Exhibit 3
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REZLOGIC, INC.
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▇-▇▇▇▇▇▇▇.▇▇▇ INC.
-and-
E-CRUITER ACQUISITION I, INC.
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MERGER AGREEMENT
JUNE 29, 2001
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Sparks ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., counsel for RezLogic
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, Hill & ▇▇▇▇▇▇▇▇▇ LLP, solicitors for the Purchaser
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THIS MERGER AGREEMENT is made as of June 29, 2001
BETWEEN:
REZLOGIC, INC., a corporation incorporated pursuant to the
laws of the state of Colorado ("RezLogic" or "the
Corporation")
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▇-▇▇▇▇▇▇▇.▇▇▇ INC., a corporation incorporated pursuant to the
laws of Canada (the "Purchaser")
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E-CRUITER ACQUISITION I, INC., a corporation incorporated
pursuant to the laws of the State of Delaware
("Merger Sub")
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law ("Delaware Law") and the
Colorado Business Corporation Act ("Colorado Law"), Purchaser, Merger Sub and
RezLogic intend to enter into a business combination transaction.
B. The Board of Directors of RezLogic (i) has determined that the
Merger (as defined below) is consistent with and in furtherance of the long-term
business strategy of RezLogic and advisable and fair to, and in the best
interests of, RezLogic and its stockholders, (ii) has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement and (iii)
has determined to recommend that the stockholders of RezLogic adopt and approve
this Agreement and approve the Merger.
C. The Board of Directors of Purchaser (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Purchaser and advisable and fair to, and in the best interests of, Purchaser
and its shareholders and (ii) has approved this Agreement, the Merger and the
other transactions contemplated by this Agreement.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
E. It is also intended by the parties hereto that the Merger shall be
accounted for as a "purchase."
F. On or prior to Closing, the Corporation and RezLogic Shareholders
will enter into a letter of transmittal, custody agreement and stock power, the
form of which is attached hereto as Schedule "A" (the "Transmittal Letter"),
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which sets forth certain representations, warranties and covenants of the
RezLogic Stockholders.
G. This Agreement shall become effective on the date that the parties
mutually agree on the content of the Schedules attached hereto.
THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 Definitions
Whenever used in this Agreement, the following words and terms shall have the
meanings set out below:
"1933 Act" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder by the SEC;
"1934 Act" means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder by the SEC;
"Accounts Receivable" means all accounts receivable, bills receivable,
trade accounts, book debts and insurance claims recorded as receivable
in the Books and Records and any other amount due to the Corporation,
including any refunds and rebates, and the benefit of all security
(including cash deposits), guarantees and other collateral held by the
Corporations;
"Accredited Investor" has the meaning ascribed thereto in Rule 501 of
Regulation D of the 1933 Act;
"Affiliate" shall have the meaning given in the Canada Business
Corporations Act as amended;
"Agreement" means this Merger Agreement, including all schedules, and
all instruments supplementing or amending or confirming this Agreement,
and references to "Article" or "Section" mean and refer to the
specified Article or Section of this Agreement;
"Associate" shall have the meaning given in the Canada Business
Corporations Act as amended;
"Benefit Plans" means all plans, arrangements, agreements, programs,
policies, practices or undertakings, whether oral or written, formal or
informal, funded or unfunded, registered or unregistered to which the
Corporation is or has been a party or by which it is or has been bound
or under which the Corporation has, or will have, any liability or
contingent liability, relating to:
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(a) Pension Plans;
(b) Insurance Plans; or
(c) Compensation Plans,
with respect to any of the Employees or former employees (or any
dependants or beneficiaries of any such Employees or former employees),
directors or shareholders of the Corporation, individuals working on
contract with the Corporation or other individuals providing services
to any of them of a kind normally provided by employees or eligible
dependants of such person;
"Books and Records" means all books and records of the Corporation, or
any of their respective Affiliates or Associates, relating to the
Corporation, including financial, corporate, operations, sales and
purchase books and records, lists of suppliers and customers, business
reports, plans and projections and all other documents, surveys, plans,
files, records, correspondence, and other data and information,
financial or otherwise, including all data and information stored on
computer-related or other electronic media;
"BSE" means the Boston Stock Exchange;
"Business" means the development and sale of web-based recruiting
process automation solutions carried on by the Corporation, and the
term "Business" shall include any part of the businesses held or
carried on by the Corporation;
"Business Day" means a day, other than a Saturday or Sunday, on which
the principal commercial banks located in Ottawa, Ontario are open for
business during normal banking hours;
"Claims" means any claim, demand, action, assessment or reassessment,
suit, cause of action, damage, loss, charge, judgment, debt, costs,
liability or expense, including reasonable professional fees and all
costs incurred in investigating or pursuing any of the foregoing or any
proceeding relating to any of the foregoing;
"Closing" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares under this Agreement;
"Closing Date" means August 1, 2001 or such other date as the Parties
may agree in writing as the date upon which the Closing shall take
place;
"Closing Time" means 2 o'clock p.m. Ottawa time on the Closing Date, or
such other time on such date as the Parties may agree in writing as the
time at which the Closing shall take place;
"Code" means the United States Internal Revenue Code of 1986, as
amended;
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"Compensation Plans" means all employment benefits relating to bonus,
incentive pay or compensation, performance compensation, deferred
compensation, profit sharing or deferred profit sharing, share
purchase, share option, stock appreciation, phantom stock, vacation or
vacation pay, sick pay, severance or termination pay, employee loans or
separation from service benefits, or any other type of arrangement
providing for compensation or benefits additional to base pay or
salary;
"Contracts" means all contracts, licences, leases, agreements,
commitments, entitlements and engagements to which the Corporation is a
party or by which it is bound or under which the Corporation has, or
will have, any liability or contingent liability, and includes all
quotations, orders or tenders for contracts which remain open for
acceptance and any warranties, guarantees or commitments (express or
implied);
"Employees" means all persons employed or retained by the Corporation,
including for greater certainty, those employees on disability leave,
parental leave or other absence;
"Encumbrances" means any pledge, lien, charge, security interest,
lease, title retention agreement, mortgage, restriction, development or
similar agreement, easement, right-of-way, title defect, option,
adverse claim or encumbrance of any kind or character whatsoever;
"Effective Time" means 1:58 p.m. Ottawa time on the Closing Date;
"Environment" means the environment or natural environment as defined
in any Environmental Laws and includes air, surface, water, ground
water, land surface, soil, subsurface strata, any sewer system and the
environment in the workplace and disposal of Hazardous Substances;
"Environmental Approvals" means all approvals, permits, certificates,
licences, authorizations, consents, agreements, instructions or
directions having the force of law, registrations or approvals issued
or required by any Governmental Authority pursuant to Environmental
Laws with respect to the operations, business or assets of the
Corporations;
"Environmental Laws" means all Laws relating in full or in part to the
Environment or employee or public health or safety, and includes those
Environmental Laws relating to the storage, generation, use, handling,
manufacture, processing, labelling, advertising, sale, display,
transportation, treatment, Release and disposal of Hazardous
Substances;
"Equipment Contracts" means all motor vehicle leases, equipment leases,
conditional sales contracts, title retention agreements and other
similar agreements relating to equipment used by the Corporation;
"Exchange Ratio" means a number equal to (a) (i) Three Million Dollars
(US$3,000,000) divided by (ii) the last sale price of Purchaser Common
Stock quoted by the NASD on its automated quotation system on the date
of this Agreement divided by (b) the number of issued and outstanding
shares of Common Stock of RezLogic immediately preceding the Effective
Time.
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"Governmental Authority" means any government, regulatory authority,
governmental department, agency, commission, board, tribunal or court
or other law, rule or regulation-making entity having or purporting to
have jurisdiction on behalf of any nation, or any province, state or
other geographic or political subdivision of any nation;
"Governmental Authorizations" means all authorizations, approvals,
including Environmental Approvals, orders, consents, directions,
notices, licences, permits, variances, registration or similar rights
issued to or by or required by any Governmental Authority;
"Hazardous Substance" means any pollutant, contaminant, waste of any
nature, hazardous substance, hazardous material, toxic substance,
prohibited substance, dangerous substance or dangerous good as defined,
judicially interpreted or identified in any Environmental Laws,
including any asbestos or asbestos-containing materials;
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder;
"Independent Auditors" means PricewaterhouseCoopers LLP or such other
independent auditing firm as the Parties may otherwise agree;
"Insurance Plans" means all employment benefits relating to disability
or wage continuation during period of absence from work (including
short term disability, long term disability and workers compensation),
hospitalization, health, medical or dental treatments or expenses, life
insurance, death or survivor's benefits and supplementary employment
insurance, in each case regardless of whether or not such benefits are
insured or self-insured;
"Intellectual Property" means registered and unregistered trade-marks
(including the Trade-marks), copyright, and other intellectual property
rights and all rights (proprietary, contractual or otherwise) in or
relating to all trade secrets, confidential and proprietary
information, methods, procedures, know-how and information;
"Laws" means all applicable laws (including common law), statutes,
by-laws, rules, regulations, orders, ordinances, protocols, codes,
guidelines, tax treaties, policies, notices, directions and judgments
or other requirements of any Governmental Authority;
"Leased Real Property" means all premises which are leased, subleased,
licensed or otherwise occupied by the Corporation, and the interest of
the Corporation in all plants, buildings, structures, fixtures,
erections, improvements, easements, rights-of-way and other
appurtenances situate on or forming part of such premises, all of which
is listed in Schedule 1.1(a);
"Marketing Inventories" means all inventories of every kind and nature
and wheresoever situate owned by the Corporation and pertaining to the
Business, including all inventories of operating supplies, marketing
and promotional materials and other materials of or pertaining to the
Business;
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"Material Contract" means any Contract: (i) involving aggregate
payments to or by the Corporations in excess of $50,000; (ii) involving
rights or obligations of the Corporation that may reasonably extend
beyond one year; (iii) which is outside the ordinary course of
business; (iv) which does not or cannot be terminated without penalty
on less than six months notice; or (iv) which restricts in whole or in
part in any material way the scope of the business or activities of the
Corporation or which restricts in anyway the scope of the business or
activities of any of their Affiliates or Associates;
"Merger Sub" means E-Cruiter Acquisition I, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Purchaser;
"NASD" means the National Association of Securities Dealers, Inc. or
one or more of its subsidiaries, as the context may require, and any
successor to any of them;
"Notice" shall have the meaning given in Section 12.3;
"Owned Real Property" means all freehold lands which are owned or
purported to be owned, in fee simple, by the Corporation including all
plants, buildings, structures, fixtures, erections, improvements,
easements, rights-of-way and other appurtenances situate on or forming
part of such lands all of which is listed in Schedule 1.1(b);
"Parties" means all of the parties to this Agreement;
"Pension Plans" means all benefits relating to retirement or retirement
savings including pension plans, pensions or supplemental pensions,
registered retirement savings plans, registered pension plans and
retirement compensation arrangements;
"Permitted Encumbrances" means the Encumbrances listed in Schedule
1.1(c);
"Person" means any individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, corporation, limited liability company, unlimited
liability company, Governmental Authority, and a natural person in such
person's capacity as trustee, executor, administrator or other legal
