or consultant of Onewire or any
spouse or dependent of such individual, or under which Onewire or
any of its ERISA Affiliates has or may have any Liability, or with
respect to which Newco or any of its Affiliates would reasonably be
expected to have any Liability, contingent or
otherwise.
“Bill of Sale” means a bill of sale
in substantially the form attached hereto as Exhibit B pursuant to which
Onewire shall transfer to Newco at the Closing to Newco title to
the tangible personal property included in the Purchased
Assets.
“Books and Records” has the meaning
set forth in Section 2.01(m).
“Business” has the meaning set
forth in the Recitals.
“Business Day” means any day except
Saturday, Sunday or any other day on which commercial banks located
in New York, New York are authorized or required by Law to be
closed for business.
“Cash” has the meaning set forth in
Section 2.01(a).
“Closing” has the meaning set forth
in Section 2.05.
“Closing Date” has the meaning set
forth in Section 2.05.
“Closing Payment” shall have the
meaning set forth in Section 2.07(b).
“Closing Working Capital”
means: (i) Current Assets, less (ii) Current Liabilities,
determined as of the open of business on the Closing
Date.
“Closing Working Capital
Statement” has the meaning set forth in 2.8(a).
“Code” means the Internal Revenue
Code of 1986, as amended.
“Contracts” means all contracts,
leases, deeds, mortgages, licenses, instruments, notes,
commitments, undertakings, indentures, joint ventures and all other
agreements, commitments and legally binding arrangements, whether
written or oral, used in or otherwise relating to the
Business.
“Current Assets” means the current
assets of the Business included in the line items set forth on
Schedule 2.09,
calculated in accordance with GAAP and in accordance with the
methodology set forth in the Estimated Working Capital Statement
attached as Exhibit
C.
“Current Liabilities” means the
current Liabilities of the Business included in the line items set
forth on Schedule
2.09 calculated in accordance with GAAP and in accordance
with the methodology set forth in the Estimated Working Capital
Statement attached hereto as Exhibit C.
“Data Protection Programs” means
(i) all Laws, (ii) all self-regulatory programs in which Onewire
has enrolled, (iii) the Payment Card Industry Data Security
Standard, and (iv) all Privacy Policies, in each case relating to
privacy, data protection, and data security.
“Direct Claim” has the meaning set
forth in Section 8.05(c).
“Disclosure Schedules” means the
Disclosure Schedules delivered by Onewire and Recruiter,
respectively, upon execution and delivery of this Agreement, as
they may be amended in accordance with Section
5.10.
“Dollars” or “$” means the lawful currency of
the United States.
“Employees” has the meaning set
forth in Section 3.19(a).
“Encumbrance” means any charge,
claim, community property interest, pledge, condition, equitable
interest, lien (statutory or other), option, security interest,
mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
“Environment” has the meaning set
forth in Section 3.22.
“Environmental Laws” has the
meaning set forth in Section 3.22.
“Environmental Liability” has the
meaning set forth in Section 3.22.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“ERISA Affiliate” means all
employers (whether or not incorporated) that would be treated
together with Onewire or any of its Affiliates as a “single
employer” within the meaning of Section 414 of the
Code.
“Estimated Closing Working Capital”
has the meaning set forth in 2.08(a).
“Estimated Closing Working Capital
Statement” has the meaning set forth in
2.08(a).
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
“Excluded Assets” has the meaning
set forth in Section 2.02.
“Excluded Liabilities” has the
meaning set forth in Section 2.04.
“FCPA” has the meaning set forth in
Section 3.18(c).
“Financial Statements” has the
meaning set forth in Section 3.04.
“Fraud” means, with respect
to a Party, an actual and intentional misrepresentation of a
material existing fact with respect to the making of any
representation or warranty of such Party in Article III or Article
IV, as applicable, which misrepresentation was made for the purpose
of inducing the other Party to act or fail to act, and upon which
the other Party justifiably relies with resulting
Losses.
“Fundamental Warranties”
means the representations and warranties in Section 3.01,
Section 3.02, Section 3.03, Section 3.04, Section
3.06, Section 3.08, Section 3.10, Section 3.17, Section 3.18,
Section 3.19 and Section 3.22.
“GAAP” means United States
generally accepted accounting principles in effect from time to
time, consistently applied.
“General Warranties” means the
representations and warranties in Article III and Article IV
(other than the Fundamental Warranties).
“Government Contracts” has the
meaning set forth in Section 3.07(a)(ix).
“Governmental Authority” means any
(i) international, multinational, federal, state, local or foreign
government or political subdivision thereof, or any agency or
instrumentality of such government or political subdivision, (ii)
any self-regulatory organization (to the extent that the rules,
regulations or orders of such organization or authority have the
force of Law), (iii) any arbitrator, court or tribunal of competent
jurisdiction, and (iv) any stock exchange, quasi-governmental or
private body exercising any regulatory, administrative,
expropriation or taxing authority under or for the account of any
of the foregoing.
“Governmental Order” means any
order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental
Authority.
“Hazardous Material” has the
meaning set forth in Section 3.22.
“Holdback Shares” means $251,000 of
the Share Consideration based on the Share Consideration Price Per
Share as of the date hereof.
“Indebtedness” means, without
duplication and with respect to Onewire, all (i) indebtedness
for borrowed money; (ii) obligations for the deferred purchase
price of property or services, (iii) long or short-term obligations
evidenced by notes, bonds, debentures or other similar instruments;
(iv) obligations under any interest rate, currency swap or other
hedging agreement or arrangement; (v) capital lease obligations;
(vi) reimbursement obligations under any letter of credit,
banker’s acceptance or similar credit transactions; (vii)
guarantees made by Onewire on behalf of any third party in respect
of obligations of the kind referred to in the foregoing clauses (i)
through (vi); and (viii) any unpaid interest, prepayment penalties,
premiums, costs and fees that would arise or become due as a result
of the prepayment of any of the obligations referred to in the
foregoing clauses (i) through (vi).
“Indemnified Party” has the meaning
set forth in Section 8.05.
“Indemnifying Party” has the
meaning set forth in Section 8.05.
“Insurance Policies” has the
meaning set forth in Section 3.16.
“Intellectual Property” means all
intellectual property rights and assets, and all rights, interests
and protections that are associated with, similar to, or required
for the exercise of, any of the foregoing, however arising,
pursuant to the Laws of any jurisdiction throughout the world,
whether registered or unregistered, including any and all: (i)
trademarks, service marks, trade names, brand names, logos, trade
dress, design rights and other similar designations of source,
sponsorship, association or origin, together with the goodwill
connected with the use of and symbolized by, and all registrations,
applications and renewals for, any of the foregoing;
(ii) internet domain names, whether or not trademarks,
registered in any top-level domain by any authorized private
registrar or Governmental Authority, web addresses, web pages,
websites and related content, accounts with Twitter, Facebook and
other social media companies and the content found thereon and
related thereto, and URLs; (iii) works of authorship, expressions,
designs and design registrations, whether or not copyrightable,
including copyrights, author, performer, moral and neighboring
rights, and all registrations, applications for registration and
renewals of such copyrights; (iv) inventions, discoveries, trade
secrets, business and technical information and know-how,
databases, data collections and other confidential and proprietary
information and all rights therein; (v) patents (including all
reissues, divisionals, provisionals, continuations and
continuations-in-part, re-examinations, renewals, substitutions and
extensions thereof), patent applications, and other patent rights
and any other Governmental Authority-issued indicia of invention
ownership (including inventor’s certificates, petty patents
and patent utility models); and (vi) software and firmware,
including data files, source code, object code, application
programming interfaces, architecture, files, records, schematics,
computerized databases and other related specifications and
documentation.
“Inventory” has the meaning set
forth in Section 2.01(b).
“Knowledge” means, (i) when used
with respect to Onewire, the actual knowledge of the Onewire
Representative, after due inquiry, and the knowledge that he would
reasonably be expected to obtain in the course of diligently
performing his duties for Onewire, and (ii) when used with
respect to Recruiter or Newco, the actual knowledge of Evan Sohn,
after reasonable inquiry, and the knowledge that he would
reasonably be expected to obtain in the course of diligently
performing his duties for Recruiter.
“Law” means any domestic or
foreign, federal provincial, state or local statute, law,
ordinance, regulation, rule, code, order, constitution, treaty,
common law, judgment, decree, other requirement or rule of law of
any Governmental Authority.
“Liabilities” means liabilities,
obligations or commitments of any nature whatsoever, asserted or
unasserted, known or unknown, absolute or contingent, accrued or
unaccrued, matured or unmatured or otherwise.
“Losses” means losses, damages,
Liabilities, deficiencies, judgments, interest, awards, penalties,
fines, costs or expenses of whatever kind or nature, including
reasonable attorneys’ and experts’ fees and
disbursements incurred by a Party in enforcing its rights
hereunder.
“Malicious Code” has the meaning
set forth in Section 3.11(c).
“Material Adverse Effect” means any
event, occurrence, fact, condition or change that is, or could
reasonably be expected to become, individually or in the aggregate,
materially adverse to (i) the business, results of operations,
condition (financial or otherwise), or assets of Onewire, Newco, or
Recruiter, as the case may be, or (ii) the ability of Onewire,
Newco, or Recruiter to consummate the transactions contemplated
hereby on a timely basis; except any event, occurrence, fact,
condition or change related to (1) any change in the United States
economy or securities or financial markets in general, or any
change in general national economic or financial conditions; (2)
any change that generally affects the market for the Business in
which Onewire operates; (3) the execution, delivery or performance
of this Agreement; (4) any changes in Laws, accounting rules or in
the authoritative interpretations thereof or in regulatory or
interpretative guidance related thereto, (5) acts of war (whether
or not declared), armed hostilities or terrorism, or the escalation
or worsening thereof, or (6) any natural or man-made disaster or
acts of God; provided, that the matters set
forth in clauses (1), (2) and (4) above shall not be excluded if
they have a disproportionate impact on one Party relative to the
other companies in the in which such Party
operates.
“Material Contracts” has the
meaning set forth in Section 3.07(a).
“Newco” has the meaning set forth
in the preamble.
“Newco Revenue True-Up Payment” has
the meaning set forth in Section 2.09(c).
“OFAC” has the meaning set forth in
Section 3.18(d).
“OFAC Prohibited Party” has the
meaning set forth in Section 3.18(d).
“Onewire” has the meaning set forth
in the preamble.
“Onewire 2020 Audited Financials”
has the meaning set forth in Section 2.09(b).
“Onewire Business Revenue” shall
mean all revenue generated by Onewire through the following
operations:
|
|
(1)
|
“Onewire
Executive Search and Additional revenue”. Professional
services business involving finding and placing candidates for
clients with revenue paid on successful placements of the
candidates.
|
|
|
(2)
|
“Onewire Saas
revenue”. Subscription business whereby businesses pay
to post jobs and search candidates within the OneWire candidate
database.
|
|
|
(3)
|
“Matchbook
revenue”. A software platform providing businesses
access to the curated list of candidates with the revenue paid for
successful placements of those candidates.
|
“Onewire Indemnitees” has the
meaning set forth in Section 8.03.
“Onewire Indemnitors” means Onewire
and Onewire Stakeholders.
“Onewire Intellectual Property”
means all Intellectual Property that is owned or purported to be
owned by Onewire, and that is used in or necessary for the conduct
of the Business as currently conducted.
“Onewire IP Agreements” means all
licenses, sublicenses, consent to use agreements, settlements,
coexistence agreements, covenants not to sue, permissions and other
Contracts (including any right to receive or obligation to pay
royalties or any other consideration), whether written or oral,
relating to Intellectual Property to which Onewire is a party,
beneficiary or otherwise bound.
“Onewire IP Registrations” means
all Onewire Intellectual Property that is subject to any issuance
registration, application or other filing by, to or with any
Governmental Authority or authorized private registrar in any
jurisdiction, including registered trademarks, domain names and
registered copyrights, issued and reissued patents and pending
applications for any of the foregoing.
“Onewire Charter Documents” has the
meaning set forth in Section 3.03.
“Onewire Representative” has the
meaning set forth in the preamble.
“Onewire Stakeholder” means any of
Onewire’s stockholders, noteholders, and other recipients of
Recruiter Common Stock.
“Onewire Product” means all
proprietary Software products and related services of Onewire and
Matchbook.io that are currently being, or at any time in the past
five years have been, offered, licensed, sold, distributed, hosted,
maintained, supported or otherwise provided or made available by or
on behalf of Onewire.
“Onewire Revenue True-Up Payment”
has the meaning set forth in Section 2.09(a).
“Onewire Valuation” shall mean an
aggregate of $1,225,336, which is equal the sum of the
following;
|
|
(1)
|
1.5x multiple of the
2020 Executive Search and Additional revenue estimated to be
$259,446 for a valuation of $383,791; and
|
|
|
(2)
|
3.0x multiple of the
2020 OneWire SaaS revenue estimated to be $210,848 for a valuation
of $632,544; and
|
|
|
(3)
|
3.0x multiple of the
2020 Matchbook revenue estimated to be $69,667 for a valuation of
$209,001.
|
“Outside Date” has the meaning set
forth in Section 9.01(d)(ii).
“Party” and “Parties” means each party to this
Agreement or collectively all the parties to this
Agreement.
“Permits” means all permits,
licenses, certifications, accreditations, franchises, approvals,
consents, authorizations, registrations, certificates, grants,
directives, guidelines, policies, requirements, concessions,
variances, exemptions, identification numbers, and similar rights
obtained, or required to be obtained, from any Governmental
Authority.
“Permitted Encumbrances” has the
meaning set forth in Section 3.08(a).
“Person” means an individual,
corporation, partnership, joint venture, limited liability company,
Governmental Authority, unincorporated organization, trust,
association or other entity.
“Personal Information” means
information pertaining to an individual that is regulated by one or
more information privacy or security Laws.
“Personnel” has the meaning set
forth in Section 3.19.
“Plan of Liquidation” has the
meaning set forth in the Recitals.
“Post Closing Working Capital
Adjustment” has the meaning set forth in Section
2.08(b).
“Privacy Policies” means all
published privacy policies and internal privacy policies and
guidelines maintained or published by Onewire.
“Property Tax Returns” has the
meaning set forth in Section 6.01(a).
“Purchase Price” means the total
consideration of $1,255,000, consisting $1,255,000 of Recruiter
Common Stock (“Share
Consideration”), the exact number of shares of which
shall be determined using the 30-day VWAP (the “Share Consideration Price Per
Share”).
“Purchased Assets” has the meaning
set forth in Section 2.01.
“Real Property” means the real
property owned, leased or subleased by Onewire, together with all
buildings, structures and facilities located
thereon.
“Representative” means, with
respect to any Person, any and all directors, managers, officers,
employees, consultants, financial advisors, counsel, accountants,
and other agents of such Person.
“Requisite Onewire Vote” has the
meaning set forth in Section 3.02(b).
“Review Period” has the meaning set
forth in Section 2.07(b).
“SEC” means the Securities and
Exchange Commission.
“SEC Reports” has the meaning set
forth in Section 4.07.
“Securities Act” has the meaning
set forth in Section 3.23(a).
“Shareholder” means any Person who
holds shares of capital stock or membership interests of
Onewire.
“Recruiter” has the meaning set
forth in the preamble.
“Recruiter Balance Sheet” has the
meaning set forth in Section 4.09.
“Recruiter Common Stock” means the
common stock, par value $0.0001 per share, of
Recruiter.
“Recruiter Indemnitees” has the
meaning set forth in Section 8.02.
“Release” has the meaning set forth
in Section 3.22.
“Shareholders” means the holders of
membership interests of Onewire.
“Software” means any and all
computer software and code, including all new versions, updates,
revisions, improvements and modifications thereof, whether in
source code, object code, or executable code format, including
systems software, application software (including mobile apps),
firmware, middleware, programming tools, scripts, routines,
interfaces, architecture, schematics, records, libraries, and data,
databases and data collections, and all related specifications and
documentation, including developer notes, comments and annotations,
user manuals and training materials relating to any of the
foregoing.
“Target Working Capital” means
$135,000.
“Tax Return” means any return,
declaration, report, claim for refund, information return or
statement or other document relating to Taxes, in each case, that
is filed or required to be filed with a Governmental Authority,
including any schedule or attachment thereto, and including any
amendment thereof.
“Taxes” means all federal, state,
local, foreign and other income, gross receipts, sales, use,
production, ad valorem, transfer, documentary, franchise,
registration, profits, license, lease, service, service use,
withholding, payroll, employment, unemployment, estimated, excise,
severance, environmental, stamp, occupation, premium, property
(real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments or similar charges,
together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties
imposed by a Governmental Authority.
“Transaction Documents” means this
Agreement, the Ancillary Documents and each other agreement,
instrument and document contemplated hereby and
thereby.
“Third Party Claim” has the meaning
set forth in Section 8.05(a).
“Trading Market” means any of the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
the New York Stock Exchange, the NYSE American, the OTCQB, the
OTCQX, or the OTC Pink Marketplace (or any successors to any of the
foregoing).
“Transaction Expenses” means all
fees and expenses incurred by Onewire and any Affiliate at or prior
to the Closing in connection with the preparation, negotiation and
execution of this Agreement and the other Transaction Documents,
and the performance and consummation of the other transactions
contemplated hereby and thereby.
“Union” has the meaning set forth
in Section 3.19(b).
