EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of the 10th day of June, 2004.
BETWEEN:
WORKSTREAM USA, INC.,
a corporation incorporated under the laws of Delaware
(hereinafter referred to as the "Purchaser")
AND:
WORKSTREAM INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as "Workstream")
AND:
XXXXXXXXXXX.XXX, LLC.,
An LLC organized under the laws of the State of Delaware
(hereinafter referred to as the "Vendor")
WHEREAS:
A. The Vendor carries on the business of providing resume management
services and software for human capital management;
B. The Vendor wishes to sell and assign to the Purchaser, and the
Purchaser wishes to purchase and assume from Vendor certain of the
assets of such business on the terms and subject to the conditions
hereinafter contained.
NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration paid by each of the parties
hereto to each of the other parties hereto (the receipt and sufficiency of which
are hereby acknowledged), it is agreed among the parties hereto as follows:
1. INTERPRETATION
1.1. DEFINED TERMS. In this Agreement and in the schedules
hereto, unless there is something in the subject-matter or
context inconsistent therewith, the following terms and
expressions will have the following meanings:
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1.1.1. "Affiliate" of any person means any corporation
which, directly or indirectly, is controlled by,
controls or is under direct or indirect common
control with such person;
1.1.2. "Agreement", "hereto", "herein", "hereof",
"hereunder" and similar expressions refer to this
Asset Purchase Agreement and not any particular
paragraph or any particular portion of this
agreement and includes all schedules attached to
this agreement;
1.1.3. "Assumed Contracts" means all contracts,
agreements, orders, commitments and other
engagements by or with third parties relating to
the Business which are included in the Purchased
Assets including, without limitation, the Customer
Contracts and the Leases all of which, including
amounts payable thereon, all of which are listed
in Schedule 1.1.3 attached hereto;
1.1.4. "Business" means the business carried on by the
Vendor which primarily involves providing resume
management services and software for human capital
management;
1.1.5. "Business Day" means a day other than a Saturday,
a Sunday or other day on which commercial banks in
Xxxxxx, Xxxxxxx, Xxxxxx are authorized or required
by law to close;
1.1.6. "Closing Date" means June __, 2004, or such other
date as the Vendor and Purchaser may agree upon;
1.1.7. "Closing Time" means 2:00 o'clock in the afternoon
on the Closing Date or such other time on the
Closing Date as the parties hereto may agree upon;
1.1.8. "Commission" means the Securities and Exchange
Commission;
1.1.9. "Commission Documents" means all of the
Purchaser's filings with the Commission prior to
the date hereof;
1.1.10. "Customer Contracts" means any and all agreements
entered into between the Vendor and one or more
third parties relating to the sale or provision of
goods or services by the Vendor to such third
parties in connection with the Business, including
unfilled orders, commitments and other engagements
by or with such third parties, all of which are
listed in Schedule 2.1.4 attached hereto;
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1.1.11. "Encumbrances" means mortgages, charges, pledges,
security interests, liens, encumbrances, actions,
claims, demands and equities of any nature
whatsoever or howsoever arising and any rights or
privileges capable of becoming any of the
foregoing;
1.1.12. Intentionally deleted;
1.1.13. "Governmental Authority" means any foreign,
domestic, federal, territorial, state or local
governmental authority, quasi-governmental
authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal
or organization or any regulatory, administrative
or other agency, or any political or other
subdivision, department or branch of any of the
foregoing;
1.1.14. "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended;
1.1.15. "Interim Period" means the period from and
including the date of this Agreement to and
including the Closing Date;
1.1.16. "License Rights" means all license and
distribution rights relating to the Business
described in Schedule 1.1.16 attached hereto;
1.1.17. "Lien" means, with respect to any asset, any
mortgage, lien, claim, pledge, charge, security
interest or other encumbrance of any kind in
respect of such asset;
1.1.18. "Material Adverse Effect" means with respect to a
Person or entity, a material adverse effect on the
assets, properties, business, operations,
financial condition or results of operations of
such Person or entity and its subsidiaries taken
as a whole;
1.1.19. "Person" means and includes any individual,
corporation, general partnership, limited
partnership, limited liability company, limited
liability partnership, joint venture, syndicate,
association, trust, government, governmental
agency or board or commission or authority, and
any other form of entity or organization;
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1.1.20. "Principal" means any manufacturer which the
Vendor represents in the sales and service of the
manufacturer's products;
1.1.21. "Purchase Price" means the sum of $730,000 which
is the amount, subject to adjustments as herein
provided, payable by the Purchaser to the Vendor
for all of the Purchased Assets, as provided
herein;
1.1.22. "Purchased Assets" means the undertaking and
assets of the Business which are to be sold by the
Vendor to the Purchaser pursuant to Section y2;
1.1.23. "Vendor's Mediation Rights" means the vendor's
mediation rights as set out in section 11 of the
escrow agreement attached hereto as Schedule
1.1.23;
1.1.24. "Warranty Claim" means a claim made by either the
Purchaser or the Vendor based on or with respect
to the inaccuracy or non-performance or
non-fulfilment or breach of any representation or
warranty made by the other party contained in this
Agreement or contained in any document or
certificate given in order to carry out the
transactions contemplated hereby.
1.2. BEST OF KNOWLEDGE. Any reference herein to "the best of the
knowledge" of the Vendor will be deemed to mean the actual
knowledge of the Vendor and the knowledge which it would
have had if it had conducted an inquiry into the relevant
subject matter that a reasonably prudent person would have
conducted under similar circumstances.
1.3. SCHEDULES. The Schedules which are attached to this
Agreement are incorporated in this Agreement by reference
and are deemed to be part hereof.
1.4. CURRENCY. Unless otherwise indicated, all dollar amounts
referred to in this Agreement are in lawful money of the
United States of America.
1.5. CHOICE OF LAW AND ATTORNMENT. This Agreement shall be
governed by and construed and enforced in accordance with
the laws of the Province of Ontario, Canada.
1.6. INTERPRETATION NOT AFFECTED BY HEADINGS OR PARTY DRAFTING.
The division of this Agreement into articles, sections,
paragraphs, subparagraphs and clauses and the insertion of
headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
The terms "this Agreement", "herein", "hereunder" and
similar expressions refer to this Agreement and the
Schedules hereto and not to any particular article, section,
paragraph, subparagraph, clause or other portion and include
any agreement or instrument supplementary or ancillary
hereto. Each party hereto acknowledges that it and its legal
counsel have reviewed and participated in settling the terms
of this Agreement, and the parties hereby agree that any
rule of construction to the effect that any ambiguity is to
be resolved against the drafting party shall not be
applicable in the interpretation of this Agreement.
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1.7. NUMBER AND GENDER. In this Agreement, unless there is
something in the subject matter or context inconsistent
therewith:
1.7.1. words in the singular number include the plural
and such words shall be construed as if the plural
had been used,
1.7.2. words in the plural include the singular and such
words shall be construed as if the singular had
been used, and
1.7.3. words importing the use of any gender shall
include all genders where the context or party
referred to so requires, and the rest of the
sentence shall be construed as if the necessary
grammatical and terminological changes had been
made.
1.8. TIME OF ESSENCE. Time shall be of the essence.
2. PURCHASE AND SALE
2.1. PURCHASED ASSETS. On the terms and subject to the fulfilment
of the conditions, the Vendor hereby agrees to sell,
transfer and assign to the Purchaser, and the Purchaser
hereby agrees to purchase and accept from the Vendor as of
the Closing Date, assets, rights and interests of the Vendor
listed in Schedule 2.1, as attached hereto (the "Purchased
Assets"), and will include the following assets:
2.1.1. Accounts Receivable: all accounts receivable,
trade accounts, notes, receivables, book debts and
other debts due or accruing to the Vendor in
connection with the Purchased Assets and the full
benefit of all securities for such accounts, notes
or debts described in Schedule 2.1.1 (the
"Accounts Receivable");
2.1.2. Computer Equipment: all of the Vendor's right,
title and interest in all computer hardware and
firmware used in the Business including, without
limitation, that described in Schedule 2.1.2
attached hereto;
2.1.3. Customer Lists and Information: all customer
lists, files, data and information relating to
customers and prospective customers of the
Business as of the Closing Time including, without
limitation, the customer list which has been
delivered by the Vendor to the Purchaser prior to
the Closing Date described in Schedule 2.1.3
attached hereto;
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2.1.4. Customer Contracts: all right, title and interest
of the Vendor in and to all Customer Contracts,
all of which are listed in Schedule 2.1.4 attached
hereto;
2.1.5. Goodwill, Name, etc.: the goodwill of the
Business, together with the exclusive right of the
Purchaser to represent itself as carrying on the
Business in continuation of and in succession to
the Vendor, and all rights in and title to the
name "Xxxxxxxxxxx.xxx" or any variation of same
(Notwithstanding the transfer of all rights in and
title to the name "Xxxxxxxxxxx.xxx", the Purchaser
acknowledges that the Vendor's corporate name
shall continue to be "Xxxxxxxxxxx.xxx, LLC" until
such time as the Vendor is able to change its
corporate name. The Vendor undertakes and agrees
to effect the change of its corporate name to
something that does not contain the name
"Peoplebonus" or any variation thereof, as soon as
practicably possible but in no event longer than
30 days from the Closing Date);
2.1.6. Technology, Intellectual Property and Software:
all of its world wide right, title and interest in
and to any intellectual property rights including
but not limited to all trade secrets, research
data, designs, proprietary know-how, technical
information, specifications and materials in
whatever form or media recording or evidencing
technology or proprietary information used in or
relating to the Business, and all rights and
interests in and to all inventions, patents,
applications for patents, copyrights, trade marks,
trade xxxx registrations, trade names, logos,
industrial designs, design patents, and other
intellectual property used in or relating to the
Business, and all computer software and any
intellectual or industrial property of any nature
whatsoever which it may have in any components or
features of the computer software used in the
Business including the software products known as
("Peoplebonus Resume Management Services",
"Peoplebonus Resume Database" and "Resume
Management Services with Email Deliverable") and
including all related codes, related source,
object or any application codes, specifications,
documentation, revisions, enhancements and
modifications thereto, in whatever form and media
to which the Vendor has any right or interest for
the full duration of all such rights, and any
renewals or extensions thereof, all of which is
listed in Schedule 2.1.6 attached hereto;
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2.1.7. Licence Rights: all licence and distribution
rights relating to the Business granted to the
Vendor by any third party under all contracts and
agreements (written or oral), all of which are
listed in Schedule 1.1.16 attached hereto;
2.1.8. Regulatory Licenses: all licenses, registrations
and qualifications of the Business required by any
governmental or regulatory authority, to the
extent transferable;
2.1.9. Supply Contracts: the full benefit of all
contracts providing for the supply of goods and
services to the Business, subject to the
Purchaser's review and acceptance of such
contracts and agreements prior to the Closing
Date; and
2.1.10. Warranty Rights and Maintenance Contracts: the
full benefit of all warranties and warranty rights
(express and implied) against manufacturers or
sellers which apply to any of the Purchased Assets
and all maintenance contracts on machinery,
equipment and the other Purchased Assets, subject
to the Purchaser's review and acceptance of such
contracts and agreements prior to the Closing
Date.