representative;
"Purchase Price" shall have the meaning given in Section 3.1;
"Purchased Shares" means all of the issued and outstanding shares in
the capital of the Corporation;
"Real Property" means the Owned Real Property and the Leased Real
Property;
"Real Property Leases" means those agreements to lease, leases,
subleases or licences or other occupancy rights pursuant to which the
Corporation uses or occupies the Leased Real Property;
"Release" has the meaning prescribed in any Environmental Laws and
includes any release, spill, leak, pumping, pouring, addition,
emission, emptying, discharge, injection, escape, leaching, disposal,
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dumping, deposit, spraying, burial, abandonment, incineration, seepage,
or placement;
"Remedial Order" means any administrative complaint, direction, order
or sanction issued, filed, imposed or threatened by any Governmental
Authority pursuant to any Environmental Laws and includes any order
requiring any remediation or clean-up of any Hazardous Substance, or
requiring that any Release or any other activity be reduced, modified
or eliminated or requiring a payment to be made to any Governmental
Authority;
"Required Approvals" means those Governmental Authorizations,
shareholder approval and third Person approvals, consents and notices
referred to in Schedule 1.1(e);
"SEC" means the Securities and Exchange Commission;
"Securities Laws" means the 1933 Act, the 1934 Act, the Investment
Company Act, the Advisers Act, the CEA, the securities or "blue sky"
laws of any state or territory of the United States and the rules and
regulations of the NASD and the comparable laws, rules and regulations
in effect in any relevant other country;
"Subsidiary" shall have the meaning given to it in the Canada Business
Corporations Act as amended;
"Tax Returns" includes all returns, reports, declarations, elections,
notices, filings, information returns and statements filed or required
to be filed in respect of Taxes;
"Taxes" includes all taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind whatsoever imposed by any
Governmental Authority, together with all interest, penalties, fines,
additions to tax or other additional amounts imposed by any
Governmental Authority in respect thereof, including those levied on,
or measured by, or in respect of income, gross receipts, profits,
capital, gains, capital gains, transfer, land transfer, sales, goods
and services, harmonized sales, use, value-added, excise, stamp,
withholding, business, franchising, property, employer health, payroll,
employment, health, social services, education and social security
taxes, all surtaxes, all customs duties and import and export taxes,
all license, franchise and registration fees and all employment
insurance, health insurance and other government pension plan premiums
or contributions;
"Trade-marks" means all trade-marks, trade names, brands, trade dress,
business names, Uniform Resource Locators ("URL"), domain names, tag
lines, designs, graphics, logos and other commercial symbols and
indicia of origin, whether registered or not, owned by, licensed to or
used by the Corporation and any goodwill associated with any of them,
including trade-marks, trade names, brands, trade dress, business
names, URL, domain names, tag lines, designs, graphics, logos and other
commercial symbols and indicia of origin owned by, licensed to or used
by the Corporation listed and described in Schedule 4.22;
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1.2 Certain Rules of Interpretation
In this Agreement and the schedules:
(a) Time - time is of the essence in the performance of the
Parties' respective obligations;
(b) Currency - unless otherwise specified, all references to money
amounts are to lawful currency of the United States of
America;
(c) Headings - descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not
intended as complete or accurate descriptions of the content
of such Articles or Sections;
(d) Singular, etc. - use of words in the singular or plural, or
with a particular gender, shall not limit the scope or exclude
the application of any provision of this Agreement to such
person or persons or circumstances as the context otherwise
permits;
(e) Consent - whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and
notification of such approval or consent is not delivered
within the applicable time limited, then, unless otherwise
specified, the Party whose consent or approval is required
shall be conclusively deemed to have withheld its approval or
consent;
(f) Calculation of Time - unless otherwise specified, time periods
within or following which any payment is to be made or act is
to be done shall be calculated by excluding the day on which
the period commences and including the day on which the period
ends and by extending the period to the next Business Day
following if the last day of the period is not a Business Day;
(g) Business Day - whenever any payment is to be made or action to
be taken under this Agreement is required to be made or taken
on a day other than a Business Day, such payment shall be made
or action taken on the next Business Day following such day;
and
(h) Inclusion - where the words "including" or "includes" appear
in this Agreement, they mean "including (or includes) without
limitation".
1.3 Knowledge
Except as specified otherwise in this Agreement, any reference to the knowledge
of any Person shall mean to the best of the knowledge, information and belief of
such Person after reviewing all relevant records available to such person and,
with respect to an entity, includes the actual knowledge of all directors and
officers the Person and its Affiliates and Associates.
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1.4 Entire Agreement
This Agreement, together with the agreements and other documents to be delivered
pursuant to this Agreement, constitute the entire agreement between the Parties
pertaining to the subject matter of this Agreement and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to that subject matter, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter of this Agreement except as specifically set
forth in this Agreement and any document delivered pursuant to this Agreement.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby.
1.5 Applicable Law
This Agreement shall be governed and construed in accordance with the laws of
the Province of Ontario and the federal laws of Canada applicable in the
Province of Ontario, and without regard to the conflict of laws principles
applicable in such jurisdiction.
1.6 Accounting Principles
All references to generally accepted accounting principles mean generally
accepted accounting principles in the United States as at the Closing Date,
applied on a consistent basis.
1.7 Schedules and Exhibits
The schedules and exhibits to this Agreement, are an integral part of this
Agreement. The Schedules shall modify all representations and warranties of
contained in this Agreement. Each party has used its best efforts to reference
the correct Schedule, however the failure to properly reference such schedule
shall not be a breach of a representation or warranty if the party to whom the
disclosure is being made could reasonably ascertain the effect of a disclosure
in a Schedule on other applicable representations and warranties.
ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the applicable provisions of Delaware Law,
Merger Sub shall be merged with and into RezLogic (the "Merger"), the separate
corporate existence of Merger Sub shall cease and RezLogic shall continue as the
surviving corporation. RezLogic as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation"
2.2 Effective Time; Closing. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by (a) filing a
certificate of merger, in such appropriate form as determined by the parties,
with the Secretary of State of the State of Delaware in accordance with the
relevant provisions of Delaware Law (the "Delaware Certificate of Merger") and
(b) by filing articles of merger, in such appropriate form as determined by the
parties, with the Secretary of State of the State of Colorado in accordance with
the relevant provisions of Colorado Law (the "Colorado Articles of Merger"). The
time of completion of the last such filing (or such later time as may be agreed
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in writing by RezLogic and Purchaser and set forth in each such filing) shall be
the "Effective Time" as soon as practicable on or after the Closing.
2.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in this Agreement and the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of RezLogic and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of RezLogic and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
2.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by
law and such Certificate of Incorporation of the Surviving
Corporation; provided however, that at the Effective Time
Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read: "The name of the
corporation is RezLogic, Inc."
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Corporation until thereafter amended.
2.5 Directors and Officers. The initial directors of the Surviving Corporation
shall be the directors of Merger Sub immediately prior to the Effective Time,
until their respective successors are duly elected or appointed and qualified.
The initial corporate officers of the Surviving Corporation shall be the
corporate officers of Merger Sub immediately prior to the Effective Time, until
their respective successors are duly appointed.
2.6 Effect on Stock. At the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, RezLogic or the holders of any of the
following securities:
(a) Each Purchased Share issued and outstanding immediately prior
to the Effective Time will be cancelled and extinguished and
automatically converted into the right to receive common
stock, no par value, of Purchaser ("Purchaser Common Stock")
according to the Exchange Ratio upon surrender of the
certificate representing such share of RezLogic Common Stock
in the manner provided in Section 2.7.
(b) Each share of RezLogic Common Stock held by RezLogic
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.
(c) Each share of common stock, $0.00l par value per share, of
Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued,
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fully paid and nonassessable share of common stock, $0.001 par
value per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of the common stock
of Merger Sub shall evidence ownership of such shares of
capital stock of the Surviving Corporation.
(d) The Exchange Ratio shall be adjusted to reflect appropriately
the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities
convertible into Purchaser Common Stock or RezLogic Common
Stock), reorganization, recapitalization, reclassification or
other like change with respect to Purchaser Common Stock or
RezLogic Common Stock occurring on or after the date hereof
and prior to the Effective Time.
(e) No fraction of a share of Purchaser Common Stock will be
issued by virtue of the Merger, but in lieu thereof each
holder of shares of RezLogic Common Stock who would otherwise
be entitled to a fraction of a share of Purchaser Common Stock
(after aggregating all fractional shares of Purchaser Common
Stock that otherwise would be received by such holder) shall
receive from Purchaser an amount of cash (rounded to the
nearest whole cent) equal to the product of (i) such fraction,
multiplied by the closing sale price of one share of Purchaser
Common Stock for the most recent days that Purchaser Common
Stock has traded ending on the trading day immediately prior
to the Effective Time.
2.7 Transfer and Delivery of the Purchased Shares. The RezLogic Stockholders
shall transfer and deliver to the Purchaser the share certificates representing
the Purchased Shares, in each case duly endorsed in blank for transfer, or
accompanied by irrevocable security transfer powers of attorney duly executed in
blank, in either case by the holders of record, and shall take such steps as
shall be necessary to cause the Corporation to enter the Purchaser or its
nominee(s) upon the books of the Corporation as the holder of the Purchased
Shares and to issue share certificates to the Purchaser or its nominee(s)
representing the Purchased Shares.
2.8 Other Documents. Each of the RezLogic Stockholders and the Purchaser shall
deliver such other documents as may be necessary to complete the transactions
contemplated by this Agreement.
2.9 Place of Closing
The Closing shall take place at the Closing Time at the offices of
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP located at ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, or at such other place as may be agreed upon in
writing by the Parties.
2.10 Tender
Any tender of documents or money under this Agreement may be made upon the
Parties or their respective counsel and money shall be tendered in U.S. dollars
by official bank certified cheque, bank draft or by such other method as the
Parties agree in writing.
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ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price
Notwithstanding any provision to the contrary, the aggregate amount payable by
the Purchaser for the Purchased Shares is $3,000,000 (the "Purchase Price").
3.2 Adjustments
The Purchase Price shall be subject to adjustment pursuant to paragraph 3.4
herein and the Escrow Agreement (as herein later defined).
3.3 Satisfaction of Purchase Price
Subject to the provisions of this Agreement and the Escrow Agreement as defined
below, at the Closing Time the Purchaser shall satisfy the Purchase Price as
follows:
(a) By delivery to the RezLogic Stockholders, the number of common
shares of the Purchaser that is equal to $1,800,000 U.S.,
according to the last sale price of Purchaser Common Stock
quoted by the NASD on its automated quotation system on the
date of this Agreement; and
(b) By delivery to the RezLogic Stockholders, subject to section
3.4 herein, the number of common shares of the Purchaser that
is equal to $1,200,000 U.S. according to the last sale price
of E-Cruiter Common Stock quoted by the NASD on its automated
quotation system on the date of this Agreement (the "Escrow
Shares").