“VWAP” means, for any date, the
price determined by the first of the following clauses that
applies: (i) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York, NY time) to 4:02 p.m. (New York, NY time)), (ii)
if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest
preceding date) on OTCQB or OTCQX as applicable, (iii) if the
Common Stock is not then listed or quoted for trading on the OTCQB
or OTCQX and if prices for the Common Stock are then reported by
the OTC Pink marketplace published by OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (iv) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by Recruiter and
Onewire, the fees and expenses of which shall be paid by
Recruiter.
“Written Consent” has the meaning
set forth in Section 3.02(b).
Article II
PURCHASE AND SALE
Section 2.01 Purchase and Sale of
Assets. Subject to the terms and conditions set forth
herein, at the Closing, Onewire shall sell, assign, transfer,
convey and deliver to Newco, and Newco shall purchase, acquire and
assume from Onewire, free and clear of any Encumbrances other than
Permitted Encumbrances, all of Onewire’s right, title and
interest in, to and under all of Onewire’s assets, including
the following assets (collectively, the “Purchased Assets”) but
specifically excluding the Excluded Assets:
(a) all
cash, cash equivalents, and negotiable instruments held by Onewire
of or related to the Business, and any claim, remedy or other right
related or indirectly to any of the Purchased Assets, including,
for the avoidance of doubt, cash held in bank accounts and
elsewhere within the Business and cash held for or on behalf of
third parties, including but not limited to customer deposits
(“Cash”);
(b) all
accounts receivable of the Business (“Accounts
Receivable”);
(c) all
inventory, finished goods, raw materials, work in progress,
packaging, supplies, parts and other inventories of the Business
(“Inventory”);
(d) all
sales and client relationships, including customer lists and
third-party lists relating to such
relationships;
(e) all
Contracts set forth on Schedule 2.01(e) (the
“Assigned
Contracts”);
(f) all
Onewire Intellectual Property, including without limitation, all
user and personal profiles, resumes, and client, CRM, recruiter and
other databases, brands, Website domains, software code, the right
to sue and recover for past, present or future infringement or
other unauthorized use of such Onewire Intellectual Property, and
the Onewire Intellectual Property specifically listed on
Schedule
2.01(f)
(g) all
social media accounts;
(h) all
partnership and vendor agreements as needed to maintain the
Business as currently conducted;
(i) all
training and operating manuals;
(j) all
Permits which are held by Onewire and required for the conduct of
the Business as currently conducted or for the ownership and use of
the Purchased Assets, including, without limitation, those listed
on Schedule
3.18(b), but solely to the extent
assignable;
(k) all
rights to any Actions of any nature available to or being pursued
by Onewire to the extent related to the Business, the Purchased
Assets or the Assumed Liabilities, whether arising by way of
counterclaim or otherwise, but specifically excluding any Action
against Onewire or its Affiliates;
(l) all
prepaid expenses, credits, advance payments, claims, security,
refunds, rights of recovery, rights of set-off, rights of
recoupment, deposits, charges, sums and fees relating to any of the
Purchased Assets;
(m) all
of Onewire’s rights under warranties, indemnities and all
similar rights against third parties, other than its Affiliates, to
the extent related to any Purchased Assets;
(n) all
insurance benefits, including rights and proceeds, arising from or
relating to the Business, the Purchased Assets or the Assumed
Liabilities, but solely to the extent
assignable;
(o) copies
of all books and records, including, but not limited to, books of
account, ledgers and general, financial and accounting records,
machinery and equipment maintenance files, customer lists, customer
purchasing histories, price lists, distribution lists, supplier
lists, production data, quality control records and procedures,
customer complaints and inquiry files, research and development
files, records and data (including all correspondence with any
Governmental Authority), sales material and records (including
pricing history, total sales, terms and conditions of sale, sales
and pricing policies and practices), strategic plans, internal
financial statements, and marketing and promotional surveys
(“Books and
Records”);
(p) all
equipment, machinery, tools, vehicles, office equipment, supplies,
computers, servers and other hardware, telephones and other
tangible personal property of the Business;
(q) all
telephone numbers, fax numbers, e-mail addresses, postal addresses
and postal boxes related to or used in the
Business;
(r) all
goodwill and the going concern value relating to the Purchased
Assets; and
(s) all
other assets of Onewire relating to the Business, other than the
Excluded Assets.
Section 2.02 Excluded Assets.
Notwithstanding the foregoing, the Purchased Assets shall not
include any assets of Onewire which are not set forth in Section
2.01, including, without limitation, the following assets
(collectively, the “Excluded
Assets”):
(a) organizational
documents, Tax Returns, rights to Tax refunds, books of account or
other records having to do with the organization of
Onewire;
(b) securities
of Onewire;
(c) the
lease set forth on Schedule
2.02(c);
(d) all
Contracts that are not Assigned Contracts;
(e) all
rights that accrue or will accrue to Onewire or its Affiliates
under the Transaction Documents;
(f) all
Benefit Plans and assets attributable thereto;
and
(g) all
of the assets, properties and rights, if any, specifically set
forth on Schedule
2.02(g).
Section 2.03 Assumed Liabilities.
Subject to the terms and conditions set forth herein, Recruiter and
Newco shall assume and agree to pay, perform and discharge only the
following Liabilities of Onewire (collectively, the
“Assumed
Liabilities”), and no other
Liabilities:
(a) all
Liabilities in respect of the Assigned Contracts, but only to the
extent that such Liabilities thereunder are required to be
performed after the Closing Date, were incurred in the ordinary
course of business and do not relate to any failure to perform,
improper performance, warranty or other breach, default or
violation by Onewire or its Affiliates on or prior to the Closing
Date; and
(b) those
Liabilities of Onewire set forth on Schedule
2.03(b).
Section 2.04 Excluded Liabilities.
Notwithstanding the provisions of Section 2.01 or any other
provision in this Agreement to the contrary, Recruiter and Newco
shall not assume and shall not be responsible to pay, perform or
discharge any Liabilities of Onewire or any of its Affiliates of
any kind or nature whatsoever other than the Assumed Liabilities
(collectively, the “Excluded
Liabilities”). Onewire shall, and shall cause each of
its Affiliates to, timely pay and satisfy all Excluded Liabilities
which they are obligated to pay and satisfy. Without limiting the
generality of the foregoing, the Excluded Liabilities shall
include, but not be limited to, the following:
(a) any
Transaction Expenses or other Liabilities of Onewire or its
Affiliates arising or incurred in connection with the negotiation,
preparation, investigation and performance of this Agreement, the
other Transaction Documents and the underlying transactions
contemplated hereby or thereby, including, without limitation,
Transaction Expenses and the fees and expenses of counsel,
accountants, consultants and advisers to Onewire and/or its
Affiliates;
(b) any
Liabilities relating to or arising out of the Excluded
Assets;
(c) any
Liabilities in respect of any pending or threatened Action arising
out of, relating to or otherwise in respect of the ownership or
operation of the Business or the Purchased Assets on or before the
Closing Date;
(d) all
other Liabilities and obligations arising out of, relating to or
otherwise in respect of Onewire’s ownership or operation of
the Business and the Purchased Assets on or before the Closing Date
(other than Current Liabilities included in the calculation of
Closing Working Capital); and
(e) any
Liabilities for (i) Taxes relating to the Business, the Purchased
Assets or the Assumed Liabilities for any taxable period ending on
or prior to the Closing Date and (ii) any other Taxes of Onewire or
its Affiliates (other than Taxes specifically allocated to Newco
hereunder) for any taxable period;
(f) except
as specifically set forth herein, any Liabilities of Onewire and
its Affiliates relating to or arising out of (i) the employment, or
termination of employment, of any employee of the Business prior to
the Closing Date, (ii) workers’ compensation claims of any
employee of the Business which relate to events occurring prior to
the Closing Date; and (iii) all Benefit Plans of Onewire or its
Affiliates;
(g) all
Liabilities relating to Contracts that are not Assigned Contracts;
and
(h) any
other Liabilities not relating to the Purchased
Assets.
Section 2.05 Closing. Subject to the
terms and conditions of this Agreement, the consummation of the
transactions contemplated by this Agreement (the
“Closing”) shall
take place at 1:00 p.m., New York, NY time, no later than three
Business Days after the last of the conditions to Closing set forth
in Article VII have been satisfied or waived (other than conditions
which, by their nature, are to be satisfied on the Closing Date),
by electronic or other exchange of documents, or at such other time
or on such other date as Onewire and Recruiter may mutually agree
upon in writing (the day on which the Closing takes place being the
“Closing
Date”).
Section 2.06 Closing
Deliverables.
(a) At
or prior to the Closing, Onewire shall deliver, or cause to be
delivered, to Newco the following:
(i) duly
executed copies of this Agreement and each other Transaction
Document to which Onewire or its Affiliates are a
party;
(ii) an
estimated Closing Date balance sheet reflecting the Current Assets
and Current Liabilities as of the Closing Date;
(iii)
a certificate, dated the Closing Date and signed by a duly
authorized officer of Onewire, certifying that each of the
conditions set forth in Section 7.02(a) and Section 7.02(b) have
been satisfied;
(iv) a
certificate, dated the Closing Date and signed by a duly authorized
officer of Onewire, certifying that (A) attached thereto are true
and complete copies of all resolutions and consents set forth in
Section 3.02 authorizing the execution, delivery and performance of
this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby,
and (B) all such resolutions and consents are in full force and
effect and are all the resolutions and consents adopted in
connection with the transactions contemplated hereby and
thereby;
(v) such
other documents or instruments as Recruiter or Newco reasonably
requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.
(b) At
the Closing, Recruiter and Newco, as applicable, shall deliver to
Onewire (and/or to such other Persons as Onewire may direct) the
following:
(i) duly
executed copies of this Agreement and each other Transaction
Document to which Newco or Recruiter are party
(ii) the
Closing Share Payment (as defined below);
(iii) a
certificate, dated the Closing Date and signed by a duly authorized
officer of Recruiter, certifying that each of the conditions set
forth in Section 7.03(a) and Section 7.03(b) have been
satisfied;
(iv) a
certificate, dated the Closing Date and signed by the Secretary or
an Assistant Secretary (or equivalent officer) of Recruiter and
Newco, certifying that attached thereto are true and complete
copies of all resolutions adopted by the board of directors of
Recruiter authorizing the execution, delivery and performance of
this Agreement and the Transaction Documents to which they are a
party and the consummation of the transactions contemplated hereby
and thereby, and that all such resolutions and written
authorizations are in full force and effect and are all the
resolutions adopted in connection with the transactions
contemplated hereby and thereby;
(v) such
other documents or instruments as Onewire reasonably requests and
are reasonably necessary to consummate the transactions
contemplated by this Agreement.
Section 2.07 Purchase Price; Holdback
Shares.
(a) The
aggregate purchase price for the Purchased Assets shall be equal to
the Purchase Price, plus
the assumption of the Assumed Liabilities. The Parties agree and
acknowledge that Onewire shall be solely responsible for, and shall
pay in full on or before the Closing Date, all of Onewire’s
(i) Indebtedness, (ii) Transaction Expenses, and (iii) Liabilities
that are not Assumed Liabilities.
(b) On
the Closing Date, Recruiter shall issue the Share Consideration to
Onewire (the “Closing Share
Payment”), of which the Holdback Shares will be held
by Onewire pursuant to Section 2.07(c), Section 2.08, Section 2.09,
and shall be used to fund the Onewire’s indemnity obligations
pursuant to Article VIII.
(c) Holdback
Shares. At Closing, Recruiter shall issue the Holdback
Shares to Onewire, provided, however, that the Holdback Shares
shall be subject to forfeiture to Recruiter for no consideration in
accordance with Onewire's indemnity obligations pursuant to Article
VIII (the "Holdback
Forfeiture Condition"). On the date that is one (1) year
after the Closing Date (the "Release Date"), the Holdback
Forfeiture Condition shall expire with respect to the Holdback
Shares.
Section 2.08 Closing Working Capital Adjustment;
Post-Closing True-Up.
(a) At
least three (3) Business Day before the Closing, Onewire shall
prepare and deliver to Newco a statement (the “Estimated Closing Working Capital
Statement”) setting forth Onewire’s good faith
estimate of Closing Working Capital (the “Estimated Closing Working
Capital”), including the calculation thereof in
reasonable detail, calculated using the same methodology as set
forth on Exhibit
C.
(b) At
the Closing, the Purchase Price shall be either (i) increased by
the amount, if any, by which the Estimated Closing Working Capital
(as set forth in the Estimated Closing Working Capital Statement)
is greater than the Target
Working Capital, or (ii) decreased by the amount, if any, by which
the Estimated Closing Working Capital (as set forth in the
Estimated Closing Working Capital Statement) is less than the Target Working
Capital.
(c) As
soon as reasonably practicable but in any event within 45 days
after the Closing Date, Newco shall prepare and deliver to Onewire
a statement (the “Closing
Working Capital Statement”) setting forth
Newco’s calculation of Closing Working Capital, including the
calculation thereof in reasonable detail calculated using the same
methodology as set forth on Exhibit C. The post-closing
working capital adjustment (the “Post-Closing Working Capital
Adjustment”) shall be an amount equal to the Closing
Working Capital minus the
Estimated Closing Working Capital.
(d) After
receipt of the Closing Working Capital Statement, Onewire shall
have 45 days (the “Review
Period”) to review the Closing Working Capital
Statement. During the Review Period, Onewire and its accountants
shall, at their sole expense, have reasonable access to the
personnel of, and work papers prepared by, Newco or Newco’s
accountants to the extent relating to the Closing Working Capital
Statement and the calculation of the Post-Closing Adjustment;
provided,
however, that any
such access shall be during normal business hours and shall be
conducted in a manner so not to disrupt the operations of the
Business.
(e) On
or prior to the last day of the Review Period, Onewire may object
to the Closing Working Capital Statement by delivering to Newco a
written statement setting forth Onewire’s objections in
reasonable detail (the “Statement of Objections”). If
Onewire fails to deliver the Statement of Objections before the
expiration of the Review Period, then the Closing Working Capital
Statement and the Post-Closing Working Capital Adjustment
(reflected in the Closing Working Capital Statement), as the case
may be, shall be deemed to have been accepted by Onewire. If
Onewire delivers the Statement of Objections prior to the
expiration of the Review Period, then Onewire and Newco shall
negotiate in good faith to resolve such objections within 30 days
after the delivery of the Statement of Objections (the
“Resolution
Period”) and, if such objections are resolved within
the Resolution Period, then the Post-Closing Working Capital
Adjustment and the Closing Working Capital Statement, with such
changes as may have been previously agreed in writing by Newco and
Onewire, shall be final and binding upon the
Parties.
(f) If
Onewire and Newco fail to reach an agreement with respect to all of
the matters set forth in the Statement of Objections before
expiration of the Resolution Period, then any amounts remaining in
dispute (“Disputed
Amounts”) shall be submitted for resolution to the
office of an impartial internationally recognized firm of
independent certified public accountants other than Newco’s
accountants or Onewire’s accountants (the “Independent Accountant”) and
appointed mutually by Onewire and Newco, who, acting as experts and
not arbitrators, shall resolve the Disputed Amounts only and make
any adjustments to the Post-Closing Working Capital Adjustment, as
the case may be, and the Closing Working Capital Statement. The
Independent Accountant shall only decide the specific items under
dispute by the Parties and their decision for each Disputed Amount
must be within the range of values assigned to each such item in
the Closing Working Capital Statement and the Statement of
Objections, respectively.
(g) The
Independent Accountant shall make a determination as soon as
practicable within 30 days (or such other time as the Parties
hereto shall agree in writing) after their engagement, and their
resolution of the Disputed Amounts and their adjustments to the
Closing Working Capital Statement and/or the Post-Closing Working
Capital Adjustment shall be conclusive and binding upon the Parties
hereto.
(h) Except
as otherwise provided herein, any payment of the Post-Closing
Working Capital Adjustment shall be due (x) within five Business
Days of acceptance of the applicable Closing Working Capital
Statement or (y) if there are Disputed Amounts, then within five
Business Days of the resolution of such Disputed Amounts pursuant
to Section2.08(c). If the Post-Closing Working Capital Adjustment,
as finally determined by the Independent Accountant, is a positive
number in favor of Onewire (i.e., the Closing Working Capital is
greater than the Estimated
Closing Working Capital), Recruiter shall issue to Onewire
additional shares of Recruiter Common Stock based on the Share
Consideration Price Per Share on the payment date. If the
Post-Closing Working Capital
Adjustment, as finally determined by the Independent Accountant, is
a negative number in favor of Newco (i.e., the Closing
Working Capital is less
than the Estimated Closing Working Capital), Onewire shall transfer
to Recruiter from the Holdback Shares the appropriate number of
shares of Recruiter Common Stock based on the Share Consideration
Price Per Share on the payment date.
(i) Allocations;
Adjustments for Tax Purposes. For U.S. federal Taxes,
Recruiter, Newco and Onewire agree to allocate the Purchase Price,
the Assumed Liabilities, and all other relevant items among the
Purchased Assets (the “Allocation”) in accordance with
the Purchase Price Allocation Methodology attached hereto as
Exhibit F. Any
payments made pursuant to this Section 2.08 shall be
treated as an adjustment to the Purchase Price by the Parties for
Taxes purposes, unless otherwise required by applicable Law.
Neither Recruiter, Newco nor Onewire shall, nor shall they permit
their respective Affiliates to, take any position inconsistent with
the Purchase Price Allocation Methodology. Recruiter, Newco and
Onewire shall make appropriate adjustments to the Allocation to
reflect the adjustments to the Purchase Price set forth in this
Section 2.08 and Section 2.09.
Section 2.09 Post-Closing Revenue
True-Up.