2.2. UNASSIGNABLE CONTRACTS. If any rights, benefits or remedies
(the "Rights") under any Assumed Contracts are not
assignable by the Vendor to the Purchaser without the
written consent of the other party thereto (the "Third
Party") and such consent is not obtained, then, unless the
Purchaser exercises its rights under Section 6.2,
2.2.1. the Vendor will hold the Rights for the benefit of
the Purchaser,
2.2.2. the Vendor will, at the request and expense and
under the direction of the Purchaser, in the name
of the Vendor or otherwise as the Purchaser shall
specify, take all such actions and do all such
things as shall, in the opinion of the Purchaser,
be necessary or desirable in order that the
obligations of the Vendor under such Assumed
Contracts may be performed in a manner such that
the value of the Rights shall be preserved and
shall enure to the benefit of the Purchaser and
such that all moneys receivable under the Assumed
Contracts may be received by the Purchaser,
2.2.3. the Vendor will promptly pay over to the Purchaser
all such moneys collected by the Vendor in respect
of such Assumed Contracts, and
2.2.4. to the extent permitted by the Third Party and
provided, in the Purchaser's opinion, it would not
be prejudicial to the Purchaser's rights to do so,
the Purchaser will perform the obligations under
such Assumed Contracts on behalf of the Vendor,
and will indemnify the Vendor against all
liabilities, costs and expenses incurred by the
Vendor in performing such obligations.
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2.3. EXCLUDED LIABILITIES AND INDEMNITY. The Purchaser will not
assume and will not be liable for, and the Vendor will
indemnify the Purchaser from and against, all obligations,
commitments and liabilities of and claims against the Vendor
(whether absolute, accrued or contingent) relating to the
Business. Without limiting the generality of the foregoing,
it is agreed that the Purchaser will have no liability for
any of the following obligations or liabilities:
2.3.1. all liabilities in respect of all indebtedness of
the Vendor to all persons;
2.3.2. all product liability claims and liabilities for
warranty or product return claims relating to any
product or service of the Business produced, sold,
performed or delivered prior to the Closing Date;
2.3.3. all liabilities for all taxes, duties, levies,
assessments and other such charges, including any
penalties, interests and fines with respect
thereto, payable by the Vendor to any federal,
state, municipal or other government or
governmental agency, authority, board, bureau or
commission, domestic or foreign, including,
without limitation, any taxes in respect of or
measured by the sale, consumption or performance
by the Vendor of any product or service prior to
the Closing Date or any similar legislation in
respect of all remuneration payable to all persons
employed in the Business prior to the Closing
Date;
2.3.4. all other liabilities of any nature whatsoever,
known or unknown, due or to become due, not
expressly assumed by Purchaser pursuant to this
Agreement or as indicated in Schedule 2.3.4
attached hereto;
2.4. PURCHASE PRICE. The price payable by the Purchaser to the
Vendor for the Purchased Assets will be the sum of
$730,000.00.
2.5. PAYMENT OF PURCHASE PRICE. Purchaser and Vendor mutually
agree that the Purchase Price will be paid and satisfied at
the Closing Time as follows:
2.5.1 By delivery to the Vendor of the balance of
$105,000.00, by way of certified check, bank draft
or wire transfer;
2.5.1(a) By delivery to the Escrow Agent (as defined in the
Escrow Agreement attached hereto as Schedule
2.5.3) of the balance of $25,000.00 by way of
certified check, bank draft or wire transfer;
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2.5.2 By delivery to the Vendor of an unsecured note for
$100,000.00 in the Form set out in Schedule 2.5.2;
and
2.5.3 By delivery to the Vendor of that number of shares
(rounded up to a whole share) of common shares, no
par value (the "Shares" or the "Workstream
Shares"), of Workstream equal to $500,000.00 based
on the average last sale price per share of
Workstream quoted by the NASDAQ on its automated
quotation system for the last five (5) trading
days on which trading of shares of Workstream
actually took place immediately preceding the
Closing Date; provided, however, that the
Purchaser shall deposit that number of Workstream
Shares equal to $300,000.00 based on the average
last sale price per share of Workstream quoted by
the NASDAQ on its automated quotation system for
the last five (5) trading days on which trading of
shares of Workstream actually took place
immediately preceding the Closing Date (the
"Escrow Shares") into an escrow account pursuant
to the terms set out in the escrow agreement
attached hereto as Schedule 2.5.3.
2.6. ALLOCATION OF PURCHASE PRICE. The Vendor and the Purchaser
shall agree to an allocation of the Purchase Price among the
Purchased Assets within ninety (90) days of the Closing
Date. The Vendor and the Purchaser shall file their
respective tax returns prepared in accordance with such
allocation.
2.7. PAYMENT OF TAXES. The Vendor shall be liable for and shall
pay all applicable federal and state sales taxes, excise
taxes and all other taxes, duties and other like charges
properly payable on and in connection with the conveyance
and transfer of the Purchased Assets to the Purchaser. The
Purchaser will do and cause to be done such things as are
reasonably requested to enable the Vendor to comply with
such obligation in an efficient manner.
2.8. FUTURE PRICE SECURITIES LIMITATION. Notwithstanding anything
contained herein to the contrary, the aggregate number of
Workstream Shares issued to the Vendor as part of the
Purchase Price shall not equal or exceed 20% of the number
of common shares of Workstream outstanding immediately
before the issuance of the Workstream Shares, unless
Workstream has obtained prior approval from the holders of
its common shares for such issuance. In the event the
aggregate number of Workstream Shares that would be issued
to the Vendor at the Closing Date equals or exceeds 20% of
the number of common shares of Workstream then outstanding,
and Workstream has failed to obtain prior shareholder
approval for such issuance, then the number of Workstream
Shares that the Vendor would be entitled acquire as part of
the Purchase Price shall be reduced so that the aggregate
number of Workstream Shares issuable to the Vendor does not
equal or exceed 20% of the number of common shares of
Workstream outstanding immediately before the issuance of
the Workstream Shares on the Closing Date.
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3. REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES BY THE VENDOR. The Vendor hereby
represents and warrants to the Purchaser and Workstream as follows,
and confirm that the Purchaser and Workstream is relying upon the
accuracy of each of such representations and warranties in connection
with the purchase of the Purchased Assets and the completion of the
other transactions hereunder:
3.1.1. Corporate Authority and Binding Obligation. The Vendor has
good right, full corporate power and absolute authority to
enter into this Agreement and to sell, assign and transfer
the Purchased Assets to the Purchaser in the manner
contemplated herein and to perform all of the Vendor's
obligations under this Agreement. The Vendor and its members
have taken all necessary or desirable actions, steps and
corporate and other proceedings to approve or authorize,
validly and effectively, the entering into of, and the
execution, delivery and performance of, this Agreement and
the sale and transfer of the Purchased Assets by the Vendor
to the Purchaser. This Agreement is a legal, valid and
binding obligation of the Vendor, enforceable against it in
accordance with its terms.
3.1.2. No Other Purchase Agreements. No person has any agreement,
option, understanding or commitment, or any right or
privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement, option or commitment, for
the purchase or other acquisition from the Vendor of any
Purchased Assets, or any rights or interest therein, other
than in the ordinary course of the Business.
3.1.3. Contractual and Regulatory Approvals. Except as specified in
Schedule 3.1.3 attached hereto, the Vendor is not under any
obligation, contractual or otherwise, to request or obtain
the consent of any person, and no permits, licences,
certifications, authorizations or approvals of, or
notifications to, any federal, state, municipal or local
government or governmental agency, board, commission or
authority are required to be obtained by the Vendor,
3.1.3.1. in connection with the execution, delivery or
performance by the Vendor of this Agreement or the
completion of any of the transactions contemplated
herein,
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3.1.3.2. to avoid the loss of any permit, licence,
certification or other authorization relating to
the Purchased Assets, or
3.1.3.3. in order that the authority of the Purchaser to
carry out the Assumed Contracts in this ordinary
course and in the same manner as presently carried
out by the Vendor.
Complete and correct copies of any agreements under which
the Vendor is obligated to request or obtain any such
consent have been provided to the Purchaser.
3.1.4. Status and Governmental Licences.
3.1.4.1. The Vendor is a limited liability company duly
organized, validly existing and in good standing
in all respects under the laws of its jurisdiction
of incorporation. The Vendor has all necessary
corporate power to own, lease and operate its
assets, properties and business and to carry on
its business as it is now being conducted and is
in good standing in every jurisdiction in which
the nature of its business or the location of its
properties requires such qualification or
licensing. Schedule 3.1.4 attached hereto sets
forth all jurisdictions in which the Vendor is
qualified or licensed to do business as a
corporation.
3.1.4.2. The Vendor holds all necessary licences,
registrations and qualifications in each
jurisdiction in which,
(i) it owns or leases any of the Purchased
Assets, or
(ii) the nature of the Purchased Assets or
any part thereof, makes such
qualification necessary or desirable to
enable the Purchased Assets to be owned,
leased and/or operated.
All of the Vendor's licences, registrations and
qualifications are listed in Schedule 3.1.4 attached hereto
and are valid and subsisting. Complete and correct copies of
the licences, registrations and qualifications have been
delivered to the Purchaser. The Vendor is in compliance with
all terms and conditions of the licences, registrations and
qualifications. There are no proceedings in progress,
pending or, to the best of the knowledge of the Vendor,
threatened, which could result in the revocation,
cancellation or suspension of any of the licences,
registrations or qualifications.
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3.1.5. Compliance with Constating Documents, Agreements and Laws.
The execution, delivery and performance of this Agreement
and each of the other agreements contemplated or referred to
herein by the Vendor, and the completion of the transactions
contemplated hereby, will not constitute or result in a
violation, breach or default, or cause the acceleration of
any obligations under:
3.1.5.1. any term or provision of any of the articles,
by-laws or other constating documents of the
Vendor,
3.1.5.2. subject to obtaining the contractual consents
referred to in Schedule 3.1.3 , the terms of any
indenture, agreement (written or oral), instrument
or understanding or other obligation or
restriction to which the Vendor is a party or by
which it is bound including, without limitation,
any of the Assumed Contracts, or
3.1.5.3. subject to obtaining the regulatory consents
referred to in Schedule 3.1.3, any term or
provision of any of the Licences or any order of
any court, governmental authority or regulatory
body or any law or regulation of any jurisdiction
in which the Business is carried on.
3.1.5.4. Absence of Undisclosed Liabilities. There are no
liabilities (contingent or otherwise) of the
Vendor of any kind whatsoever in respect of which
the Purchaser may become liable on or after the
consummation of the transactions contemplated by
this Agreement.
3.1.6. Litigation. Except for the matters referred to in Schedule
3.1.6 attached hereto, there are no actions, suits or
proceedings, judicial or administrative (whether or not
purportedly on behalf of the Vendor) pending or, to the best
of the knowledge of the Vendor, threatened, by or against or
affecting the Vendor which may affect the Purchased Assets,
at law or in equity, or before or by any court or any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign. Except for the matters referred to in
Schedule 3.1.6 there are no grounds on which any such
action, suit or proceeding might be commenced with any
reasonable likelihood of success.
