ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of the 8th of March, 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:
PEOPLEVIEW, INC.,
a corporation incorporated under the laws of the State of Nevada
(hereinafter referred to as the "Vendor")
WHEREAS:
A. The Vendor carries on the business of providing real-time decision
support 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
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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 the provision of real-time decision support 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 March 17, 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;
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 $1,000,000 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;
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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 2;
1.1.23. "Vendor's Mediation Rights" means the vendor's mediation rights as
set out in section 12 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 State of New York.
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
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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;
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;
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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 "PeopleView, Inc." or any variation of same (Notwithstanding the
transfer of all rights in and title to the name "PeopleView, Inc., the Purchaser
acknowledges that the Vendor's corporate name shall continue to be "PeopleView,
Inc." 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 "PeopleView, Inc" or any variation
thereof, as soon as practicably possible);
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 Climate
Sight, Skill Sight, Performance Sight, Compliance Sight and HCM TOOLS 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;
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
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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.
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:
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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.
2.4. PURCHASE PRICE. The price payable by the Purchaser to the Vendor for
the Purchased Assets will be equal to the sum of: the value of the Workstream
Shares (as defined in section 2.5.1 herein), the value of the Warrant (as
defined in section 2.5.2 herein) and $300,000.00.
2.5. PAYMENT OF PURCHASE PRICE. Purchaser and Vendor mutually agree that the
Purchase Price, less the Hold Back Shares (as hereinafter defined) and the Hold
Back Funds (as hereinafter defined), will be paid and satisfied at the Closing
Time as follows:
2.5.1. by delivery to the Vendor of that number of shares (rounded up to a
whole share) of 350,000 common shares, no par value (the "Shares" or the
"Workstream Shares"), of Workstream; provided, however, that the Purchaser shall
deposit 50,000 of the Workstream Shares (the "Hold Back Shares") into an escrow
account reasonably approved by the parties until the Purchaser, in its
reasonable discretion and subject to Vendor's Mediation Rights, within 90 days
of the Closing Date, has satisfied itself of the following:
2.5.1.1. that all proprietary issues relating to the Intellectual Property
(as hereinafter defined) have been resolved, namely:
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2.5.1.1.1. that the Vendor rightfully owns or has valid rights to the
Intellectual Property; and
2.5.1.1.2. that the Intellectual Property does not infringe on any patent,
trade xxxx, trade name, copyright, industrial design, trade secret or other
Intellectual Property or propriety right of any other person.
2.5.1.2. that all computer systems and application software, including
without limitation, the software products known as Climate Sight, Skill Sight,
Performance Sight, Compliance Sight and HCM TOOLS and all documentation relating
thereto and the latest revisions of all related object and source codes
therefor, forming part of the Purchased Assets and contained in Schedule 2.1.13
or Schedule 2.1.6 attached hereto, are fully functional, merchantable and fit
for the purpose for which they were intended; and
2.5.2. by delivery to the Vendor of a warrant to purchase 50,000 common
shares (the "Warrant Shares"), no par value in Workstream at a purchase price of
$3.00 per common share (the "Warrant"). The form of Warrant is attached hereto
as Schedule 2.5.2; and
2.5.3. by delivery to the Vendor of the balance of $300,000, by way of
certified check or bank draft, less $50,000 (the "Hold Back Funds") which shall
be deposited by the Purchaser on account of the Accounts Receivable into an
escrow account reasonably approved by the parties until the following has
occurred: The Purchaser shall have the right, by written notice to the Vendor
given on or after ninety (90) days, but no later than 120 days, following the
Closing Date (the "Repurchase Date"), to require the Vendor to repurchase for
cash all of the Accounts Receivable that are at the Repurchase Date uncollected.
The terms governing the repurchase by the Vendor of the uncollected Accounts
Receivables are as follows:
2.5.3.1. the Vendor shall repurchase all uncollected Accounts Receivable at
a purchase price (the "Repurchase Price") equal to their aggregate face value,
and the Repurchase Price shall be paid and satisfied at the Repurchase Date by
deducting the Repurchase Price from the Hold Back Funds. The Purchaser hereby
acknowledges and agrees that if the Repurchase Price exceeds the amount of Hold
Back Funds, the Vendor shall, not be required to pay to the Purchaser any
additional amounts with respect to such uncollected Accounts Receivable, and
such
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uncollected Accounts Receivable shall be the sole responsibility of the
Purchaser.
2.5.3.2. the Purchaser shall execute and deliver to the Vendor, at the cost
of the Vendor, all instruments as shall be reasonably necessary to effectively
vest in the Vendor all of the right, title and interest of the Purchaser with
respect to any uncollected Accounts Receivable repurchased by the Vendor
pursuant to this subsection.