3.4 Delivery of the E-Cruiter Shares
3.4.1 At the Closing Time the Parties shall enter into the escrow
agreement as set out in Schedule 3.4.1 (the "Escrow
Agreement").
3.4.2 Pursuant to this Agreement and the Escrow Agreement, the
Escrow Shares shall be placed in escrow and released to the
RezLogic Stockholders pending the meeting of revenue and
profit targets as set forth in the Escrow Agreement or at any
other time at the discretion of the board of directors of the
Purchaser. Such revenue and profit targets have been
determined on the basis of RezLogic's operational budget, a
copy of which is attached as a schedule to the Escrow
Agreement.
3.5 Surrender Procedures.
(a) Purchaser shall act as its own exchange agent in the Merger
(except for the Escrow Shares).
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(b) At or promptly after the Closing, the RezLogic Stockholders
shall transfer and deliver to the Purchaser the share
certificates representing the Purchased Shares, in each case
duly endorsed in blank for transfer, or accompanied by
irrevocable security transfer powers of attorney duly executed
in blank, in either case by the holders of record, and shall
take such steps as shall be necessary to cause the Corporation
to enter the Purchaser or its nominee(s) upon the books of the
Corporation as the holder of the Purchased Shares and to issue
share certificates to the Purchaser or its nominee(s)
representing the Purchased Shares; and
(c) Each of the RezLogic Stockholders and the Purchaser shall
deliver such other documents as may be necessary to complete
the transactions contemplated by this Agreement.
(d) At or promptly after the Effective Time, Purchaser shall make
available to the RezLogic Stockholders, the shares of
Purchaser Common Stock issuable pursuant to Section 3.3(a) and
cash in an amount sufficient for payment in lieu of fractional
shares and any dividends or distributions to which holders of
Purchased Shares may be entitled. Each share certificate
evidencing Purchaser Common Stock shall bear a legend setting
forth the restriction on offers, sales, transfers and other
dispositions referred to in the last sentence of Section 5.5.
3.6 No Further Ownership Rights. All shares of Purchaser Common Stock issued in
accordance with the terms hereof (including any cash paid in respect thereof)
shall be deemed to have been issued in full satisfaction of all rights
pertaining to the Purchased Shares and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of RezLogic
Common Stock which were outstanding immediately prior to the Effective Time. If
after the Effective Time Certificates are presented to the Surviving Corporation
for any reason, they shall be cancelled and exchanged as provided in this
Agreement.
3.7 Tax and Accounting Consequences
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368
of the Code. The parties hereto adopt this Agreement as a
"plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger shall be
treated as a "purchase" for accounting purposes.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE corporation
The Corporation hereby represents and warrants to the Purchaser the matters set
out below.
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4.1 Incorporation and Registration
The Corporation is a corporation duly incorporated and validly existing under
the laws of its jurisdiction of incorporation and has all necessary corporate
power, authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement, to own its property and assets and to carry on
its business as presently conducted. Neither the nature of its business nor the
location or character of the property owned or leased by the Corporation
requires it to be registered, licensed or otherwise qualified as an
out-of-province or foreign corporation in any other jurisdiction other than
those listed opposite its name in Schedule 4.1, where it is duly registered,
licensed or otherwise qualified for such purpose.
4.2 Right to Sell
The Purchased Shares are not subject to the terms of any agreement to which the
Corporation is a party which would conflict with this Agreement.
4.3 Capitalization
The authorized and issued share capital of the Corporation is as set forth in
Schedule 4.3, together with a corporate structure diagram illustrating the
issued share capital and shareholders of the Corporation. All of the shares in
the capital of the Corporation have been duly and validly issued and are
outstanding as fully paid and non-assessable shares of the Corporation, as the
case may be. Other than as set forth in Schedule 4.3, (a) no options, warrants
or other rights to purchase shares or other securities of the Corporation, and
no securities or obligations convertible into or exchangeable for shares or
other securities of the Corporation, have been authorized or agreed to be issued
or are outstanding; and (b) all such securities referenced in subsection (a)
shall have been exercised in full or terminated at or prior to the Effective
Time.
4.4 Title to Assets
The Corporation is the sole beneficial and legal owner of all of its assets and
interests in assets, real and personal, including all of the assets used in the
Business, with good and valid title, free and clear of all Encumbrances, other
than Permitted Encumbrances. In particular, without limiting the generality of
the foregoing, there has been no assignment, subletting or granting of any
licence (of occupation or otherwise) of or in respect of any of the assets of
the Corporation or any granting of any agreement or right capable of becoming an
agreement or option for the purchase of any of such assets. Except for
co-located assets set forth in Schedule 4.4, all of the assets of the
Corporation are located on the Owned Real Property or the Leased Real Property.
4.5 Due Authorization and Enforceability
The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been, or will prior to the
Closing Date be, duly authorized by all necessary corporate action on the part
of each of the Corporation. This Agreement constitutes a valid and binding
obligation of the Corporation enforceable against it in accordance with its
terms.
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4.6 Absence of Conflicting Agreements
The Corporation is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, Law or Governmental Authorization which would be violated,
contravened, breached by, or under which default would occur or an Encumbrance
would be created as a result of the execution and delivery of this Agreement or
any other documents or agreements to be delivered or entered into under the
terms of this Agreement, or the performance by the Corporation of its
obligations provided for under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement.
4.7 Approvals
(a) Except as disclosed in Schedule 4.7, no approval, order or
consent of or notice to or filing with any Governmental
Authority or other Person is required on the part of the
Corporation in connection with the execution, delivery and
performance of this Agreement or any other documents or
agreements to be delivered under this Agreement or the
performance of the obligations of the Corporation under this
Agreement or any other documents or agreements to be delivered
or entered into under this Agreement.
(b) Schedule 4.7 sets out a complete list of all notifications,
approvals and consents required to be made or obtained by the
Corporation in connection with the execution, delivery and
performance of this Agreement or any other documents and
agreements to be delivered under this Agreement.
4.8 Financial Statements
Schedule 4.8 attached hereto sets forth the audited balance sheets of the
Corporation as of December 31, 2000 and the unaudited balance sheets of
Corporation as of May 31, 2001, and the related statements of income and
retained earnings for the periods ending on those respective dates. The
financial statements in Schedule 4.9 are hereinafter collectively referred to as
the "Company Financial Statements". The Company Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently followed by the Corporation throughout the periods indicated, and
fairly present the financial position of the Corporation as of the respective
dates of the balance sheets included in the Company Financial Statements, and
the results of its operations for the respective periods indicated, provided
that the May 31, 2001 Financial Statements do not contain footnotes or year-end
adjustments required by generally accepted accounting principles, which, to the
knowledge of the Company, will not be materially adverse in the aggregate.
Except as set forth on Schedule 4.8, as of the date of this Agreement, the
Corporation does not have any material liability or obligation of any nature,
except for liabilities or obligations that are reflected on Company Financial
Statements as of May 31, 2001.
4.9 Absence of Undisclosed Liabilities
Since the date of the Company Financial Statements, the Corporation has not
incurred any liabilities or obligations (whether accrued, absolute, contingent
or otherwise) which continue to be outstanding, except those incurred in the
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ordinary and usual course of business and which were not, individually or in the
aggregate, materially adverse. The reserves and accrued liabilities disclosed on
or reflected in the Company Financial Statements and the Books and Records are
sufficient in all material respects to provide for the liabilities in respect of
which they have been established.
4.10 Absence of Changes and Unusual Transactions
Except as described in Schedule 4.10, or except as consented to in advance in
writing by the Purchaser, since the date of the Company Financial Statements:
(i) there has not been any material change in the
financial condition, operations or prospects of the
Corporation other than changes in the ordinary and
usual course of business, none of which has been
materially adverse;
(ii) there has not been any damage, destruction, loss,
labour dispute, organizing drive, application for
certification or other event, development or
condition of any character (whether or not covered by
insurance) materially and adversely affecting the
business, assets, properties or future prospects of
any of the Corporation;
(iii) the Corporation has not transferred, assigned, sold
or otherwise disposed of any of the assets shown or
reflected in the Company Financial Statements or
cancelled any debts or entitlements except, in each
case, in the ordinary and usual course of business;
(iv) the Corporation has not incurred or assumed any
obligation or liability (fixed or contingent) except
unsecured current obligations and liabilities
incurred in the ordinary and usual course of
business, none of which has been materially adverse;
(v) the Corporation has not discharged or satisfied any
Encumbrance, or paid any obligation or liability
(fixed or contingent) other than liabilities included
in the Company Financial Statements and liabilities
incurred since the date of the Company Financial
Statements in the ordinary and usual course of
business;
(vi) the Corporation has not suffered any cumulative
operating loss or any extraordinary loss, waived or
omitted to take any action in respect of any rights
of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course
of business where such loss, rights, commitment or
transaction is or would be material in relation to
the Corporation, as the case may be;
(vii) the Corporation has not granted any bonuses, whether
monetary or otherwise, or made any general wage,
salary or Benefit Plan increases in respect of its
Employees or changed the terms of employment for any
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Employee except in the ordinary and usual course of
business and consistent with past practice;
(viii) the Corporation has not hired or dismissed any senior
Employees or hired or dismissed any other Employees
other than in ordinary and usual course of business;
(ix) the Corporation has not mortgaged, pledged, subjected
to lien, granted a security interest in or otherwise
encumbered any of its assets or property, whether
tangible or intangible;
(x) the Corporation has not, directly or indirectly,
declared or paid any dividends or declared or made
any other payments or distributions on or in respect
of any of its shares or, directly or indirectly,
purchased or otherwise acquired any of its shares;
(xi) the Corporation has not, directly or indirectly, paid
any management fees or other amounts (other than
salaries and benefits of employees, the terms of
which are disclosed in Schedule 4.27) to any of the
RezLogic Stockholders; and
(xii) the Corporation has not authorized, agreed or
otherwise become committed to do any of the
foregoing.
4.11 Non-Arm's Length Transactions
Except as disclosed in Schedule 4.11, no director or officer, former director or
officer, shareholder or Employee of the Corporation, or any other person not
dealing at arm's length (within the meaning of the Code) with the Corporation or
any of the RezLogic Stockholders, has any indebtedness, liability or obligation
to the Corporation, and the Corporation is not indebted or otherwise obligated
to or is party to any Contract with any such person, except for employment
arrangements with Employees, the terms of which are disclosed in Schedule 4.27.
4.12 Absence of Guarantees
Except as described in Schedule 4.12, the Corporation has not given or agreed to
give, or is a party to or bound by, any guarantee, surety or indemnity in
respect of any indebtedness or other obligation of any Person, or any other
commitment by which the Corporation is, or are contingently, responsible for any
such indebtedness or other obligation.
4.13 Operating Businesses
The Business is carried on exclusively by the Corporation. All assets used in or
necessary to carry on the Business are owned by the Corporation, or leased or
licensed by the Corporation from Persons acting at arm's length from the
RezLogic Stockholders and the Corporation.
