FORBEARANCE AGREEMENT
EXHIBIT 99.8
This Forbearance Agreement (the “Agreement”) is made as of this 14th day of April 2008 by and
between Workstream Inc. (the “Company”) and the holder listed on the signature page hereto (the
“Holder”).
RECITALS
A. The Company, the Holder and various others entered into that certain Transaction Agreement
dated as of July 25, 2007 (the “Transaction Agreement”).
B. Simultaneously with the consummation of the transactions contemplated by the Transaction
Agreement, (i) the Company, the Holder and various others entered into that certain Registration
Rights Agreement dated as of August 3, 2007 (the “Registration Rights Agreement”) and (ii) the
Company sold a Special Warrant (the “Special Warrant”) to the Holder for $5,000,000.
C. During and only during the period beginning on the date of this Agreement and ending on the
twelve month and one day anniversary of the date hereof (such period is referred to herein as the
“Standstill Period” and such scheduled ending date is referred to herein as the “Scheduled
Standstill Expiration Date”), the Holder is willing to temporarily forbear from exercising certain
rights and remedies on the terms, conditions, and provisions contained in this Agreement.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Acknowledgment of Triggering Events and Breaches. The Company acknowledges and
agrees that:
(i) (1) a Triggering Event (as defined in the Special Warrant) has occurred prior to the
date hereof under Section 17(a)(i) of the Special Warrant and (2) an Effectiveness Failure
(as defined in the Registration Rights Agreement) has occurred prior to the date hereof
under Section 2(e) of the Registration Rights Agreement, in each case, as a result of the
failure of the Registration Statement (as defined in the Registration Rights Agreement)
initially filed by the Company with the SEC (as defined in the Transaction Agreement) on
September 11, 2007 to be declared effective by the SEC on or prior to the date that is
sixty (60) days after the Effectiveness Deadline (as defined in the Registration Rights
Agreement) for such Registration Statement;
(ii) a Triggering Event has occurred prior to the date hereof under Section 17(a)(iv) of the
Special Warrant as a result of threatened or proposed delisting of the Common Shares
(as defined in the Special Warrant) from an Eligible Market (as defined in the Special
Warrant);
(iii) a Triggering Event has occurred prior to the date hereof under Section 17(a)(vi) of
the Special Warrant as a result of the Company’s failure to pay all Registration Delay
Payments (as defined in the Registration Rights Agreement) accrued through the date hereof
to the Holder and to each other holder of the other Transaction Agreement Warrants (as
defined in the Special Warrant) and such failure continued for at least ten (10) days;
(iv) a Triggering Event has occurred prior to the date hereof under Section 17(a)(x) of the
Special Warrant as a result of Xxxxxx Xxxxx ceasing to serve as Chief Executive Officer of
the Company; and
(v) a Triggering Event has occurred prior to the date hereof under Section 17(a)(ix) of the
Special Warrant as a result of each of clauses (i) through (iv) above causing a Triggering
Event to occur under the other Transaction Agreement Warrants.
The Triggering Events listed in clauses (i) through (v) above are collectively referred to herein
as the “Existing Triggering Events” and each is individually referred to herein as an “Existing
Triggering Event.” The Company further acknowledges and agrees that it has breached its obligations
under the Registration Rights Agreement to pay to the Holder all of the Registration Delay Payments
owed to the Holder prior to the date hereof as a result of the Effectiveness Failure described in
clause (i) above (such Registration Delay Payments so owed to the Holder are referred to herein as
the “Owed Registration Delay Payments” and such breach to so pay the Owed Registration Delay
Payments is referred to herein as the “Existing Payment Breach”). The Company represents and
warrants to the Holder that no other (a) Triggering Event has occurred other than the Existing
Triggering Events and (b) breach has occurred under any of the Transaction Documents other than the
Existing Payment Breach.
2. Forbearance; Standstill Termination. Unless and until a Standstill Termination (as
defined below) occurs, during the Standstill Period, the Holder will not exercise any of its rights
or remedies (i) under Section 17(b) (other than under the last sentence thereof) of the Special
Warrant solely with respect to any of the Existing Triggering Events or (ii) to collect the Owed
Registration Delay Payments. Upon the occurrence of a Standstill Termination, the Standstill Period
shall be automatically terminated and the Holder shall then be permitted and entitled to
immediately exercise all of its rights and remedies (i) under Section 17(b) of the Special Warrant
with respect to each of the Existing Triggering Events and (ii) to collect the Owed Registration
Delay Payments. “Standstill Termination” shall mean the occurrence of the Scheduled Standstill
Expiration Date, or, if earlier, the occurrence of any one or more of the following events: (a) any
Triggering Event occurs after the date hereof; or (b) the failure of the transactions contemplated
by the Term Sheet attached hereto as Attachment 1 to be consummated within 45 days after
the date hereof except if such failure was caused solely by the Holder in bad faith.