2.5.4. the Vendor, the Purchaser and Workstream shall execute and deliver to
each other the escrow agreement attached hereto as Schedule 1.1.23;
2.6. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets in the manner provided by Schedule 2.6 attached
hereto. 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.
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 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 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
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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,
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 corporation duly incorporated, 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
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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.
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.
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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.
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.
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
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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. Section 2.1.6 and Schedule 2.1.13 attached hereto lists and
contains a complete description of:
(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").
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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 2.1.13.
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 2.1.13. Except as indicated in Schedule
2.1.13, 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 2.1.6, 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.
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.
16
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.
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, 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,
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 exceeding $1,000;
17
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 2.1.13
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.
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
18
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.
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.
19
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, the Warrant and the Warrant Shares
(collectively, the "Securities") have not and are not being registered under the
Securities Act of 1933 as amended (the "1933 Act"), and that accordingly the
Securities 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 0000 Xxx.
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
20
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.
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
21
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 and November 30, 2003; and (iii) Workstream's
proxy statement with respect to its 2003 annual meeting.
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.
When the Warrant Shares are issued in accordance with the terms of this
Agreement and as set forth in the Warrant, such shares will be duly authorized
by all necessary corporate action and validly issued and outstanding, fully paid
and non-assessable, and free from preemptive rights, taxes upon issuance, liens
and other similar charges caused by Workstream, and the holders shall be
entitled to all rights accorded to a holder of common shares of Workstream.
22
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.
23
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.
24
3.2.8. No Material Adverse Change. Since February 20, 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.
25
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)
26
the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate actions is taken
with respect to any differences.
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.
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
27
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.
3.2.19. Dilutive Effect. Workstream understands and acknowledges that the
----------------
number of the Warrant Shares issuable upon exercise of the Warrant will increase
in certain circumstances.
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.
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.
28
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 $15,000. After the aggregate amount of such damages,
losses, liabilities and expenses incurred by the Purchaser and/or Workstream
exceeds $15,000, 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 $15,000.
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
29
Workstream
will be limited to an amount equal to the Purchase Price.
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.
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
30
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,
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
31
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.
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
32
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 Nevada and the federal laws of United
States applicable in the State of Nevada.
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
33
1.1.23.
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.
34
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. Revenue Sharing Agreement. The Vendor and Purchaser shall have
entered into a revenue sharing agreement in substantially the same form as
attached hereto as Schedule 6.3.4.
6.3.5. Escrow Agreement. The Vendor, the Purchaser and Workstream shall
have entered into the escrow agreement attached hereto as Schedule 1.1.23.
6.3.6. 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.
6.3.7. 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.
6.3.8. 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").
6.3.9. Reservation of Shares. As of the Closing Date, Workstream shall have
---------------------
reserved out of its authorized and unissued common shares, solely for the
purpose of effecting the issuance of the Workstream Shares and the
35
exercise of
the Warrant, a number of shares of common shares equal to at least 100% of the
shares of common shares which would be issuable upon issuance of the Workstream
Shares and upon exercise of the Warrant following the Closing Date (after giving
effect to the Workstream Shares and Warrant to be issued on the Closing Date and
assuming all such Workstream Shares and Warrant were fully issuable and
exercisable, as applicable, on such date regardless of any limitation on the
timing or amount of such issuances or exercises).
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, Hill & 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.
36
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.
37
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
38
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.
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
39
Third Party
Liability, the following procedures will apply:
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:
40
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. RIGHT OF SET-OFF. The Purchaser shall have the right to satisfy any
amount from time to time owing by it to the Vendor by way of set-off against any
amount from time to time owing by the Vendor to the Purchaser, including any
amount owing to the Purchaser pursuant to the Vendor's, or the Vendor's as
Indemnifying Party, indemnification pursuant to Sections 8.1 and/or 8.2.
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.
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 telecopy machine.
41
9.2.2. Notices shall be sent to the following addresses or telecopy numbers:
in the case of the Vendor:
PEOPLEVIEW, INC.
00000X Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx Xxxxxxxxxx
Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: 000 000 0000
With a copy to:
------------------
XXXXXXXXXX LAW GROUP
000 Xxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx
Fax: 000 000 0000
in the case of the Purchaser or Workstream:
000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx, XX X0X 0X0
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: 000-000-0000
With a copy to:
------------------
Xxxxxx-Xxxxxxxxx, Xxxx & 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 telecopier 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.
42
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 telecopy 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,
each of which so executed shall be deemed to be an original, and such
counterparts together shall constitute but one and the same instrument.
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 jointly and severally agree 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
43
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.
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 State of New York, without giving
effect to the choice of law provisions.
[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
I have authority to bind the corporation.
WORKSTREAM INC.
Per: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: CEO
I have authority to bind the corporation.
PEOPLEVIEW, INC.
Per: Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: CEO
I have authority to bind the corporation.