(a) Subject
to the terms and conditions of this Section 2.09, Onewire shall be
entitled to receive additional shares of Recruiter Common Stock
based on the amount of Onewire Business Revenue actually collected
for fiscal 2020 (the “Onewire
Revenue True-Up Payment”).
(b) In
the event that the aggregate amount of the Onewire Business Revenue
for the period commencing on January 1, 2020 and ending on December
31, 2020, and actually collected by Onewire by the close of
business on February 28, 2021 (the “2020 Base Revenue Amount”), as
reflected in Onewire’s 2020 audited financial statements (the
“Onewire 2020 Audited
Financials”), is greater than the Onewire Valuation,
Onewire shall be entitled to receive, and Recruiter shall pay and
deliver to Onewire within 45 days following delivery of the Onewire
2020 Audited Financials, a Onewire Revenue True-Up Payment in an
amount equal to the 2020 Base Revenue Amount minus the Onwire Valuation. Such
Onewire Revenue True-Up Payment shall be made by Recruiter in
shares of Recruiter Common Stock based on the Share Consideration
Price Per Share on the date such Onewire Revenue True-Up Payment is
made.
(c) In
the event that the Onewire Revenue True-Up Payment pursuant to
Section 2.09(b) is less
than the 2020 Base Revenue Amount, Newco shall be entitled to
receive, and Onewire shall transfer and deliver to Newco within 45
days following delivery of the Onewire 2020 Audited Financials, a
payment in an amount equal to the difference between the Revenue
True-Up Payment and the 2020 Base Revenue Amount (the
“Newco Revenue True-Up
Payment”); provided, however, that in no event shall
the Newco Revenue True-Up Payment exceed 50% of the aggregate value
of the Holdback Shares based on the Share Consideration Price Per
Share on the date that such Newco Revenue True-Up Payment is made.
The Newco Revenue True-Up Payment shall be made by Onewire in the
form of shares of Recruiter Common Stock, based on the Share
Consideration Price Per Share on the date such Newco Revenue
True-Up Payment is made. In the event of a dispute regarding the
amount or calculation of the Revenue True-Up Payment, such dispute
shall be resolved by the Independent Accountant in accordance with
Section 2.08.
Section 2.10 Tax Consequences; Plan of
Reorganization; Tax Reporting. The Parties intend
that the purchase of the Purchased Assets contemplated by this
Agreement shall qualify as a tax-free reorganization pursuant to
Section 368(a)(1)(C) of the Code and that the receipt of all
Recruiter Common Stock shall qualify as tax free consideration for
the Purchased Assets pursuant to Section 361(a) of the Code. The
Parties shall file all Tax Returns required by Law consistent with
such treatment, except as otherwise required by final determination
of a Tax authority. By executing this Agreement, the Parties hereto
adopt this Agreement as a “plan of reorganization”
within the meaning of Section 1.368-2(g) and 1.368-3(a) of the
Treasury Regulations. Notwithstanding the foregoing, Recruiter
makes no representations or warranties to Onewire regarding the Tax
treatment of the transaction contemplated hereby, or any of the Tax
consequences to Onewire, the Shareholders or other security holders
of Onewire, under this Agreement or any of the other transactions
or agreements contemplated hereby. Onewire acknowledges that it is
relying solely on Onewire’s own Tax advisors in connection
with this Agreement and the other transactions and agreements
contemplated hereby. Neither Onewire, Recruiter, Newco, nor any of
their Affiliates, has taken, shall take or agreed to take any
action, or shall refrain from taking any action, that would
reasonably be expected to prevent the transactions contemplated
hereby from constituting a reorganization qualifying under Section
368(a)(1)(C) of the Code.
Section 2.11 Third Party Consents. To
the extent that Onewire’s rights under any Assigned Contract,
or any other Purchased Asset, may not be assigned to Newco without
the consent of another Person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be
unlawful, and Onewire, at its expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as
promptly as possible. If any such consent shall not be obtained or
if any attempted assignment would be ineffective or would impair
Newco’s rights under the Purchased Asset in question so that
Newco would not in effect acquire the benefit of all such rights,
Onewire, to the maximum extent permitted by law and such Purchased
Asset, shall act after the Closing as Newco’s agent in order
to obtain for it the benefits thereunder and shall cooperate, to
the maximum extent permitted by Law and such Purchased Asset, with
Newco in any other reasonable arrangement designed to provide such
benefits to Newco.
Section 2.12 Interim Payroll. Upon
Closing, Purchaser shall be obligated to make the payroll
disbursements in the amounts and to individuals set forth in
Exhibit D
hereto.
Article III
REPRESENTATIONS AND WARRANTIES OF ONEWIRE AND ONEWIRE
REPRESENTATIVE
Onewire and the Onewire
Representative represent and warrant to Newco and Recruiter that
the statements contained in this Article III are true and correct
as of the date hereof and will be true and correct on the Closing
Date, subject to such exceptions as are disclosed (referencing the
appropriate section and paragraph numbers) in the Disclosure
Schedule attached to this Agreement as Exhibit G and incorporated
herein by this reference and made a part hereof (the
“Onewire Disclosure
Schedule”).
Section 3.01 Organization and Qualification of
Onewire. Onewire is a limited liability company duly
organized, validly existing and in good standing under the Laws of
the State of Delaware. Onewire is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business
as currently conducted makes such licensing or qualification
necessary, except where the failure to be so qualified or in good
standing would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Business or the
Purchased Assets or the ability of Onewire to consummate the
transactions contemplated hereby and by the Ancillary Documents in
accordance with the terms hereof and thereof.
Section 3.02 Authority; Shareholder
Approval
(a) Onewire
has full power and authority to enter into and perform its
obligations under this Agreement and the Ancillary Documents to
which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by
Onewire of this Agreement and any Ancillary Document to which it is
a party and the consummation by Onewire of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Onewire and no other proceedings on
the part of Onewire are necessary to authorize the execution,
delivery and performance of this Agreement or to consummate the
other transactions contemplated hereby. This Agreement has been
duly executed and delivered by Onewire, and (assuming due
authorization, execution and delivery by each other party hereto)
this Agreement constitutes a legal, valid and binding obligation of
Onewire enforceable against Onewire in accordance with its terms.
When each Ancillary Document to which Onewire is or will be a party
has been duly executed and delivered by Onewire (assuming due
authorization, execution and delivery by each other party thereto),
such Ancillary Document will constitute a legal and binding
obligation of Onewire enforceable against it in accordance with its
terms.
(b) Onewire,
pursuant to written consents of the Shareholders in lieu of a
meeting (the “Written
Consent”) and, as of the date hereof, not subsequently
rescinded or modified in any way, has, as of the date hereof,
obtained the consent of the Shareholders required under
Onewire’s Charter Documents (“Requisite Onewire Vote”) to
approve this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby in accordance with the
Delaware General Corporation Law, as amended. Onewire has delivered
to Newco and Recruiter a copy of the Written Consent approving this
Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby. Other than the Written Consent, no
other consents of the Share holders are required in order to
authorize and approve this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby, and
no Shareholder has or has exercised any dissenters’ or
appraisal rights with respect to the transactions contemplated by
this Agreement.
Section 3.03 No Conflicts; Consents.
Except as set forth in Schedule 3.03, the execution,
delivery and performance by Onewire of this Agreement and the
Ancillary Documents to which it is a party, and the consummation of
the transactions contemplated hereby and thereby, do not and will
not: (i) conflict with or result in a violation or breach of, or
default under, any provision of the Certificate of Incorporation,
Bylaws or other organizational documents of Onewire
(“Onewire Charter
Documents”); (ii) conflict with or result in a
violation or breach of any provision of any Law or Governmental
Order applicable to Onewire, the Business or the Purchased Assets;
(iii) require the consent, notice or other action by any
Person under, conflict with, result in a violation or breach of,
constitute a default or an event that, with or without notice or
lapse of time or both, would constitute a default under, result in
the acceleration of or create in any party the right to accelerate,
terminate, modify or cancel any Contract to which Onewire is a
party or by which Onewire or the Business is bound or to which any
of the Purchased Assets are subject (including any Assigned
Contract); or (iv) result in the creation or imposition of any
Encumbrance other than Permitted Encumbrances on the Purchased
Assets. Except as set forth in Schedule 3.03, no consent,
approval, Permit, Governmental Order, declaration or filing with,
or notice to, any Governmental Authority is required by or with
respect to Onewire in connection with the execution, delivery and
performance of this Agreement and the Ancillary Documents and the
consummation of the transactions contemplated hereby and
thereby.
Section 3.04 Financial Statements.
Complete copies of Onewire’s unaudited financial statements
consisting of the balance sheet of Onewire at March 31, 2021 and
the related statements of income and retained earnings,
shareholders’ equity and cash flow for the year (the
“Financial
Statements”) are attached as Exhibit H. The Financial
Statements have been prepared in accordance with GAAP and are based
on Onewire’s books and records and fairly present in all
material respects the financial position of Onewire as of the
respective dates they were prepared and the results of the
operations of Onewire for the periods indicated. The balance sheet
of Onewire as of March 31, 2021 is referred to herein as the
“Balance Sheet”
and the date thereof as the “Balance Sheet
Date”.
Section 3.05 Undisclosed Liabilities.
Onewire has no Liabilities, except (a) those which are adequately
reflected or reserved against in the Balance Sheet as of the
Balance Sheet Date, (b) those which have been incurred in the
ordinary course of business consistent with past practice since the
Balance Sheet Date and which are not, individually or in the
aggregate, material in amount, or (c) those set forth in
Schedule
3.05.
Section 3.06 Absence of Certain Changes, Events and
Conditions. Except as set forth in Schedule 3.06, since the
Balance Sheet Date, and other than in the ordinary course of
business consistent with past practice, there has not been, with
respect to Onewire’s Business, any:
(a) event,
occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect;
(b) amendment
of the Onewire Charter Documents;
(c) material
change in any method of accounting or accounting practice of
Onewire, except as required by GAAP or disclosed in the notes to
the Financial Statements;
(d) material
change in Onewire’s cash management practices and its
policies, practices and procedures with respect to collection of
accounts receivable, establishment of reserves for uncollectible
accounts, accrual of accounts receivable, inventory control,
prepayment of expenses, payment of trade accounts payable, accrual
of other expenses, deferral of revenue and acceptance of customer
deposits;
(e) entry
into any Contract that would constitute a Material Contract except
with Recruiter or Newco;
(f) transfer,
assignment, sale, or other disposition of any of the Purchased
Assets shown or reflected in the Balance Sheet or cancellation of
any debts, entitlements or claims, or amendment, termination or
waiver of any rights constituting Purchased Assets, other than to
Recruiter or an Affiliate thereof;
(g) transfer,
assignment, or grant of any license or sublicense of any material
rights under or with respect to any Onewire Intellectual Property
or Onewire IP Agreements;
(h) material
damage, destruction, or loss of any Purchased Assets (whether or
not covered by insurance);
(i) capital
investment in, or any loan to, any other
Person;
(j) acceleration,
termination, material modification to, or cancellation of any
Material Contract or Permit;
(k) material
capital expenditures which would constitute an Assumed
Liability;
(l) imposition
of any Encumbrance upon any of the Purchased Assets, other than any
Permitted Encumbrance;
(m) (i)
grant of any bonuses, whether monetary or otherwise, or increase in
any wages, salary, severance, pension, or other compensation or
benefits in respect of its current or former employees, officers,
directors, managers, independent contractors, or consultants, other
than (A) as provided for in any written agreements , (B) a
distribution of the Purchase Price to any current or former
employees, officers, directors, managers, independent contractors,
or consultants of Onewire, (C) as required by applicable Law, or
(D) in the ordinary course of business and consistent with past
practice, (ii) change in the terms of employment for any employee
or any termination of any employees for which the aggregate costs
and expenses exceed $10,000 per annum, or (iii) action to
accelerate the vesting or payment of any compensation or benefit
for any current or former employee, officer, manager, independent
contractor, or consultant;
(n) hiring
or promoting any person as or to (as the case may be) an officer or
hiring or promoting any employee below officer except to fill a
vacancy in the ordinary course of business;
(o) adoption,
modification, or termination of any: (i) employment, severance,
retention, or other agreement with any current or former employee,
officer, director, manager, independent contractor, or consultant,
except in the ordinary course of business and consistent with past
practice, or (ii) Benefit Plan collective bargaining or other
agreement with a union, in each case whether written or
oral;
(p) loan
to (or forgiveness of any loan to), or entry into any other
transaction with, any of its Shareholders or current or former
officers, directors and employees (other than the payment of
compensation to employees in the ordinary course of business and
consistent with past practice);
(q) abandonment
or discontinuance of the Business;
(r) adoption
of any plan of merger, consolidation, reorganization, liquidation,
or dissolution, or filing of a petition in bankruptcy under any
provisions of federal bankruptcy Law or state insolvency Law or
consent to the filing of any bankruptcy or insolvency petition
against it under any similar Law;
(s) purchase,
lease or other acquisition of the right to own, use, or lease any
property or assets, except for purchases of inventory or supplies
in the ordinary course of business consistent with past practice;
or
(t) any
Contract to do any of the foregoing, or any action or omission that
would result in any of the foregoing.
Section 3.07 Material
Contracts.
(a) Schedule
3.07(a) lists each of the following Contracts of Onewire
affecting the Business (x) by which any of the Purchased Assets are
bound or affected or (y) to which Onewire is a party or by which it
is bound in connection with the Business or the Purchased Assets
(the “Material
Contracts”):
(i) all
Onewire IP Agreements;
(ii) each
Contract of Onewire involving aggregate consideration in a twelve
(12) month period in excess of $25,000 and which, in each case,
cannot be cancelled by Onewire without penalty or without more than
90 days’ notice;
(iii) all
Contracts that require Onewire to purchase its total requirements
of any product or service from a third party or that contain
“take or pay” provisions;
(iv) all
Contracts that provide for the indemnification by Onewire of any
Person or the assumption of any Taxes, environmental, or other
Liability of any Person;
(v) all
Contracts that relate to the acquisition or disposition of any
business, a material amount of stock or other equity or assets of
any other Person or any real property (whether by merger, sale of
stock, sale of assets, or otherwise);
(vi) all
broker, distributor, dealer, agency, sales promotion, market
research, marketing consulting, and advertising Contracts to which
Onewire is a party;
(vii) all
employment Contracts and Contracts with independent contractors or
consultants (or similar arrangements) to which Onewire is a party
and which contain any severance provisions, or are not cancellable
without material penalty or without more than 90 days’
notice;
(viii) all
Contracts relating to Indebtedness (including, without limitation,
guarantees) of Onewire;
(ix) all
Contracts with any Governmental Authority to which Onewire is a
party (“Government
Contracts”);
(x) all
Contracts that limit or purport to limit the ability of Onewire to
compete in any line of business or with any Person or in any
geographic area or during any period of time;
(xi) any
Contracts to which Onewire is a party that provide for any joint
venture, partnership, or similar arrangement by
Onewire;
(xii) all
Contracts for the sale of any of the Purchased Assets or for the
grant to any Person of any option, right of first refusal or
preferential or similar right to purchase any of the Purchased
Assets;
(xiii) all
powers of attorney with respect to the Business or any Purchased
Asset;
(xiv) all
collective bargaining agreements or Contracts with any union to
which Onewire is a party; and
(xv) any
other Contract that is material to the Purchased Assets or the
operation of the Business and not previously disclosed pursuant to
this Section 3.07.
(b) Each
Material Contract is valid and binding on Onewire in accordance
with its terms and is in full force and effect. Except as set forth
in Schedule
3.07(b), none of Onewire or, to Onewire’s Knowledge,
any other party thereto is in breach of or default under (or is
alleged to be in breach of or default under) in any material
respect, or has provided or received any notice of any intention to
terminate, any Material Contract. No event or circumstance has
occurred that, with notice or lapse of time or both, would
constitute an event of default under any Material Contract or
result in a termination thereof or would cause or permit the
acceleration or other changes of any right or obligation or the
loss of any benefit thereunder. Complete and correct copies of each
Material Contract (including all modifications, amendments and
supplements thereto and waivers thereunder) have been made
available to Newco. Except as set forth in Schedule 3.07(b), there are no
material disputes pending or, to Onewire’s Knowledge,
threatened under any Contract included in the Purchased
Assets.
Section 3.08 Title to Purchased
Assets
(a) Onewire
has good and valid title to, or a valid leasehold interest in, all
of the Purchased Assets. All such Purchased Assets (including
leasehold interests) are free and clear of Encumbrances except for
the following (collectively referred to as “Permitted
Encumbrances”):
(i) liens
for Taxes not yet due and payable;
(ii) mechanics,
carriers’, workmen’s, repairmen’s or other like
liens arising or incurred in the ordinary course of business
consistent with past practice or amounts that are not delinquent
and which are not, individually or in the aggregate, material to
the Business or the Purchased Assets;
(iii) easements,
rights of way, zoning ordinances and other similar encumbrances
affecting Real Property which are not, individually or in the
aggregate, material to the Business or the Purchased Assets, which
do not prohibit or interfere with the current operation of any Real
Property and which do not render title to any Real Property
unmarketable; or
(iv) liens
arising under original purchase price conditional sales contracts
and equipment leases with third parties entered into in the
ordinary course of business consistent with past practice which are
not, individually or in the aggregate, material to the
Business.
(b) Schedule 3.08(b)
lists the street address of each parcel of Real Property used in or
necessary for the conduct of the Business as currently
conducted.
