ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of the 6th day of October, 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:
HRSOFT, LLC
a corporation incorporated under the laws of the State of Delaware
(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
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. "Assumed liabilities" means the liabilities set forth in
Schedule 2.6.2.
1.1.5. "Business" means the business carried on by the Vendor which
primarily involves the provision of real-time decision support
for human capital management;
1.1.6. "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;
1.1.7. "Closing Date" means October , 2004, or such other date as
the Vendor and Purchaser may agree upon;
1.1.8. "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;
1.1.9. "Commission" means the Securities and Exchange Commission;
1.1.10. "Commission Documents" means all of the Purchaser's filings
with the Commission prior to the date hereof;
1.1.11. "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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1.1.12. "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;
1.1.13. Intentionally deleted;
1.1.14. "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;
1.1.15. "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended;
1.1.16. "Interim Period" means the period from and including the
date of this Agreement to and including the Closing Date;
1.1.17. "License Rights" means all license and distribution rights
relating to the Business described in Schedule 1.1.17 attached
hereto;
1.1.18. "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;
1.1.19. "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;
1.1.20. "Person" means and includes any individual, corporation,
general partnership, limited partnership, limited liability
company, limited liability partnership, joint venture,
syndicate, association, trust, government, governmental agency
or board or commission or authority, and any other form of
entity or organization;
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1.1.21. "Principal" means any manufacturer which the Vendor
represents in the sales and service of the manufacturer's
products;
1.1.22. "Purchase Price" means the sum of $1,426,000 which is the
amount, subject to adjustments as herein provided, payable by
the Purchaser to the Vendor for all of the Purchased Assets,
as provided herein;
1.1.23. "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;
1.1.24. Intentionally deleted.
1.1.25. "Warranty Claim" means a claim made by either the Purchaser
or the Vendor based on or with respect to the inaccuracy or
non-performance or non-fulfilment or breach of any
representation or warranty made by the other party contained
in this Agreement or contained in any document or certificate
given in order to carry out the transactions contemplated
hereby.
1.2. BEST OF KNOWLEDGE. Any reference herein to "the best of the
knowledge" of the Vendor will be deemed to mean the actual knowledge
of the Vendor and the knowledge which it would have had if it had
conducted an inquiry into the relevant subject matter that a
reasonably prudent person would have conducted under similar
circumstances.
1.3. SCHEDULES. The Schedules which are attached to this Agreement are
incorporated in this Agreement by reference and are deemed to be
part hereof.
1.4. CURRENCY. Unless otherwise indicated, all dollar amounts referred to
in this Agreement are in lawful money of the United States of
America.
1.5. CHOICE OF LAW AND ATTORNMENT. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
Province of Ontario, Canada.
1.6. INTERPRETATION NOT AFFECTED BY HEADINGS OR PARTY DRAFTING. The
division of this Agreement into articles, sections, paragraphs,
subparagraphs and clauses and the insertion of headings are for
convenience of reference only and shall not affect the construction
or interpretation of this Agreement. The terms "this Agreement",
"herein", "hereunder" and similar expressions refer to this
Agreement and the Schedules hereto and not to any particular
article, section, paragraph, subparagraph, clause or other portion
and include any agreement or instrument supplementary or ancillary
hereto. Each party hereto acknowledges that it and its legal counsel
have reviewed and participated in settling the terms of this
Agreement, and the parties hereby agree that any rule of
construction to the effect that any ambiguity is to be resolved
against the drafting party shall not be applicable in the
interpretation of this Agreement.
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1.7. NUMBER AND GENDER. In this Agreement, unless there is something in
the subject matter or context inconsistent therewith:
1.7.1. words in the singular number include the plural and such
words shall be construed as if the plural had been used,
1.7.2. words in the plural include the singular and such words shall
be construed as if the singular had been used, and
1.7.3. words importing the use of any gender shall include all
genders where the context or party referred to so requires,
and the rest of the sentence shall be construed as if the
necessary grammatical and terminological changes had been
made.
