EXHIBIT 10.5
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered into as of
December 31, 2003 by and among Workstream Inc., a Canada corporation, with
offices at 000 Xxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxx, Xxxxxx X0X-0X0 (the
"Company"), and Sunrise Securities Corporation, a corporation with offices at
0000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (the "Purchaser").
RECITALS
WHEREAS, the Purchaser has acted as the agent of the Company in connection with
the offer for sale (the "Offering") in United States of up to U.S. $1,600,000
worth of the Company's Common Shares, no par value per share (the "Common
Shares"), at a price of U.S. $1.60 per Common Share; and
WHEREAS, in consideration for the services the Purchaser has rendered to the
Company in connection with the Offering, (a)the Company desires to compensate
the Purchaser by paying the Purchaser a cash commission equal to 10% of the
gross proceeds received by the Company in connection with the Offering (the
"Commission"), and (b) the Purchaser desires to issue the Purchaser a warrant to
purchase that number of Common Shares equal to 10% of the gross proceeds
received by the Company in connection with the Offering at an exercise price of
U.S. $1.60 per Common Share in the form attached hereto as Exhibit A (the
"Warrant").
AGREEMENT
In consideration of the mutual promises contained herein and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
to this Agreement agree as follows:
1. Purchase and Sale of Shares.
(a) Purchase and Sale of Shares. Subject to the terms and conditions
of this Agreement, the Company agrees to pay the Purchaser the Commission and
issue the Warrant to the Purchaser or its designee in consideration for the
services it provided to the Company in connection with the Offering.
(b) Closings: Delivery. The payment of the Commission and the issuance
of the Warrant shall take place at the offices of Xxxxxx-Xxxxxxxxx, Xxxx &
XxXxxxxxx LLP, 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxx X0X 0X0, at 10:00
a.m., on the 31st day of December, 2003, or at such other time and place as the
Company and the Purchaser mutually agree upon, orally or in writing (which time
and place shall be designated as the "Closing").
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2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Canada and has all requisite corporate authority to own, lease and
operate its properties and assets and to carry on its business as now being
conducted. The Company is duly qualified or licensed as a foreign corporation
and is in good standing in all jurisdictions where the nature of its business or
property makes such qualification or licensing necessary and where the failure
to do so would have a material adverse effect on its condition (financial or
otherwise), business, properties, assets, liabilities (including contingent
liabilities) or results of operations of the Company and its subsidiaries, taken
as a whole (hereinafter a "Material Adverse Effect").
(b) Corporate Power. The Company will have at the Closing all
requisite legal and corporate power to execute and deliver this Agreement and to
consummate any other transactions contemplated by the terms of this Agreement,
and to carry out and perform its obligations under the terms of this Agreement.
(c) Authorization, Enforcement. (i) The execution and delivery of the
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
and no further consent or authorization of the Company or its Board of Directors
or stockholders is required, and (ii) this Agreement has been duly executed and
delivered by the Company, and at the Closing shall constitute a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(d) Capitalization
The authorized capital stock of the Company consists of an
unlimited number of shares of Common Shares, of which as of December 2, 2003,
23,200,659 Common Shares were issued and outstanding, and an unlimited number of
shares of Class A Preferred Shares, of which as of December 2, 2003, 0 shares
were issued and outstanding. The outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in material compliance with all applicable
federal and state securities laws.
(e) Solvency. The Company is solvent after giving effect to the
transactions contemplated by this Agreement.
(f) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not and will not (i) violate any provision of the
Company's Charter 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
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cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party, (iii) create or impose a lien, charge or encumbrance on any property of
the Company under any agreement or any commitment to which the Company is a
party or by which the Company 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 other foreign statute, rule, regulation, order, judgment or
decree (including any federal or state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries are bound, except, in all cases,
for such conflicts, defaults, termination, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the Company is not being
conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for violations which singularly or in the aggregate
do not and will not have a Material Adverse Effect. The Company is not required
under any 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 Warrant in accordance
with the terms hereof (other than any filings which may be required to be made
by the Company with the United States Securities and Exchange Commission (the
"SEC") or state securities administrators ); provided, however, that for purpose
of the representations made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and agreements of the
Purchaser herein.
(g) Compliance with Law. The Company has 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, except for such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals the failure of which to
hold, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
(h) SEC Reports. The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during the 12 months preceding the
date of this Agreement and such documents complied as to form in all material
respects with the SEC's requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.