Section 3.09 Condition and Sufficiency of
Assets. The Purchased Assets are sufficient for the
continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing and
constitute all of the rights, property and assets necessary to
conduct the Business as currently conducted.
Section 3.10 Intellectual
Property.
(a) Each
Onewire IP Agreement is valid and binding on Onewire in accordance
with its terms and is in full force and effect. Neither Onewire
nor, to Onewire’s Knowledge, any other party thereto is in
breach of or default under (or, to Onewire’s Knowledge, is
alleged to be in breach of or default under), or, to
Onewire’s Knowledge, has provided or received any notice of
breach or default of or any intention to terminate, any Onewire IP
Agreement.
(b) Except
as set forth in Schedule
3.10(b), Onewire is the sole and exclusive legal and
beneficial, and with respect to Onewire IP Registrations, record,
owner of all right, title and interest in and to Onewire
Intellectual Property, and, to Onewire’s Knowledge, has the
valid right to use all other Intellectual Property used in or
necessary for the conduct of the Business as currently conducted,
in each case, free and clear of Encumbrances other than Permitted
Encumbrances.
(c) The
consummation of the transactions contemplated hereunder will not
result in the loss or impairment of or payment of any additional
amounts with respect to, nor require the consent of any other
Person in respect of, Onewire’s right to own, use or hold for
use any Intellectual Property as owned, used or held for use in the
conduct of the Business as currently conducted.
(d) To
Onewire’s Knowledge, Onewire’s rights in Onewire
Intellectual Property are valid, subsisting and
enforceable.
(e) To
Onewire’s Knowledge, the conduct of the Business as currently
and formerly conducted, and the products, processes and services of
Onewire, have not infringed, misappropriated, diluted or otherwise
violated the Intellectual Property or other rights of any Person.
To Onewire’s Knowledge, no Person has infringed,
misappropriated, diluted or otherwise violated, or is currently
infringing, misappropriating, diluting or otherwise violating, any
Onewire Intellectual Property.
(f) There
are no Actions (including any oppositions, interferences or
re-examinations) settled, pending or, to Onewire’s Knowledge,
threatened (including in the form of offers to obtain a license):
(i) alleging any infringement, misappropriation, dilution or
violation of the Intellectual Property of any Person by Onewire in
connection with the Business; (ii) challenging the validity,
enforceability, registrability or ownership of any Onewire
Intellectual Property or Onewire’s rights with respect to any
Onewire Intellectual Property; or (iii) by Onewire or any other
Person alleging any infringement, misappropriation, dilution or
violation by any Person of Onewire Intellectual Property. Onewire
is not subject to any outstanding or prospective Governmental Order
(including any motion or petition therefor) that does or would
restrict or impair the use of any Onewire Intellectual
Property.
Section 3.11 Conformance with Specifications;
Defects; Malicious Code.
(A) All
Onewire Products conform in all material respects to all applicable
warranties in all Contracts with customers.
(B) To
the Knowledge of Onewire, none of the Onewire Products contain any
bug, defect or error that materially adversely affects the
functionality or performance of such Onewire Product against its
applicable specifications.
(C) To
the Knowledge of Onewire, none of the Onewire Products, and no
other Software used in the provision of any Onewire Product or
otherwise in the operation of its business, contains any
“time bomb,” “Trojan horse,” “back
door,” “worm,” virus, malware, spyware, or other
device or code (“Malicious
Code”) designed or intended to, or that could
reasonably be expected to, (i) disrupt, disable, harm or otherwise
impair the normal and authorized operation of, or provide
unauthorized access to, any computer system, hardware, firmware,
network or device on which any Onewire Product or such other
Software is installed, stored or used, or (ii) damage, destroy or
prevent the access to or use of any data or file without the
user’s consent. Onewire has taken reasonable steps designed
to prevent the introduction of Malicious Code into Onewire
Products.
Section 3.12 IT
Systems.
(A) To
the Knowledge of Onewire, Onewire’s information technology
systems are reasonably sufficient for the needs of Onewire’s
business as currently conducted, including as to capacity,
scalability, and ability to process current and anticipated peak
volumes in a timely manner. Onewire’s information technology
are in sufficiently good working condition to perform all
information technology operations and include sufficient licensed
capacity (whether in terms of authorized sites, units, users, seats
or otherwise) for all Software, in each case as necessary for the
conduct of Onewire’s business as currently
conducted.
(B) To
the Knowledge of Onewire, in the last three years, there has been
no material unauthorized access, use, intrusion or breach of
security, or material failure, breakdown, performance reduction or
other adverse event affecting any Onewire systems, that has
resulted in or could reasonably be expected to result in any: (i)
substantial disruption of or interruption in or to the use of such
Onewire systems or the conduct of Onewire’s business; (ii)
material loss, destruction, damage or harm of or to Onewire or its
operations, personnel, property or other assets; or (iii) material
Liability of any kind to Onewire. Onewire has taken reasonable
actions, consistent with applicable industry best practices in
Onewire’s industry, to protect the integrity and security of
Onewire systems and the data and other information stored
thereon.
(C) Onewire
maintains commercially reasonable back-up and data recovery, and
procedures and has acted in material compliance
therewith.
Section 3.13 Privacy Policies Onewire
has complied and is in compliance with all Onewire privacy policies
and with all applicable Laws and Contracts to which it is a party
relating to: (i) the privacy of customers or users of the Onewire
Products, any website, product or service operated by or on behalf
of Onewire; and (ii) the collection, storage, hosting, disclosure,
transmission, transfer, disposal, other processing or security of
any Customer Data or Personal Information by Onewire or by third
parties having authorized access to the records of Onewire, with
respect to each of (i) and (ii) in all material respects. No claims
have been asserted or are threatened against Onewire alleging a
violation of any Person’s privacy, confidentiality or other
rights under any Onewire Privacy Policy, under any Contract, or
under any Law relating to any Customer Data or Personal
Information. With respect to any Customer Data and Personal
Information, Onewire has taken commercially reasonable measures
(including implementing and monitoring compliance with respect to
technical and physical security) designed to safeguard such data
against loss and against unauthorized access, use, modification,
disclosure or other misuse. To the Knowledge of Onewire, there has
been no unauthorized access to or other misuse of any Customer Data
and Personal Information. Onewire has not received any complaint
from any Person (including any action letter or other inquiry from
any Governmental Authority) regarding Onewire’s collection,
storage, hosting, disclosure, transmission, transfer, disposal,
other processing or security of Customer Data or Personal
Information. To the Knowledge of Onewire, there have been no facts
or circumstances that would require Onewire to give notice to any
customers, suppliers, consumers or other similarly situated Persons
of any actual or perceived data security breaches pursuant to an
applicable Law requiring notice of such a
breach.
Section 3.14 Accounts Receivable. The
Accounts Receivable reflected on the Balance Sheet and the Accounts
Receivable arising after the date thereof (a) have arisen from bona
fide transactions entered into by Onewire involving the sale of
goods or the rendering of services in the ordinary course of
business consistent with past practice; (b) constitute only valid,
undisputed claims of Onewire not subject to claims of set-off or
other defenses or counterclaims other than normal discounts entered
into in the ordinary course of business consistent with past
practice; and (c) are collectible in the ordinary course of
business. The reserve for bad debts shown on the Balance Sheet or,
with respect to accounts receivable arising after the Balance Sheet
Date, on the accounting records of Onewire have been determined in
accordance with past practices, consistently applied, subject to
normal year-end adjustments and the absence of disclosures normally
made in footnotes.
Section 3.15 Data
Protection.
(a) Except
as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect,
Onewire has adopted, and is, and during the 24 month period prior
to the date hereof has been, in compliance with, commercially
reasonable policies and procedures that apply to the Business with
respect to privacy, data protection, security, and the collection
and use of Personal Information gathered or accessed in the course
of the operations of the Business.
(b) During
the 24 month period prior to the date hereof, (i) to
Onewire’s Knowledge, there has been no loss, damage, or
unauthorized access, use, modification, or other misuse of any
Personal Information maintained, collected, stored or processed by
or on behalf of Onewire, and (ii) no Person has made any claim or
commenced any Action with respect to loss, damage, or unauthorized
access, use, modification, or other misuse of any such Personal
Information or otherwise relating to the collection or use of any
such Personal Information.
(c) Except
as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect,
Onewire and its Privacy Policies, are, and during the 24 month
period prior to the date hereof have been, in compliance with all
Data Protection Programs and all contractual commitments that
Onewire has entered into with respect to Personal Information. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not violate
any Privacy Policy as it currently exists or as it existed at any
time during which any Personal Information was collected or
obtained by Onewire. Upon the Closing, Newco will own and continue
to have the right to use all such Personal Information on identical
terms and conditions as Onewire enjoyed immediately prior to the
Closing.
Section 3.16 Insurance. Schedule 3.16 sets forth a
true and complete list of all current policies or binders of fire,
liability, product liability, umbrella liability, real and personal
property, workers’ compensation, vehicular, directors’
and officers’ liability, fiduciary liability, data privacy
and cybersecurity, and other casualty and property insurance
maintained by Onewire and relating to the Business (including
without limitation as they relate to its employees, officers,
managers and directors of Onewire), the Purchased Assets and the
Assumed Liabilities (collectively, the “Insurance Policies”) and true and
complete copies of such Insurance Policies have been made available
to Newco. Such Insurance Policies are in full force and effect and
shall be maintained in full force and effect by Onewire through the
Closing Date. Onewire has not received any written notice of
cancellation of, premium increase with respect to, or alteration of
coverage under, any of such Insurance Policies. All premiums due on
such Insurance Policies have either been paid or, if due and
payable prior to Closing, will be paid prior to Closing in
accordance with the payment terms of each Insurance Policy. The
Insurance Policies do not provide for any retrospective premium
adjustment or other experience-based Liability on the part of
Onewire. All such Insurance Policies (a) are valid and binding in
accordance with their terms; (b) are provided by carriers who are
financially solvent; and (c) have not been subject to any lapse in
coverage. Except as set forth in Schedule 3.16, there are no
claims related to the Business, Purchased Assets or Assumed
Liabilities pending under any such Insurance Policies as to which
coverage has been questioned, denied or disputed or in respect of
which there is an outstanding reservation of rights. Onewire is not
in default under, and has not otherwise failed to comply with, any
provision contained in any such Insurance Policy. The Insurance
Policies are of the type and in the amounts customarily carried by
Persons conducting a business similar to the Business and are
sufficient for compliance with all applicable Laws and Contracts to
which Onewire is a party or by which it is
bound.
Section 3.17 Legal Proceedings; Governmental
Orders.
(a) Except
as set forth in Schedule
3.17, there are no Actions pending or, threatened (i)
against or by Onewire relating to or affecting the Business, the
Purchased Assets or the Assumed Liabilities; or (ii) against
or by Onewire that challenge or seek to prevent, enjoin or
otherwise delay the transactions contemplated by this Agreement. No
event has occurred or circumstances exist that may give rise to, or
serve as a basis for, any such Action.
(b) There
are no outstanding Governmental Orders and no unsatisfied
judgments, penalties or awards relating to or affecting the
Business or the Purchased Assets.
Section 3.18 Compliance With Laws;
Permits.
(a) To
Onewire’s Knowledge, Onewire has complied in all material
respects, and is now complying in all material respects, with all
Laws applicable to it, the Business as currently conducted or the
ownership and use of the Purchased Assets.
(b) All
Permits required for Onewire to conduct the Business as currently
conducted or for the ownership and use of the Purchased Assets have
been obtained by it and are valid and in full force and effect. All
fees and charges with respect to such Permits as of the date hereof
have been paid in full. Schedule 3.18(b) lists all
current Permits issued to Onewire which are related to the conduct
of the Business as currently conducted or the ownership and use of
the Purchased Assets, including the names of the Permits and their
respective dates of issuance and expiration. No event has occurred
that, with or without notice or lapse of time or both, would
reasonably be expected to result in the revocation, suspension,
lapse or limitation of any Permit set forth in Schedule
3.18(b).
(c) Since
January 1, 2018, none of Onewire or any of its directors, or
officers, or to the Knowledge of Onewire, any of its other
Representatives or any Person performing services for Onewire, has,
in connection with or acting on behalf of Onewire, directly or
indirectly, (i) used corporate funds for any unlawful contribution,
gift, entertainment, or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful
payment to any official, officer, employee, or representative of
any Governmental Authority; or (iii) made any bribe, payoff,
rebate, influence payment, kickback, or other unlawful payment.
Onewire is, to the extent applicable, in compliance with any
applicable Law, whether foreign or domestic, governing corrupt
practices, money laundering, anti-bribery, or anticorruption,
including the Foreign Corrupt Practices Act of 1977 (the
“FCPA”). Since
January 1, 2018, Onewire has not, in connection with or relating to
the Business, Purchased Assets or Assumed Liabilities received any
written notice alleging any such violation or made any voluntary or
involuntary disclosure to a Governmental Authority, or conducted
any internal investigation concerning any actual or alleged
violation of the FCPA.
(d) Onewire
is in compliance in all material respects with all Laws relating to
imports, exports, and economic sanctions, including all Laws
administered and enforced by the U.S. Treasury Department’s
Office of Foreign Assets Control (“OFAC”). Since January 1, 2017,
Onewire has not been a party to any Contract, nor has Onewire been
engaged in, any transaction or other business, directly or
indirectly, with any Governmental Authority or other Person that
appears on any list of OFAC-sanctioned parties (including any
Person that appears on OFAC’s Specially Designated Nationals
and Blocked Persons List), is owned or controlled by such a Person,
or is located or organized in any country or territory that is
subject to comprehensive OFAC sanctions (an “OFAC Prohibited Party”). Neither
Onewire nor any of the directors, or officers of Onewire is an OFAC
Prohibited Party or is a target of material sanctions in any other
jurisdiction in which Onewire has business operations or
arrangements. To the Knowledge of Onewire, no proceeds from the
sale of Onewire Common Stock or other securities was provided to or
used for the benefit of any OFAC Prohibited Party. For the purposes
of the definition of “OFAC Prohibited Party,” the term
“control,” when used with respect to any specified
Person, means the power to direct or cause the direction of the
management or policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and
“controlled” have correlative
meanings.
The representations and warranties
made in this Section 3.18 do not apply to matters covered by,
Section 3.19 (Employment Matters), and Section 3.20
(Taxes).
Section 3.19 Employment
Matters.
(a) With
respect to the Business, Schedule 3.19(a) sets
forth a list of all persons who are employees (“Employees”), independent
contractors, or consultants, of Onewire (each, together with the
Employees, collectively, “Personnel”) as of the date hereof,
including any Personnel who are on a leave of absence of any
nature, paid or unpaid, authorized or unauthorized, and sets forth
for each such individual the following: (i) name; (ii) title or
position (including whether full or part time); (iii) hire date;
(iv) current annual base compensation rate; (v) commission,
bonus, or other incentive-based compensation; and (vi) a
description of the fringe benefits provided to each such individual
as of the date hereof, including without limitation paid time off
and severance benefits. Except as set forth in Schedule 3.19(a), as of the
date hereof and the Closing Date, all compensation, including
wages, commissions, and bonuses, payable to all Personnel of
Onewire for services performed on or prior to the date hereof has
been paid in full (or accrued in full on Onewire’s financial
statements) and there are no outstanding agreements,
understandings, or commitments of Onewire with respect to any
compensation, commissions or bonuses.
(b) Onewire
is not, and has not been for the past three years, a party to,
bound by, or negotiating any collective bargaining agreement or
other Contract with a union, works council or labor organization
(collectively, “Union”), and there is not, and has
not been for the past three years, any Union representing or
purporting to represent any employee of Onewire, and no Union or
group of employees is seeking or has sought to organize employees
for the purpose of collective bargaining. To Onewire’s
Knowledge, there has never been, nor has there been any threat of,
any strike, slowdown, work stoppage, lockout, concerted refusal to
work overtime or other similar labor disruption or dispute
affecting Onewire or any of its employees. Onewire has no duty to
bargain with any Union.
(c) Onewire
is and has been in compliance in all material respects with all
applicable Laws pertaining to employment and employment practices
to the extent they relate to employees or any other Personnel of
the Business, including all Laws relating to labor relations, equal
employment opportunities, fair employment practices, employment
discrimination, harassment including sexual harassment,
retaliation, reasonable accommodation, disability rights or
benefits, immigration, wages, hours, overtime compensation, child
labor, hiring, promotion and termination of employees, working
conditions, meal and break periods, privacy, health and safety,
workers’ compensation, leaves of absence and unemployment
insurance. All individuals characterized and treated by Onewire as
independent contractors or consultants are properly treated as
independent contractors under all applicable Laws, and all
employees of Onewire classified as exempt under the Fair Labor
Standards Act and state and local wage and hour laws are properly
classified in all material respects. There are no Actions against
Onewire pending or threatened to be brought or filed, by or with
any Governmental Authority or arbitrator in connection with the
employment of any current or former applicant, employee,
consultant, volunteer, intern, or independent contractor of
Onewire, including, without limitation, any claim relating to
unfair labor practices, employment discrimination, harassment,
retaliation, equal pay, wage and hours or any other
employment-related matter arising under applicable
Laws.
(d) Onewire
has never been a party to any Government
Contract.
Section 3.20 Taxes.
(a) All
Tax Returns required by Law to be filed on or before the Closing
Date by Onewire have been, or will be, timely filed (taking into
account all applicable extensions). All Taxes required by Law to be
paid by Onewire (whether or not shown on any Tax Return) have been,
or will be, timely paid.