1.8. TIME OF ESSENCE. Time shall be of the essence.
2. PURCHASE AND SALE
2.1. PURCHASED ASSETS. On the terms and subject to the fulfilment of the
conditions, the Vendor hereby agrees to sell, transfer and assign to
the Purchaser, and the Purchaser hereby agrees to purchase and
accept from the Vendor as of the Closing Date, assets, rights and
interests of the Vendor listed in Schedule 2.1, as attached hereto
(the "Purchased Assets"), and will include the following assets:
2.1.1. Accounts Receivable: all accounts receivable, trade accounts,
notes, receivables, book debts and other debts due or accruing
to the Vendor in connection with the Purchased Assets and the
full benefit of all securities for such accounts, notes or
debts described in Schedule 2.1.1 (the "Accounts Receivable");
2.1.2. Computer Equipment: all of the Vendor's right, title and
interest in all computer hardware and firmware used in the
Business including, without limitation, that described in
Schedule 2.1.2 attached hereto;
2.1.3. Customer Lists and Information: all customer lists, files,
data and information relating to customers and prospective
customers of the Business as of the Closing Time including,
without limitation, the customer list which has been delivered
by the Vendor to the Purchaser prior to the Closing Date
described in Schedule 2.1.3 attached hereto;
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2.1.4. Customer Contracts: all right, title and interest of the
Vendor in and to all Customer Contracts, all of which are
listed in Schedule 2.1.4 attached hereto;
2.1.5. Goodwill, Name, etc.: the goodwill of the Business, together
with the exclusive right of the Purchaser to represent itself
as carrying on the Business in continuation of and in
succession to the Vendor, and all rights in and title to the
name and trademark "HRSoft" or any variation of same
(Notwithstanding the transfer of all rights in and title to
the name "HRSoft", the Purchaser acknowledges that the
Vendor's corporate name shall continue to be "HRSoft, LLC"
until such time as the Vendor is able to change its corporate
name. The Vendor undertakes and agrees to effect the change of
its corporate name to something that does not contain the name
"HRSoft, LLC" or any variation thereof, as soon as practicably
possible, but in no event longer than thirty (30) days from
the Closing Date);
2.1.6. Technology, Intellectual Property and Software: all of its
world wide right, title and interest in and to any
intellectual property rights including but not limited to all
trade secrets, research data, designs, proprietary know-how,
technical information, specifications and materials in
whatever form or media recording or evidencing technology or
proprietary information used in or relating to the Business,
and all rights and interests in and to all inventions,
patents, applications for patents, copyrights, trade marks,
trade xxxx registrations, trade names, logos, industrial
designs, design patents, and other intellectual property used
in or relating to the Business, and all computer software and
any intellectual or industrial property of any nature
whatsoever which it may have in any components or features of
the computer software used in the Business including the
software products known as HRM Connect, Charter 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 1.1.17 attached hereto;
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2.1.8. Regulatory Licenses: all licenses, registrations and
qualifications of the Business required by any governmental or
regulatory authority, to the extent transferable;
2.1.9. Supply Contracts: the full benefit of all contracts providing
for the supply of goods and services to the Business, subject
to the Purchaser's review and acceptance of such contracts and
agreements prior to the Closing Date; and
2.1.10. Warranty Rights and Maintenance Contracts: the full benefit
of all warranties and warranty rights (express and implied)
against manufacturers or sellers which apply to any of the
Purchased Assets and all maintenance contracts on machinery,
equipment and the other Purchased Assets, subject to the
Purchaser's review and acceptance of such contracts and
agreements prior to the Closing Date.