(i) Books and Records. The records and documents of the Company
accurately reflect in all material respects the information relating to the
business of the Company, the location and collection of its assets, and the
nature of all transactions giving rise to the obligations or accounts receivable
of the Company.
(j) Securities Laws. The Company has complied and will comply with
all applicable federal and state securities laws in connection with the offer,
issuance and sale of the Warrant hereunder. Neither the Company nor anyone
acting on its behalf, directly or indirectly, has or will sell, offer to sell or
solicit offers to buy the Warrant or similar securities to, or solicit
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offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the Purchaser), so as
to bring the issuance and sale of the Warrant under the registration provisions
of the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities laws. Neither the Company nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Warrant.
3. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company that:
(a) Corporate Power. The Purchaser has all requisite legal and
corporate power to execute and deliver this Agreement and to consummate any
other transactions contemplated by the terms of this Agreement, and to carry out
and perform its obligations under the terms of this Agreement.
(b) Authorization, Enforcement. (i) The execution and delivery of the
Agreement by the Purchaser and the consummation by it of the transactions
contemplated hereby has been duly authorized by all necessary action and no
further consent or authorization is required, and (ii) this Agreement has been
duly executed and delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c) Purchase Entirely for Own Account. The Warrant to be acquired by
the Purchaser, including the Common Shares issuable upon exercise of the
Warrant, will be acquired for investment for the Purchaser's own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same. The Purchaser has not
been formed for the specific purpose of acquiring the Warrant, including the
Common Shares issuable upon exercise of the Warrant.
(d) Knowledge. The Purchaser has such knowledge and experience in
financial and business affairs as to be capable of evaluating the merits and
risks of the investment hereunder in the Warrant, including the Common Shares
issuable upon exercise of the Warrant, and is able to bear the economic risk of
loss of such investment.
(e) Restricted Securities. The Purchaser understands that the
Warrant, including the Common Shares issuable upon exercise of the Warrant, have
not been, and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchaser's representations as expressed herein. The Purchaser understands that
the Warrant, including the Common Shares issuable upon exercise of the Warrant,
are "restricted securities" under applicable U.S. federal and state securities
laws and that, pursuant to these laws, the
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Purchaser must hold the Warrant, including the Common Shares issuable upon
exercise of the Warrant, indefinitely unless the Warrant, including the Common
Shares issuable upon exercise of the Warrant, are registered with the SEC and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Warrant, including the
Common Shares issuable upon exercise of the Warrant, for resale. The Purchaser
further acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Warrant,
including the Common Shares issuable upon exercise of the Warrant, and on
requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.
(f) No Public Market. The Purchaser understands that no public market
now exists for the Warrant, including the Common Shares issuable upon exercise
of the Warrant, and that the Company has made no assurances that a public market
will ever exist for the Warrant, including the Common Shares issuable upon
exercise of the Warrant.
(g) Legends. The Purchaser understands that the Warrant, including the
Common Shares issuable upon exercise of the Warrant, may bear one or all of the
following legends.
(i) "THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT FOR A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
AFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT.
(ii) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the Warrant, including the Common Shares
issuable upon exercise of the Warrant, represented by the certificate so
legended.
(h) Accredited Investor Status. The Purchaser:
(i) is an "Accredited Investor," as such term is defined in
Rule 501 of Regulation D of the Securities Act;
(ii) represents and warrants that the information provided to the
Company herein, and any other information provided to the Company by the
Purchaser, is true, complete and correct in all material respects; and
(iii) understands that the Warrant, including the Common Shares
issuable upon exercise of the Warrant, are being offered and sold in reliance
upon specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgements
and understandings set forth herein in order to determine the
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applicability of such exemptions and the suitability of the undersigned to
acquire the Warrant, including the Common Shares issuable upon exercise of the
Warrant.
(i) Securities Filings. The Purchaser acknowledges that it has been
provided with copies of and has reviewed the following documents, which have
been filed by the Company with the SEC pursuant to the Exchange Act
(collectively, the "Disclosure Documents"): (i) the Company's Annual Report on
Form 10-K, as amended, for the fiscal year ended May 31, 2003; (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 2003;
and (iii) the Company's proxy statement with respect to its 2003 annual meeting.