(b) Onewire
has withheld and paid each Tax required by Law to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, customer, shareholder
or other party, and complied with all information reporting and
backup withholding provisions of applicable
Law.
(c) No
written claim has been made by any taxing authority in any
jurisdiction where Onewire does not file Tax Returns alleging that
Onewire is, or may be, subject to Tax by that jurisdiction and, to
Onewire’s Knowledge, no such claim has been
threatened.
(d) No
extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of Onewire, which such
extension or waiver remains in effect.
(e) Schedule
3.20(e) sets forth:
(i) those
years for which examinations of Onewire by the taxing authorities
have been completed; and
(ii) those
taxable years for which examinations of Onewire by taxing
authorities are presently being conducted.
(f) All
deficiencies asserted, or assessments made, against Onewire as a
result of any examinations by any taxing authority have been fully
paid or otherwise resolved.
(g) Onewire
is not a party to any Action by any taxing authority. There are no
pending or, to the Knowledge of Onewire, threatened Actions by any
taxing authority.
(h) Onewire
has delivered to Newco copies of all federal, state, local and
foreign income, franchise and similar Tax Returns, examination
reports, and statements of deficiencies assessed against, or agreed
to by, Onewire for all Tax periods ending on or after December 31,
2015.
(i) There
are no Encumbrances for Taxes (other than for current Taxes not yet
due and payable) upon the Purchased Assets.
(j) Onewire
is not a party to, or bound by, any Tax indemnity, Tax sharing or
Tax allocation agreement, other than commercial Contracts the
principal purposes of which are unrelated to Taxes and which are
set forth on Schedule
3.20(j).
(k) No
private letter rulings, technical advice memoranda or similar
agreement or rulings have been requested, entered into or issued by
any taxing authority, in each case, with respect to
Onewire.
(l) Onewire
has no Liability for Taxes of any Person (other than Onewire), as
transferee or successor, by contract (other than commercial
Contracts the principal purposes of which are unrelated to Taxes)
or otherwise;
(m) Onewire
is not a “foreign person” as that term is used in
Treasury Regulations Section 1.1445-2.
(n) Intentionally
deleted.
(o) None
of the Purchased Assets is (i) required to be treated as being
owned by another Person pursuant to the so-called “safe
harbor lease” provisions of former Section 168(f)(8) of
the Code, (ii) subject to Section 168(g)(1)(A) of the Code,
(iii) subject to a disqualified leaseback or long-term agreement as
defined in Section 467 of the Code, or (iv) tax-exempt use
property within the meaning of Section 168(h) of the
Code.
(p) Schedule
3.20(p) sets forth all jurisdictions outside the United
States in which Onewire is subject to Tax, is engaged in business
or has a permanent establishment.
Section 3.21 Related Party
Transactions. Except as set forth in Schedule 3.21 and except with
respect to the Onewire Charter Documents, no executive officer, or
director of Onewire or any Person owning five percent or more of
Onewire common stock (or any of such Person’s immediate
family members or Affiliates or associates), is a party to any
Contract with or binding upon Onewire or any of its assets, rights
or properties or has any interest in any property owned by Onewire
or has engaged in any transaction with any of the foregoing within
the last 18 months.
Section 3.22 Environmental
Liability.
(a) Onewire
is, and since January 1, 2015, have been, in material compliance
with all Environmental Laws applicable to its operations or use of
the Real Property;
(b) Since
January 1, 2015, Onewire has not generated, transported, treated,
stored, or disposed of any Hazardous Material, except in material
compliance with all applicable Environmental Laws, and there has
been no Release of any Hazardous Material by Onewire at or on the
Real Property that requires reporting, investigation or remediation
by Onewire pursuant to any Environmental Law, and Onewire has not
installed, used, generated, treated, disposed of or arranged for
the disposal of any Hazardous Material in any manner that would
reasonably be expected to create any material Liability under any
Environmental Law;
(c) To
the Knowledge of Onewire, there is not present in, on or under any
of the Real Property any Hazardous Material in such form or
quantity as to create any material Liability for Onewire under any
Environmental Law;
(d) Onewire
has obtained each Permit that it is or was required to obtain under
any Environmental Law, and all of such Permits that are currently
held by Onewire listed in Schedule 3.22. Onewire is, and
since January 1, 2015 has been, in compliance with the terms and
conditions of all Permits issued to them pursuant to any
Environmental Law. To the Knowledge of Onewire, no incident,
condition, change, effect or circumstance has occurred or exists
that would reasonably be expected to prevent or interfere with such
compliance by Onewire in the future;
(e) Onewire
has not (i) received notice under the citizen suit provisions of
any Environmental Law; (ii) received any written request for
information, notice, demand letter, administrative inquiry or
written complaint or claim under any Environmental Law; (iii) been
subject to or threatened with any enforcement action by any
Governmental Authority or citizen group with respect to any
Environmental Law, or (iv) received written notice of any
Environmental Liability; and
(f) Onewire
has delivered to Newco and Recruiter true, correct and complete
copies of all reports, Permits, authorizations, disclosures and
other documents relating to the status of any of the Real Property
or otherwise relating to the Business with respect to any
Environmental Law, including Phase I and Phase Il environmental
site assessments related to any of the Real Property that are in
Onewire’s possession or control.
(g) For
the purposes of this Agreement:
(i) “Environment”
means soil, surface waters, groundwater, land, stream sediments,
surface or subsurface strata and ambient air and biota living in or
on such media.
(ii) “Environmental
Laws” means all applicable Laws and agreements with
Governmental Authorities and all other statutory or other legal
requirements relating to public health or the protection of human
health or the environment and all Permits issued pursuant to such
Laws, agreements or statutory requirements.
(iii) “Environmental
Liability” means any Liability arising under any
Environmental Law.
(iv) “Hazardous
Material” means any pollutant, toxic substance,
hazardous waste, hazardous materials, hazardous substances,
petroleum or petroleum-containing products as defined in, or listed
under, any Environmental Law.
(v) “Release”
means any releasing, disposing, discharging, injecting, spilling,
leaking, pumping, dumping, emitting, escaping or emptying of a
Hazardous Material into the Environment.
Section 3.23 Brokers. No Person,
broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any Ancillary
Document based upon arrangements made by or on behalf of
Onewire.
Section 3.24 Investment
Representations. With respect to Onewire receiving
Recruiter Common Stock hereunder:
(a) Onewire
understands that the shares of Recruiter Common Stock it is
acquiring hereunder are “restricted securities” and
have not been registered under the Securities Act of 1933, as
amended (the “Securities
Act”) or any applicable state securities Law and is
acquiring such shares as principal for its own account and not with
a view to or for distributing or reselling such shares or any part
thereof in violation of the Securities Act or any applicable state
securities Law, has no present intention of distributing any of
such shares in violation of the Securities Act or any applicable
state securities Law and has no direct or indirect arrangement or
understandings with any other Persons to distribute or regarding
the distribution of such shares in violation of the Securities Act
or any applicable state securities Law. Each stock certificate
representing the shares of Recruiter Common Stock received pursuant
to this Agreement shall bear a restrictive legend evidencing the
transfer restrictions set forth herein.
(b) As
of the date Onewire acquires Recruiter Common Stock, Onewire will
be: (i) an “accredited investor” as defined in Rule
501(a) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the
Securities Act.
(c) Onewire,
either alone or together with its Representatives, has such
knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of
the investment in the Recruiter Common Stock, and has so evaluated
the merits and risks of such investment. Onewire is able to bear
the economic risk of an investment in the Recruiter Common Stock
and, at the present time, is able to afford a complete loss of such
investment.
(d) Onewire
is not acquiring the shares of Recruiter issuable to Onewire
hereunder as a result of any advertisement, article, notice, or
other communication regarding the stock published in any newspaper,
magazine, or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.
(e) Onewire
has been given the opportunity to ask questions of, and receive
answers from, Recruiter concerning the terms and conditions herein
and to obtain such additional information necessary to verify the
accuracy of same as Onewire reasonably desires in order to evaluate
the acquisition of the Recruiter Common Stock. Onewire acknowledges
it does not desire to receive any further information from
Recruiter in order to make its acquisition of the Recruiter Common
Stock. Onewire has received no representations or warranties from
Recruiter, its employees, agents, or attorneys in making this
investment decision other than as set forth in this
Agreement.
Section 3.25 Cash and Accounts
Receivable. As of the date of this Agreement, Onewire
has $10,180.39 in cash and the accounts receivable set forth on
Schedule
3.24.
Article IV
REPRESENTATIONS AND WARRANTIES OF RECRUITER AND
NEWCO
Recruiter and Newco represent and
warrant to Onewire that the statements contained in this Article IV
are true and correct as of the date hereof and will be true and
correct as of the Closing Date, subject to such exceptions as are
disclosed (referencing the appropriate section and paragraph
numbers) in the Disclosure Schedule attached to this Agreement as
Exhibit I and
incorporated herein by this reference and made a part hereof (the
“Recruiter Disclosure
Schedule”).
Section 4.01 Organization and Qualification of
Recruiter and Newco. Each of Recruiter and Newco is a
corporation, as applicable, duly organized, validly existing and in
good standing under the Laws of the State of Nevada and each has
full power and authority to own, operate or lease the properties
and assets now owned, operated or leased by it and to carry on its
business as it has been and is currently conducted. Schedule 4.01 sets forth each
jurisdiction in which Recruiter or Newco is licensed or qualified
to do business, and Recruiter and Newco are duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the
operation of its business as currently conducted makes such
licensing or qualification necessary, except where the failure to
be so qualified or in good standing would not have a Material
Adverse Effect.
Section 4.02 Authority
(a) Each
of Recruiter and Newco has full power and authority to enter into
and perform its obligations under this Agreement and the Ancillary
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance by each of Recruiter and Newco of this Agreement and
any Ancillary Document to which they are a party and the
consummation by each of Recruiter and Newco of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Recruiter and Newco and no other
proceedings on the part of Recruiter and Newco are necessary to
authorize the execution, delivery and performance of this Agreement
or to consummate the other transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Recruiter
and Newco, and (assuming due authorization, execution and delivery
by each other party hereto) this Agreement constitutes a legal,
valid and binding obligation of each of Recruiter and Newco
enforceable against Recruiter and Newco in accordance with its
terms. When each Ancillary Document to which Recruiter or Newco is
or will be a party has been duly executed and delivered by
Recruiter or Newco (assuming due authorization, execution and
delivery by each other party thereto), such Ancillary Document will
constitute a legal and binding obligation of Recruiter and Newco
enforceable against it in accordance with its
terms.
(b) Each
of Recruiter and Newco, pursuant to written consents of the board
of directors and, as of the date hereof, not subsequently rescinded
or modified in any way, has, as of the date hereof, obtained the
affirmative vote or consent of the board of directors approving
this Agreement and the transactions contemplated by this Agreement.
Each of Recruiter and Newco has delivered to Onewire a copy of the
consent approving this Agreement and the transactions contemplated
hereby. Other than the consent of the board of directors, no other
consents are required in order to authorize and approve this
Agreement and the transactions contemplated hereby, and no
shareholder of Recruiter or Newco has any dissenters’ or
appraisal rights with respect to the transactions contemplated by
this Agreement.
Section 4.03 No Conflicts; Consents.
The execution, delivery and performance by Recruiter and Newco of
this Agreement and the Ancillary Documents to which they are a
party, and the consummation of the transactions contemplated hereby
and thereby, do not and will not: (a) conflict with or result
in a violation or breach of, or default under, any provision of the
certificate of incorporation, bylaws or other organizational
documents of Recruiter or Newco, as applicable; (b) conflict with
or result in a violation or breach of any provision of any Law or
Governmental Order applicable to Recruiter or Newco; or (c) require
the consent, notice or other action by any Person under any
Contract to which Recruiter or Newco is a party. Except as set
forth in Schedule 4.03, no consent,
approval, Permit, Governmental Order, declaration or filing with,
or notice to, any Governmental Authority is required by or with
respect to Recruiter or Newco in connection with the execution,
delivery and performance of this Agreement and the Ancillary
Documents and the consummation of the transactions contemplated
hereby and thereby, except for the filing of Form D with the SEC
and compliance with all applicable state securities
Laws.
Section 4.04 No Prior Newco
Operations. Newco was formed solely for the purpose
of purchasing the Purchased Assets hereunder and has not engaged in
any business activities or conducted any operations other than in
connection with the transactions contemplated
hereby.
Section 4.05 Brokers. Except as set
forth in Schedule 4.05, no Person,
broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or any Ancillary
Document based upon arrangements made by or on behalf of Recruiter
or Newco.
Section 4.06 Legal Proceedings; Governmental
Orders.
(a) Except
as set forth in Schedule
4.06, there are no Actions pending or, threatened (a)
against or by Recruiter or Newco affecting any of their properties
or assets; or (b) against or by Recruiter or Newco that challenges
or seeks to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement. No event has occurred or
circumstances exist that may give rise to, or serve as a basis for,
any such Action.
(b) There
are no material outstanding Governmental Orders and no material
unsatisfied judgments, penalties, or awards against Recruiter or
Newco or any of their properties or assets.
Section 4.07 SEC Reports. During the
last two years, Recruiter has timely filed all periodic reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the Exchange Act and the rules and regulations promulgated
thereunder (the “SEC
Reports”). Each of the SEC Reports, as of the
respective dates thereof (or, if amended or superseded by a filing
or submission, as the case may be, prior to the Closing Date, then
on the date of such filing or submission, as the case may be) (a)
did not contain any untrue statement of a material fact nor omit to
state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with
the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Report.
During the last two years, Recruiter did not file any registration
statements under the Securities Act.
Section 4.08 Sarbanes-Oxley.
Recruiter is in material compliance with all requirements of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the
Closing Date.
Section 4.09 Financial Statements. To
the Knowledge of Recruiter, the consolidated financial statements
of Recruiter included in the SEC Reports (a) complied in all
material respects with the applicable accounting rules and
regulations of the SEC with respect thereto as were in effect at
the time of filing and (b) have been prepared in accordance with
GAAP throughout the periods involved and, except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, present fairly, in all
material respects, the consolidated financial position of Recruiter
as of the dates indicated therein, and the consolidated results of
its operations and cash flows for the periods therein specified in
accordance with GAAP and Regulation S-X of the SEC, subject, in the
case of unaudited financial statements, to normal, immaterial
year-end audit adjustments. Recruiter has no Liabilities except (i)
those which are adequately reflected or reserved against in
Recruiter’s most recent balance sheet included in the SEC
Reports (the “Recruiter
Balance Sheet”), or (ii) those which have been
incurred in the ordinary course of business consistent with past
practice since the date of the Recruiter Balance Sheet and which
are not, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on
Recruiter.
Section 4.10 Capitalization. The
authorized capital stock of Recruiter consists, immediately prior
to the Closing (unless otherwise noted), of the following:
250,000,000 shares of Recruiter Common Stock, of which 8,481,967
shares of Recruiter Common Stock are issued and outstanding, and
10,000,000 shares of preferred stock par value $0.0001 per share
(the “Preferred
Stock”), of which 1,184,967 shares of Preferred Stock
are issued and outstanding. Recruiter has 2,770,000 shares of
Recruiter Common Stock for issuance to officers, directors,
employees and consultants of Recruiter pursuant to its 2017 Equity
Incentive Plan duly adopted by the Board of Directors and approved
by the Recruiter stockholders (the “Stock Plan”). Of such shares of
Recruiter Common Stock under the Stock Plan, 2,735,665 shares have
been issued or underlie outstanding stock options granted under the
Stock Plan, and 534,335 shares of Recruiter Common Stock remain
available for issuance to officers, directors, employees and
consultants pursuant to the Stock Plan. Except as set forth on
Schedule 4.10,
there are no Contracts or other obligations relating to the issued
or unissued capital stock of Recruiter, or obligating Recruiter to
issue, grant or sell any shares of capital stock of, or other
equity interests in, or securities convertible into equity
interests in, Recruiter, or that materially affect the rights of
the holder of Recruiter Common Stock. Each outstanding share of
capital stock of Recruiter is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Recruiter
is free and clear of all Encumbrances of any nature whatsoever,
other than restrictions under the Securities Act and applicable
state securities Laws. None of the outstanding equity securities or
other securities of Recruiter was issued in violation of the
Securities Act, except for any sales or issuances the claim for
which has been barred by Section 13 of the Securities
Act.
Section 4.11 Absence of Certain Changes and
Events. Except as disclosed in the SEC Reports or on
Schedule 4.11,
since the filing of its Annual Report on Form 10-K for the fiscal
year ended December 31, 2020, Recruiter has conducted its business
only in the ordinary course of business and there has not been any
Material Adverse Effect on Recruiter, and no event has occurred or
circumstance exists that may result in a Material Adverse Effect on
Recruiter, nor has there been:
(a) (i)
any declaration, accrual, set aside or payment of any dividend or
any other distribution in respect of any shares of capital stock of
Recruiter, or (ii) any repurchase, redemption or other acquisition
by Recruiter of any shares of capital stock or other
securities;
(b) any
sale, issuance or grant, or authorization of the issuance of, (i)
any capital stock or other security of Recruiter, (ii) any option,
warrant or right to acquire any capital stock or any other security
of Recruiter, or (iii) any instrument convertible into or
exchangeable for any capital stock or other security of
Recruiter;
(c) any
amendment, to the certificate of incorporation or bylaws of
Recruiter, or any merger, consolidation, share exchange, business
combination, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction involving
Recruiter;
(d) any
change of the methods of accounting or accounting practices of
Recruiter in any material respect; and
(e) any
agreement or commitment to take any of the actions referred to in
clauses (a) through (d) above; provided, that Recruiter
through the Closing Date has outstanding warrants, options,
debentures and preferred stock that may require Recruiter to issue
shares of Common Stock.