2.2. UNASSIGNABLE CONTRACTS. If any rights, benefits or remedies (the
"Rights") under any Assumed Contracts are not assignable by the
Vendor to the Purchaser without the written consent of the other
party thereto (the "Third Party") and such consent is not obtained,
then, unless the Purchaser exercises its rights under Section 6.2,
2.2.1. the Vendor will hold the Rights for the benefit of the
Purchaser,
2.2.2. the Vendor will, at the request and expense and under the
direction of the Purchaser, in the name of the Vendor or
otherwise as the Purchaser shall specify, take all such
actions and do all such things as shall, in the opinion of the
Purchaser, be necessary or desirable in order that the
obligations of the Vendor under such Assumed Contracts may be
performed in a manner such that the value of the Rights shall
be preserved and shall enure to the benefit of the Purchaser
and such that all moneys receivable under the Assumed
Contracts may be received by the Purchaser,
2.2.3. the Vendor will promptly pay over to the Purchaser all such
moneys collected by the Vendor in respect of such Assumed
Contracts, and
2.2.4. to the extent permitted by the Third Party and provided, in
the Purchaser's opinion, it would not be prejudicial to the
Purchaser's rights to do so, the Purchaser will perform the
obligations under such Assumed Contracts on behalf of the
Vendor, and will indemnify the Vendor against all liabilities,
costs and expenses incurred by the Vendor in performing such
obligations.
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2.3. EXCLUDED LIABILITIES AND INDEMNITY. The Purchaser will not assume
and will not be liable for, and the Vendor will indemnify the
Purchaser from and against, all obligations, commitments and
liabilities of and claims against the Vendor (whether absolute,
accrued or contingent) relating to the Business, except the Assumed
Liabilities. Without limiting the generality of the foregoing, it is
agreed that the Purchaser will have no liability for any of the
following obligations or liabilities:
2.3.1. all liabilities in respect of all indebtedness of the Vendor
to all persons;
2.3.2. all product liability claims and liabilities for warranty or
product return claims relating to any product or service of
the Business produced, sold, performed or delivered prior to
the Closing Date;
2.3.3. all liabilities for all taxes, duties, levies, assessments
and other such charges, including any penalties, interests and
fines with respect thereto, payable by the Vendor to any
federal, state, municipal or other government or governmental
agency, authority, board, bureau or commission, domestic or
foreign, including, without limitation, any taxes in respect
of or measured by the sale, consumption or performance by the
Vendor of any product or service prior to the Closing Date or
any similar legislation in respect of all remuneration payable
to all persons employed in the Business prior to the Closing
Date;
2.3.4. all liabilities with respect to leases for the Vendor's
facilities in Morristown, New Jersey and Fairfield, Iowa.
2.3.5. 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. ASSUMED LIABILITIES. The Purchaser shall be liable for, and shall
indemnify Vendor from and against, all obligations, commitments and
liabilities relating to the Assumed Liabilities.
2.5. PURCHASE PRICE. The purchase price will not exceed the assumption of
$1,426,000 in payables, bank debt, settlement and employee payroll
of the Vendor by the Purchaser.
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2.6. PAYMENT OF PURCHASE PRICE. Purchaser and Vendor mutually agree that
the Purchase Price will be paid and satisfied at the Closing Time as
follows:
2.6.1. by delivery on behalf of the Vendor certified or bank checks:
(i) in the amount of $XXXX to Xxxxxx United Bank, in
satisfaction of Loan Number [XXXXX]; and (ii) in the amount of
$XXXXX to PNC Bank, in satisfaction of Loan Number [XXXXXX];
by assuming the outstanding liabilities of the Vendor as attached
in Schedule 2.6.2 hereto and 0.0.0.xx application to the
Purchase Price of the pre-closing loan in the amount of
$100,000 made by the Purchaser to the Vendor in satisfaction
of the of the promissory note executed by the Vendor dated
September 30, 2004.
2.7. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets in the manner provided by Schedule 2.7
attached hereto. The Vendor and the Purchaser shall file their
respective tax returns prepared in accordance with such allocation.
2.8. PAYMENT OF TAXES. The Purchaser 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, except
for any income tax payable by the Vendor, on and in connection with
the conveyance and transfer of the Purchased Assets to the
Purchaser. The Vendor will do and cause to be done such things as
are reasonably requested to enable the Purchaser 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 terms.