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3.1.7. Title to Purchased Assets. The Vendor is the owner of and
has good and marketable title to all of the Purchased Assets
free and clear of all Liens except for matters as set forth
in Schedule 3.1.7 attached hereto;
3.1.8. Works Orders and Deficiencies. There are no outstanding work
orders, non-compliance orders, deficiency notices or other
such notices relative to the Purchased Assets which have
been issued by any regulatory authority, police or fire
department, sanitation, environment, labour, health or other
governmental authorities or agencies. There are no matters
under discussion with any such department or authority
relating to work orders, non-compliance orders, deficiency
notices or other such notices. None of the Purchased Assets
are being operated, in a manner which is in contravention of
any statute, regulation, rule, code, standard or policy.
3.1.9. Leases of Personal Property. Schedule 3.1.9 attached hereto
describes all leases of equipment and vehicles relating to
or included in the Purchased Assets. Complete and correct
copies of those leases have been provided to the Purchaser.
The Vendor is entitled to all rights and benefits as lessee
under those leases, and the Vendor has not sublet, assigned,
licensed or otherwise conveyed any rights in those leases or
in the property leased thereunder to any other person. All
payments and other obligations required to be paid and
performed by the Vendor under those leases have been duly
paid and performed; the Vendor is not in default of any its
obligations under those leases; and, to the best of the
knowledge of the Vendor, none of the lessors or any other
parties to those leases are in default of any of their
obligations under those leases. The Vendor is entitled to
assign all of its right and interest under those leases and
in and to the property leased thereunder to the Purchaser
subject to obtaining the consents referred to in Schedule
3.1.3 attached hereto. Subject to obtaining such consents,
the terms and conditions of those leases will not be
affected by, nor will any of those leases be in default as a
result of, the completion of the transaction contemplated
hereunder.
3.1.10. Intellectual Property.
3.1.10.1. Schedule 2.1.6 attached hereto lists and contains
a complete description of:
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(i) all patents, patent applications and
registrations, trade marks, trade xxxx
applications and registrations,
copyrights, copyright applications and
registrations, trade names and
industrial designs, domestic or foreign,
owned or used by the Vendor and included
as part of the Purchased Assets,
(ii) all trade secrets, know-how, inventions
and other intellectual property owned or
used by the Vendor and included as part
of the Purchased Assets,
(iii) all computer systems and application
software, including without limitation
all documentation relating thereto and
the latest revisions of all related
object and source codes therefor, owned
or used by the Vendor and included as
part of the Purchased Assets,
(all of the foregoing being collectively called
the "Intellectual Property").
3.1.10.2. The Vendor has good and valid title to all of the
Intellectual Property, free and clear of any and
all Encumbrances, except in the case of any
Intellectual Property licensed to the Vendor as
disclosed in Schedule 3.1.10.2. Complete and
correct copies of all agreements whereby any
rights in any of the Intellectual Property have
been granted or licensed to the Vendor have been
provided to the Purchaser. No royalty or other fee
is required to be paid by the Vendor to any other
person in respect of the use of any of the
Intellectual Property except as provided in such
agreements delivered to the Purchaser. The Vendor
has protected its rights in the Intellectual
Property in the manner and to the extent described
in Schedule 3.1.10.2. Except as indicated in
Schedule 3.1.10.2, the Vendor has the exclusive
right to use all of the Intellectual Property and
has not granted any licence or other rights to any
other person in respect of the Intellectual
Property. Complete and correct copies of all
agreements whereby any rights in any of the
Intellectual Property have been granted or
licensed by the Vendor to any other person have
been provided to the Purchaser. The Vendor is
entitled to assign all of its rights and interest
in and to the Intellectual Property to the
Purchaser subject to obtaining the consents
referred to in Schedule 3.1.3 attached hereto.
3.1.10.3. Subject to obtaining the aforesaid consents, and
except as disclosed in Schedule 3.1.10.2, there
are no restrictions on the ability of the Vendor
or any successor to or assignee from the Vendor to
use and exploit all rights in the Intellectual
Property. All statements contained in all
applications for registration of the Intellectual
Property were true and correct as of the date of
this Agreement of such applications. Each of trade
marks and trade names included in the Intellectual
Property is in use.
15
3.1.10.4. The use of the Intellectual Property does not
infringe, and the Vendor has not received any
notice, complaint, threat or claim alleging
infringement of, any patent, trade xxxx, trade
name, copyright, industrial design, trade secret
or other Intellectual Property or propriety right
of any other person, and the conduct of the
Business does not include any activity which may
constitute passing off.
3.1.11. Affiliates. None of the Purchased Assets are owned or
operated by any Affiliate of the Vendor.
3.1.12. Partnerships or Joint Ventures. The Vendor is not, in
relation to any part of the Purchased Assets, a partner or
participant in any partnership, joint venture,
profit-sharing arrangement or other association of any kind
and is not party to any agreement under which the Vendor
agrees to carry on any part of the Business in such manner
or by which the Vendor agrees to share any revenue or profit
relating to the Purchased Assets with any other person or as
set forth in Schedule 3.1.12 attached hereto;
3.1.13. Customers. The Vendor has delivered to the Purchaser a true
and complete list of all customers of the Business, as it
relates to the Purchased Assets, as of the date of this
Agreement. The Vendor is the sole and exclusive owner of,
and has the unrestricted right to use, such customer list.
Other than as set forth on Schedule 3.1.13 or pursuant to
Confidentiality and Non-Disclosure Agreements set forth on
Schedule 3.1.13, neither the customer list nor any
information relating to the customers of the Business, as
they related to the Purchased Assets, have, within three
years prior to the date of this Agreement, been made
available to any person other than the Purchaser. The Vendor
has no knowledge of any facts which could reasonably be
expected to result in the loss of any customers or sources
of revenue of the Business which, in the aggregate, would
materially affect the Purchased Assets.
3.1.14. Warranties and Discounts. Except as described in Schedule
3.1.14 attached hereto,
16
3.1.14.1. the Vendor has not given any guarantee or warranty
in respect of any of the products sold or the
services provided as part of the Purchased Assets,
except warranties made in the form of the standard
written warranty, a copy of which has been
provided to the Purchaser, and except for
warranties implied by law;
3.1.14.2. except as set forth on Schedule 3.1.14.2, during
each of the three fiscal years of the Vendor ended
immediately preceding the date , no claims have
been made against the Vendor for breach of
warranty or contract requirement or negligence or
for a price adjustment or other concession in
respect of any defect in or failure to perform or
deliver any products, services or work in
connection with the Purchased Assets which had, in
any such year, an aggregate cost in excess of
$1,000;
3.1.14.3. there are no repair contracts or maintenance
obligations in favor of the customers or users of
the Purchased Assets except obligations incurred
in accordance with standard terms, a copy of which
has been provided to the Purchaser;
3.1.14.4. the Vendor is not now subject to any agreement or
commitment, and the Vendor has not, within three
years prior to the date of this Agreement, entered
into any agreement with or made any commitment to
any customer of the Business in relation to the
Purchased Assets which would require the
repurchase of any products sold to such customers
or adjustment of any price or the granting of any
refund, discount or other concession to such
customer; and
3.1.14.5. the Vendor is not required to provide any letters
of credit, bonds or other financial security
arrangements in connection with any transactions
with any suppliers or customers of the Business
relating to the Purchased Assets.
3.1.15. Licences, Agency and Distributorship Agreements. Schedule
3.1.15 attached hereto lists all agreements to which the
Vendor is a party or by which it is bound under which the
right to manufacture, use or market any product, service,
technology, information, data, computer hardware or software
or other property used in or produced or sold by the
Business in relation to the Purchased Assets has been
granted, licensed or otherwise provided to the Vendor or by
the Vendor to any other person, or under which the Vendor
has been appointed or any person has been appointed by the
Vendor as an agent, distributor, licensee or franchisee for
any of the foregoing. Complete and correct copies of all of
the agreements relating to the License Rights have been
provided to the Purchaser. The Vendor is entitled to assign
all of its interest in the License Rights to the Purchaser
subject to obtaining the consents referred to in Schedule
3.1.3 attached hereto. None of the agreements relating to
the License Rights grant to any person any authority to
incur any liability or obligation or to enter into any
agreement on behalf of the Vendor.
17
3.1.16. Outstanding Agreements. The Vendor is not a party to or
bound by any outstanding or executory agreement, contract or
commitment, whether written or oral, relating to the
Purchased Assets, except for those agreements set out in
this Agreement or in the Schedules hereto. Complete and
correct copies of each of the contracts, leases and
agreements described in the Schedules attached hereto have
been provided to the Purchaser.
3.1.17. Good Standing of Agreements. The Vendor is not in material
default or breach of any of its obligations under any one or
more contracts, agreements (written or oral), commitments,
indentures or other instruments to which it is a party or by
which it is bound relating to the Purchased Assets, and
there exists no state of facts which, after notice or lapse
of time or both, would constitute such a default or breach.
All such contracts, agreements, commitments, indentures and
other instruments are now in good standing and in full force
and effect without amendment thereto, the Vendor is entitled
to all benefits thereunder and, to the best of the knowledge
of the Vendor, the other parties to such contracts,
agreements, commitments, indentures and other instruments
are not in material default or breach of any of their
obligations thereunder. There are no contracts, agreements,
commitments, indentures or other instruments relating to the
Purchased Assets under which the Vendor's rights or the
performance of its obligations are dependent on or supported
by the guarantee of or any security provided by any other
person.
3.1.18. Compliance with Laws. In relation to the Business, the
Vendor is not in violation of any federal, state or other
law, regulation or order of any government or governmental
or regulatory authority, domestic or foreign.
3.1.19. Accounts Receivable. All Accounts Receivable are bona fide
and good and, subject to an allowance for doubtful accounts
taken in accordance with generally accepted accounting
principles, collectible without set-off or counterclaim.
18
3.1.20. Copies of Documents. Complete and correct copies (including
all amendments) of all contracts, leases and other documents
referred to in this Agreement or any Schedule hereto or
required to be disclosed hereby have been delivered to the
Purchaser.
3.1.21. Disclosure. No representation or warranty contained in this
Section 3.1, and no statement contained in any Schedule,
certificate, list, summary or other disclosure document
provided or to be provided to the Purchaser pursuant hereto,
or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact which
is necessary in order to make the statements contained
therein not misleading.
3.1.22. Recitals. The recitals set forth in the first page of this
Agreement are true and correct.
3.1.23. Antitrust. Any waiting period applicable to the transactions
contemplated herein under the HSR Act shall have been
terminated or shall have expired.