Section 4.12 Compliance With Laws;
Permits.
(a) Recruiter
and Newco have complied, and are now complying, in all material
respects with all Laws applicable to each or their business,
properties, or assets.
(b) Except
as disclosed on Schedule
4.12(b), all Permits required for Recruiter and Newco to
conduct their business have been obtained by them and are valid and
in full force and effect. All fees and charges with respect to such
Permits as of the date hereof have been paid in full. No event has
occurred that, with or without notice or lapse of time or both,
would reasonably be expected to result in the revocation,
suspension, lapse, or limitation of any Permit except as set forth
in Schedule 4.12(b).
(c) Since
January 1, 2018, none of Recruiter or any of its directors or
officers, or to the Knowledge of Recruiter, any of its other
Representatives or any Person performing services for Recruiter,
has, in connection with or acting on behalf of Recruiter, directly
or indirectly, (i) used corporate funds for any unlawful
contribution, gift, entertainment, or other unlawful expense
relating to political activity; (ii) made any direct or indirect
unlawful payment to any official, officer, employee, or
representative of any Governmental Authority; or (iii) made any
bribe, payoff, rebate, influence payment, kickback, or other
unlawful payment. Recruiter is, to the extent applicable, in
material compliance with any applicable Law, whether foreign or
domestic, governing corrupt practices, money laundering,
anti-bribery, or anticorruption, including the FCPA. Since January
1, 2018, Recruiter has not, in connection with or relating to the
business of Recruiter, received any written notice alleging any
such violation or made any voluntary or involuntary disclosure to a
Governmental Authority, or conducted any internal investigation
concerning any actual or alleged violation of the
FCPA.
(d) Recruiter
is in compliance in all material respects with all Laws relating to
imports, exports, and economic sanctions, including all Laws
administered and enforced by OFAC. Since April 1, 2016, Recruiter
has not been a party to any Contract, nor has Recruiter been
engaged in, any transaction or other business, directly or
indirectly, with any OFAC Prohibited Party. Neither Recruiter nor
any of the directors, or officers of Recruiter is an OFAC
Prohibited Party or is a target of material sanctions in any other
jurisdiction in which Recruiter has business operations or
arrangements.
Section 4.13 Recruiter Common Stock.
The shares of Recruiter Common Stock issuable have been duly
authorized, and upon consummation of the transactions contemplated
hereby, will be validly issued, fully paid and non-assessable,
subject to compliance with applicable securities Laws and certain
provisions of this Agreement.
Article V
COVENANTS
Section 5.01 Conduct of Business Prior to the
Closing. From the date hereof until the Closing,
except as otherwise provided in this Agreement, required by
applicable Law, or consented to in writing by Recruiter or Newco
(which consent shall not be unreasonably conditioned, withheld or
delayed), Onewire shall (x) conduct the Business in the
ordinary course of business consistent with past practice; and
(y) use commercially reasonable efforts to maintain and
preserve intact its current Business organization, operations and
franchise and to preserve the rights, franchises, goodwill and
relationships of its employees, lenders, suppliers, regulators and
others having relationships with the Business. Without limiting the
foregoing, from the date hereof until the Closing Date, Onewire
shall:
(a) preserve
and maintain all Permits required for the conduct of the Business
as currently conducted or the ownership and use of the Purchased
Assets;
(b) pay
the debts, Taxes and other obligations of the Business when
due;
(c) continue
to collect Accounts Receivable included in the Current Assets in a
manner consistent with past practice;
(d) maintain
the properties and assets included in the Purchased Assets in the
same condition as they were on the date of this Agreement, subject
to reasonable wear and tear;
(e) continue
in full force and effect without material modification all
Insurance Policies, except as required by applicable
Law;
(f) defend
and protect the properties and assets included in the Purchased
Assets from infringement or usurpation;
(g) perform
all of its obligations under all Assigned
Contracts;
(h) maintain
the Books and Records in accordance with past
practice;
(i) comply
in all material respects with all Laws applicable to the conduct of
the Business or the ownership and use of the Purchased Assets;
and
(j) not
take or permit any action which, if taken or permitted prior to the
date hereof, would have been required to be listed on Schedule
3.06.
Section 5.02 Access to
Information.
(a) From
the date hereof until the Closing, Onewire shall (a) afford Newco
and its Representatives reasonable access to and the right to
inspect all of the Real Property, properties, assets, premises,
Books and Records, Assigned Contracts and other documents and data
related to the Business; (b) furnish Newco and its Representatives
with such financial, operating and other data and information
related to the Business as Newco or any of its Representatives may
reasonably request; and (c) instruct the Representatives of Onewire
to cooperate with Newco in its investigation of the Business. Any
investigation pursuant to this Section 5.02 shall be conducted in
such manner as not to interfere unreasonably with the conduct of
the Business.
Section 5.03 Notice of Certain
Events.
(a) From
the date hereof until the Closing, Onewire shall promptly notify
Recruiter, and Recruiter shall promptly notify Onewire, in writing
of:
(i) any
fact, circumstance, event or action the existence, occurrence or
taking of which (A) has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect,
(B) has resulted in, or could reasonably be expected to result in,
any representation or warranty made by any Party hereunder not
being true and correct, or (C) has resulted in, or could reasonably
be expected to result in, the failure of any of the conditions set
forth in Section 7.02 or Section 7.03, as applicable, to be
satisfied;
(ii) any
notice or, to Onewire’s or Recruiter’s Knowledge, as
the case may be, any other communication, from any Person alleging
that the consent of such Person is or may be required in connection
with the transactions contemplated by this
Agreement;
(iii) any
notice or, to Onewire’s or Recruiter’s Knowledge, as
the case may be, any other communication from any Governmental
Authority in connection with the transactions contemplated by this
Agreement; and
(iv) any
Actions (A) commenced against Onewire, Recruiter or Newco, as
applicable, (B) with respect to Onewire and to Onewire’s
Knowledge, threatened against, relating to or involving or
otherwise affecting Onewire that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant
to Section 3.06 or that relates to the consummation of the
transactions contemplated by this Agreement, and (C) with respect
to Recruiter and/or Newco and to the Knowledge of Recruiter,
threatened against, relating to or involving or otherwise affecting
Recruiter and/or Newco that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant
to Section 4.06 or that relates to the consummation of the
transactions contemplated by this Agreement.
(b) A
Party’s receipt of information pursuant to this Section 5.03
shall not be deemed to amend or supplement the Disclosure
Schedules.
Section 5.04 Employees and Employee
Benefits.
(a) Prior
to the Closing Date, Newco shall extend offers of at-will
employment to Employees of the Business, and offers to engage those
Personnel of the Business, exclusive of Employees, for certain
consultant or independent contractor services, on such terms and
conditions as set forth as Exhibit J (“Offer Letters”). The persons
listed on Schedule
5.04(a) hereto shall be retained by Newco for the positions
and for such period of time after the Closing Date as are listed on
such schedule.
(b) Onewire
shall be solely responsible for, and Recruiter and Newco shall have
no obligations whatsoever for, any compensation or other amounts
payable to any current or former Personnel of the Business,
including, without limitation, hourly pay, commission, bonus,
salary, accrued vacation, fringe, pension or profit sharing
benefits or severance pay for any period relating to the service
with Onewire at any time on or prior to the Closing Date and
Onewire shall pay all such amounts to all entitled persons as and
when due.
(c) Onewire
shall remain solely responsible for the satisfaction of all claims
for medical, dental, life insurance, health accident or disability
benefits brought by or in respect of current or former Personnel of
the Business or the spouses, dependents or beneficiaries thereof,
which claims relate to events occurring on or prior to the Closing
Date. Onewire also shall remain solely responsible for all
worker’s compensation claims of any current or former
Personnel of the Business which relate to events occurring on or
prior to the Closing Date. Onewire shall pay, or cause to be paid,
all such amounts to the appropriate persons as and when
due.
(d) Effective
as soon as practicable following the Closing Date, Onewire, or any
applicable Affiliate, shall effect a transfer of assets and
liabilities (including outstanding loans) from the defined
contribution retirement plan that it maintains, to the defined
contribution retirement plan maintained by Newco, with respect to
those eligible Personnel of the Business who become employed by
Newco, or an Affiliate of Newco, in connection with the
transactions contemplated by this Agreement. Any such transfer
shall be in an amount sufficient to satisfy Section 414(l) of
the Code. Upon the transfer of assets and liabilities into
Newco’s plan, all transferred account balances from
Onewire’s plan shall become fully vested.
Section 5.05 Confidentiality.
Recruiter and Newco acknowledges and agrees that the Non-Disclosure
Agreement remains in full force and effect and, in addition,
covenants and agrees to keep confidential, in accordance with the
provisions of the Non-Disclosure Agreement, information provided to
Recruiter and Newco pursuant to this Agreement. If this Agreement
is, for any reason, terminated prior to the Closing, the
Non-Disclosure Agreement and the provisions of this Section 5.05
shall nonetheless continue in full force and
effect.
Section 5.06 Governmental Approvals and
Consents.
(a) Each
Party hereto shall, as promptly as possible, (i) make, or cause or
be made, all filings and submissions required under any Law
applicable to such Party or any of its Affiliates; and (ii) use
reasonable best efforts to obtain, or cause to be obtained, all
consents, authorizations, orders and approvals from all
Governmental Authorities that may be or become necessary for its
execution and delivery of this Agreement and the performance of its
obligations pursuant to this Agreement and the Ancillary Documents.
Each Party shall cooperate fully with the other Party and its
Affiliates in promptly seeking to obtain all such consents,
authorizations, orders and approvals. The Parties hereto shall not
willfully take any action that will have the effect of delaying,
impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.
(b) Each
Party hereto shall use reasonable best efforts to give all notices
to, and obtain all consents from, all third parties that are
described in Section 5.06(a).
(c) Without
limiting the generality of the Parties’ undertakings pursuant
to Sections 5.06 (a) and (b) above, each of the Parties hereto
shall use all reasonable best efforts to:
(i) respond
to any inquiries by any Governmental Authority regarding antitrust
or other matters with respect to the transactions contemplated by
this Agreement or any Ancillary Document;
(ii) avoid
the imposition of any order or the taking of any Action that would
restrain, alter or enjoin the transactions contemplated by this
Agreement or any other Transaction Document;
and
(iii) in
the event any Governmental Order adversely affecting the ability of
the Parties to consummate the transactions contemplated by this
Agreement or any Ancillary Document has been issued, to have such
Governmental Order vacated or lifted.
(d) All
analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals made by or on
behalf of any Party before any Governmental Authority or the staff
or regulators of any Governmental Authority, in connection with the
transactions contemplated hereunder (but, for the avoidance of
doubt, not including any interactions between Onewire and
Governmental Authorities in the ordinary course of business, any
disclosure which is not permitted by Law or any disclosure
containing confidential information) shall be disclosed to the
other Parties hereunder in advance of any filing, submission or
attendance, it being the intent that the Parties will consult and
cooperate with one another, and consider in good faith the views of
one another, in connection with any such analyses, appearances,
meetings, discussions, presentations, memoranda, briefs, filings,
arguments, and proposals. Each Party shall give notice to the other
Parties with respect to any meeting, discussion, appearance or
contact with any Governmental Authority or the staff or regulators
of any Governmental Authority, with such notice being sufficient to
provide the other Parties with the opportunity to attend and
participate in such meeting, discussion, appearance or
contact.
(e) Notwithstanding
the foregoing, nothing in this Section 5.06 shall require, or be
construed to require, Recruiter or Newco or any of their Affiliates
to agree to (i) sell, hold, divest, discontinue or limit, before or
after the Closing Date, any assets, businesses or interests of
Recruiter, Newco or any of their respective Affiliates; (ii) any
conditions relating to, or changes or restrictions in, the
operations of any such assets, businesses or interests which, in
either case, could reasonably be expected to result in a Material
Adverse Effect or materially and adversely impact the economic or
business benefits to Recruiter or Newco of the transactions
contemplated by this Agreement; or (iii) any material modification
or waiver of the terms and conditions of this
Agreement.
Section 5.07 Intentionally
deleted.
Section 5.08 Closing Conditions. From
the date hereof until the Closing, each Party hereto shall use
reasonable best efforts to take such actions as are necessary to
expeditiously satisfy the closing conditions set forth in Article
VII hereof.
Section 5.09 Public Announcements.
Unless otherwise required by applicable Law, by Recruiter in
connection with a financing or stock exchange requirements (based
upon the reasonable advice of counsel), no Party to this Agreement
shall make any public announcements in respect of this Agreement or
the transactions contemplated hereby (except that, prior to the
Closing (i) after giving Onewire prior written notice of such
intended disclosure and a reasonable opportunity to review,
Recruiter may disclose the execution of this Agreement and file a
copy in any SEC Reports, in a press release announcing the
execution of this Agreement, and in connection with an application
to be listed on any national securities exchange, and (ii)
Recruiter may discuss the transaction contemplated hereby in a
conference call discussing its potential acquisition of the
Business and in discussions in meetings with investors, provided
such discussions are consistent with the disclosures made under
clause (i) above) or otherwise communicate with any news media
without the prior written consent of the other Party (which consent
shall not be unreasonably withheld or delayed), and the Parties
shall cooperate as to the timing and contents of any such
announcement. Notwithstanding the foregoing and any other agreement
between Recruiter and Onewire, Recruiter shall have no limitations
in providing confidential information to prospective lenders who
are subject to customary confidentiality
requirements.
Section 5.10 Supplemental
Disclosures. Onewire or Recruiter and Newco may
supplement or amend, from time to time, their respective Disclosure
Schedules (including by adding additional disclosure schedules
relating to matters covered in Article III or Article IV, as
applicable) to properly reflect matters, if any, arising after the
date hereof or, in the case of matters that are based on the
Knowledge of Onewire or Recruiter and/or Newco, matters, if any, of
which Onewire or Recruiter and/or Newco, as applicable, first
acquires such Knowledge after the date hereof. The amending Party
shall reasonably highlight the changes in the Disclosure Schedules
comprising supplements or amendments made pursuant to this Section
5.10. In the event that the changes to the Disclosure Schedules
resulting from such supplements and amendments give rise to a
Material Adverse Effect, then the non-amending Party may terminate
this Agreement without Liability on the part of the non-amending
Party to any other Party hereto. In order to terminate this
Agreement pursuant to this Section 5.10, the non-amending Party
must give notice of such termination to the amending Party within
10 Business Days following receipt from Onewire of such
supplemented or amended Disclosure Schedules. In the event that a
Party terminates this Agreement pursuant to this Section 5.10, such
termination shall be such terminating Party’s sole remedy
hereunder and no Party hereto shall have any further Liability or
obligation to any other Party hereto, except as otherwise provided
in this Agreement.
Section 5.11 Books and
Records.
(a) In
order to facilitate the resolution of any claims made against or
incurred by Onewire prior to the Closing, or for any other
reasonable purpose, for a period of seven years after the Closing,
Newco shall:
(i) retain
the Books and Records (including Personnel files) relating to
periods prior to the Closing in a manner reasonably consistent with
the prior practices of Onewire; and
(ii) upon
reasonable notice, afford Onewire’s Representatives
reasonable access (including the right to make, at Onewire’s
expense, photocopies), during normal business hours, to such Books
and Records.
(b) Neither
Recruiter nor Newco shall be obligated to provide Onewire or any
other Party with access to any Books and Records (including
Personnel files) pursuant to this Section 5.11 where such access
would violate any Law.
Section 5.12 Non-Competition;
Non-Solicitation.
(a) For
a period of 36 months following the Closing Date, (the
“Restricted
Period”), Onewire shall not, and shall not permit any
of its Affiliates (each, a “Restricted Party”) to, directly or
indirectly, engage in or assist others in engaging in the
Restricted Business (as defined below), or have an interest in any
Person that engages directly or indirectly in the Restricted
Business in any capacity, including as a partner, shareholder,
member, employee, principal, agent, trustee or consultant. For a
period of 24 months following the Closing Date, the Restricted
Parties shall not cause, induce or encourage any material actual or
prospective client, customer, supplier or licensor of the Business
(including any existing or former client or customer of Onewire and
any Person that becomes a client or customer of the Business after
the Closing), or any other Person who has a material business
relationship with the Business, to terminate or modify any such
actual or prospective relationship. The term “Restricted Business” means any
business that competes with the services or products of the
Business, including without limitation, with respect to staffing,
recruitment / direct-hire, or online recruitment service.
Notwithstanding the foregoing, each Restricted Party may own,
directly or indirectly, solely as an investment, securities of any
Person traded on any national securities exchange if such
Restricted Party is not a controlling Person of, or a member of a
group that controls, such Person and does not, directly or
indirectly, own 5% or more of any class of securities of such
Person.
(b) During
the Restricted Period, the Restricted Parties shall not, and shall
not permit any of their respective Affiliates to, directly or
indirectly, hire or solicit any person who is offered employment by
Buyer pursuant to the terms of an Offer Letter or employment
agreement or is or was employed in the Business during the
Restricted Period, or encourage any such employee to leave such
employment or hire any such employee who has left such employment,
except pursuant to a general solicitation that is not directed
specifically to any such employees.