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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 qualified or licensed to do business as a
corporation.
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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
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3.1.5.3. subject to obtaining the regulatory consents referred
to in Schedule 3.1.3, any term or provision of any of
the Licences or any order of any court, governmental
authority or regulatory body or any law or regulation of
any jurisdiction in which the Business is carried on.
3.1.5.4. Absence of Undisclosed Liabilities. There are no
undisclosed 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, subject to the payment at the Closing
Time of the liabilities owed by Vendor to Xxxxxx United Bank
and PNC (Fleet) and the subsequent filing of UCC3s by such
institutions releasing the Liens with respect to such
liabilities.
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.
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3.1.9. Leases of Personal Property. Schedule 3.1.9 attached hereto
describes all leases of equipment and vehicles relating to or
included in the Purchased Assets. Complete and correct copies
of those leases have been provided to the Purchaser. The
Vendor is entitled to all rights and benefits as lessee under
those leases, and the Vendor has not sublet, assigned,
licensed or otherwise conveyed any rights in those leases or
in the property leased thereunder to any other person. All
payments and other obligations required to be paid and
performed by the Vendor under those leases have been duly paid
and performed; the Vendor is not in default of any its
obligations under those leases; and, to the best of the
knowledge of the Vendor, none of the lessors or any other
parties to those leases are in default of any of their
obligations under those leases. The Vendor is entitled to
assign all of its right and interest under those leases and in
and to the property leased thereunder to the Purchaser subject
to obtaining the consents referred to in Schedule 3.1.3
attached hereto. Subject to obtaining such consents, the terms
and conditions of those leases will not be affected by, nor
will any of those leases be in default as a result of, the
completion of the transaction contemplated hereunder.
3.1.10. Intellectual Property.
3.1.10.1. Section 2.1.6 and Schedule 2.1.6 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,
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(all of the foregoing being collectively called the
"Intellectual Property").
3.1.10.2. The Vendor has good and valid title to all of the
Intellectual Property, free and clear of any and all
Encumbrances, except in the case of any Intellectual
Property licensed to the Vendor as disclosed in Schedule
2.1.6. 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 2.1.6. Except as indicated in
Schedule 2.1.6, 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.
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3.1.10.4. The use of the Intellectual Property does not
infringe, and the Vendor has not received any notice,
complaint, threat or claim alleging infringement of, any
patent, trade xxxx, trade name, copyright, industrial
design, trade secret or other Intellectual Property or
propriety right of any other person, and the conduct of
the Business does not include any activity which may
constitute passing off.
3.1.11. Affiliates. None of the Purchased Assets are owned or
operated by any Affiliate of the Vendor.
3.1.12. Partnerships or Joint Ventures. Except as set forth on
Schedule 1.1.17, 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 except
pursuant to a written agreement containing an obligation of
confidentiality. 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, 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;
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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
1.1.17 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. Other than as has been disclosed to
Vendor during due diligence, the Vendor is not a party to or
bound by any outstanding or executory agreement, contract or
commitment, whether written or oral, relating to the Purchased
Assets, except for those agreements set out in this Agreement
or in the Schedules hereto. Complete and correct copies of
each of the contracts, leases and agreements described in the
Schedules attached hereto have been provided to the Purchaser.
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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 to the best of its knowledge 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 to the best of its knowledge, 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.
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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.
3.2. 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 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.
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3.2.3. No Conflicts. Except as set forth in Schedule 3.2.3 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, 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.
3.2.4. Governmental Approvals. Except as set forth in the Commission
Documents or on Schedule 3.2.4 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 the performance
by the Purchaser or Workstream of its obligations under this
Agreement.
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3.2.5. 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
3.2.6. Bulk Transfer Laws. The Buyer acknowledges that the Seller
will not comply with the provisions of the bulk transfer Laws
of any jurisdiction in connection with the transactions
contemplated by this Agreement. The Seller and Xxxx Xxxxxxx,
Xxxx Xxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxxxxxxx hereby jointly
and severally covenant and agree to indemnify and hold
harmless from and against any and all claims of the Seller's
creditors or others asserted against the Buyer or any of its
Affiliates resulting from such non-compliance
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.