3.1.24. Federal Securities Act - Unregistered Shares. The Vendor
acknowledges that the Workstream Shares, have not and are
not being registered under the Securities Act of 1933 as
amended (the "1933 Act"), and that accordingly the
Workstream Shares are not fully transferable except as
permitted under the various exemptions contained in the 1933
Act and the rules of the Securities and Exchange Commission
interpreting the 1933 Act. The provisions contained in this
paragraph 3.1.24 are intended to ensure compliance with the
1933 Act.
3.1.25. No Transfers in Violation of 1933 Act. The Vendor covenants,
warrants and represents that none of the Securities that
will be issued to it pursuant to this Agreement will be
offered, sold, assigned, pledged, hypothecated, transferred,
or otherwise disposed of except after full compliance with
all of the applicable provisions of the 1933 Act and the
rules and regulations of the Securities and Exchange
Commission under the 0000 Xxx.
3.1.26. No Distribution of Securities to Public. The Vendors
represent and warrants to Workstream that it is acquiring
the Securities for its own account, for investment, and not
with a view to their resale or other distribution; that it
currently has no intention of selling, transferring,
hypothecating, or otherwise disposing of all or any part of
the Securities at any particular time, for any particular
price, or on the happening of any particular event or
circumstances; and that Workstream is relying on the truth
and accuracy of these covenants, warranties, and
representations in issuing the Securities without first
registering them under the 1933 Act.
19
3.1.27. Investment Legend on Certificates. The Vendor agrees not to
sell, transfer, hypothecate or otherwise dispose of any of
the Securities received pursuant to this Agreement unless
and until it has: presented Workstream with a written legal
opinion in form and substance satisfactory to the solicitors
for Workstream to the effect that the disposition is
permissible under the terms of the 1933 Act and regulations
interpreting the 1933 Act; has complied with the
registration and prospectus requirements of the 1933 Act
relating to the disposition ,or; has presented Workstream
satisfactory evidence that the transfer will comply with
Rule 144 under the 1933 Act and therefore will be exempt
from registration under section 4(2) of the 1933 Act. The
Vendor further agrees that the certificates evidencing the
Securities it will receive shall contain the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION FOR THESE SECURITIES UNDER THE ACT OR AN
OPINION OF THE COMPANY'S COUNSEL THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT."
Workstream shall also place a "stop transfer" order against
any transfer of the Securities until one of the conditions
set forth above has been met.
3.2. REPRESENTATIONS AND WARRANTIES BY THE PURCHASER AND/OR WORKSTREAM. The
Purchaser and/or Workstream hereby represents and warrants to the
Vendor as follows, and confirms that the Vendor is relying on the
accuracy of each of such representations and warranties in connection
with the sale of the Purchased Assets and the completion of the other
transactions hereunder:
3.2.1. Corporate Authority and Binding Obligation. The Purchaser is
a corporation duly incorporated and validly subsisting in
all respects under the laws of its jurisdiction of
incorporation. The Purchaser has good right, full corporate
power and absolute authority to enter into this Agreement
and to purchase the Purchased Assets from the Vendor in the
manner contemplated herein and to perform all of the
Purchaser's obligations under this Agreement. The Purchaser
and its shareholders and board of directors have taken all
necessary or desirable actions, steps and corporate and
other proceedings to approve or authorize, validly and
effectively, the entering into of, and the execution,
delivery and performance of, this Agreement and the purchase
of the Purchased Assets by the Purchaser from the Vendor.
This Agreement is a legal, valid and binding obligation of
the Purchaser, enforceable against it in accordance with its
terms.
20
3.2.2. Contractual and Regulatory Approvals. Except as specified in
Schedule 3.2.2 attached hereto, the Purchaser is not under
any obligation, contractual or otherwise to request or
obtain the consent of any person, and no permits, licences,
certifications, authorizations or approvals of, or
notifications to, any federal, state, municipal or local
government or governmental agency, board, commission or
authority are required to be obtained by the Purchaser in
connection with the execution, delivery or performance by
the Purchaser of this Agreement or the completion of any of
the transactions contemplated herein. Complete and correct
copies of any agreements under which the Purchaser is
obligated to request or obtain any such consent have been
provided to the Vendor.
3.2.3. Capitalization. The authorized capital stock of Workstream
and the shares thereof issued and outstanding as of the date
hereof are set forth on Schedule 3.2.3 hereto. All of the
outstanding shares of Workstream have been duly and validly
authorized. Workstream is not a party to, and it has no
knowledge of, any agreement or understanding restricting the
voting or transfer of any shares of the capital stock of
Workstream. Except as set forth on the Commission Documents
or Schedule 3.2.3 hereto, the offer and sale of all capital
stock, convertible securities, rights, warrants, or options
of Workstream issued prior to the Closing Date complied in
all material respects with all applicable federal and state
securities laws, and no holder of such securities has a
right of rescission or claim for damages with respect
thereto which could have a Material Adverse Effect. The
Purchaser has furnished or made available to the Vendor true
and correct copies of Workstream's Articles of Incorporation
as in effect on the date hereof (the "Articles"), and
Workstream's Bylaws as in effect on the date hereof (the
"Bylaws"). Workstream has provided the Vendor with copies of
and the Vendor has reviewed the following documents, which
have been filed by Workstream with the Commission pursuant
to the Securities Exchange Act of 1934: (i) Workstream's
Annual Report on Form 10-K, as amended, for the fiscal year
ended May 31, 2003; (ii) Workstream's Quarterly Reports on
Form 10-Q for the quarters ended August 31, 2003, November
30, 2003 and February 29, 2004; and (iii) Workstream's proxy
statement with respect to its 2003 annual meeting.
21
3.2.4. Issuance of Securities. The Shares to be issued on the
Closing Date have been duly authorized by all necessary
corporate action and, when paid for or issued in accordance
with the terms hereof, the Shares shall be validly issued
and outstanding, fully paid and nonassessable, and free from
preemptive rights, taxes upon issuance, liens and similar
charges caused by Workstream and entitled to all applicable
rights and preferences set forth in the Articles.
3.2.5. No Conflicts. Except as set forth in Schedule 3.2.5 attached
hereto, the execution, delivery and performance of this
Agreement by the Purchaser and Workstream and the
consummation by the Purchaser and Workstream of the
transactions contemplated herein and therein do not and will
not (i) violate any provision of the Purchaser or
Workstream's Articles or Bylaws, (ii) conflict with, or
constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument
or obligation to which the Purchaser or Workstream is a
party or by which any of its respective properties or assets
are bound, (iii) create or impose a lien, mortgage, security
interest, charge or encumbrance of any nature whatsoever on
any property of the Purchaser or Workstream under any
agreement or any commitment to which the Purchaser or
Workstream is a party or by which the Purchaser or
Workstream is bound or by which any of its respective
properties or assets are bound, or (iv) result in a
violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations)
applicable to the Purchaser or Workstream or any of its
subsidiaries or by which any property or asset of the
Purchaser or Workstream or any of its subsidiaries are bound
or affected, except, in all cases other than violations
pursuant to clause (i) above, for such conflicts, defaults,
terminations, amendments, acceleration, cancellations and
violations as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the
Purchaser or Workstream and its subsidiaries is not being
conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible
violations which singularly or in the aggregate do not and
will not have a Material Adverse Effect. The Purchaser or
Workstream is not required under federal, state or local
law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this
Agreement, or issue and sell the Shares and the Warrant
Shares in accordance with the terms hereof or thereof (other
than any filings which may be required to be made by the
Purchaser or Workstream with the Commission or state
securities administrators subsequent to a Closing, and any
registration statement which may be filed pursuant hereto);
provided that, for purposes of the representation made in
this sentence, the Purchaser and Workstream is assuming and
relying upon the accuracy of the relevant representations
and agreements of the Vendor herein.
22
3.2.6. Commission Documents, Financial Statements. The financial
statements of the Purchaser or Workstream furnished to the
Vendor comply as to form in all material respects with
applicable accounting requirements and the published rules
and regulations of the Commission or other applicable rules
and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except (i) as
may be otherwise indicated in such financial statements or
the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present
in all material respects the financial position of the
Purchaser and Workstream and its subsidiaries as of the
dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
3.2.7. Subsidiaries. The Commission Documents or Schedule 3.2.7
hereto sets forth each subsidiary of the Purchaser and
Workstream showing the jurisdiction of its incorporation or
organization and showing the percentage of the Purchaser and
Workstream's ownership of the outstanding stock or other
interests of such subsidiary. For the purposes of this
Agreement, "subsidiary" shall mean any corporation or other
entity of which at least a majority of the securities or
other ownership interest having ordinary voting power
(absolutely or contingently) for the election of directors
or other persons performing similar functions are at the
time owned directly or indirectly by the Purchaser and
Workstream and/or any of its other subsidiaries. All of the
outstanding shares of capital stock of each subsidiary have
been duly authorized and validly issued, and are fully paid
and non-assessable. Except as disclosed on Schedule 3.2.7
there are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by
or binding upon any subsidiary for the purchase or
acquisition of any shares of capital stock of any subsidiary
or any other securities convertible into, exchangeable for
or evidencing the rights to subscribe for any shares of such
capital stock. Neither the Purchaser, Workstream nor any
subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any
shares of the capital stock of any subsidiary or any
convertible securities, rights, warrants or options of the
type described in the preceding sentence. Neither the
Purchaser, Workstream nor any subsidiary is party to, nor
has any knowledge of, any agreement restricting the voting
or transfer of any shares of the capital stock of any
subsidiary.
23
3.2.8. No Material Adverse Change. Since February 29, 2004, the
date through which the most recent report of Workstream has
been prepared and filed with the Commission (a copy of which
is included in the Commission Documents) Workstream has not
experienced or suffered any Material Adverse Effect, except
as disclosed on Schedule 3.2.8 hereto.
3.2.9. No Undisclosed Events or Circumstances. No event or
circumstance has occurred or exists with respect to the
Purchaser, Workstream or its subsidiaries or their
respective businesses, properties, prospects, operations or
financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement by
the Purchaser or Workstream but which has not been so
publicly announced or disclosed.
3.2.10. Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of
the Purchaser or Workstream, threatened against the
Purchaser, Workstream or any subsidiary which questions the
validity of this Agreement or the transactions contemplated
hereby or any action taken or to be taken pursuant hereto or
thereto. To the knowledge of the Purchaser and Workstream,
there is no action, suit, claim, investigation or proceeding
pending or threatened, against or involving the Purchaser,
Workstream, any subsidiary or any of their respective
properties or assets, except as set forth in the Commission
Document or Schedule 3.2.10 hereto. There are no outstanding
orders, judgments, injunctions, awards or decrees of any
court, arbitrator or governmental or regulatory body against
the Purchaser, Workstream or any subsidiary or any officers
or directors of the Purchaser, Workstream or subsidiary in
their capacities as such.