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4.14 Major Suppliers
(a) A comprehensive listing of all suppliers of goods and services
to the Corporation (including suppliers of goods and services
to their respective customers, which are arranged for by the
Corporation), where the value of the goods or services
supplied exceeded $25,000, in each case individually or in the
aggregate, during the 12 month period ending April 30, 2001 is
attached as Schedule 4.14.
(b) True and complete copies of all Contracts with those suppliers
of goods and services for the Business (or for customers of
the Business) referred to in subsection 4.14(a) have been made
available to the Purchaser. The Corporation has not received
any oral and/or written communication that that any of such
Contracts will not be honoured in the ordinary and usual
course of business consistent with the past experience of the
Business.
(c) Except as disclosed in Schedule 4.14, the Corporation is not
subject to any Contract under which any of them has made any
commitment or is subject to any obligation or would suffer any
penalty (financial or otherwise) as a result of a failure to
acquire, or arrange for the acquisition of, a specified
minimum volume of products or services.
(d) Except as disclosed in Schedule 4.14, the Corporation is not
subject to any Contract involving a commitment of exclusivity
whereby its ability, or the ability of its Affiliates, to
acquire goods or services from any Person would be restricted
in any manner.
(e) To the knowledge of the Corporation, none of the suppliers
included in the list referred to in subsection 4.14(a) has any
intention to change its relationship or the terms upon which
it conducts business with the Corporation, including as a
result of the transactions contemplated by this Agreement.
4.15 Condition of Assets
The fixed assets, machinery, equipment, fixtures, furniture, furnishings and
vehicles owned or used or held by the Corporation, including any of the
foregoing which are in storage or in transit, and other tangible property and
facilities used by the Corporation, whether located in or on the premises of the
Corporations or elsewhere, are in good condition, repair and (where applicable)
proper working order, having regard to their use and age and such assets have
been reasonably maintained.
4.16 Marketing Inventories
The Corporation does not have any Marketing Inventories.
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4.17 Accounts Receivable
The Accounts Receivable are good and collectible at the aggregate recorded
amounts, except (a) as disclosed on Schedule 4.17, and (b) to the extent of any
reserves provided for such accounts in the Company Financial Statements, and are
not subject to any defence, counterclaim or set off.
4.18 Business in Compliance with Law
In all material respects, the business and operations of the Corporation have
been and are now conducted in compliance with all Laws of each jurisdiction in
which the Corporation carry on or have carried on business and none of the
Corporation have received any notice of any alleged violation of any such Laws.
4.19 Governmental Authorizations
Schedule 4.19 sets forth a complete list of the Governmental Authorizations
issued to or required by the Corporation to enable it to carry on business in
compliance, in all material respects, with all Laws. The Governmental
Authorizations listed in Schedule 4.19 are, in all material respects, in full
force and effect in accordance with their terms, and there have been no material
violations of them and no proceedings are pending or, to the knowledge of the
Corporation, threatened, which could result in their revocation or limitation.
4.20 Governmental Assistance
Except as disclosed in Schedule 4.20, the Corporation has not received any
grants or other forms of assistance, including loans with interest below market
rates or guarantees of any loans, from any Governmental Authority that have not
been fully repaid or reimbursed and satisfied, and the Corporation is not a
party to any Contract or understanding with respect to any such grant or form of
assistance.
4.21 Restrictive Covenants
Except as disclosed in Schedule 4.21, and as set forth in license agreements
supplied to the Purchaser in due diligence, the Corporation is not party to or
bound or affected by any Contract or document limiting the freedom of the
Corporation to compete in any line of business, acquire goods and services from
any supplier, sell goods and services to any customer, or transfer or move any
of its assets or operations, or which would materially adversely affect the
business practices, operations or conditions of the Corporation, materially
adversely affect the Purchaser, or the continued operation of their businesses,
after the Closing.
4.22 Intellectual Property
(a) Schedule 4.22 sets forth a complete list and brief description
of all Intellectual Property owned by the Corporation
(including Trade-marks) that have been registered or for which
applications for registration have been filed by or on behalf
of the Corporation (collectively, the "Owned Intellectual
Property") and all Intellectual Property licensed to the
Corporation (the "Licensed Intellectual Property") except for
commercially available software licensed by the Corporation,
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for which the usage rights are licensed subject to the terms
of the applicable, standard form license agreements.
(b) Except as disclosed in Schedule 4.22, the Corporation has the
exclusive right to use and is the exclusive owner of all
right, title and interest in and to all Owned Intellectual
Property (with no breaks in the chain of title). The Owned
Intellectual Property and the Licensed Intellectual Property
are all Intellectual Property used in or necessary to carry on
the Business as currently conducted. All Licensed Intellectual
Property is being used by the Corporation solely in accordance
with a licence from or the express consent of the rightful
owner of such Intellectual Property, and all such licences and
consents are in full force and effect.
(c) All rights to Owned or Licensed Intellectual Property are in
full force and effect and have not been used, enforced or
licensed or failed to be used, enforced or licensed in a
manner that would result in the abandonment, cancellation or
unenforceability of or any loss of rights in any of such
Intellectual Property.
(d) Except as disclosed in Schedule 4.22, the Corporation has no
knowledge of any claim of adverse ownership, invalidity or
other opposition to or conflict with any Owned or Licensed
Intellectual Property nor of any pending or threatened action,
litigation, investigation, claim, opposition, complaint,
grievance or proceeding of any nature or kind against any of
them relating to such Intellectual Property.
(e) Except as disclosed in Schedule 4.22, to the knowledge of the
Corporation:
(i) the use of any of the Intellectual Property owned or
licensed by the Corporation;
(ii) any activity in which the Corporation is or has been
engaged;
(iii) any product or service which the Corporation sells,
provides, produces or uses, or has sold, provided,
produced or used; and
(iv) any process, method, advertising, or material that
the Corporation employ or has employed in the
marketing or sale of any such product or service,
does not breach, violate, infringe or interfere with any
proprietary, contractual or other rights of any Person
relating to Intellectual Property.
(f) Except as disclosed in Schedule 4.22, the Corporation has no
knowledge of any breach, violation, infringement or
interference with the Intellectual Property owned or licensed
by the Corporation.
4.23 Equipment Contracts
Schedule 4.23 sets forth a complete list of all Equipment Contracts involving
aggregate payments in excess of $10,000 per annum, together with a description
of the assets to which the Equipment Contracts relate. The Equipment Contracts
listed in Schedule 4.23 are all those used to earn the revenue shown on the
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Company Financial Statements. All of the Equipment Contracts are in full force
and effect and no default exists on the part of the Corporation, or, to the
knowledge of the Corporation and, on the part of any of the other parties
thereto. The entire interest of the Corporation under each of the Equipment
Contracts is held by them free and clear of any Encumbrances, other than
Permitted Encumbrances, and all payments due under the Equipment Contracts have
been duly and punctually paid. .
4.24 Owned Real Property. The Corporation does not have now, and has never had,
any Owned Real Property.
4.25 Leased Real Property
(a) Schedule 4.25 sets forth a complete list of the Leased Real
Property (by reference to municipal address) and Real Property
Leases (by reference to all relevant documents including
details of parties to the Real Property Leases and dates of
documents as well as details of annual rent payable, any
discounts or associated premiums, current terms, renewal
rights, security deposits or prepaid rent, and area of
premises). True copies of all the Real Property Leases have
been provided or made available to the Purchaser. The terms of
the Real Property Leases as summarized in Schedule 4.25 are
true and accurate in all respects. The Real Property Leases
have not been altered or amended and are in full force and
effect.
(b) There are no agreements or understandings between the landlord
and tenant, or sublandlord and subtenant, in respect of any
Leased Real Property other than as contained in the Real
Property Leases, pertaining to the rights and obligations of
the parties to the Real Property Leases relating to the use
and occupation of the Leased Real Property.
(c) Except for the Real Property Leases listed in Schedule 4.25,
the Corporation is not a party to or bound by any other
leases, subleases, agreements to lease, licenses or occupancy
agreements pertaining to real property.
(d) All interests held by the Corporation as lessee or occupant
under the Real Property Leases are free and clear of all
Encumbrances other than Permitted Encumbrances.
(e) All payments required to be made by the Corporation pursuant
to the Real Property Leases have been duly paid and none of
the Corporation is otherwise in default in meeting any of its
obligations under any of the Real Property Leases.
(f) None of the landlords and sublandlords, and to the knowledge
of the Corporation, none of the tenants or subtenants under
any of the Real Property Leases, is in default in meeting any
of its obligations under Real Property Leases to which it is a
party.
(g) The Corporation does not have any option, right of first
refusal or other contractual right relating to the Leased Real
Property which is not provided under the Real Property Leases.
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(h) To the knowledge of the Corporation, no event exists which,
but for the passing of time or the giving of notice, or both,
would constitute a default by any party to any of the Real
Property Leases and no party to any Real Property Lease is
claiming any such default or taking any action purportedly
based upon any such default.
4.26 Environmental Matters
(a) There are no Environmental Approvals.
(b) All operations of the Corporation has been and are now in
compliance with all Environmental Laws. There has been no
Release by the Corporation of any Hazardous Substance into the
Environment.
(c) Neither the Corporation nor any of its operation has been or
is now the subject of any Remedial Order, nor does the
Corporation have any knowledge of any investigation or
evaluation commenced as to whether any such Remedial Order is
necessary nor, to their knowledge, has any threat of any such
Remedial Order been made nor, to their knowledge, are there
any circumstances which could reasonably result in the
issuance of any such Remedial Order.
(d) The Corporation has never been prosecuted for or convicted of
any offence under Environmental Laws, nor has the Corporation
been found liable in any proceeding to pay any fine, penalty,
damages, amount or judgment to any person as a result of any
Release or threatened Release of any Hazardous Substance into
the Environment or as the result of the breach of any
Environmental Law and to the knowledge of the Corporation,
there is no basis for any such proceeding or action.
(e) The Corporation does not have any knowledge of any Hazardous
Substance in, on or under the Leased Real Property or any
other assets of the Corporation.
4.27 Employment Matters
(a) Schedule 4.27 (Part A) sets forth a complete list of all
Employees, whose current wages, salaries or hourly rates of
pay, and bonus (whether monetary or otherwise) exceed $40,000
U.S., together with their titles, service dates and material
terms of employment, including current wages, salaries or
hourly rates of pay, and bonus (whether monetary or otherwise)
paid since the beginning of the most recently completed fiscal
year (including the date of payment if paid since May 31,
2001) or payable to each such Employee, the date upon which
such wage, salary, rate or bonus became effective and the date
upon which each such Employee was first hired by the
Corporation. Except as disclosed in Schedule 4.27, no Employee
is on disability leave, pregnancy or parental leave, extended
leave of absence or receiving benefits pursuant to the Laws.
(b) Except for those written employment contracts with salaried
Employees identified in Schedule 4.27 (Part B), there are no
written contracts of employment entered into with any
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Employees or any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance
with applicable law.