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4.2. SURVIVAL OF WARRANTIES BY PURCHASER AND WORKSTREAM. The
representations and warranties made by the Purchaser and/or
Workstream and contained in this Agreement or contained in any
document or certificate given in order to carry out the transactions
contemplated hereby will survive the closing of the purchase and
sale of the Purchased Assets provided for herein and,
notwithstanding such closing or any investigation made by or on
behalf of the Vendor or any other person or any knowledge of the
Vendor or any other person, shall continue in full force and effect
for the benefit of the Vendor except that no Warranty Claim may be
made or brought by the Vendor after the date which is two years
following the Closing Date.
After the expiration of the period of time referred to in this
section 4.2, the Purchaser and Workstream will be released from all
obligations and liabilities in respect of the representations and
warranties made by the Purchaser and/or Workstream and contained in
this Agreement or in any document or certificate given in order to
carry out the transactions contemplated hereby except with respect
to any claims made by the Purchaser and/or Workstream in writing
prior to the expiration of such period.
4.3. LIMITATIONS ON WARRANTY CLAIMS.
4.3.1. The Purchaser and/or Workstream shall not be entitled to make
a Warranty Claim if the Purchaser and/or Workstream has been
advised in writing or otherwise has actual knowledge prior to
the Closing Time of the inaccuracy, non-performance,
non-fulfilment or breach which is the basis for such Warranty
Claim and the Purchaser and/or Workstream completes the
transactions hereunder notwithstanding such inaccuracy,
non-performance, non-fulfilment or breach.
4.3.2. The amount of any damages which may be claimed by the
Purchaser and/or Workstream pursuant to a Warranty Claim shall
be calculated to be the cost or loss to the Purchaser and/or
Workstream after giving effect to any insurance proceeds
available to the Purchaser and/or Workstream in relation to
the matter which is the subject of the Warranty Claim.
4.3.3. The Purchaser and/or Workstream shall not be entitled to make
any Warranty Claim until the aggregate amount of all damages,
losses, liabilities and expenses incurred by the Purchaser
and/or Workstream as a result of all misrepresentations and
breaches of warranties contained in this Agreement or
contained in any document or certificate given in order to
carry out the transactions contemplated hereby, after taking
into account section 4.3.2 of this section, is equal to
$20,000. After the aggregate amount of such damages, losses,
liabilities and expenses incurred by the Purchaser and/or
Workstream exceeds $20,000, 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 $20,000.
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4.3.4. Notwithstanding any other provisions of this Agreement or of
any agreement, certificate or other document made in order to
carry out the transactions contemplated hereby, the maximum
aggregate liability of the Vendor together in respect of all
Warranty Claims by the Purchaser and/or Workstream will be
limited to an amount equal to the Purchase Price.
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. Continuation of Representations and Warranties. Any
investigations and inspections conducted by Purchaser shall
not mitigate or affect the representations and warranties of
the Vendor hereunder, which shall continue in full force and
effect.
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5.1.3. Transfer of Purchased Assets. At or before the Closing Time,
the Vendor will cause all necessary steps and corporate
proceedings to be taken in order to permit the Purchased
Assets to be duly and regularly transferred to the Purchaser.
5.1.4. Forms of Conveyance. At the Closing Time, the Vendor will
deliver to the Purchaser good and marketable title to and
exclusive possession of the Purchased Assets, free and clear
of any and all Encumbrances. At the Closing Time, the Vendor
will execute and deliver to the Purchaser one or more forms of
general conveyance, or bills of sale, deeds, transfers and
other documents reasonably requested by the Purchaser in
respect of the assignment, conveyance, transfer and delivery
of the Purchased Assets to the Purchaser in form which is
registrable and acceptable to the Purchaser.