(c) The
Restricted Parties acknowledge that a breach or threatened breach
of this Section 5.12 would give rise to irreparable harm to Newco
and Recruiter, for which monetary damages would not be an adequate
remedy, and hereby agree that in the event of a breach or a
threatened breach by any Restricted Party of such obligations,
Newco and Recruiter shall, in addition to any and all other rights
and remedies that may be available to them in respect of such
breach, be entitled to seek equitable relief, including a temporary
restraining order, an injunction, specific performance and any
other relief that may be available from a court of competent
jurisdiction (without any requirement to post
bond).
(d) The
Restricted Parties acknowledge that the restrictions contained in
this Section 5.12 are reasonable and necessary to protect the
legitimate interests of Newco and Recruiter and constitute a
material inducement to Newco and Recruiter to enter into this
Agreement and consummate the transactions contemplated by this
Agreement. In the event that any covenant contained in this Section
5.12 should ever be adjudicated to exceed the time, geographic,
product or service or other limitations permitted by applicable Law
in any jurisdiction, then any court is expressly empowered to
reform such covenant, and such covenant shall be deemed reformed,
in such jurisdiction to the maximum time, geographic, product or
service or other limitations permitted by applicable Law. The
covenants contained in this Section 5.12 and each provision hereof
are severable and distinct covenants and provisions. The invalidity
or unenforceability of any such covenant or provision as written
shall not invalidate or render unenforceable the remaining
covenants or provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such covenant or provision in any other
jurisdiction.
Section 5.13 Subsequent Collections.
From and after the Closing, if Onewire or any of its Affiliates
receives or collects any funds relating to any Accounts Receivable
or any other Purchased Asset, Onewire or its Affiliate shall remit
such funds to Newco within five Business Days after its receipt
thereof. From and after the Closing, if Newco or its Affiliate
receives or collects any funds relating to any Excluded Asset,
Newco or its Affiliate shall remit any such funds to Onewire or its
designee within five Business Days after its receipt
thereof.
Section 5.14 Tax Certificates. If any
taxing authority asserts that Onewire is liable for any Tax,
Onewire shall promptly pay any and all such amounts and shall
provide evidence to Newco that such Liabilities have been paid in
full or otherwise satisfied.
Section 5.15 Further Assurances.
Following the Closing, each of the Parties hereto shall, and shall
cause their respective Affiliates to, execute and deliver such
additional documents, instruments, conveyances and assurances and
take such further actions as may be reasonably required to carry
out the provisions hereof and give effect to the transactions
contemplated by this Agreement and the Ancillary
Documents.
Section 5.16 Bulk Sales Laws. The
Parties hereby waive compliance with the provisions of any bulk
sales, bulk transfer or similar Laws of any jurisdiction that may
otherwise be applicable with respect to the sale of any or all of
the Purchased Assets.
Section 5.17 Employment Agreement.
Newco will make a employment offer to Eric Stutzke pursuant to the
employment agreement in the form attached as Exhibit K hereto (the
“Executive Employment
Agreement”).
Article VI
CERTAIN TAX MATTERS
Section 6.01 Certain Tax
Matters.
(a) Onewire
will be responsible for preparing and filing property (whether real
or personal) and similar Tax Returns (“Property Tax Returns”) with
respect to the Purchased Assets for Tax periods ending on or before
the Closing Date, and will make all payments required with respect
to each such Tax Return. Newco will be responsible for preparing
and filing all Property Tax Returns for the Purchased Assets for
all periods commencing after the Closing Date and will make all
payments required with respect to each such Tax Return. In the case
of any Property Tax Return that covers a period that begins on or
before the Closing Date and ends after the Closing Date (a
“Straddle
Period”), the Taxes payable (i) by Onewire, shall be
equal to the product of all such Taxes multiplied by a fraction,
the numerator of which is the number of days in the Straddle Period
from the commencement of the Straddle Period through and including
the Closing Date, and the denominator of which is the number of
days in the entire Straddle Period and (ii) by Newco, shall be
equal to the product of all such Taxes multiplied by a fraction,
the numerator of which is the number of days in the Straddle Period
from the day following the Closing Date through and including the
last day of the Straddle Period, and the denominator of which is
the number of days in the entire Straddle Period. Newco and Onewire
shall timely pay, or reimburse the other, for any Taxes properly
payable by such Party for a Straddle Period pursuant hereto. Newco
and Onewire shall cooperate, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax
Returns pursuant to this Agreement and any audit, Action or other
proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon a Party’s request) the provision of
records and information which are reasonably relevant to any such
audit, Action or other proceeding, making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder, and timely
notification of receipt of any notice of an audit or notice of
deficiency relating to any Tax or Tax Return with respect to which
the non-recipient may have Liability hereunder.
(b) Onewire
shall pay all sales or use Taxes, recording, registration and
conveyance Taxes and fees, and similar transfer Taxes arising from
or relating to the transactions contemplated in this Agreement, and
Onewire shall file or cause to be filed all necessary Tax Returns
and other documentation with respect to such Taxes. To the extent
practicable, Onewire shall deliver all of the Purchased Assets
through electronic delivery or in another manner reasonably
calculated and legally permitted to minimize or avoid the
incurrence of transfer and sales Taxes if such method of delivery
does not adversely affect the condition, operability or usefulness
of any Purchased Asset. For the avoidance of doubt, Onewire shall
be solely responsible for any and all income, gross receipts, and
similar Taxes of Onewire for all periods (whether before or after
the Closing), and Onewire shall be solely responsible for preparing
and filing all Tax Returns relating thereto. At the reasonable
request of Newco, Onewire will certify to Newco that Onewire has
paid all such income, gross receipts and similar Taxes and has
prepared and filed all such Tax Returns.
Article VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to Obligations of All
Parties. The obligations of each Party to consummate
the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) This
Agreement shall have been duly adopted by the Requisite Onewire
Vote as of the date hereof.
(b) No
Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this
Agreement illegal, otherwise restraining or prohibiting
consummation of such transactions or causing any of the
transactions contemplated hereunder to be rescinded following
completion thereof.
(c) The
Recruiter Common Stock shall have been listed on the Nasdaq Capital
Market, or any successor thereof.
Section 7.02 Conditions to Obligations of Recruiter
and Newco. The obligations of Recruiter and Newco to
consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or Recruiter’s or Newco’s
waiver, at or prior to the Closing, of each of the following
conditions:
(a) Other
than the representations and warranties of Onewire contained in the
first sentence of Section 3.01, Section 3.02, Section 3.03, Section
3.23, and Section 3.24, the representations and warranties of
Onewire contained in this Agreement and the Ancillary Documents
shall be true and correct in all respects (in the case of any
representation or warranty qualified by materiality or Material
Adverse Effect) or in all material respects (in the case of any
representation or warranty not qualified by materiality or Material
Adverse Effect) on and as of the Closing Date with the same effect
as though made at and as of such date (except those representations
and warranties that address matters only as of a specified date,
the accuracy of which shall be determined as of that specified date
in all respects). The representations and warranties of Onewire
contained in the first sentence of Section 3.01, Section 3.02,
Section 3.03, Section 3.23, and Section 3.24 shall be true and
correct in all respects on and as of the date hereof and on and as
of the Closing Date with the same effect as though made at and as
of such date (except those representations and warranties that
address matters only as of a specified date, the accuracy of which
shall be determined as of that specified date in all
respects).
(b) Onewire
shall have duly performed and complied in all material respects
with all agreements, covenants and conditions required by this
Agreement and each of the Ancillary Documents to be performed or
complied with by it prior to or on the Closing Date; provided, that, with respect to
agreements, covenants and conditions that are qualified by
materiality, Onewire shall have performed such agreements,
covenants and conditions, as so qualified, in all
respects.
(c) From
the date of this Agreement, there shall not have occurred any
Material Adverse Effect with respect to Onewire, nor shall any
event or events have occurred that, individually or in the
aggregate, with or without the lapse of time, could reasonably be
expected to result in a Material Adverse Effect with respect to
Onewire.
(d) Onewire
shall have delivered each of the closing deliverables set forth in
Section 2.06(a).
(e) All
approvals, consents and waivers listed on Schedule 3.03 shall have been
received, and executed counterparts thereof shall have been
delivered to Newco at or prior to the Closing.
(f) The
Plan of Liquidation shall have been adopted and approved by the
Shareholders and Onewire’s Board of
Directors.
(g) All
outstanding convertible promissory notes or similar instruments of
Indebtedness issued or payable by Onewire shall have been satisfied
or fully converted into equity securities of Onewire, or the
holders thereof shall have provided their written consent to the
consummation of the transactions contemplated by this Agreement and
the other Transaction Documents and written waiver of any claims
they may have against Newco and Recruiter arising therefrom, as of
the Closing Date.
Section 7.03 Conditions to Obligations of
Onewire. The obligations of Onewire to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment or Onewire’s waiver, at or prior to the Closing,
of each of the following conditions:
(a) Other
than the representations and warranties of Recruiter and Newco
contained in the first sentence of Section 4.01, Section 4.02,
Section 4.05, and Section 4.10, the representations and warranties
of Recruiter and Newco contained in this Agreement and the
Ancillary Documents shall be true and correct in all respects (in
the case of any representation or warranty qualified by materiality
or Material Adverse Effect) or in all material respects (in the
case of any representation or warranty not qualified by materiality
or Material Adverse Effect) as of the Closing Date with the same
effect as though made at and as of such date (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects). The representations and
warranties of Recruiter and Newco contained in the first sentence
of Section 4.01, Section 4.02, Section 4.05, and Section 4.10 shall
be true and correct in all respects on and as of the Closing Date
with the same effect as though made at and as of such
date.
(b) Recruiter
and Newco shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by
this Agreement and each of the Ancillary Documents to be performed
or complied with by them prior to or on the Closing Date;
provided,
that, with respect
to agreements, covenants and conditions that are qualified by
materiality, Recruiter and Newco shall have performed such
agreements, covenants and conditions, as so qualified, in all
respects.
(c) All
approvals, consents and waivers that are listed on Schedule 4.03 shall have been
received, and executed counterparts thereof shall have been
delivered to Onewire at or prior to the
Closing.
(d) Newco
shall have delivered each of the closing deliverables set forth in
Section 2.06(b).
Article VIII
INDEMNIFICATION
Section 8.01 Survival. Subject to the
limitations and other provisions of this Agreement, the
representations and warranties contained herein shall survive the
Closing and shall remain in full force and effect until (a) for
General Warranties, the date that is 12 months following the
Closing Date; (b) for Fundamental Warranties, until the expiration
of the relevant statute of limitations; and (c) for Tax Warranties,
until the expiration of the applicable statutes of limitations. All
covenants and agreements of the Parties contained herein (other
than this Article VIII) shall terminate on the Closing Date and
shall thereafter be of no further force and effect, other than
those covenants and agreements that by their terms contemplate
performance after the Closing Date, and each such surviving
covenant and agreement shall survive the Closing for the period
contemplated by its terms. Notwithstanding the foregoing, any
claims asserted in good faith with reasonable specificity (to the
extent known at such time) and in writing by notice from the
Indemnified Party to the Indemnifying Party prior to the expiration
date of the applicable survival period shall not thereafter be
barred by the expiration of the relevant representation or warranty
and such claims shall survive until finally
resolved.
Section 8.02 Indemnification by Onewire and the
Onewire Indemnitors. Subject to the other terms and
conditions of this Article VIII, Onewire and each Onewire
Indemnitor shall severally and not jointly (based on their pro rata
percentage of Share Consideration (the “Indemnity Pro Rata Percentage”))
indemnify and defend each of Recruiter and Newco and each of their
Affiliates and their respective Representatives (collectively, the
“Recruiter
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
the Recruiter Indemnitees based upon, arising out of, with respect
to or by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of Onewire contained in this Agreement, an Ancillary Document or in
any certificate or instrument delivered by or on behalf of Onewire
pursuant hereto or thereto, as of the date such representation or
warranty was made or as if such representation or warranty was made
on and as of the Closing Date (except for representations and
warranties that expressly relate to a specified date, the
inaccuracy in or breach of which will be determined with reference
to such specified date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation
to be performed by Onewire pursuant to this Agreement or the
Ancillary Documents;
(c) any
Excluded Asset or any Excluded Liability;
(d) any
Third Party Claim based upon, resulting from or arising out of the
business, operations, properties, assets or obligations of Onewire
or any of its Affiliates on or prior to the Closing
Date;
(e) any
Liability arising out of or otherwise relating to past or present
PPP similar governmental loans utilized by Onewire or its
Affiliates;
(f) any
Transaction Expenses or Indebtedness of Onewire outstanding as of
the Closing to the extent not paid or satisfied by Onewire at or
prior to the Closing.
Section 8.03 Indemnification By Recruiter and
Newco. Subject to the other terms and conditions of
this Article VIII, Recruiter and Newco, jointly and severally,
shall indemnify and defend Onewire, its members, managers,
directors, and affiliates, and the Onewire Indemnitors, and their
members, managers, directors, and affiliates (collectively, the
“Onewire
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
Onewire Indemnitees based upon, arising out of, with respect to or
by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of Recruiter and Newco contained in this Agreement, any Ancillary
Document or in any certificate or instrument delivered by or on
behalf of Recruiter or Newco pursuant hereto or thereto, as of the
date such representation or warranty was made or as if such
representation or warranty was made on and as of the Closing Date
(except for representations and warranties that expressly relate to
a specified date, the inaccuracy in or breach of which will be
determined with reference to such specified
date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation
to be performed by Recruiter or Newco pursuant to this
Agreement;
(c) any
Assumed Liability; or
(d) any
Third Party Claim based upon, resulting from or arising out of the
operation of the Business or the ownership of the Purchased Assets
following the Closing Date.
Section 8.04 Certain Limitations. The
indemnification provided for in Section 8.02 and Section 8.03 shall
be subject to the following limitations:
(a) Onewire
and the Onewire Indemnitors shall not be liable to the Recruiter
Indemnitees for indemnification under Section 8.02 until the
aggregate amount of all Losses in respect of the Recruiter
Indemnitees are entitled to indemnification under Section 8.02
exceeds $50,000 (based on the Share Consideration Price Per Share)
(the “Basket”),
in which event Onewire and the Onewire Indemnitors shall be
required to forfeit the Holdover Shares for all Losses as if there
was no Basket.
(b) Notwithstanding
anything herein to contrary, except in the case of Fraud, the
liability of Onewire and the Onewire Indemnitors shall be limited
to the Holdback Shares issued under this Agreement or transferred
to the Onewire Indemnitors.
(c) Each
Indemnified Party shall act promptly to avoid or mitigate any
Losses which it or any other Indemnified Party may suffer in
consequence of any fact, matter or circumstance giving rise to a
claim for indemnification under this Agreement or likely to give
rise to a claim for indemnification under this Agreement and no
Indemnified Party shall be entitled to recover under this Agreement
to the extent of any Losses that could have been avoided but for
the Indemnified Party’s failure to avoid or mitigate such
Losses.
(d) Notwithstanding
anything herein to the contrary, the representations, warranties
and covenants of the Indemnifying Parties, and the Indemnified
Party’s right to indemnification with respect thereto, shall
not be affected or deemed waived by reason of any investigation
made by or on behalf of the Indemnified Party or by reason of the
fact that the Indemnified Party knew or should have known that any
such representation or warranty is, was or might be inaccurate or
by reason of the Indemnified Party’s waiver of any condition
set forth in Article VII, as the case may be.
Section 8.05 Indemnification
Procedures. The Party making a claim under this
Article VIII is referred to as the “Indemnified Party”, and the Party
against whom such claims are asserted under this Article VIII is
referred to as the “Indemnifying
Party”.
(a) Third
Party Claims. If any Indemnified Party receives notice of
the assertion or commencement of any Action made or brought by any
Person who is not a party to this Agreement or an Affiliate of a
Party to this Agreement or a Representative of the foregoing (a
“Third Party
Claim”) against such Indemnified Party with respect to
which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall
give the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than 10 days after receipt of
such notice of such Third Party Claim. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying
Party of its indemnification obligations, except and only to the
extent that the Indemnifying Party is prejudiced. Such notice by
the Indemnified Party shall describe the Third Party Claim in
reasonable detail, shall include copies of all material written
evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be
sustained by the Indemnified Party. The Indemnifying Party shall
have the right to participate in, or by giving written notice to
the Indemnified Party, to assume the defense of any Third Party
Claim at the Indemnifying Party’s expense and by the
Indemnifying Party’s own counsel, such counsel to be
reasonably satisfactory to the Indemnified Party, and the
Indemnified Party shall cooperate in good faith in such defense. In
the event that the Indemnifying Party assumes the defense of any
Third Party Claim, subject to Section 8.05(b), it shall have the
right to take such action as it deems necessary to avoid, dispute,
defend or appeal any such Third Party Claim in the name and on
behalf of the Indemnified Party. The Indemnified Party shall have
the right to participate in the defense of any Third Party Claim
with counsel selected by it subject to the Indemnifying
Party’s right to control the defense thereof. The fees and
disbursements of such counsel shall be at the expense of the
Indemnified Party, provided, that if in the reasonable
opinion of counsel to the Indemnified Party, there exists a
conflict of interest between the Indemnifying Party and the
Indemnified Party that cannot be waived; the Indemnifying Party
shall be liable for the reasonable fees and expenses of counsel to
the Indemnified Party. If the Indemnifying Party elects not to
compromise or defend such Third Party Claim, fails to promptly
notify the Indemnified Party in writing of its election to defend
as provided in this Agreement, or fails to diligently prosecute the
defense of such Third Party Claim, the Indemnified Party may,
subject to Section 8.05(b), pay, compromise, defend such Third
Party Claim and seek indemnification for any and all Losses based
upon, arising from or relating to such Third Party Claim. Onewire,
on the one hand, and Recruiter and Newco, on the other hand, shall
cooperate with each other in all reasonable respects in connection
with the defense of any Third Party Claim, including making
available records relating to such Third Party Claim and
furnishing, without expense (other than reimbursement of actual
out-of-pocket expenses) to the defending party, management
employees of the non-defending party as may be reasonably necessary
for the preparation of the defense of such Third Party Claim. In no
event shall the Indemnifying Party also be liable for local counsel
selected at the request of the Indemnified Party. If
indemnification is sought against Onewire or the Onewire
Indemnitors, the Onewire Stakeholders may direct the control of the
Third Party Claim.