(c) There are no written or oral change of control provisions or
Contracts with any of the Employees which provide for any
rights of Employees contingent upon or affected by a change of
control of the Corporation or the sale of any or all of their
assets.
(d) Schedule 4.27 (Part C) sets out a complete list of all
independent contractors with whom the Corporation has entered
into any Contract, together with the material terms of all
Contracts with them.
(e) Except for the Benefit Plans, there are no employment policies
or plans which are binding upon the Corporation.
(f) The Corporation has been and is being operated in full
compliance with all Laws relating to employees, including
employment standards, occupational health and safety, human
rights, labour relations and pay equity.
(g) There are no Claims or complaints nor, to the knowledge of the
Corporation, are there any threatened Claims or complaints,
against the Corporation pursuant to any Laws relating to
employees, including employment standards, human rights,
labour relations, occupational health and safety, worker's
compensation or pay equity. To the knowledge of the
Corporation, nothing has occurred which might lead to a Claim
or complaint against the Corporation under any such Laws.
There are no outstanding decisions or settlements or pending
settlements which place any obligation upon the Corporation to
do or refrain from doing any act.
(h) All current assessments under workers' compensation
legislation in relation to the Corporation have been paid or
accrued and the Corporation has not been subject to any
special or penalty assessment under such legislation which has
not been paid.
4.28 Collective Agreements
(a) The Corporation is not a party, either directly or by
operation of law, to any collective agreement, letters of
understanding, letters of intent or other written
communication with any trade union or association which may
qualify as a trade union, which would cover any of the
Employees or any dependent contractors of the Corporation.
(b) There are no outstanding or, to the knowledge of the
Corporation, threatened labour tribunal proceedings of any
kind, including any proceedings which could result in
certification of a trade union as bargaining agent for
Employees or dependent contractors of the Corporation, and
there have not been any such proceedings within the last two
years.
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(c) To the knowledge of the Corporation, there are no threatened
or apparent union organizing activities involving any
Employees or dependent contractors of the Corporation.
(d) The Corporation does not have any serious labour problems that
might materially affect the value of the Corporation or lead
to an interruption of its operations at any location.
4.29 Benefit Plans
(a) Schedule 4.29 sets forth a complete list of the Benefit Plans.
(b) Current and complete copies of all written Benefit Plans or,
where oral, written summaries of the material terms of them,
have been provided or made available to the Purchaser together
with current and complete copies of all documents relating to
the Benefit Plans, including: all documents establishing,
creating or amending any of the Benefit Plans; all trust
agreements, funding agreements; insurance contracts, and the
most recent financial statements and accounting statements and
reports; all booklets, summaries, manuals and written
communications of a general nature distributed or made
available to any Employees or former employees concerning any
Benefit Plans.
(c) Each Benefit Plan is, and has been, established, registered
(where required), qualified, administered and invested, in
compliance with (i) the terms thereof, and (ii) all Laws; and
the Corporation has not received, in the last six years, any
notice from any Person questioning or challenging such
compliance (other than in respect of any claim related solely
to that Person).
(d) All obligations to or under the Benefit Plans (whether
pursuant to their terms or any Laws) have been satisfied, and
there are no outstanding defaults or violations under the
Benefits Plans by the Corporation nor do the RezLogic
Stockholders or the Corporation have any actual knowledge,
without further enquiry or investigation, of any default or
violation by any other party to any Benefit Plan.
(e) There have been no improvements, increases or changes to, or
promised improvements, increases or changes to, the benefits
provided under any Benefit Plan. None of the Benefit Plans
provides for benefit increases or the acceleration of or an
increase in funding obligations that are contingent upon or
will be triggered by the entering into of this Agreement or
the completion of the transactions contemplated by this
Agreement.
(f) All employer or employee payments, contributions or premiums
required to be remitted, paid to or in respect of each Benefit
Plan have been paid or remitted in a timely fashion in
accordance with the terms of that Benefit Plan and all Laws,
and no Taxes, penalties or fees are owing or exigible under
any Benefit Plan, and there are no liabilities or contingent
liabilities in respect of any Benefit Plans that have been
discontinued.
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(g) There is no proceeding, action, investigation, suit or claim
(other than routine claims for payment of benefits) pending
or, to the knowledge of the Corporation, threatened involving
any Benefit Plan or its assets, and no facts exist which could
reasonably be expected to give rise to any such proceeding,
action, suit or Claim (other than routine claims for
benefits).
(h) No event has occurred respecting any registered Benefit Plan
which would entitle any person (without the consent of the
Corporation) to wind-up or terminate any Benefit Plan, in
whole or in part, or which could otherwise reasonably be
expected to adversely affect the tax status of any such plan.
(i) The Corporation has not received, or applied for, any payment
of surplus or any payments as a result of the demutalization
of the insurer of any Benefit Plan out of or in respect of any
Benefit Plan.
(j) The Corporation has not taken any contribution or premium
holidays under any Benefit Plan and there have been no
withdrawals or transfers of assets from any Benefit Plan.
(k) All employee data necessary to administer each Benefit Plan is
in the possession of the Corporation and is complete, correct
and in a form which is sufficient for the proper
administration of the Benefit Plan in accordance with its
terms and all Laws.
(l) None of the Benefit Plans provide benefits beyond retirement
or other termination of service to Employees or former
employees or to the beneficiaries or dependants of such
employees.
(m) None of the Benefit Plans require or permit a retroactive
increase in premiums or payments, or require additional
payments or premiums on the termination of any Benefit Plan or
insurance contract in respect thereof, and the level of
insurance reserves, if any, under any insured Benefit Plan is
reasonable and sufficient to provide for all incurred but
unreported claims.
4.30 Insurance
The Corporation maintains the policies of insurance set forth in Schedule 4.30,
copies of which have been provided to the Purchaser. All such policies of
insurance are in full force and effect and the Corporation is not in default, as
to the payment of premium or otherwise, under the terms of any such policy.
4.31 Material Contracts
Schedule 4.31 sets forth a complete list of the Material Contracts. The Material
Contracts are all in full force and effect unamended and no default exists under
any of the Material Contracts on the part of the Corporation or, to the
knowledge of the Corporation, on the part of any other party to such Contracts.
The Corporation has the capacity, including the necessary personnel, equipment
and supplies, to perform all of their respective obligations under the Material
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Contracts. Current and complete copies of the Material Contracts have been
delivered or made available to the Purchaser and there are no current or pending
negotiations with respect to the renewal, repudiation or amendment of any such
Contract.
4.32 Litigation
Except as disclosed in Schedule 4.32, there is no action, suit, litigation,
investigation, claim, complaint, grievance or proceeding, including appeals and
applications for review, in progress or, to the knowledge of the Corporation,
pending or threatened against or relating to the Corporation before any court,
Governmental Authority, commission, board, bureau, agency or arbitration panel
which, if determined adversely to the Corporation, would,
(a) materially and adversely affect the properties, business,
future prospects or financial condition of the Corporation;
(b) enjoin, restrict or prohibit the transfer of all or any part
of the Purchased Shares or any of the other transactions
contemplated by this Agreement; or
(c) to the knowledge of the Corporation, prevent the RezLogic
Stockholders from fulfilling all of their obligations set out
in this Agreement or arising from this Agreement,
and the RezLogic Stockholders and the Corporation have no knowledge of any
existing ground on which any such action, suit, litigation or proceeding might
be commenced with any reasonable likelihood of success. Except as disclosed in
such Schedule 4.32, there is not presently outstanding against the Corporation
any judgment, decree, injunction, rule or order of any court, Governmental
Authority, commission, board, bureau, agency or arbitrator.
4.33 Tax Matters
Except as disclosed in Schedule 4.33:
(a) The Corporation is not, and has never been, a member of an
affiliated group, within the meaning of Section 1504(a) of the
Code, and neither the Corporation nor any entity whose
liabilities the Corporation has succeeded has ever filed a
consolidated United States federal income tax return with (or
been included in a consolidated return or) an affiliated
group;
(b) The Corporation has filed or caused to be filed all tax
returns and reports required to have been filed by or for them
on or before the Closing Date, and all information set forth
in such returns or reports is accurate and complete in all
material respect
(c) No tax return or report of the Corporation contains any
position which is, or could be subject to, penalties under the
Code Section 6662 or corresponding provision of state, local
or foreign Tax law;
(d) The Corporation has paid all taxes due and payable by them;
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(e) The Corporation is in material compliance with, and their
records contain all information and documents (including,
without limitation, properly completed United States Internal
Revenue Services Forms W-9) necessary to comply with, all
applicable information tax reporting and tax withholding
requirements;
(f) There are no unpaid taxes, additions to tax, penalties, or
interest payable by the Corporation or any other person that
are or could become a lien on any assets, or otherwise
adversely affect the business, properties, or financial
condition of the Corporation;
(g) The Corporation has collected or withheld all amounts required
to be collected or withheld by them for any taxes, and all
such amounts have been paid to the appropriate governmental
agencies or set aside in appropriate accounts for future
payment when due;
(h) The balance sheet of the Corporation fully and properly
reflects, as of the Closing Date, the liabilities of the
Corporation for all accrued taxes for all periods ending on or
before the Closing Date;
(i) The Corporation has not granted (nor is subject to) any waiver
currently in effect of the period of limitations for the
assessment or collection of tax, no unpaid tax deficiency has
been asserted against or with respect to the Corporation by
any taxing authority, and there is no pending examination,
administrative or judicial proceeding, or deficiency or refund
litigation with respect to any taxes or tax returns of the
Corporation;
(j) The Corporation have not made or entered into, nor hold any
assets subject to, a consent filed pursuant to Section 341(f)
of the Code and the regulations there under or a "safe harbour
lease" subject to former Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended before the Tax Reform Act of
1984, and the regulations thereunder;
(k) The Corporation is not required to include in income any
amount from an adjustment pursuant to Section 481 of the Code
or the regulations thereunder or any similar provision of
state law;
(l) The Corporation is not a party to, nor obligated under, any
agreement or other arrangement providing for the payment of
any amount that is or would be non-deductible under Section
280G or the Code;
(m) The Corporation has not distributed to their stockholders or
security holders stock or securities of a controlled
corporation in a transaction to which Section 355(a) of the
Code applies;
(n) There are no outstanding rulings or requests for rulings from
any taxing authority that are, or if issued would be, binding
on the Corporation;
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(o) The Corporation is not, nor have they been at any time within
the last five years, a "United States real property holding
corporation" for the purposes of Section 897 of the Code;
(p) The Corporation does not have and has not had any permanent
establishment, nor are otherwise subject to taxation, in any
country other than the United States;
(q) All accounts, books, ledgers, tax returns and reports,
financial and other similar records (or, where applicable,
true and accurate copies thereof) of or including the
Corporation; and
(r) Schedule 4.33 attached hereto describes all material tax
elections, consents, and agreements made by or affecting the
Corporation that would be effective after the Closing, lists
all material types of taxes paid and tax returns filed by or
on behalf of the Corporation, expressly indicates each tax
with respect to which the Corporation is or has been included
in a consolidated, unitary, or combined return and describes
the status of all examinations, administrative or judicial
proceedings, and litigation with respect to taxes of the
Corporation.