5.1.5. Transfer of Assumed Contracts. At the Closing Time, the
Vendor will deliver to the Purchaser:
5.1.5.1. an executed original or certified to copy of each of
the Assumed Contracts and, as to any copy to which
authenticity is certified, an officer's certificate
attesting thereto and to the absence of an original,
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.
5.2. 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 not pursuant to any
obligation of confidentiality, as demonstrated by
written records,
24
5.2.1.2. is generally available to the public, other than as a
result of a disclosure by the Purchaser, or
5.2.1.3. is made available to the Purchaser on a
non-confidential basis from a source other than the
Vendor, or its representatives.
5.2.1.4. The Purchaser further agrees that such information
will be disclosed only to those of its employees and
representatives of its advisors who need to know such
information for the purposes of evaluating and
implementing the transaction contemplated hereby.
Notwithstanding the foregoing provisions of this
paragraph, the obligation to maintain the
confidentiality of such information will not apply to
the extent that disclosure of such information is
required in connection with governmental or other
applicable filings relating to the transactions
hereunder, provided that, in such case, unless the
Vendor otherwise agrees, the Purchaser will, if
possible, request confidentiality in respect of such
governmental or other filings. If the transactions
contemplated hereby are not consummated for any reason,
the Purchaser will return forthwith, without retaining
any copies, all information and documents obtained from
the Vendor.
6. CONDITIONS
6.1. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. Notwithstanding
anything herein contained, the obligation of the Purchaser and/or
Workstream to complete the transactions provided for herein will be
subject to the fulfilment of the following conditions by the Vendor
at or prior to the Closing Time and the Vendor covenants to ensure
that such conditions are fulfilled.
6.1.1. Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Vendor
contained in this Agreement or in any documents delivered in
order to carry out the transactions contemplated hereby shall
be true and accurate on the date and at the Closing Time with
the same force and effect as though such representations and
warranties had been made as of the Closing Time (regardless of
the date as of which the information in this Agreement or in
any Schedule or other document made pursuant hereto is given).
In addition, the Vendor shall have complied with all covenants
and agreements herein agreed to be performed or caused to be
performed by them at or prior to the Closing Time. In
addition, the Vendor shall have delivered to the Purchaser a
certificate in the form of Schedule 6.1.1 attached hereto
confirming that the facts with respect to each of such
representations and warranties by the Vendor are as set out
herein at the Closing Time and that the Vendor has performed
all covenants required to be performed by them hereunder.
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6.1.2. Material Adverse Changes. During the Interim Period there
will have been no change in the Purchased Assets, howsoever
arising, except changes which have occurred in the ordinary
course of the Business and which, individually or in the
aggregate, have not affected and may not affect the Purchased
Assets in any material adverse respect. Without limiting the
generality of the foregoing, during the Interim Period no
damage to or destruction of any material part of the Purchased
Assets shall have occurred, whether or not covered by
insurance.
6.1.3. No Restraining Proceedings. No order, decision or ruling of
any court, tribunal or regulatory authority having
jurisdiction shall have been made, and no action or proceeding
shall be pending or threatened which, in the opinion of
counsel to the Purchaser, is likely to result in an order,
decision or ruling,
6.1.3.1. to disallow, enjoin, prohibit or impose any
limitations or conditions on the purchase and sale of
the Purchased Assets contemplated hereby or the right of
the Purchaser to own the Purchased Assets; or
6.1.3.2. to impose any limitations or conditions which may
have a Material Adverse Effect on the Purchased Assets.
6.1.4. Consents. All consents required to be obtained in order to
carry out the transactions contemplated hereby in compliance
with all laws and agreements binding on the parties hereto
shall have been obtained, including the consents referred to
in Schedules 3.1.3 and 3.2.2 attached hereto.