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3. No Waiver; Reservation of Rights. The Company acknowledges that the Holder is not
waiving any of the Existing Triggering Events, the Owed Registration Delay Payments or the Existing
Payment Breach but is simply agreeing to forbear from exercising its rights with respect to the
Existing Triggering Events, the Owed Registration Delay Payments and the Existing Payment Breach to
the extent expressly set forth in this Agreement. Without limiting the generality of the foregoing,
the Company acknowledges and agrees that immediately upon expiration of the Standstill Period, the
Holder shall have all of its rights and remedies with respect to the Existing Triggering Events,
the Owed Registration Delay Payments and the Existing Payment Breach to the same extent, and with
the same force and effect, as if the forbearance had not occurred. The Company will not assert and
hereby forever waives any right to assert that the Holder is obligated in any way to continue
beyond the Standstill Period to forbear from enforcing its rights or remedies (i) under Section
17(b) of the Special Warrant with respect to any of the Existing Triggering Events or (ii) to
collect the Owed Registration Delay Payments or that the Holder is not entitled to act on the
Existing Triggering Events, the Owed Registration Delay Payments or the Existing Payment Breach
after the occurrence of a Standstill Termination as if such Existing Triggering Events, the Owed
Registration Delay Payments or Existing Payment Breach (as the case may be) had just occurred and
the Standstill Period had never existed. The Company acknowledges that the Holder has made no
representations as to what actions, if any, the Holder will take after the Standstill Period or
upon the occurrence of any Standstill Termination or the occurrence of any Triggering Event or any
other breach of any of the Transaction Documents after the date hereof, and the Holder must and
does hereby specifically reserve any and all rights, remedies, and claims it has (after giving
effect hereto) with respect to the Existing Triggering Events, the Owed Registration Delay
Payments, the Existing Payment Breach and each other Triggering Event or each other breach under
any of the Transaction Documents that may occur. It is expressly understood and agreed that nothing
contained in this Agreement shall prohibit the Holder from exercising any rights or remedies that
may be available to the Holder under this Agreement, the Special Warrant, any other Transaction
Document or applicable law, other than its rights and remedies (i) under Section 17(b) (other than
under the last sentence thereof) of the Special Warrants solely with respect to the Existing
Triggering Events and (ii) to collect the Owed Registration Delay Payments.
4. Existing Agreements; Entire Agreement. Except as expressly set forth in this
Agreement, the Transaction Documents (as defined in the Transaction Agreement) and all of the
obligations of the Company thereunder and the rights of and benefits to the Holder thereunder
remain in full force and effect. This Agreement supersedes all other prior oral or written
agreements between the Holder and the Company with respect to the matters contained herein, and
this Agreement contains the entire understanding of the parties with respect to the matters covered
herein. The Recitals set forth above are hereby incorporated into this Agreement by reference. The
language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.
5. Counterparts. This Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In the event that any
signature is delivered by facsimile transmission or by an e-mail which contains
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a portable document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page were an original
thereof.
6. Headings; Severability. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine,
neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,” “hereunder,” “hereof” and words
of like import refer to this entire Agreement instead of just the provision in which they are
found. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction.
7. Miscellaneous. The Company hereby represents and warrants that it has the necessary
power and authority to execute, deliver, and perform the undertakings contained herein, and that
this Agreement constitutes the valid and binding obligation of the Company enforceable against it
in accordance with its terms. The parties hereto hereby acknowledge and agree that this Agreement
shall constitute a Transaction Document for all purposes. The provisions of this Agreement shall
survive the termination of the Standstill Period. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person (as defined in the Transaction
Agreement).
8. Governing Law; Jurisdiction; Jury Trial. The parties hereby agree that pursuant to
735 Illinois Compiled Statutes 105/5-5 they have chosen that all questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Illinois, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Illinois or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of Illinois. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
Xxxx County, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such notices
to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
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9. RELEASE. FOR VALUE RECEIVED, INCLUDING, WITHOUT LIMITATION, THE AGREEMENTS OF THE
HOLDER IN THIS AGREEMENT, THE COMPANY HEREBY RELEASES THE HOLDER AND ALL THE OTHER INDEMNITEES (AS
DEFINED IN THE TRANSACTION AGREEMENT) (COLLECTIVELY, THE “RELEASED PARTIES”) OF AND FROM ANY AND
ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES, ACTS AND OMISSIONS, LIABILITIES, AND
OTHER CLAIMS OF EVERY KIND OR NATURE WHATSOEVER, BOTH IN LAW AND IN EQUITY, KNOWN OR UNKNOWN, WHICH
THE COMPANY OR ANY OF ITS SUBSIDIARIES NOW HAS OR EVER HAD AGAINST ANY OF THE RELEASED PARTIES
ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTION DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANY
ARISING OUT OF OR RELATING TO THE NEGOTIATIONS IN CONNECTION WITH THE EXISTING TRIGGERING EVENTS,
THE OWED REGISTRATION DELAY PAYMENTS AND THE EXISTING PAYMENT BREACH AS OF THE DATE HEREOF), AND
THE COMPANY FURTHER ACKNOWLEDGES THAT, AS OF THE DATE HEREOF, NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES HAS ANY COUNTERCLAIM, SET-OFF, OR DEFENSE AGAINST ANY OF THE RELEASED PARTIES, EACH OF
WHICH THE COMPANY HEREBY EXPRESSLY WAIVES ON BEHALF OF ITSELF AND ITS SUBSIDIARIES.
[signature page follows]
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IN WITNESS WHEREOF, the Holder and the Company have caused this Agreement to be duly executed
on behalf of itself as of the date first written above.
| WORKSTREAM INC. | ||||||
| By: | /s/ Xxx Xxxxxxx | |||||
| Its: | CFO | |||||
| MAGNETAR CAPITAL MASTER FUND, LTD | ||||||
| By: Magnetar Financial LLC | ||||||
| Its: Investment Manager | ||||||
| By : | /s/ Xxxx Xxxxxxxx | |||||
| Its: Counsel | ||||||
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Attachment 1
See Exhibit 99.7 to the Schedule 13D