4.34 Books and Records
All Books and Records have been delivered or made available to the Purchaser.
Such Books and Records fairly and correctly set out and disclose in all respects
the financial position of the Corporation and all financial transactions to
which the Corporation is or was a party have been accurately recorded in such
Books and Records.
4.35 Corporate Records
(a) The articles and by-laws for the Corporation, including any
and all amendments, have been delivered or made available to
the Purchaser and such articles and by-laws as so amended are
in full force and effect unamended.
(b) The corporate records and minute books for the Corporation
have been delivered or made available to the Purchaser. The
minute books include complete and accurate minutes of all
meetings of the directors and shareholders for each of the
Corporation held to date and resolutions passed by the
directors or shareholders on consent. The share certificate
books, registers of shareholders, registers of transfers and
registers of directors of each of the Corporation are complete
and accurate.
4.36 Management Recommendation Letters
The Purchaser has been provided with copies of all management recommendation
letters received by the Corporation or their boards of directors from any
auditor of the Corporation during the last three years.
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4.37 Trade Allowances
The Material Contracts contain all provisions concerning discounts, allowances,
volume rebates, customer vouchers or coupons, preferential terms, customer
credits or similar reductions in price or other trade terms that have a material
effect on the Corporation.
4.38 Bank Accounts, etc.
Schedule 4.38 sets forth a complete list of every financial institution in which
the Corporation maintain any depository account, trust account or safe deposit
box, details of all such accounts and safe deposit boxes and the names of all
persons authorized to draw on or who have access to such accounts or safe
deposit boxes.
4.39 No Broker
Other than the engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by RezLogic, each party to this
Agreement has carried on all negotiations relating to this Agreement and the
transactions contemplated by this Agreement directly and without intervention on
his, her or its behalf of any other party in such manner as to give rise to any
valid claim for a brokerage commission, finder's fee or other like payment
against the Purchaser or the Corporation. With respect to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a fee
of US$175,000 shall be paid by the Purchaser (the "AA Fee"), provided that as a
condition of closing to the parties, ▇▇▇▇▇▇▇▇ agrees that such payment
constitutes full and complete payment of outstanding fees (excluding
reimbursable expenses if any).
4.40 Antitrust
Any waiting period applicable to the transactions contemplated herein under the
HSR Act, shall have been terminated or shall have expired.
4.41 Full Disclosure
The Corporation has made available to the Purchaser all information, including
financial, marketing, sales and operational information on a historical basis,
relating to the Corporation which would be material to a purchaser of the
Corporation. All information which has been provided to the Purchaser is true
and correct in all material respects and no material fact or facts have been
omitted from that information which would make such information misleading.
Without limiting the generality of the foregoing, the Corporation has not failed
to disclose to the Purchaser any fact or information which would be material to
a purchaser of the Corporation.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the RezLogic Stockholders the
matters set out below.
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5.1 Incorporation
The Purchaser is a corporation duly incorporated and validly existing under the
laws of Canada and has all necessary corporate power to own its property and
assets and to carry on its business as presently conducted.
5.2 Due Authorization
The Purchaser has all necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Purchaser.
5.3 Enforceability of Obligations
This Agreement constitutes a valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms.
5.4 Absence of Conflicting Agreements
The Purchaser is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, Law or Governmental Authorization which would be violated,
contravened, breached by, or under which any default would occur or an
Encumbrance would be created as a result of the execution and delivery by it of
this Agreement or the performance by it of any of its obligations provided for
under this Agreement.
5.5 Approvals; Restrictions
Except for the filings and/or notices required (a) under the HSR Act or the
Securities Laws, (b) under a foreign anti-trust or trade regulation law, (c) to
be made with: (i) the NASD and/or its Nasdaq SmallCap Market, (ii) the Boston
Stock Exchange, and (iii) each state securities or "blue sky" authority which
may have jurisdiction, or (d) to be filed by the Purchaser pursuant to the
Investment Canada Act , no approval, order or consent of or filing with any
Governmental Authority is required on the part of the Purchaser in connection
with the execution, delivery and performance of this Agreement or any other
documents or agreements to be delivered under this Agreement or the performance
of the Purchasers' obligations under this Agreement or any other documents or
agreements to be delivered or entered into under this Agreement. Such filings
shall be accomplished in a timely manner, except where failure to accomplish
such filing would not reasonably be expected to have a material adverse change
in the assets (tangible or otherwise), business, financial condition or
prospects of the Corporation or on RezLogic Stockholders. The Purchaser Common
Stock will be of the same class as is currently registered under the 1934 Act
and the Purchaser will use commercially reasonable efforts to ensure that the
Purchaser Common Stock is listing for trading on the Nasdaq SmallCap Market. The
shares of Purchaser Common Stock to be issued hereunder will constitute
"restricted securities" within the meaning of the federal securities laws of the
United States and may not be offered, sold, transferred or otherwise disposed of
by any other person except in strict compliance with all applicable provisions
of such laws, the rules and regulations thereunder and all state and Canadian
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securities laws, rules and regulations. There are no other restrictions on the
securities being issued except as provided in the Escrow Agreement.
5.6 Litigation
There is no action, suit, litigation, investigation, claim, complaint, grievance
or proceeding, including appeals and applications for review, in progress or, to
the knowledge of the Purchaser pending or threatened against or relating to the
Purchaser before any court, Governmental Authority, commission, board, bureau,
agency or arbitration panel, which, if determined adversely to the Purchaser
would:
(a) prevent the Purchaser from paying to the RezLogic Stockholders
the Purchase Price;
(b) enjoin, restrict or prohibit the transfer of all or any part
of the Purchased Shares contemplated by this Agreement; or
(c) prevent the Purchaser from fulfilling all of its obligations
set out in this Agreement or arising from this Agreement,
and the Purchaser has no knowledge of any existing ground on which any such
action, suit, litigation or proceeding might be commenced with any reasonable
likelihood of success.
5.7 No Broker
The Purchaser has carried on all negotiations relating to this Agreement and the
transactions contemplated by this Agreement directly and without the
intervention on their behalf of any other party in such manner as to give rise
to any valid claim for a brokerage commission, finder's fee or other like
payment against any of the RezLogic Stockholders.
5.8 Shares.
All Purchased Shares issued in the transaction shall be fully-paid and
non-assessable shares of Common Stock of the Purchaser.
5.9 Experience.
The Purchaser has carefully reviewed the representations concerning the
Corporation contained in this Agreement and has made detailed inquiry concerning
the Company, its business and its personnel; the officers of the Corporation
have made available to the Purchaser any and all written information which it
has requested and have answered to the Purchaser's satisfaction all inquiries
made by the Purchaser as of the date of this Agreement. The Purchaser has
sufficient knowledge and experience in finance and business that it is capable
of evaluating the risks and merits of this transaction, and the Purchaser is
able financially to bear the risks thereof.
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5.10 Merger Sub.
Merger Sub is a wholly-owned subsidiary of Purchaser and Purchaser shall cause
Merger Sub to perform as provided in this Agreement.
ARTICLE 6
NON-WAIVER; SURVIVAL
6.1 Non-Waiver
No investigations made by or on behalf of the Purchaser at any time shall have
the effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made by the Corporation. No waiver of any condition
or other provision, in whole or in part, shall constitute as a waiver of any
other condition or provision (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
6.2 Nature and Survival
(a) All representations, warranties and covenants contained in
this Agreement on the part of each of the Parties shall
survive the Closing, the execution and delivery under this
Agreement of any share or security transfer instruments or
other documents of title to any of the Purchased Shares and
the payment of the consideration for the Purchased Shares.
(b) The representations and warranties of the Corporation
contained in Article 4 shall survive the Closing as follows:
(i) the representations and warranties contained in
Sections 4.1, 4.2, 4.3, 4.4 and 4.5 shall survive for
the statute of limitations applicable to such
provisions;
(ii) all representations and warranties relating to Taxes,
including Section 4.33, shall survive until the date
which is 90 days following the expiration of all
periods allowed for objecting or appealing the
determination of any proceedings relating to any
assessment or reassessment of the Corporation, as the
case may be, by any taxing authority in respect of
any taxation period ending on or prior to the Closing
or in which the Closing occurs unless a bona fide
notice of a Claim shall have been made in writing
before the expiry of such period, in which case the
representation and warranty to which such notice
applies shall survive in respect of that Claim until
the final determination or settlement of the Claim;
(iii) all representations and warranties relating to
environmental matters, including Section 4.26, shall
survive until the expiry of seven years after the
Closing Date, unless a bona fide notice of a Claim
shall have been given in writing before the expiry of
such period, in which case the representation and
warranty to which such notice relates shall survive
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in respect of that Claim until final determination or
settlement of such Claim; and
(iv) representations and warranties as to all other
matters shall survive until one year from the date of
this Agreement, unless a bona fide notice of a Claim
shall have been given in writing before the expiry of
such period, in which case the representation and
warranty to which such notice relates shall survive
in respect of that Claim until final determination or
settlement of such Claim.
(c) The representations and warranties of the Purchaser contained
in Article 5 shall survive the Closing as follows:
(i) the representations and warranties contained in
Sections 5.1, 5.2 and 5.3 shall survive for the
statute of limitations applicable to such provisions;
(ii) all other representations and warranties shall
survive until one year from the date of this
Agreement, unless a bona fide notice of a Claim shall
have been given in writing before the expiry of that
period, in which case the representation and warranty
to which such notice relates shall survive in respect
of that Claim until final determination or settlement
of such Claim.
ARTICLE 7
PURCHASER'S CONDITIONS PRECEDENT
The obligation of the Purchaser to complete the purchase of the Purchased Shares
under this Agreement shall be subject to the satisfaction of, or compliance
with, at or before the Closing Time, each of the following conditions precedent
(each of which is acknowledged to be inserted for the exclusive benefit of the
Purchaser and may be waived by it in whole or in part).
7.1 Truth and Accuracy of Representations of Corporation at the Closing Time
All of the representations and warranties of the Corporation made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
and the Purchaser shall have received a certificate from the CEO of the
Corporation, to the best of his or her knowledge, information and belief, the
truth and correctness in all material respects of such representations and
warranties.
7.2 Performance of Obligations
The Corporation shall have performed or complied with, in all respects, all
their obligations and covenants under this Agreement.
7.3 Receipt of Closing Documentation
All documentation relating to the due authorization and completion of the sale
and purchase of the Purchased Shares under this Agreement and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by each of the Corporation shall be satisfactory to the Purchaser, acting
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reasonably, and the Purchaser shall have received copies of all such
documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated by this Agreement
and the taking of all corporate proceedings in connection with such transactions
in compliance with these conditions, in form (as to certification and otherwise)
and substance satisfactory to the Purchaser.