3.2.11. Compliance with Law. The business of the Purchaser,
Workstream and the subsidiaries has been and is presently
being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Commission Documents
or Schedule 3.2.11 hereto or such that, individually or in
the aggregate, the non-compliance therewith would not have a
Material Adverse Effect. The Purchaser, Workstream and each
of its subsidiaries have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of its business as
now being conducted by it unless the failure to possess such
franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
24
3.2.12. Taxes. Except as set forth in the Commission Documents or
Schedule 3.2.12 hereto, the Purchaser, Workstream and each
of the subsidiaries has accurately prepared and filed all
federal, state and other tax returns required by law to be
filed by it, has paid or made provisions for the payment of
all taxes shown to be due and all additional assessments,
and adequate provisions have been and are reflected in the
financial statements of the Purchaser, Workstream and the
subsidiaries for all current taxes and other charges to
which the Purchaser, Workstream or any subsidiary is subject
and which are not currently due and payable. Except as
disclosed on Schedule 3.2.12 hereto, none of the federal
income tax returns of the Purchaser, Workstream or any
subsidiary have been audited by the Internal Revenue
Service. The Purchaser and Workstream has no knowledge of
any additional assessments, adjustments or contingent tax
liability (whether federal or state) of any nature
whatsoever, whether pending or threatened against the
Purchaser, Workstream or any subsidiary for any period, nor
of any basis for any such assessment, adjustment or
contingency.
3.2.13. Operation of Business. The Purchaser, Workstream and each of
the subsidiaries owns or possesses all patents, trademarks,
domain names (whether or not registered) and any patentable
improvements or copyrightable derivative works thereof,
websites and intellectual property rights relating thereto,
service marks, trade names, copyrights, licenses and
authorizations and all rights with respect to the foregoing,
which are necessary for the conduct of its business as now
conducted without any conflict with the rights of others
except as disclosed in the Commission Documents or on
Schedule 3.2.13.
3.2.14. Books and Record Internal Accounting Controls. The records
and documents of the Purchaser, Workstream and its
subsidiaries accurately reflect in all material respects the
information relating to the business of the Purchaser,
Workstream and the subsidiaries, the location and collection
of their assets, and the nature of all transactions giving
rise to the obligations or accounts receivable of the
Purchaser, Workstream or any subsidiary. The Purchaser,
Workstream and each of its subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of
the Purchaser and Workstream's board of directors, to
provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity
with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at
reasonable intervals and appropriate actions is taken with
respect to any differences.
25
3.2.15. Material Agreements. Except as set forth in the Commission
Documents or on Schedule 3.2.15 hereto, neither the
Purchaser, Workstream nor any subsidiary is a party to any
written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement, a copy of which would be
required to be filed with the Commission as an exhibit to a
registration statement on Form S-3 or applicable form
(collectively, "Material Agreements"). Except as set forth
in the Commission Documents or on Schedule 3.2.15 hereto,
the Purchaser, Workstream and each of its subsidiaries has
in all material respects performed all the obligations
required to be performed by them to date under the foregoing
agreements, have received no notice of default and, to the
best of the Purchaser and Workstream's knowledge are not in
default under any Material Agreement now in effect, the
result of which could cause a Material Adverse Effect. No
written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement of the Purchaser, Workstream
or of any subsidiary limits or shall limit the payment of
dividends on Workstream's common shares.
3.2.16. Securities Act of 1933. The Purchaser and Workstream have
complied and will comply in all material respects with all
applicable federal and state securities laws in connection
with the issuance of the Shares and the Warrants hereunder.
Neither the Purchaser or Workstream nor anyone acting on
their behalf, directly or indirectly, has or will sell,
offer to sell or solicit offers to buy any of the Shares, or
similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken
or will take any action so as to bring the issuance and sale
of any of the Shares under the registration provisions of
the Securities Act and any other applicable federal and
state securities laws.
26
3.2.17. Governmental Approvals. Except as set forth in the
Commission Documents or on Schedule 3.2.17 hereto, and
except for the filing of any notice prior or subsequent to
the Closing Date that may be required under applicable state
or federal securities laws (which if required, shall be
filed on a timely basis), no authorization, consent,
approval, license exemption of, filing or registration with
any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is
or will be necessary for, or in connection with, the
execution or delivery of the Shares, or for the performance
by the Purchaser or Workstream of its obligations under this
Agreement.
3.2.18. Investment Company Act Status. The Purchaser and Workstream
is not, and as a result of and immediately upon the Closing
Date will not be, an "investment company" or a company
"controlled" by an "investment company," within the meaning
of the Investment Company Act of 1940, as amended.
4. SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES
4.1. SURVIVAL OF WARRANTIES BY THE VENDOR. The representations
and warranties made by the Vendor and contained in this
Agreement, or contained in any document or certificate given
in order to carry out the transactions contemplated hereby,
will survive the closing of the purchase of the Purchased
Assets provided for herein and, notwithstanding such closing
or any investigation made by or on behalf of the Purchaser,
Workstream or any other person or any knowledge of the
Purchaser, Workstream or any other person, shall continue in
full force and effect for the benefit of the Purchaser or
Workstream, except that no Warranty Claim may be made or
brought by the Purchaser or Workstream after the date which
is two years following the Closing Date.
After the expiration of the period of time referred to in
this section 4.1, the Vendor will be released from all
obligations and liabilities in respect of the
representations and warranties made by the Vendor and
contained in this Agreement or in any document or
certificate given in order to carry out the transactions
contemplated hereby except with respect to any claims made
by the Purchaser and/or Workstream in writing prior to the
expiration of such period.
27
4.2. SURVIVAL OF WARRANTIES BY PURCHASER AND WORKSTREAM. The
representations and warranties made by the Purchaser and/or
Workstream and contained in this Agreement or contained in
any document or certificate given in order to carry out the
transactions contemplated hereby will survive the closing of
the purchase and sale of the Purchased Assets provided for
herein and, notwithstanding such closing or any
investigation made by or on behalf of the Vendor or any
other person or any knowledge of the Vendor or any other
person, shall continue in full force and effect for the
benefit of the Vendor except that no Warranty Claim may be
made or brought by the Vendor after the date which is two
years following the Closing Date.
After the expiration of the period of time referred to in
this section 4.2, the Purchaser and Workstream will be
released from all obligations and liabilities in respect of
the representations and warranties made by the Purchaser
and/or Workstream and contained in this Agreement or in any
document or certificate given in order to carry out the
transactions contemplated hereby except with respect to any
claims made by the Purchaser and/or Workstream in writing
prior to the expiration of such period.
4.3. LIMITATIONS ON WARRANTY CLAIMS.
4.3.1. The Purchaser and/or Workstream shall not be
entitled to make a Warranty Claim if the Purchaser
and/or Workstream has been advised in writing or
otherwise has actual knowledge prior to the
Closing Time of the inaccuracy, non-performance,
non-fulfilment or breach which is the basis for
such Warranty Claim and the Purchaser and/or
Workstream completes the transactions hereunder
notwithstanding such inaccuracy, non-performance,
non-fulfilment or breach.
4.3.2. The amount of any damages which may be claimed by
the Purchaser and/or Workstream pursuant to a
Warranty Claim shall be calculated to be the cost
or loss to the Purchaser and/or Workstream after
giving effect to any insurance proceeds available
to the Purchaser and/or Workstream in relation to
the matter which is the subject of the Warranty
Claim.
4.3.3. The Purchaser and/or Workstream shall not be
entitled to make any Warranty Claim until the
aggregate amount of all damages, losses,
liabilities and expenses incurred by the Purchaser
and/or Workstream as a result of all
misrepresentations and breaches of warranties
contained in this Agreement or contained in any
document or certificate given in order to carry
out the transactions contemplated hereby, after
taking into account section 4.3.2 of this section,
is equal to $5,000. After the aggregate amount of
such damages, losses, liabilities and expenses
incurred by the Purchaser and/or Workstream
exceeds $5,000, the Purchaser and/or Workstream
shall only be entitled to make Warranty Claims to
the extent that such aggregate amount, after
taking into account the provisions of section
4.3.2 of this section, exceeds $5,000.
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4.3.4. Notwithstanding any other provisions of this
Agreement or of any agreement, certificate or
other document made in order to carry out the
transactions contemplated hereby, the maximum
aggregate liability of the Vendor together in
respect of all Warranty Claims by the Purchaser
and/or Workstream will be limited to an amount
equal to the Purchase Price actually received by
Vendor.
5. COVENANTS
5.1. COVENANTS BY THE VENDOR. The Vendor covenants to the
Purchaser and Workstream that it will do or cause to be done
the following:
5.1.1. Investigation of Business and Examination of
Documents. During the Interim Period, the Vendor
will provide access to and will permit the
Purchaser, through its representatives, to make
such investigation of, the operations, properties,
assets and records of the Business and of its
financial and legal condition as the Purchaser
deems necessary or advisable to familiarize itself
with such operations, properties, assets, records
and other matters relating to the Purchased
Assets. Without limiting the generality of the
foregoing, during the Interim Period the Vendor
will permit the Purchaser and its representatives
to have access to the premises used in connection
with the Business and will produce for inspection
and provide copies to the Purchaser of:
5.1.1.1. all agreements and other documents
referred to in Section 3.1 or in any of
the Schedules attached hereto and all
other documents of or in the possession
of the Vendor relating to the Purchased
Assets; and
5.1.1.2. all other information which, in the
reasonable opinion of the Purchaser's
representatives, is required in order to
make an examination of the Purchased
Assets.
5.1.2. such investigations and inspections shall not
mitigate or affect the representations and
warranties of the Vendor hereunder, which shall
continue in full force and effect.
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5.1.3. Transfer of Purchased Assets. At or before the
Closing Time, the Vendor will cause all necessary
steps and corporate proceedings to be taken in
order to permit the Purchased Assets to be duly
and regularly transferred to the Purchaser.
5.1.4. Forms of Conveyance. At the Closing Time, the
Vendor will deliver to the Purchaser good and
marketable title to and exclusive possession of
the Purchased Assets, free and clear of any and
all Encumbrances. At the Closing Time, the Vendor
will execute and deliver to the Purchaser one or
more forms of general conveyance, or bills of
sale, deeds, transfers and other documents
reasonably requested by the Purchaser in respect
of the assignment, conveyance, transfer and
delivery of the Purchased Assets to the Purchaser
in form which is registrable and acceptable to the
Purchaser.
5.1.5. Transfer of Assumed Contracts. At the Closing
Time, the Vendor will deliver to the Purchaser:
5.1.5.1. an executed original of each of the
Assumed Contracts,
5.1.5.2. one or more forms of assignment of the
Assumed Contracts in form acceptable to
the Purchaser, and
5.1.5.3. consents to the assignment of all of the
Assumed Contracts under which consent is
required executed by all persons whose
consent is required in form acceptable
to the Purchaser.
5.1.6. Transmittal Letter. At the Closing Time, the
Vendor will deliver to the Purchaser a transmittal
letter for the subscription for the common shares
in Workstream issuable pursuant to this Agreement,
in a form and content acceptable to solicitors for
the Purchaser.
5.2. COVENANTS BY THE PURCHASER AND/OR WORKSTREAM. The Purchaser
and/or Workstream covenants to the Vendor that it will do or
cause to be done the following:
5.2.1. Confidentiality. Prior to the Closing Time and, if
the transaction contemplated hereby is not
completed, at all times after the Closing Time,
the Purchaser will keep confidential all
information obtained by it relating to the
Purchased Assets and Business, except such
information which:
5.2.1.1. prior to the date of this Agreement was
already in the possession of the
Purchaser, as demonstrated by written
records,
30
5.2.1.2. is generally available to the public,
other than as a result of a disclosure
by the Purchaser, or
5.2.1.3. is made available to the Purchaser on a
non-confidential basis from a source
other than the Vendor, or its
representatives.
