Item 1.01 Entry into a Material Definitive
Agreement.
Asset Purchase Agreement
On July
7, 2021, Recruiter.com Group, Inc. (the “Company”), a
Nevada corporation, entered into and closed on an Asset Purchase
Agreement (the “Purchase Agreement”) with Parrut, Inc.
(“Parrut”), and certain individuals named
therein.
Parrut does business as Uncubed and, pursuant to the Purchase
Agreement, the Company acquired the assets of the Technology
Solutions Division of Uncubed. The purchased assets include assets
related to Finalist, an online marketplace for sourcing and
screening early-professional software and data candidates and
assets related to Uncubed’s job board technology and
candidate engagement platform which includes Mediabistro, a job
board and professional community for media, content, and creative
professionals.
The amount due at closing was $3,500,000, consisting of $500,000 in
cash, a $1,750,000
promissory note with an interest rate of 6% and a maturity date of
July 1, 2023, and 257,545 of the Company’s common stock (the
“Common Stock”), obtained by dividing $1,250,000
by the volume-weighted average price of the Company for the five
consecutive trading days immediately prior to the closing
date. In addition, the
Purchase Agreement includes “earn-out” provisions under
which the Company could become obligated to pay Parrut up to an
additional $1,350,000 in the form of Common Stock (the
“Earn-Out Consideration”). The Earn-Out Consideration
Parrut may be entitled to is equal to 1.35 times the revenue
derived or generated by Company or any of its affiliates from
the Purchased Assets
achieved during the twelve-month period immediately following the
closing date.
The
Purchase Agreement includes customary representations, warranties
and covenants of the Company and Parrut. The representations and
warranties made by each party were made solely for the benefit of
the other party and (i) were not intended to be treated as
categorical statements of fact, but rather as a way of allocating
the risk between the parties to the Purchase Agreement if those
statements prove to be inaccurate; (ii) may have been qualified in
the Purchase Agreement by disclosures that were made to the other
party in disclosure schedules to the Purchase Agreement, and (iii)
were made only as of the date of the Purchase Agreement or such
other date or dates as may be specified in the Purchase
Agreement.
The
Purchase Agreement also contains post-closing indemnification
provisions pursuant to which Parrut has agreed to indemnify the
Company against losses resulting from certain events, including
breaches of representations and warranties, covenants and certain
other matters.
The
foregoing is only a summary description of the Purchase Agreement
and it does not purport to be a complete description of the rights
and obligations of the parties thereunder and is qualified in its
entirety by reference to the full text of the document, which is
filed as Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Registration Rights Agreement
In
connection with entering into the Purchase Agreement, the Company
and Parrut executed a
Registration Rights Agreement (the “Registration Rights
Agreement”) whereby the Company agreed to register under the
Securities Act of 1933, as amended (the “Securities
Act”), for resale, subject to certain limitations, shares
issued to Parrut pursuant to the Purchase
Agreement.
Following
the six-month anniversary of the Purchase Agreement closing, and
within the five-year period immediately following the six-month
anniversary, Parrut is
entitled to request that the Company register all or part of the
shares of the Common Stock held by Parrut on a long-form or
short-form registration statement on one or more occasions in the
future, which registrations may be “shelf
registrations.” Parrut is also entitled to participate in
certain registered offerings by the Company, subject to the terms
and conditions in the Registration Rights Agreement. The Company
will pay Parrut’s expenses in connection with Parrut’s
exercise of these rights. The registration rights described in this
paragraph apply to (i) all shares of Common Stock
acquired by Parrut pursuant to the Purchase Agreement and the
promissory note, and (ii) any securities into which such shares of
the Common Stock may be converted or exchanged pursuant to any
merger, consolidation, sale of all or any part of its assets,
corporate conversion or other extraordinary transaction of the
Company and any equity securities of the Company then outstanding
that were issued or issuable as a dividend, stock split or other
distribution with respect to or in replacement of such shares of
Common Stock (the “Registerable Securities”). Such
securities held by Parrut
will cease to be Registrable Securities when (i) a
registration statement covering such Registrable Securities has
been declared effective and such Registrable Securities have been
disposed of pursuant to such effective registration statement; (ii)
such Registrable Securities shall have been sold pursuant to Rule
144 under the Securities Act; (iii) such Registrable Securities may
be sold pursuant to Rule 144 without limitation thereunder on
volume or manner of sale and without the requirement for the
Company to be in compliance with the current public information
requirement under Rule 144(c)(1) for a period of ninety days, or
(iv) such Registrable Securities cease to be
outstanding.
The
foregoing is only a summary description of the Registration Rights
Agreement and it does not purport to be a complete description of
the rights and obligations of the parties thereunder and is
qualified in its entirety by reference to the full text of the
document, which is filed as Exhibit 10.2 to this Current Report on
Form 8-K and is incorporated herein by reference.