7.4 Releases
Each of the RezLogic Stockholders shall have executed and delivered
comprehensive releases of the Corporation substantially in the form of Schedule
7.4.
7.5 Opinion of Counsel for Corporation
The Purchaser shall have received an opinion dated the Closing Date from counsel
for the Corporation, Sparks ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., in form and
substance acceptable to the Purchaser and its counsel, acting reasonably.
7.6 Consents, Authorizations and Registrations
The Required Approvals shall have been obtained at or before the Closing Time on
terms acceptable to the Purchaser, acting reasonably.
7.7 No Proceedings
There shall be no injunction or restraining order issued preventing, and no
claim, action, suit, litigation or proceeding, judicial or administrative, or
investigation against any Party pending by any Person, or pending or threatened
by any Governmental Authority, for the purpose of enjoining or preventing, the
consummation of the transactions contemplated by this Agreement or otherwise
claiming that this Agreement or the consummation of those transactions is
improper or would give rise to proceedings under any Laws.
7.8 Substantial Damage
No substantial damage by fire or other hazard to the assets or business of the
Corporation shall have occurred prior to the Closing Time.
7.9 No Laws
No Laws shall have been enacted, introduced or announced which would be
reasonably likely to materially and adversely affect the Corporation or the
Business carried on by them.
7.10 No Material Change
There shall have been no material adverse change in the assets (tangible or
otherwise), business, financial condition or prospects of the Corporation since
the date of this Agreement.
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7.11 Directors and Officers of the Corporations
There shall have been delivered to the Purchaser on or before the Closing Time,
the resignations of all individuals who are currently directors or officers of
the Corporation (except to the extent that the RezLogic Stockholders have been
notified to the contrary by the Purchaser) and duly executed comprehensive
releases from each such individual in favour of the Corporation.
7.12 Employment Agreements
▇▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered an employment agreement with
RezLogic and successors to assigns in substantially the form attached as
Schedule 7.12.
7.13 Transfer and Delivery of the Purchased Shares
The RezLogic Stockholders shall have provided the Purchaser with the share
certificates representing the Purchased Shares, in each case duly endorsed in
blank for transfer, or accompanied by irrevocable security transfer powers of
attorney duly executed in blank, in either case by the holders of record, and
shall take such steps as shall be necessary to cause the Corporation to enter
the Purchaser or its nominee(s) upon the books of the Corporation as the holder
of the Purchased Shares and to issue share certificates to the Purchaser or its
nominee(s) representing the Purchased Shares, free and clear of all
encumbrances.
7.14 The Form and Legality of Matters
The form and legality of all matters incidental to this Agreement shall be
subject to the reasonable approval of the solicitors of the Purchaser.
7.15 Audits
An audit of the Corporation shall be conducted by the Purchaser's auditors,
PriceWaterhouseCoopers, to the satisfaction of the Purchaser.
7.16 Contracts Affected by Change of Control
Any consents required by any outstanding contract or commitment of the
Corporation which requires prior approval of any change of control of the
Corporation resulting from the consummation of this Agreement, shall be
delivered to the Purchaser.
7.17 Corporate Records
The RezLogic Stockholders shall have delivered to the Purchaser all corporate
records of the Corporation including, but not limited to all financial
statements, books, records, contracts and facilities.
7.18 Satisfactory Completion of Due Diligence
Purchaser and its representatives (including, without limitation, attorneys,
agents and accountants) shall have completed their due diligence review of the
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business and affairs, assets and liabilities and condition of the Corporation;
and the results of such review shall be satisfactory to Purchaser.
7.19 Securities Laws
Purchaser shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the sale and
issuance of the Purchased Shares have been met.
7.20 Letter of Transmittal
Purchaser shall have received Transmittal Letters and guarantees (subject to the
limitations in Section 10.1) in a form reasonably acceptable to Purchaser from
those RezLogic Stockholders voting in favour of the transaction.
7.21 RezLogic Stockholder Approval
The stockholders of RezLogic shall have approved this Agreement and the
conversion of all Preferred Stock to common stock, all in accordance with the
Articles of Incorporation of RezLogic and as provided by Colorado Law.
7.22 AA Fee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have agreed with the Parties that the payment of the AA
Fee constitutes full and complete payment of outstanding fees (excluding
reimbursable expenses, if any).
If any of the foregoing condition in this Article has not been fulfilled by
Closing, the Purchaser may terminate this Agreement by notice in writing to the
Corporation, in which event the Purchaser will be released from all obligations
under this Agreement, and unless the Purchaser can show that the condition
relied upon could reasonably have been performed by the Corporation, the
RezLogic Stockholders will also be released from all obligations under this
Agreement. The Purchaser may, however, waive compliance with any condition in
whole or in part if it sees fit to do so, without prejudice to its rights of
termination in the event of non-fulfilment of any other condition, in whole or
in part, or to its rights to recover damages for the breach of any
representation, warranty, covenant or condition contained in this Agreement.
ARTICLE 8
CORPORATION'S CONDITIONS PRECEDENT
The obligations of the Corporation to complete the sale of the Purchased Shares
under this Agreement shall be subject to the satisfaction of or compliance with,
at or before the Closing Time, each of the following conditions precedent (each
of which is acknowledged to be inserted for the exclusive benefit of the
Corporation and may be waived by the Corporation, in whole or in part).
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8.1 Truth and Accuracy of Representations of the Purchaser at the Closing Time
All of the representations and warranties of the Purchaser made in or pursuant
to this Agreement shall be true and correct in all material respects as at the
Closing Time and with the same effect as if made at and as of the Closing Time
and the Corporation shall have received a certificate from an officer of the
Purchaser confirming to the best of his or her knowledge, information and
belief, the truth and correctness in all material respects of such
representations and warranties.
8.2 Performance of Obligations
The Purchaser shall have performed or complied with, in all respects, all its
obligations and covenants under this Agreement.
8.3 Receipt of Closing Documentation
All documentation relating to the due authorization and completion of the sale
and purchase of the Purchased Shares under this Agreement and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by the Purchaser of its obligations under this Agreement, shall be satisfactory
to the Corporation, acting reasonably, and the Corporation shall have received
copies of all extra documentation or other evidence as they may reasonably
request in order to establish the consummation of the transactions contemplated
by this Agreement and the taking of all corporate proceedings in connection with
such transactions in compliance with these conditions in form (as to
certification and otherwise) and substance satisfactory to the Corporation.
8.4 Consents, Authorizations and Registrations
The Required Approvals shall have been obtained at or before the Closing Time on
terms acceptable to the Corporation, acting reasonably.
8.5 No Proceedings
There shall be no injunction or restraining order issued preventing, and no
pending or threatened claim, action, suit, litigation or proceeding, judicial or
administrative, or investigation against any Party by any Person, for the
purpose of enjoining or preventing, the consummation of the transactions
contemplated by this Agreement or otherwise claiming that this Agreement or the
consummation of those transactions is improper or would give rise to proceedings
under any Laws.
8.6 Opinion of Counsel for Purchaser
The Corporation shall have received an opinion dated as of the Closing Date from
counsel to the Purchaser, ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, Hill & ▇▇▇▇▇▇▇▇▇ LLP, in form and
substance acceptable to the Corporation and its counsel, acting reasonably.
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8.7 Securities Laws
Corporation shall have reasonably satisfied itself that all applicable
requirements of any and all applicable Securities Laws relating to the
transaction have been met.
8.8 RezLogic Stockholder Approval
The stockholders of RezLogic shall have approved this Agreement and the
conversion of all Preferred Stock to common stock, all in accordance with the
Articles of Incorporation of RezLogic and as provided by Colorado Law.
8.9 Piggyback Registration Rights
Purchaser shall have delivered to the shareholder representative of the
Corporation a Piggyback Registration Rights Agreement reasonably acceptable to
the shareholder representative of the Corporation with respect to the Purchaser
Common Stock being issued in the transaction, such agreement to contain normal
and usual provisions, including, standard cut-back provisions.
8.10 AA Fee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have agreed with the Parties that the payment of the AA
Fee constitutes full and complete payment of outstanding fees (excluding
reimbursable expenses, if any).
ARTICLE 9
OTHER COVENANTS OF THE PARTIES
9.1 Conduct of Business Prior to Closing
During the period from the date of this Agreement to the Closing Time, the
Corporation will do the following:
(a) Conduct Business in the Ordinary Course - Except as otherwise
expressly contemplated under this Agreement, conduct its
business in the ordinary and usual course, consistent with
past practice and regular customer service and business
policies and not, without the prior written consent of the
Purchaser, enter into any transaction or Contract which, if
effected before the date of this Agreement, would constitute a
breach of the representations, warranties or covenants of the
Corporation contained in this Agreement.
(b) Maintain Good Relations - Use all reasonable efforts to
maintain good relations with the Employees, its customers and
suppliers.
(c) Continue Insurance - Continue in force all policies of
insurance maintained by or for the benefit of the Corporation
and give all notices and present claims under all insurance
policies in a timely fashion.
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(d) Perform Obligations - Comply with all Laws affecting the
operation of the Corporation.
(e) Prevent Certain Changes - Not, without the prior written
consent of the Purchaser, take any of the actions, do any of
the things or perform any of the acts described in Section
4.10.
(f) Approvals - Co-operate with the Purchaser and use all
reasonable efforts and diligently pursue obtaining the
Required Approvals.
9.2 Access for Investigation
(a) The Corporation shall permit the Purchaser and its
representatives, on reasonable notice to the Corporation,
between the date of this Agreement and the Closing Time,
without interference to the ordinary conduct of the Business,
to have free and unrestricted access during normal business
hours to (i) the Real Property; (ii) all other locations where
Books and Records or other material relevant to the Business
are stored; (iii) all the Books and Records; and (iv) the
properties and assets used in the Business. The Corporation
shall furnish to the Purchaser copies of Books and Records
(subject to any confidentiality agreements or covenants
relating to any Books and Records) as the Purchaser shall from
time to time reasonably request to enable confirmation of the
matters warranted in Article 4. Without limiting the
generality of the foregoing, it is agreed that the accounting
representatives of the Purchaser shall be afforded ample
opportunity to make a full investigation of all aspects of the
financial affairs of the Corporation.
(b) Notwithstanding subsection (a), the Corporation shall not be
required to disclose any information, records, files or other
data to the Purchaser where prohibited by Laws.
9.3 Confidentiality
(a) Prior to the Closing, the Purchaser shall keep confidential
all information disclosed to it by the Corporation or their
agents relating to the Corporation, except information which:
(i) is or becomes generally available to the public;
(ii) the Purchaser received from an independent third
Person, who had obtained the information lawfully and
was under no obligation of secrecy, or
(iii) the Purchaser can show was in its possession before
receipt of such information from the Corporation or
their agents.
If this Agreement is terminated without completion of the
transactions contemplated by this Agreement, the Purchaser
shall promptly return all documents, work papers and other
written material (including all copies) obtained from the
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Corporation or their agents in connection with this Agreement
and not previously made public, and shall continue to maintain
the confidence of all such information.