5.2.1.4. The Purchaser further agrees that such
information will be disclosed only to
those of its employees and
representatives of its advisors who need
to know such information for the
purposes of evaluating and implementing
the transaction contemplated hereby.
Notwithstanding the foregoing provisions
of this paragraph, the obligation to
maintain the confidentiality of such
information will not apply to the extent
that disclosure of such information is
required in connection with governmental
or other applicable filings relating to
the transactions hereunder, provided
that, in such case, unless the Vendor
otherwise agrees, the Purchaser will, if
possible, request confidentiality in
respect of such governmental or other
filings. If the transactions
contemplated hereby are not consummated
for any reason, the Purchaser will
return forthwith, without retaining any
copies, all information and documents
obtained from the Vendor.
6. CONDITIONS
6.1. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.
Notwithstanding anything herein contained, the obligation of
the Purchaser and/or Workstream to complete the transactions
provided for herein will be subject to the fulfilment of the
following conditions by the Vendor at or prior to the
Closing Time and the Vendor covenants to ensure that such
conditions are fulfilled.
6.1.1. Accuracy of Representations and Warranties and
Performance of Covenants. The representations and
warranties of the Vendor contained in this
Agreement or in any documents delivered in order
to carry out the transactions contemplated hereby
shall be true and accurate on the date and at the
Closing Time with the same force and effect as
though such representations and warranties had
been made as of the Closing Time (regardless of
the date as of which the information in this
Agreement or in any Schedule or other document
made pursuant hereto is given). In addition, the
Vendor shall have complied with all covenants and
agreements herein agreed to be performed or caused
to be performed by them at or prior to the Closing
Time. In addition, the Vendor shall have delivered
to the Purchaser a certificate in the form of
Schedule 6.1.1 attached hereto confirming that the
facts with respect to each of such representations
and warranties by the Vendor are as set out herein
at the Closing Time and that the Vendor has
performed all covenants required to be performed
by them hereunder.
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6.1.2. Material Adverse Changes. During the Interim
Period there will have been no change in the
Purchased Assets, howsoever arising, except
changes which have occurred in the ordinary course
of the Business and which, individually or in the
aggregate, have not affected and may not affect
the Purchased Assets in any material adverse
respect. Without limiting the generality of the
foregoing, during the Interim Period no damage to
or destruction of any material part of the
Purchased Assets shall have occurred, whether or
not covered by insurance.
6.1.3. No Restraining Proceedings. No order, decision or
ruling of any court, tribunal or regulatory
authority having jurisdiction shall have been
made, and no action or proceeding shall be pending
or threatened which, in the opinion of counsel to
the Purchaser, is likely to result in an order,
decision or ruling,
6.1.3.1. to disallow, enjoin, prohibit or impose
any limitations or conditions on the
purchase and sale of the Purchased
Assets contemplated hereby or the right
of the Purchaser to own the Purchased
Assets; or
6.1.3.2. to impose any limitations or conditions
which may have a Material Adverse Effect
on the Purchased Assets.
6.1.4. Consents. All consents required to be obtained in
order to carry out the transactions contemplated
hereby in compliance with all laws and agreements
binding on the parties hereto shall have been
obtained, including the consents referred to in
Schedules 3.1.3 and 3.2.2 attached hereto.
6.1.5. Opinion of Vendor's Counsel. At the Closing Time,
the Purchaser shall have received an opinion of
legal counsel for the Vendor in the form of the
draft opinion attached hereto as Schedule 6.1.5,
which opinion may rely on certificates of one or
more senior officers of the Vendor as to factual
matters and may rely upon opinions of local
counsel with respect to matters governed by laws
other than the laws of the State of Illinois and
the federal laws of United States applicable in
the State of Illinois.
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6.1.6. Assignment and Waiver of Intellectual Property
Rights. At the Closing Time, the Vendor shall have
delivered to the Purchaser a certificate of the
Vendor in the form of the draft attached hereto as
Schedule 6.1.6, whereby the Vendor assigns all of
its intellectual property rights in the assets
listed in Schedule 2.1.6 (the "IP Assets").
6.1.7. Further Assurances. On and at any time after the
Closing Time, the Vendor shall furnish the
Purchaser at no additional charge with such
further written documentation in order to enable
the Purchaser to establish, prove or perfect the
Purchaser's ownership of any of the assets herein
conveyed. 6.1.8. Escrow Agreement. The Vendor, the
Purchaser and Workstream shall have entered into
the escrow agreement attached hereto as Schedule
2.5.3.
6.2. WAIVER OR TERMINATION BY PURCHASER AND/OR WORKSTREAM. The
conditions contained in Section 6.1 are inserted for the
exclusive benefit of the Purchaser and/or Workstream and may
be waived in whole or in part by the Purchaser and/or
Workstream at any time. The Vendor acknowledges that the
waiver by the Purchaser and/or Workstream of any condition
or any part of any condition shall constitute a waiver only
of such condition or such part of such condition, as the
case may be, and shall not constitute a waiver of any
covenant, agreement, representation or warranty made by the
Vendor herein that corresponds or is related to such
condition or such part of such condition, as the case may
be. If any of the conditions contained in Section 6.1 are
not fulfilled or complied with as herein provided, the
Purchaser and/or Workstream may, at or prior to the Closing
Time at its option, rescind this Agreement by notice in
writing to the Vendor and in such event the Purchaser and
Workstream shall be released from all obligations hereunder
and, unless the condition or conditions which have not been
fulfilled are reasonably capable of being fulfilled or
caused to be fulfilled by the Vendor, then the Vendor shall
also be released from all obligations hereunder.
6.3. CONDITIONS TO THE OBLIGATIONS OF THE VENDOR. Notwithstanding
anything herein contained, the obligations of the Vendor to
complete the transactions provided for herein will be
subject to the fulfilment of the following conditions at or
prior to the Closing Time, and the Purchaser and/or
Workstream will use its best efforts to ensure that such
conditions are fulfilled.
6.3.1. Accuracy of Representations and Warranties and
Performance of Covenants. The representations and
warranties of the Purchaser and Workstream
contained in this Agreement or in any documents
delivered in order to carry out the transactions
contemplated hereby will be true and accurate on
the date and at the Closing Time with the same
force and effect as though such representations
and warranties had been made as of the Closing
Time (regardless of the date as of which the
information in this Agreement or any such Schedule
or other document made pursuant hereto is given).
In addition, the Purchaser and Workstream shall
have complied with all covenants and agreements
herein agreed to be performed or caused to be
performed by it at or prior to the Closing Time.
In addition, the Purchaser and Workstream shall
have delivered to the Vendor a certificate in the
form of Schedule 6.3.1 attached hereto confirming
that the facts with respect to each of the
representations and warranties of the Purchaser
and Workstream are as set out herein at the
Closing Time and that the Purchaser and Workstream
has performed each of the covenants required to be
performed by it hereunder.
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6.3.2. No Restraining Proceedings. No order, decision or
ruling of any court, tribunal or regulatory
authority having jurisdiction shall have been
made, and no action or proceeding shall be pending
or threatened which, in the opinion of counsel to
the Vendor, is likely to result in an order,
decision or ruling, to disallow, enjoin or
prohibit the purchase and sale of the Purchased
Assets contemplated hereby.
6.3.3. Consents. All consents required to be obtained in
order to carry out the transactions contemplated
hereby in compliance with all laws and agreements
binding upon the parties hereto shall have been
obtained, including the consents referred to in
Schedules 3.1.3 and 3.2.2 attached hereto.
6.3.4. Escrow Agreement. The Vendor, the Purchaser and
Workstream shall have entered into the escrow
agreement attached hereto as Schedule 2.5.3.
6.3.5. No Suspension, Etc. From the date hereof to the
Closing Date, trading in Workstream's common
shares shall not have been suspended by the
Commission, and, at any time prior to the Closing
Date, trading in securities generally as reported
by Bloomberg Financial Markets ("Bloomberg") shall
not have been suspended or limited, or minimum
prices shall not have been established on
securities whose trades are reported by Bloomberg,
or on the New York Stock Exchange, nor shall a
banking moratorium have been declared either by
the United States, or New York State authorities.
34
6.3.6. Stock and Warrant Certificates. Workstream shall
have executed and be prepared to deliver to the
Vendor, the certificates for the Workstream Shares
being received by the Vendor at the Closing Date.
6.3.7. Resolutions. Prior to the Closing, the Board of
Directors of the Purchaser and Workstream shall
have adopted resolutions consistent with this
Agreement in a form reasonably acceptable to the
Vendor (the "Resolutions").
6.4. WAIVER OR TERMINATION BY VENDOR. The conditions contained in
Section 6.3 are inserted for the exclusive benefit of the
Vendor and may be waived in whole or in part by the Vendor
at any time. The Purchaser and Workstream acknowledges that
the waiver by the Vendor of any condition or any part of any
condition shall constitute a waiver only of such condition
or such part of such condition, as the case may be, and
shall not constitute a waiver of any covenant, agreement,
representation or warranty made by the Purchaser and/or
Workstream herein that corresponds or is related to such
condition or such part of such condition, as the case may
be. If any of the conditions contained in Section 6.3 are
not fulfilled or complied with as herein provided, the
Vendor may, at or prior to the Closing Time at their option,
rescind this Agreement by notice in writing to the Purchaser
and Workstream and in such event the Vendor shall each be
released from all obligations hereunder and, unless the
condition or conditions which have not been fulfilled are
reasonably capable of being fulfilled or caused to be
fulfilled by the Purchaser and/or Workstream, then the
Purchaser and Workstream shall also be released from all
obligations hereunder.
7. CLOSING
7.1. CLOSING ARRANGEMENTS. Subject to the terms and conditions ,
the transactions contemplated herein shall be closed at the
Closing Time at the offices of Xxxxxx-Xxxxxxxxx, Xxxx &
XxXxxxxxx LLP, 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX X0X
0X0, Xxxxxx or at such other place or places as may be
mutually agreed on by the Vendor and the Purchaser.
7.2. DOCUMENTS TO BE DELIVERED. At or before the Closing Time,
the Vendor shall execute, or cause to be executed, and shall
deliver, or cause to be delivered, to the Purchaser all
documents, instruments and things which are to be delivered
by the Vendor pursuant to the provisions of this Agreement,
and the Purchaser and/or Workstream shall execute, or cause
to be executed, and shall deliver, or cause to be delivered,
to the Vendor all cheques or bank drafts and all documents,
instruments and things which the Purchaser and/or Workstream
is to deliver or to cause to be delivered pursuant to the
provisions of this Agreement.