(j) Access to Information. The Purchaser acknowledges that it has been
furnished all materials relating to the Company and its activities, and has been
afforded the opportunity to ask questions of, and receive answers from, the
Company concerning the Warrant and the Common Shares issuable upon exercise
thereof, and the terms and conditions of the offering and to obtain any
additional information the Purchaser may consider necessary in making an
informed investment decision or in order to verify the accuracy of any
information set forth in this Agreement or otherwise provided to the Purchaser.
(k) Additional Information. The Purchaser will supply the Company with
such other facts as from time to time are deemed necessary or desirable in order
to ascertain that no violation has occurred of any securities laws of the United
States or any other relevant jurisdiction, including the Securities Act.
(l) Broker-Dealer. The Purchaser is duly registered as a broker-dealer
under the Exchange Act and as a broker-dealer under any applicable state
securities laws
(m) No Solicitation. Neither the Purchaser nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the Offering.
(n) Canadian Offering. The Purchaser acknowledges that prior to the
date hereof, the Company sold up to U.S. $4,000,000 of Common Shares to various
purchasers in Canada and pay the Company's agent a cash commission of 7.0% of
the gross proceeds of such offering received by the Company and a warrant to
purchase that number of Common Shares equal to 10% of the number of Common
Shares sold pursuant to the offering.
4. Conditions of the Purchaser's Obligations at Closing. The obligations
of the Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) Representations and Warranties. The representations and warranties
of the Company contained in Section 2 hereof shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
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(b) Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Warrant pursuant to this Agreement shall be obtained and effective as of the
Closing.
(c) Performance; Proceedings and Documents. The Company shall have
performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing and all corporate and other proceedings in connection with
the transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Purchaser, and
they shall have received all such counterpart original and certified or other
copies of such documents as they may reasonably request.
(g) Registration Rights. The Company, the Purchaser and the purchasers
of the Common Shares in the Offering shall have entered into a Registration
Rights Agreement in substantially the form attached hereto as Exhibit B.
(d) Warrant. The Company shall have executed and delivered the
Warrant.
5. Conditions of the Company's Obligations at Closing. The obligations of
the Company to the Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) Representations and Warranties. The representations and warranties
of the Purchaser contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.
(b) Performance of Obligations. The Purchaser shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by him/her/it on or before the Closing.
(c) Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Warrant pursuant to this Agreement shall be obtained and effective as of the
Closing.
6. Miscellaneous.
(a) Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(b) Governing Law; Jurisdiction. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the Province of Ontario and the Country of Canada applicable therein, without
giving effect to principles of conflicts of law.
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In addition, the parties hereto agree that (i) any legal suit, action or
proceeding arising out of or relating to this Agreement shall be instituted
exclusively in the Ontario Superior Court of Justice in Xxxxxx, Xxxxxxx, Xxxxxx,
(ii) waive any objection which the parties may have now or hereafter based upon
forum non conveniens or to the venue of any such suit, action or proceeding, and
(iii) irrevocably consent to the jurisdiction of the Ontario Superior Court of
Justice in Xxxxxx, Xxxxxxx, Xxxxxx in any such suit, action or proceeding.
FURTHER, THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION TO ENFORCE
THIS AGREEMENT AND IN CONNECTION WITH ANY DEFENSE, COUNTERCLAIM OR CROSS CLAIM
ASSERTED IN ANY SUCH ACTION.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(d) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Survival. The warranties, representations, agreements and
covenants of the Company contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
(f) Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified as such party's address as set forth in the recitals to this
Agreement or as subsequently modified by written notice.
(g) Amendments and Waivers. Any term of this Agreement may be amended
or waived only with the written consent of the Company and the Purchaser.
(h) Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then such provision shall be
excluded form this Agreement, and the balance of the Agreement shall be
enforceable in accordance with its terms.
(i) Entire Agreement. This Agreement, and the documents referred to
herein, constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
(j) Expenses. The Company and the Purchaser shall pay their respective
costs and expenses incurred with respect to the negotiation, execution, delivery
and performance of this Agreement.
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[signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Securities Purchase
Agreement as of the date first written above.
COMPANY:
WORKSTREAM INC.
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman and CEO
PURCHASER:
SUNRISE SECURITIES CORPORATION
By: /s/ Xxxxxx Low
---------------------------
Name: Xxxxxx Low
Title: President