(b) After the Closing, the Corporation shall, and shall cause
their Affiliates, Associates and agents to, keep confidential
all information relating to the Business, the Corporation and
this Agreement and transactions contemplated by this
Agreement, except information which:
(i) is or becomes generally available to the public; or
(ii) the Corporation received after Closing from an
independent third Person, who had obtained the
information lawfully and was under no obligation of
secrecy.
9.4 Actions to Satisfy Closing Conditions
Each of the Parties shall take all such actions as are within its power to
control, and shall use its reasonable efforts to cause other actions to be taken
which are not within its power to control, so as to ensure compliance with each
of the conditions and covenants set forth in Articles 7, 8 and 9 which are for
the benefit of any other Party.
9.5 Investment Canada Notification
The Purchaser shall file the notification required to be filed by the Purchaser
under the Investment Canada Act in respect of the transaction contemplated under
this Agreement within 10 days following the Closing.
9.6 Stub Period Returns
The Purchaser shall cause to be prepared and filed on a timely basis all Tax
Returns for the Corporation for any period which ends on or before the Closing
Date and for which Tax Returns have not been filed as of such date. The
Purchaser shall also cause to be prepared and filed on a timely basis all Tax
Returns of the Corporation for periods beginning before and ending after the
Closing Date.
9.7 Post Effective Time Operation.
The Purchaser shall solely be responsible for all acts and omissions of the
Surviving Corporation after the Effective Time.
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ARTICLE 10
INDEMNIFICATION
10.1 Mutual Indemnification for Breaches of Covenants and Warranty, etc.
The Corporation and the Purchaser agree (the Party or Parties so covenanting and
agreeing to indemnify another Party being referred to as the "Indemnifying
Party" and the Party so to be indemnified being referred to as the "Indemnified
Party") to indemnify and save harmless, on an after-tax basis, the Indemnified
Party effective as and from the Closing Time, from and against all Claims that
may be made or brought against the Indemnified Party, or that it may suffer or
incur, directly or indirectly as a result of or in connection with any
non-fulfilment of any covenant or agreement on the part of the Indemnifying
Party under this Agreement or any incorrectness in or breach of any
representation or warranty of the Indemnifying Party contained in this Agreement
or in any certificate or other document furnished by the Indemnifying Party
pursuant to this Agreement. The foregoing obligation of indemnification shall be
subject to:
(a) the requirement that the Indemnifying Party shall, in respect
of any Claim made by any third person, be afforded an
opportunity at its sole expense to resist, defend and
compromise such Claim;
(b) the limitation that, for Claims made in connection with any
representation or warranty contained in Article 4 or 5, the
Indemnifying Party shall not be required to pay any such
amount until the aggregate amount of such Claims exceeds
$10,000 and upon the aggregate amount of such Claims exceeding
$10,000, the Indemnifying Party shall be required to pay the
amount owing in respect of all such Claims including the
$10,000,
(c) the limitation that, for Claims made in connection with any
representation or warranty contained in Sections 4.1, 4.2,
4.3, 4.4 and 4.5 and/or Article 5, the Corporation and the
RezLogic Stockholders in the aggregate, on the one hand, and
the Purchaser, on the other hand, shall not, absent fraud, be
required to pay any amount in excess of the Purchase Price;
and
(d) the limitation that, for Claims made in connection with any
representation or warranty contained in Article 4, other than
those made in Sections 4.1, 4.2, 4.3, 4.4 and 4.5, the
aggregate liability of the Corporation and the RezLogic
Stockholders for such Claims will not exceed, absent fraud,
the Escrow Shares plus $600,000.
10.2 [Intentionally Deleted]
10.3 Indemnification Procedures for Third Person Claims
(a) In the case of Claims made by a third Person with respect to
which indemnification is sought, the Party seeking
indemnification shall give Notice promptly, and in any event
within 20 days, to the other Party of any such Claims made
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upon it. In the event of a failure to give such notice, such
failure shall not preclude the Party seeking indemnification
from obtaining such indemnification but its right to
indemnification may be reduced to the extent that such delay
prejudiced the defence of the Claim or increased the amount of
liability or cost of defence and provided that,
notwithstanding anything else contained in this Agreement, no
Claim for indemnity in respect of the breach of any
representation or warranty contained in this Agreement may be
made unless Notice of such Claim has been given prior to the
expiry of the survival period applicable to such
representation and warranty pursuant to Section 6.2.
(b) The Indemnifying Party shall have the right, by Notice to the
Indemnified Party given not later than 30 days after receipt
of the Notice described in subsection (a), to assume the
control of the defence, compromise or settlement of the Claim,
provided that such assumption shall, by its terms, be without
cost to the Indemnified Party and provided the Indemnifying
Party acknowledges in writing its obligation to indemnify the
Indemnified Party in accordance with the terms contained in
this Article 10 in respect of that Claim.
(c) Upon the assumption of control of any Claim by the
Indemnifying Party as set out in subsection (b), the
Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the Claim at its sole expense,
including if necessary, employment of counsel reasonably
satisfactory to the Indemnified Party and, in connection
therewith, the Indemnified Party shall co-operate fully, but
at the expense of the Indemnifying Party with respect to any
out-of-pocket expenses incurred, to make available to the
Indemnifying Party all pertinent information and witnesses
under the Indemnified Party's control, make such assignments
and take such other steps as in the opinion of counsel for the
Indemnifying Party are reasonably necessary to enable the
Indemnifying Party to conduct such defence. The Indemnified
Party shall also have the right to participate in the
negotiation, settlement or defence of any Claim at its own
expense.
(d) The final determination of any Claim pursuant to this Section,
including all related costs and expenses, will be binding and
conclusive upon the parties as to the validity or invalidity,
as the case may be, of such Claim against the Indemnifying
Party.
If the Indemnifying Party does not assume control of a Claim as
permitted in subsection (b), the Indemnified Party shall be entitled to
make such settlement of the Claim as in its sole discretion may appear
advisable, and such settlement or any other final determination of the
Claim shall be binding upon the Indemnifying Party.
(e) Claims shall be settled in the following manner unless the
shareholder representative for the RezLogic Stockholders can
settle such Claim with cash or other consideration acceptable
to the person making the Claim:
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(i) by the Purchaser for cash with a deduction from the
Escrow Shares (with dollar-for-dollar credit being
given to the Escrow Shares at the price at which the
Exchange Ratio was computed);
(ii) by the Purchaser for cash with a deduction from the
Purchaser Common Stock issued in the transaction,
provided however, that as a condition precedent,
RezLogic Stockholders have surrendered to the
Purchaser a sufficient number of shares of Purchaser
Common Stock such that the dollar value, at the price
at which the Exchange Ratio was computed, is
sufficient to satisfy such Claims; or
(iii) by the RezLogic Stockholders pursuant to the
guarantee of obligations under the Transmittal
Letter.
ARTICLE 11 TERMINATION
11.1 Termination Certain of the Parties may terminate this Agreement as
provided below:
(i) The parties may terminate this Agreement by their mutual written
consent at any time prior to the Closing;
(ii) Purchaser may terminate this Agreement by giving written notice to
the Corporation at any time prior to the Closing (A) in the event the
Corporation has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Purchaser has notified the
Corporation of the breach, and the breach has continued without cure for a
period of 10 days after the notice of breach, (B) if the Closing shall not have
occurred on or before August 1, 2001, by reason of the failure of any condition
precedent of Purchaser (unless the failure results primarily from Purchaser
itself breaching any representation, warranty, or covenant contained in this
Agreement), or (C) Purchaser has failed to obtain Required Approvals; and
(iii) Corporation may terminate this Agreement by giving written notice
to Purchaser at any time prior to the Closing (A) in the event Purchaser has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, Corporation or the RezLogic Stockholders have
notified Purchaser of the breach, and the breach has continued without cure for
a period of 10 days after the notice of breach or (B) if the Closing shall not
have occurred on or before August 1, 2001, by reason of the failure of any
condition precedent of Corporation hereof (unless the failure results primarily
from any of Corporation or the RezLogic Stockholders themselves breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement all
rights and obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any liability of any Party
then in breach).
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ARTICLE 12
GENERAL
12.1 Public Notices
All public notices to third Persons and all other publicity concerning the
transactions contemplated by this Agreement shall be jointly planned and
co-ordinated by the Corporation, on the one hand, and the Purchaser, on the
other hand, and no Party shall act unilaterally in this regard without the prior
approval of the other Parties, such approval not to be unreasonably withheld,
except where required to do so by law or by the applicable regulations or
policies of any Governmental Authority or any stock exchange in circumstances
where prior consultation with the other Parties is not practicable.
12.2 Expenses
Each Party shall be responsible for and pay their own respective legal,
accounting, and other professional advisory fees, costs and expenses incurred in
connection with the purchase and sale of the Purchased Shares and the
preparation, execution and delivery of this Agreement and all documents and
instruments executed pursuant to this Agreement and any other costs and expenses
incurred, provided that the Surviving Corporation shall pay the reasonable
expenses of the Corporation's accountants and attorneys associated with the
transaction, not to exceed $30,000.
12.3 Notices
Any notice or other writing required or permitted to be given under this
Agreement or for the purposes of this Agreement (a "Notice") shall be in writing
and shall be sufficiently given if delivered, or if sent by prepaid registered
mail or if transmitted by facsimile or other form of recorded communication
tested prior to transmission to such Party:
(a) in the case of a Notice to the Corporation:
Shareholder Representative
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
Sparks ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, P.C.
▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P.O. Box 1678
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇ ▇▇▇▇▇▇
Facsimile: 719-633-8477
(b) in the case of a Notice to the Purchaser.:
▇-▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the Party to whom such Notice is to be given shall
have last notified the Party giving the Notice in the manner provided in this
Section. Any Notice delivered to the Party to whom it is addressed as provided
above shall be deemed to have been given and received on the day it is so
delivered at such address, provided that if such day is not a Business Day then
the Notice shall be deemed to have been given and received on the next Business
Day. Any Notice sent by prepaid registered mail shall be deemed to have been
given and received on the fifth Business Day following the date of its mailing.
Any Notice transmitted by facsimile or other form of recorded communication
shall be deemed to have been given and received on the first Business Day after
its transmission.
12.4 Guarantee of Corporation [Intentionally Deleted]
12.5 Assignment
Neither party may assign this Agreement without the written consent of the other
party. Further Assurances
The Parties shall, with reasonable diligence, do all such things and provide all
such reasonable assurances as may be required to consummate the transactions
contemplated by this Agreement, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
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12.6 Counterparts
This Agreement may be executed by the Parties in separate counterparts each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
12.7 Enurement
This Agreement shall enure to the benefit of and be binding upon the Parties
hereto and their respective successors and permitted assigns.
IN WITNESS OF WHICH the Parties have duly executed this Agreement as of the date
first set forth above.
SIGNED, SEALED & DELIVERED
REZLOGIC, INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO and President
▇-▇▇▇▇▇▇▇.▇▇▇ INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CEO and President
E-CRUITER ACQUISITION I, INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Director