35
8. INDEMNIFICATION AND SET-OFF
8.1. INDEMNITY BY THE VENDOR AND THE PURCHASER.
8.1.1. The parties hereto (in this Section 8, an
"Indemnifying Party") covenant and agree to
indemnify and save each other (in this Section 8,
each being referred to as an "Indemnified Party")
harmless from and against any claims, demands,
actions, causes of action, damage, loss,
deficiency, cost, liability and expense which may
be made or brought against the Indemnified Party
or which the Indemnified Party may suffer or incur
as a result of, in respect of or arising out of:
8.1.1.1. any non-performance or non-fulfilment of
any covenant or agreement on the part of
the Indemnifying Party contained in this
Agreement or in any document given in
order to carry out the transactions
contemplated hereby;
8.1.1.2. any misrepresentation, inaccuracy,
incorrectness or breach of any
representation or warranty made by the
Indemnifying Party contained in this
Agreement or contained in any document
or certificate given in order to carry
out the transactions contemplated
hereby;
8.1.1.3. any non-compliance with any federal,
state, local, municipal, foreign,
international or other administrative
order, constitution, law, ordinance,
statute, or treaty applicable to
Indemnifying Party in the carrying out
of the transaction contemplated herein;
and
8.1.1.4. all costs and expenses including,
without limitation, attorney's fees,
incidental to, arising from or in
respect of the foregoing.
8.1.2. The obligations of indemnification by the
Indemnifying Party pursuant to paragraph 8.1.1 of
this section will be:
8.1.2.1. subject to the limitations referred to
in Sections 4.1 and 4.2 with respect to
the survival of the representations and
warranties by the Indemnifying Party;
8.1.2.2. subject to the limitations referred to
in Section 4.3; and
8.1.2.3. subject to the provisions of Section
8.3.
36
8.2. INDEMNITY OF THE VENDOR.
8.2.1. The Vendor hereby further agrees to indemnify and
save the Purchaser and Workstream (collectively,
in this Section 8, the "Purchaser") harmless from
and against any claims, demands, actions, causes
of action, damage, loss, deficiency, cost,
liability and expense which may be made or brought
against the Purchaser or which the Purchaser may
suffer or incur as a result of, in respect of or
arising out of:
8.2.1.1. any claim for a debt, obligation or
liability which is not specifically
assumed by the Purchaser pursuant to
this Agreement;
8.2.1.2. any suit, action, proceeding, claim,
investigation pending or threatened
against or affecting the Purchased
Assets or the Business, regardless of
whether such is disclosed in a Schedule
hereto, that arises from the conduct of
the Business prior to the Closing Date;
and
8.2.1.3. all costs and expenses including,
without limitation, attorney's fees,
incidental to, arising from or in
respect of the foregoing.
8.2.2. The obligations of indemnification by the Vendor
pursuant to paragraph 8.2.1 of this section will
be:
8.2.2.1. subject to the limitations referred to
in Section 4.1 with respect to the
survival of the representations and
warranties by the Vendor;
8.2.2.2. subject to the limitations referred to
in Section 4.3; and
8.2.2.3. subject to the provisions of Section
8.3.
8.3. PROVISIONS RELATING TO INDEMNITY CLAIMS. The following
provisions will apply to any claim by the Indemnified Party
or the Purchaser, whatever the case may be, for
indemnification by the Indemnifying Party or the Vendor,
whatever the case may be, pursuant to Sections 8.1 and 8.2
(an "Indemnity Claim").
8.3.1. Promptly after becoming aware of any matter that
may give rise to an Indemnity Claim, the
Indemnified Party or the Purchaser will provide to
the Indemnifying Party or the Vendor written
notice of the Indemnity Claim specifying (to the
extent that information is available) the factual
basis for the Indemnity Claim and the amount of
the Indemnity Claim or, if an amount is not then
determinable, an estimate of the amount of the
Indemnity Claim, if an estimate is feasible in the
circumstances.
37
8.3.2. If an Indemnity Claim relates to an alleged
liability to any other person (a "Third Party
Liability"), including without limitation any
governmental or regulatory body or any taxing
authority, which is of a nature such that the
Indemnified Party or the Purchaser is required by
applicable law to make a payment to a third party
before the relevant procedure for challenging the
existence or quantum of the alleged liability can
be implemented or completed, then the Indemnified
Party or the Purchaser may, notwithstanding the
provisions of sections 8.3.3. and 8.3.4 of this
section, make such payment and forthwith demand
reimbursement for such payment from the
Indemnifying Party or the Vendor in accordance
with this Agreement; provided that, if the alleged
Third Party Liability as finally determined on
completion of settlement negotiations or related
legal proceedings is less than the amount which is
paid by the Indemnifying Party or the Vendor in
respect of the related Indemnity Claim, then the
Indemnified Party or the Purchaser shall forthwith
following the final determination pay to the
Indemnifying Party or the Vendor the amount by
which the amount of the Third Party Liability as
finally determined is less than the amount which
is so paid by the Indemnifying Party or the
Vendor.
8.3.3. The Indemnified Party or the Purchaser shall not
negotiate, settle, compromise or pay (except in
the case of payment of a judgement) any Third
Party Liability as to which it proposes to assert
an Indemnity Claim, except with the prior consent
of the Indemnifying Party or the Vendor (which
consent shall not be unreasonably withheld or
delayed), unless there is a reasonable possibility
that such Third Party Liability may materially and
adversely affect the Purchased Assets or the
Indemnified Party or the Purchaser, in which case
the Indemnified Party or the Purchaser shall have
the right, after notifying the Indemnifying Party
or the Vendor, to negotiate, settle, compromise or
pay such Third Party Liability without prejudice
to its rights of indemnification hereunder. The
Indemnified Party or the Purchaser shall notify
the Indemnifying Party or the Vendor within one
(1) week of any third party claims being asserted.
8.3.4. With respect to any Third Party Liability,
provided the Indemnifying Party or the Vendor
first admit the Indemnified Party's or the
Purchaser's right to indemnification for the
amount of such Third Party Liability which may at
any time be determined or settled, then, in any
legal, administrative or other proceedings in
connection with the matters forming the basis of
the Third Party Liability, the following
procedures will apply:
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8.3.4.1. except as contemplated by subparagraph
8.3.4.3 of this section, the
Indemnifying Party or the Vendor will
have the right to assume carriage of the
compromise or settlement of the Third
Party Liability and the conduct of any
related legal, administrative or other
proceedings, but the Indemnified Party
or the Purchaser shall have the right
and shall be given the opportunity to
participate in the defence of the Third
Party Liability, to consult with the
Indemnifying Party or the Vendor in the
settlement of the Third Party Liability
and the conduct of related legal,
administrative and other proceedings
(including consultation with counsel)
and to disagree on reasonable grounds
with the selection and retention of
counsel, in which case counsel
satisfactory to the Indemnifying Party
or the Vendor and the Indemnified Party
or the Purchaser shall be retained by
the Indemnifying Party or the Vendor;
8.3.4.2. the Indemnifying Party or the Vendor
will co-operate with the Indemnified
Party or the Purchaser in relation to
the Third Party Liability, will keep it
fully advised with respect thereto, will
provide it with copies of all relevant
documentation as it becomes available,
will provide it with access to all
records and files relating to the
defence of the Third Party Liability and
will meet with representatives of the
Indemnified Party or the Purchaser at
all reasonable times to discuss the
Third Party Liability; and
8.3.4.3. notwithstanding subparagraphs 8.3.4.1
and 8.3.4.2 of this paragraph, the
Indemnifying Party or the Vendor will
not settle the Third Party Liability or
conduct any legal, administrative or
other proceedings in any manner which
could, in the reasonable opinion of the
Indemnified Party or the Purchaser, have
a material adverse affect on the
Purchased Assets or the Indemnified
Party or the Purchaser, except with the
prior written consent of the Indemnified
Party or the Purchaser.
8.3.5. If, with respect to any Third Party Liability, the
Indemnifying Party or the Vendor does not admit
the Indemnified Party's or the Purchaser's right
to indemnification or decline to assume carriage
of the settlement or of any legal, administrative
or other proceedings relating to the Third Party
Liability, then the following provisions will
apply:
39
8.3.5.1. the Indemnified Party or the Purchaser,
at its discretion, may assume carriage
of the settlement or of any legal,
administrative or other proceedings
relating to the Third Party Liability
and may defend or settle the Third Party
Liability on such terms as the
Indemnified Party or the Purchaser,
acting in good faith, considers
advisable; and
8.3.5.2. any cost, lost, damage or expense
incurred or suffered by the Indemnified
Party or the Purchaser in the settlement
or defence of such Third Party Liability
or the conduct of any legal,
administrative or other proceedings
shall be added to the amount of the
Indemnity Claim.
8.3.6. No Indemnified Party shall be entitled to make any
Indemnity Claim under this Agreement until the
aggregate amount of all damages, losses,
liabilities and expenses incurred by the
Indemnified Party is equal to $10,000. After the
aggregate amount of such damages, losses,
liabilities and expenses incurred by the
Indemnified Party exceeds $10,000, the Indemnified
Party shall only be entitled to make an Indemnity
Claim to the extent that such aggregate amount
exceeds $10,000.
8.3.7. In the event that the Purchaser is entitled to
indemnification from the Vendor pursuant to the
terms of this Agreement, such Indemnity Claim may
be recovered: (a) firstly by, subject to the terms
of the escrow agreement attached hereto as
Schedule 2.5.3, deducting the amount of such
Indemnity Claim from the Escrow Shares by
instructing the Escrow Agent to return a number of
Escrow Shares to the Purchaser equal to the value
of such Indemnity Claim based on a trailing 5-day
average prior to the date the Indemnity Claim is
paid; and (b) secondly by the Purchaser having the
right to satisfy the amount of such Indemnity
Claim by way of set-off against any amount owing
to the Vendor by the Purchaser. Notwithstanding
the aforementioned order for recovery of an
Indemnity Claim by the Purchaser, the Purchaser is
not limited to the aforementioned remedies as its
sole remedies for payment of an Indemnity Claim by
the Vendor.
9. GENERAL PROVISIONS
9.1. FURTHER ASSURANCES. Each of the Vendor and the Purchaser
hereby covenants and agrees that at any time and from time
to time after the Closing Date it will, on the request of
the others, do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged and delivered all such
further acts, deeds, assignments, transfers, conveyances and
assurances as may be required for the better carrying out
and performance of all the terms of this Agreement.
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9.2. NOTICES
9.2.1. Any notice, designation, communication, request,
demand or other document, required or permitted to
be given or sent or delivered hereunder to any
party hereto shall be in writing and shall be
sufficiently given or sent or delivered if it is:
9.2.1.1. delivered personally to an officer or
director of such party,
9.2.1.2. sent to the party entitled to receive it
by registered mail, postage prepaid, or
9.2.1.3. sent by facsimile.
9.2.2. Notices shall be sent to the following addresses
or facsimile numbers:
in the case of the Vendor:
000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: *
Facsimile: *
With a copy to:
*
Attention: *
Fax: *
in the case of the Purchaser or Workstream:
000 Xxx Xxxx, Xxxxx 000
Xxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: 000-000-0000
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With a copy to:
Xxxxxx-Xxxxxxxxx, Hill & XxXxxxxxx LLP
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: 613-238-8775
or to such other address or facsimile number as the party
entitled to or receiving such notice, designation,
communication, request, demand or other document shall, by a
notice given in accordance with this section, have
communicated to the party giving or sending or delivering
such notice, designation, communication, request, demand or
other document.