(b) Settlement
of Third Party Claims. Notwithstanding any other provision
of this Agreement, the Indemnifying Party shall not enter into
settlement of any Third Party Claim without the prior written
consent of the Indemnified Party, except as provided in this
Section 8.05(b). If a firm offer is made to settle a Third Party
Claim without leading to liability or the creation of a financial
or other obligation on the part of the Indemnified Party and
provides, in customary form, for the unconditional release of each
Indemnified Party from all liabilities and obligations in
connection with such Third Party Claim, the Indemnifying Party may
settle the Third Party Claim upon the terms set forth in such firm
offer to settle such Third Party Claim. If the Indemnified Party
has assumed the defense pursuant to Section 8.05(a) (including,
without limitation, where the Indemnified Party is defending
pursuant to Section 8.05(a)), it shall not agree to any settlement
without the written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld or
delayed).
(c) Direct
Claims. Any Action by an Indemnified Party on account of a
Loss which does not result from a Third Party Claim (a
“Direct Claim”)
shall be asserted by the Indemnified Party giving the Indemnifying
Party reasonably prompt written notice thereof, but in any event
not later than 30 days after the Indemnified Party becomes aware of
such Direct Claim. The failure to give such prompt written notice
shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the
Indemnifying Party is prejudiced. Such notice by the Indemnified
Party shall describe the Direct Claim in reasonable detail, shall
include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the
Loss that has been or may be sustained by the Indemnified Party.
The Indemnifying Party shall have 30 days after its receipt of such
notice to respond in writing to such Direct Claim. The Indemnified
Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give
rise to the Direct Claim, and whether and to what extent any amount
is payable in respect of the Direct Claim and the Indemnified Party
shall assist the Indemnifying Party’s investigation by giving
such information and assistance (including access to
Onewire’s premises and personnel and the right to examine and
copy any accounts, documents or records) as the Indemnifying Party
or any of its professional advisors may reasonably request. If the
Indemnifying Party does not so respond within such 30 day period,
the Indemnifying Party shall be deemed to have rejected such claim,
in which case the Indemnified Party shall be free to pursue such
remedies as may be available to the Indemnified Party on the terms
and subject to the provisions of this
Agreement.
Section 8.06 Payments.
(a) Once
a Loss is agreed to by the Indemnifying Party or finally
adjudicated to be payable pursuant to this Article VIII by a
non-appealable judgment issued by a court of competent
jurisdiction, indemnification payments made pursuant to Section
8.02 shall be satisfied as follows: (i) if Newco and Recruiter are
the Indemnifying Parties, at the option of Onewire, either (a)
through the issuance of additional shares of Recruiter Common Stock
based on the Share Consideration Price Per Share, or (b) payment of
funds to cover the Loss, and (ii) if Onewire is the Indemnifying
Party, through the deduction of Holdback Shares based on the Share
Consideration Price Per Share for immediate cancellation by
Newco.
(b) Any
amount payable by Onewire to a Recruiter Indemnitee with respect to
a Loss shall be reduced by the amount of any net insurance proceeds
(i.e., insurance payments less deductible and premiums, including
the amount of any increase in future premiums assessed under such
policies of insurance) actually received by the Recruiter
Indemnitee with respect to the Loss, and Recruiter and Newco agree
to use their reasonable best efforts to collect any insurance
proceeds to which Recruiter and/or Newco may be entitled in respect
of any Loss.
Section 8.07 Tax Treatment of Indemnification
Payments. All indemnification payments made under
this Agreement shall be treated by the Parties as an adjustment to
the Purchase Price for Tax purposes, unless otherwise required by
Law.
Section 8.08 Exclusive Remedy.
Commencing on the Closing Date, this Article VIII shall provide the
sole and exclusive remedy for any and all Losses sustained or
incurred by an Indemnified Party pursuant to this Agreement except
as a result of fraud by an Indemnifying Party; provided, however, that nothing
contained in this Article VIII shall prevent any Party from seeking
equitable remedies (including specific performance and injunctive
relief).
Section 8.09 Onewire
Representative.
(a) For
purposes of the Indemnity obligations in this Article VIII, Onewire
and the Onewire Stakeholders hereby appoint Stobie Creek
Investments, LLC ("Stobie Creek"), as agent and attorney-in-fact
for and on behalf of Onewire and the Onewire Stakeholders to give
and receive notices and communications, to authorize payment to any
Indemnified Party in satisfaction of claims by any Indemnified
Party, to object to such payments, to agree to, negotiate, enter
into settlements and compromises of, and initiate actions and
comply with orders of courts with respect to such claims, to
assert, negotiate, enter into settlements and compromises of, and
initiate actions and comply with orders of courts with respect to,
any other claim by any Indemnified Party against Onewire or any
Onewire Stakeholder or by Onewire or any such Onewire Stakeholder
against any Indemnified Party or any dispute between any
Indemnified Party and Onewire or any such Onewire Stakeholder, in
each case relating to this Agreement or the transactions
contemplated hereby or thereby, to execute any and all agreements
and certificates contemplated by this Agreement, and to take all
other actions that are necessary or appropriate in the judgment of
Onewire and the Onewire Stakeholders for the accomplishment of the
foregoing or specifically mandated by the terms of this
Agreement.
(b) For
all other purposes of this Agreement and the obligations of Onewire
prior to Closing, Onewire and the Onewire Stakeholders hereby
appoint Eric Stutze, in his capacity as the Onewire Representative,
as agent and attorney-in-fact for and on behalf of Onewire and the
Onewire Stakeholders to give and receive notices and
communications, to execute any and all agreements and certificates
contemplated by this Agreement, and to take all other actions that
are necessary or appropriate in the judgment of the Onewire
Representative for the accomplishment of the foregoing or
specifically mandated by the terms of this
Agreement.
(c) The
Onewire Representative shall not be liable for any act done or
omitted hereunder as Onewire Representative while acting in good
faith and in the exercise of reasonable judgment, even though such
act or omission constitutes negligence on the part of such Onewire
Representative. For the avoidance of any doubt, nothing in this
Section 8.09(b) shall in
any way impact any Liability that the Onewire Representative may
have in his capacity as a stockholder of Onewire. The Onewire
Representative shall only have the duties expressly stated in this
Agreement and shall have no other duty, express or implied. The
Onewire Representative may engage attorneys, accountants and other
professionals and experts. The Onewire Representative may in good
faith rely conclusively upon information, reports, statements and
opinions prepared or presented by such professionals, and any
action taken by the Onewire Representative based on such reliance
shall be deemed conclusively to have been taken in good faith and
in the exercise of reasonable judgment. The Onewire Stakeholders
shall indemnify the Onewire Representative and hold the Onewire
Representative harmless against any Losses incurred without gross
negligence or bad faith on the part of the Onewire Representative
and arising out of or in connection with the acceptance or
administration of the Onewire Representative’s duties
hereunder, including the reasonable fees and expenses of any legal
counsel or other professionals and advisors retained by the Onewire
Representative (“Onewire
Representative Expenses”). Following Closing, the
Onewire Representative shall have the right to recover Onewire
Representative Expenses from any deferred payments in accordance
with the terms hereof prior to any distribution to any Onewire
Stakeholder, and prior to any such distribution. Prior to Closing,
a decision, act, consent or instruction of the Onewire
Representative, including an amendment or waiver of any provision
of this Agreement, shall constitute a decision of Onewire and the
Onewire Stakeholders and shall be final, binding and conclusive
upon Onewire and the Stakeholders.
Article IX
TERMINATION
Section 9.01 Termination. This
Agreement may be terminated at any time prior to the
Closing:
(a) by
the mutual written consent of Onewire and
Newco;
(b) by
Newco by written notice to Onewire if:
(i) neither
Recruiter nor Newco is then in material breach of any provision of
this Agreement and there has been a material breach, inaccuracy in,
or failure to perform any representation, warranty, covenant or
agreement made by Onewire pursuant to this Agreement that would
give rise to the failure of any of the conditions specified in
Article VII and such breach, inaccuracy, or failure has not been
cured by Onewire within 10 Business Days of Onewire’s receipt
of written notice of such breach from
Recruiter.
(c) by
Onewire by written notice to Recruiter and Newco
if:
(i) Onewire
is not then in material breach of any provision of this Agreement
and there has been a material breach, inaccuracy in, or failure to
perform any representation, warranty, covenant or agreement made by
Recruiter or Newco pursuant to this Agreement that would give rise
to the failure of any of the conditions specified in Article VII
and such breach, inaccuracy, or failure has not been cured by
Recruiter or Newco within 10 Business Days of their receipt of
written notice of such breach from Onewire;
(d) by
Newco or Onewire by written notice to the other
if:
(i) there
shall be any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or
any Governmental Authority shall have issued a Governmental Order
restraining or enjoining the transactions contemplated by this
Agreement, and such Governmental Order shall have become final and
non-appealable; or
(ii) the
Closing has not occurred by [____________ 31, 2021] (the
“Outside
Date”);
Provided, however, that the right to
terminate this Agreement pursuant to this Section 9.01(d) shall not
be available to any Party (or any Affiliate of such Party) whose
breach of any provision of this Agreement results in or causes the
failure of the transactions contemplated hereby to be consummated
on or before such time.
Section 9.02 Effect of Termination.
In the event of the termination of this Agreement in accordance
with this Article IX, this Agreement shall forthwith become void
and there shall be no liability on the part of any Party hereto
except:
(a) as
set forth in this Article IX, Section 5.02(b) and Article X hereof;
and
(b) that
nothing herein shall relieve any Party hereto from liability for
any willful breach of any provision hereof.
Article X
MISCELLANEOUS
Section 10.01 Expenses. Except as
otherwise expressly provided herein, all costs and expenses,
including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the Party incurring such costs and expenses, whether or not
the Closing shall have occurred.
Section 10.02 Notices. All notices,
requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if
sent by a nationally recognized overnight courier (receipt
requested); or (c) on the date sent by e-mail of a PDF document
(with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after
normal business hours of the recipient Such communications must be
sent to the respective Parties at the following addresses (or at
such other address for a Party as shall be specified in a notice
given in accordance with this Section 10.02):
|
If to Onewire:
|
OneWire Holdings,
LLC
404 5th Avenue,
3rd
Floor
New York, NY
10018
E-mail:
Attention:
_____________________
|
|
with a copy via email (which shall
not constitute notice) to:
|
LOPRESTI, PLLC
Attn: Anthony A. LoPresti,
Esq.
Email:
|
|
If to
Recruiter:
|
100 Waugh Drive,
Suite 300
Houston, Texas
77007
Email:
Attention: Evan Sohn
|
|
with
a copy (which shall not constitute notice)
to:
|
Lucosky Brookman LLP 101 Wood Avenue South, Fifth
Floor Iselin, NJ 08830 Email: Attn: Joseph M. Lucosky,
Esq.
|
Section 10.03 Interpretation. For
purposes of this Agreement, (a) the words “include,”
“includes” and “including” shall be deemed
to be followed by the words “without limitation”;
(b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,”
“hereby,” “hereto” and
“hereunder” refer to this Agreement as a whole. Unless
the context otherwise requires, references herein: (x) to Articles,
Sections, Disclosure Schedules and Exhibits mean the Articles and
Sections of, and Disclosure Schedules and Exhibits attached to,
this Agreement; (y) to an agreement, instrument or other document
means such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted
by the provisions thereof and (z) to a statute means such statute
as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement
shall be construed without regard to any presumption or rule
requiring construction or interpretation against the Party drafting
an instrument or causing any instrument to be drafted. The
Disclosure Schedules and Exhibits referred to herein shall be
construed with, and as an integral part of, this Agreement to the
same extent as if they were set forth verbatim
herein.
Section 10.04 Headings. The headings
in this Agreement are for reference only and shall not affect the
interpretation of this Agreement.
Section 10.05 Severability. If any
term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the Parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
Section 10.06 Entire Agreement. This
Agreement and the Ancillary Documents constitute the sole and
entire agreement of the Parties to this Agreement with respect to
the subject matter contained herein and therein, and supersede all
prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event
of any inconsistency between the statements in the body of this
Agreement and those in the Ancillary Documents, the Exhibits and
Disclosure Schedules (other than an exception expressly set forth
as such in the Disclosure Schedules), the statements in the body of
this Agreement will control.
Section 10.07 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit
of the Parties hereto and their respective successors and permitted
assigns. Neither Party may assign its rights or obligations
hereunder without the prior written consent of the other Party,
which consent shall not be unreasonably withheld or delayed. No
assignment shall relieve the assigning Party of any of its
obligations hereunder.
Section 10.08 No Third-Party
Beneficiaries. Except as provided in Article VIII,
this Agreement is for the sole benefit of the Parties hereto and
their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any
other Person or entity any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
Section 10.09 Amendment and Modification;
Waiver. This Agreement may only be amended, modified
or supplemented by an agreement in writing signed by Recruiter,
Newco, and Onewire at any time prior to the Closing. Any failure of
Recruiter or Newco, on the one hand, or Onewire, on the other hand,
to comply with any obligation, covenant, agreement or condition
herein may be waived by Onewire (with respect to any failure by
Recruiter or Newco) or by Recruiter or Newco (with respect to any
failure by Onewire), respectively, only by a written instrument
signed by the Party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other
failure.
Section 10.10 Governing Law; Submission to
Jurisdiction; Waiver of Jury
Trial.
(a) This
Agreement and all matters related to the transactions contemplated
herein shall be governed by and construed in accordance with the
internal laws of the State of Nevada without giving effect to any
choice or conflict of law provision or rule (whether of the State
of Nevada or any other jurisdiction).
(b) Any
legal suit, Action, or proceeding arising out of or based upon this
Agreement, the Ancillary Documents, or the transactions
contemplated hereby or thereby shall be instituted exclusively in
the federal or state courts located in New York County, New York
and each Party irrevocably submits to the exclusive jurisdiction of
such courts in any such suit, Action or proceeding. The Parties
irrevocably and unconditionally waive any objection to the laying
of venue of any suit, Action or any proceeding in such courts and
irrevocably waive and agree not to plead or claim in any such court
that any such suit, Action or proceeding brought in any such court
has been brought in an inconvenient forum.
(c) Each
Party acknowledges and agrees that any controversy which may arise
under this Agreement or the Ancillary Documents is likely to
involve complicated and difficult issues and, therefore, each such
Party irrevocably and unconditionally waives any right it may have
to a trial by jury in respect of any legal Action arising out of or
relating to this Agreement, the Ancillary Documents, or the
transactions contemplated hereby or thereby. Each Party to this
Agreement certifies and acknowledges that (A) no representative of
any other Party has represented, expressly or otherwise, that such
other Party would not seek to enforce the foregoing waiver in the
event of a legal Action, (B) such Party has considered the
implications of this waiver, (C) such Party makes this waiver
voluntarily, and (D) such Party has been induced to enter into this
Agreement by, among other things, the mutual waivers and
certifications in this Section 10.10(c).
(d) Specific
Performance. The Parties agree that irreparable damage would
occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the Parties shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy to which they are entitled at law or in equity,
without having to plead or prove irreparable harm or lack of
adequate remedy at law and without having to post a bond or other
security.
(e) Attorneys’
Fees. In the event that any Party institutes any legal suit,
Action, or proceeding against the other Party(ies) arising out of
or relating to this Agreement, the Ancillary Documents or any of
the transactions contemplated hereunder, the prevailing Party in
the suit, Action or proceeding shall be entitled to receive, in
addition to all other damages to which it may be entitled, the
costs incurred by such Party in conducting the suit, Action, or
proceeding, including attorneys’ fees and expenses and court
costs.
(f) Counterparts.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement
delivered by e-mail or other means of electronic transmission shall
be deemed to have the same legal effect as delivery of an original
signed copy of this Agreement.
[Signature Page
Follows]
IN
WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly
authorized.
|
Onewire Inc.
By:____________________________
Name: Eric
Stutzke
Title: Chief Executive
Officer
|
|
Recruiter.com Group,
Inc.
By:____________________________
Name: Evan Sohn
Title: Chief Executive
Officer
|
|
|
|
Recruiter.com - Onewire,
Inc.
By:_____________________________
Name: Evan Sohn
Title: Chief Executive
Officer
|
EXHIBIT A
PLAN OF
LIQUIDATION
EXHIBIT B
BILL OF SALE
EXHIBIT C
ESTIMATED WORKING CAPITAL
STATEMENT
EXHIBIT D
EXHIBIT E
Intentially
Omitted.
EXHIBIT F
PURCHASE PRICE ALLOCATION
METHODOLOGY
EXHIBIT G
ONEWIRE DISCLOSURE
SCHEDULE
EXHIBIT H
FINANCIAL
STATEMENTS
EXHIBIT I
RECRUITER DISCLOSURE
SCHEDULE
EXHIBIT J
OFFER LETTERS
EXHIBIT K
EXECUTIVE EMPLOYMENT
AGREEMENT