9.2.3. Any notice, designation, communication, request,
demand or other document given or sent or
delivered as aforesaid shall:
9.2.3.1. if delivered as aforesaid, be deemed to
have been given, sent, delivered and
received on the date of delivery;
9.2.3.2. if sent by mail as aforesaid, be deemed
to have been given, sent, delivered and
received (but not actually received) on
the fourth Business Day following the
date of mailing, unless at any time
between the date of mailing and the
fourth Business Day thereafter there is
a discontinuance or interruption of
regular postal service, whether due to
strike or lockout or work slowdown,
affecting postal service at the point of
dispatch or delivery or any intermediate
point, in which case the same shall be
deemed to have been given, sent,
delivered and received in the ordinary
course of the mails, allowing for such
discontinuance or interruption of
regular postal service; and
9.2.3.3. if sent by facsimile machine, be deemed
to have been given, sent, delivered and
received on the date the sender receives
the telecopy answer back confirming
receipt by the recipient.
9.3. COUNTERPARTS. This Agreement may be executed in several
counterparts, including by way of facsimile, each of which
so executed shall be deemed to be an original, and such
counterparts together shall constitute but one and the same
instrument.
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9.4. EXPENSES OF PARTIES. Each of the parties hereto shall bear
all expenses incurred by it in connection with this
Agreement including, without limitation, the charges of
their respective counsel, accountants, financial advisors
and finders.
9.5. BROKERAGE AND FINDER'S FEES. The Vendor agrees to indemnify
the Purchaser and hold it harmless in respect of any claim
for brokerage or other commissions relative to this
Agreement or the transactions contemplated hereby which is
caused by actions of the Vendor. The Purchaser will
indemnify the Vendor and hold them harmless in respect of
any claim for brokerage or other commissions relative to
this Agreement or to the transactions contemplated hereby
which is caused by actions of the Purchaser.
9.6. ANNOUNCEMENTS. No announcement with respect to this
agreement will be made by any party hereto without the prior
approval of the other parties. The foregoing will not apply
to any announcement by any party required in order to comply
with laws pertaining to timely disclosure, provided that
such party consults with the other parties before making any
such announcement.
9.7. ASSIGNMENT. The rights of the Vendor hereunder shall not be
assignable without the written consent of the Purchaser. The
Purchaser may assign this contract without the written
consent of the Vendor.
9.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on
and enure to the benefit of the parties hereto and their
respective successors and permitted assigns. Nothing herein,
express or implied, is intended to confer on any person,
other than the parties hereto and their respective
successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.9. ENTIRE AGREEMENT. This Agreement and the Schedules referred
to herein constitute the entire agreement between the
parties hereto and supersede all prior agreements,
representations, warranties, statements, promises,
information, arrangements and understandings, whether oral
or written, express or implied, with respect to the
subject-matter . None of the parties hereto shall be bound
or charged with any oral or written agreements,
representations, warranties, statements, promises,
information, arrangements or understandings not specifically
set forth in this Agreement or in the Schedules, documents
and instruments to be delivered on or before the Closing
Date pursuant to this Agreement. The parties hereto further
acknowledge and agree that, in entering into this Agreement
and in delivering the Schedules, documents and instruments
to be delivered on or before the Closing Date, they have not
in any way relied, and will not in any way rely, on any oral
or written agreements, representations, warranties,
statements, promises, information, arrangements or
understandings, express or implied, not specifically set
forth in this Agreement or in such Schedules, documents or
instruments.
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9.10. WAIVER. Any party hereto which is entitled to the benefits
of this Agreement may, and has the right to, waive any term
or condition at any time on or prior to the Closing Time;
provided, however, that such waiver shall be evidenced by
written instrument duly executed on behalf of such party.
9.11. AMENDMENTS. No modification or amendment to this Agreement
may be made unless agreed to by the parties hereto in
writing.
9.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the
Province of Ontario, without giving effect to the choice of
law provisions.
10. CONFIDENTIAL INFORMATION
10.1 DEFINITION
(a) As used in this Article 10, the term "Confidential
Information" includes any and all of the following
information of Vendor, Purchaser or Workstream
that has been or may hereafter be disclosed in any
form, whether in writing, orally, electronically
or otherwise, or otherwise made available by
observation, inspection or otherwise by either
party (Vendor on the one hand or Purchaser and
Workstream, collectively, on the other hand) or
its representatives (collectively, a "Disclosing
Party") to the other party or its representatives
(collectively, a "Receiving Party"):
(i) all information that is a trade secret
under applicable trade secret or other
law;
(ii) all information concerning product
specifications, data, know-how,
formulae, compositions, processes,
designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas,
past, current and planned research and
development, current and planned
manufacturing or distribution methods
and processes, customer lists, current
and anticipated customer requirements,
price lists, market studies, business
plans, computer hardware, software and
computer software and database
technologies, systems, structures and
architectures;
(iii) all information concerning the business
and affairs of the Disclosing Party
(which includes historical and current
financial statements, financial
projections and budgets, tax returns and
accountants' materials, historical,
current and projected sales, capital
spending budgets and plans, business
plans, strategic plans, marketing and
advertising plans, publications, client
and customer lists and files, contracts,
the names and backgrounds of key
personnel and personnel training
techniques and materials, however
documented), and all information
obtained from review of the Disclosing
Party's documents or property or
discussions with the Disclosing Party
regardless of the form of the
communication; and
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(iv) all notes, analyses, compilations,
studies, summaries and other material
prepared by the Receiving Party to the
extent containing or based, in whole or
in part, upon any information included
in the foregoing.
(b) Any trade secrets of a Disclosing Party shall also
be entitled to all of the protections and benefits
under applicable trade secret law and any other
applicable law, if any information that a
Disclosing Party deems to be a trade secret is
found by a court of competent jurisdiction not to
be a trade secret for purposes of this Article 10,
such information shall still be considered
Confidential Information of that Disclosing Party
for purposes of this Article 10 to the extent
included within the definition. In the case of
trade secrets, each of Vendor, Purchaser and
Workstream hereby waives any requirement that the
other party submit proof of the economic value of
any trade secret or post a bond or other security.
10.2 RESTRICTED USE OF CONFIDENTIAL INFORMATION
(a) Each Receiving Party acknowledges the confidential
and proprietary nature of the Confidential
Information of the Disclosing Party and agrees
that such Confidential Information (i) shall be
kept confidential by the Receiving Party; (ii)
shall not be used for any reason or purpose other
than to evaluate and consummate the transactions
contemplated hereby; and (iii) without limiting
the foregoing, shall not be disclosed by the
Receiving Party to any Person, except in each case
as otherwise expressly permitted by the terms of
this Agreement or with the prior written consent
of any authorized representative of Purchaser with
respect to Confidential Information of Purchaser
(each, a "Purchaser Contact") or an authorized
representative of Vendor with respect to
Confidential Information of Vendor (each, a
"Vendor Contact"). Each of Vendor and Purchaser
and Workstream shall disclose the Confidential
Information of the other party only to its
representatives who require such material for the
purpose of evaluating the transactions
contemplated herein and are informed by Vendor,
Purchaser or Workstream as the case may be, of the
obligations of this Article 10 with respect to
such information. Each of Vendor, Purchaser and
Workstream shall (iv) enforce the terms of this
Article 10 as to its respective representatives;
(v) take such action to the extent necessary to
cause its representatives to comply with the terms
and conditions of this Article 10; and (vi) be
responsible and liable for any breach of the
provisions of this Article 10 by it or its
representatives.
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(b) Unless and until this Agreement is terminated,
Vendor shall maintain as confidential any
Confidential Information (including for this
purpose any information of Vendor of the type
referred to in Sections 10.2 (a) (i), (ii) and
(iii), whether or not disclosed to Purchaser) of
the Vendor relating to any of the Purchased
Assets. Notwithstanding the preceding sentence,
Vendor may use any Confidential Information of
Vendor before the Closing in the ordinary course
of the Business of the Vendor.
(c) From and after the Closing, the provisions of
Section 10.2 (a) above shall not apply to or
restrict in any manner Purchaser's use of any
Confidential Information of the Vendor relating to
any of the Assets.
10.3 EXCEPTIONS. Sections 10.2 (a) and (b) do not apply to that
part of the Confidential Information of a Disclosing Party
that a Receiving Party demonstrates (as) was, is or becomes
generally available to the public other than as a result of
a breach of this Article 10 or the Confidentiality Agreement
by the Receiving Party or its representatives; (b) was or is
developed by the Receiving Party independently of and
without reference to any Confidential Information of the
Disclosing Party; or (c) was, is or becomes available to the
Receiving Party on non-confidential basis from Third Party
not bound by a confidentiality agreement or any legal,
fiduciary or other obligation restricting disclosure. The
Vendor shall not disclose any Confidential Information of
Purchaser or Workstream relating to any of the Assets in
reliance on the exceptions in clauses (b) or (c).
10.4 LEGAL PROCEEDINGS. If a Receiving Party becomes compelled in
any proceeding or is requested by a Governmental Authority
having regulatory jurisdiction over the transactions
contemplated herein to make any disclosure that is
prohibited or otherwise constrained by this Article 10, that
Receiving Party shall provide the Disclosing Party with
prompt notice of such compulsion or request so that it may
seek an appropriate protective order or other appropriate
remedy or waive compliance with the provisions of this
Article 10. In the absence of a protective order or other
remedy, the Receiving Party may disclose that portion (and
only that portion) of the Confidential Information of the
Disclosing Party that, based upon advice of the Receiving
Party's counsel, the Receiving Party is legally compelled to
disclose or that has been requested by such Governmental
Authority, provided, however, that the Receiving Party shall
use reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded by any Person to
whom any Confidential Information is so disclosed. The
provisions of this Section 10.4 do not apply to any
proceedings between the parties to this Agreement.
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10.5 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION. If this
Agreement is terminated, each Receiving Party shall (a)
destroy all Confidential Information of the Disclosing Party
prepared or generated by the Receiving Party without
retaining a copy of any such material; (b) promptly deliver
to the Disclosing Party all other Confidential Information
of the Disclosing Party, together with all copies thereof,
in the possession, custody or control of the Receiving Party
or, alternatively, with the written consent of a Vendor
Contact or a Purchaser Contact (whichever represents the
Disclosing Party) destroy all such Confidential Information;
and (c) certify all such destruction in writing to the
Disclosing Party, provided, however, that the Receiving
Party may retain a list that contains general descriptions
of the information it has returned or destroyed to
facilitate the resolution of any controversies after the
Disclosing Party's Confidential Information is returned.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
under seal as of the day and year first above written.
WORKSTREAM USA, INC.
Per: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: CEO and President
I have authority to bind the corporation.
WORKSTREAM INC.
Per: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: CEO and President
I have authority to bind the corporation.
XXXXXXXXXXX.XXX, LLC
Per: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title:
I have authority to bind the corporation.
SCHEDULES