6.1.5. Deliveries at Closing. At the Closing Time, the Vendor shall
have delivered and/or Purchaser shall have received, all in
form satisfactory to Purchaser:
6.1.5.1. 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 New Jersey and the federal laws of United
States applicable in the State of New Jersey;
26
6.1.5.2. a certificate of the Vendor in the form of the draft
attached hereto as Schedule 6.1.5.2, whereby the Vendor
assigns all of its intellectual property rights in the
assets listed in Schedule 2.1.6;
6.1.5.3. form of assignment and assumption agreement whereby
the Vendor assigns, and the Purchaser assumes, all of
the Assumed Contracts;
6.1.5.4. xxxx of sale for the Purchased Assets
6.1.5.5. employment agreements for Xxxx Xxxxxxx, Xxxx Xxxxxx,
Xxxxx Xxxxxxx and Xxxx Xxxxxxxxxxx are to be negotiated
by Xxxx Xxxxxxx CEO and Xxxx Xxxxxxxxx CEO pursuant to
existing and ongoing discussions;
6.1.5.6. a promissory note in the amount of $325,000, executed
by the Vendor ("Promissory Note");
6.1.5.7. a guarantee of the Promissory Note, in an amount not
to exceed $100,000; and
6.1.5.8. any other documents required to be delivered under
this Agreement.
6.1.6. 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.
6.2. 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.
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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.
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.
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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. 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.
6.3.5. Deliveries at Closing. At the Closing Time, the Purchaser
shall have delivered and/or Vendor shall have received, all in
form satisfactory to Vendor:
6.3.5.1. form of assignment and assumption agreement whereby
the Vendor assigns, and the Purchaser assumes, all of
the Assumed Contracts;
6.3.5.2. form of assumption agreement whereby the Purchaser
assumes all of the Assumed Liabilities;
6.3.5.3. employment agreements for Xxxx Xxxxxxx, Xxxx Xxxxxx,
Xxxxx Xxxxxxx and Xxxx Xxxxxxxxxxx are to be negotiated
by Xxxx Xxxxxxx CEO and Xxxx Xxxxxxxxx CEO pursuant to
existing and ongoing discussions;
6.3.5.4. certified or bank check payable to Vendor in the
amount of $325,000 in connection with the delivery of
the Promissory Note; and
6.3.5.5. any other documents required to be delivered under
this Agreement.
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.
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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 set forth in Section
6 and all other 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.
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;
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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,
reasonable 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.
8.2. INDEMNITY OF THE PURCHASER.
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;
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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, reasonable attorney's fees, incidental
to, arising from or in respect of the foregoing.
8.2.2. The obligations of indemnification by the Vendor pursuant to
paragraph 8.2.1 of this section will be:
8.2.2.1. subject to the limitations referred to in
Section 4.1 with respect to the survival of the
representations and warranties by the Vendor;
8.2.2.2. subject to the limitations referred to in
Section 4.3; and
8.2.2.3. subject to the provisions of Section 8.3.
8.3. PROVISIONS RELATING TO INDEMNITY CLAIMS. The following provisions
will apply to any claim by the Indemnified Party or the Purchaser,
whatever the case may be, for indemnification by the Indemnifying
Party or the Vendor, whatever the case may be, pursuant to Sections
8.1 and 8.2 (an "Indemnity Claim").
8.3.1. Promptly after becoming aware of any matter that may give
rise to an Indemnity Claim, the Indemnified Party or the
Purchaser will provide to the Indemnifying Party or the Vendor
written notice of the Indemnity Claim specifying (to the
extent that information is available) the factual basis for
the Indemnity Claim and the amount of the Indemnity Claim or,
if an amount is not then determinable, an estimate of the
amount of the Indemnity Claim, if an estimate is feasible in
the circumstances.
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.
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8.3.3. The Indemnified Party or the Purchaser shall not negotiate,
settle, compromise or pay (except in the case of payment of a
judgement) any Third Party Liability as to which it proposes
to assert an Indemnity Claim, except with the prior consent of
the Indemnifying Party or the Vendor (which consent shall not
be unreasonably withheld or delayed), unless there is a
reasonable possibility that such Third Party Liability may
materially and adversely affect the Purchased Assets or the
Indemnified Party or the Purchaser, in which case the
Indemnified Party or the Purchaser shall have the right, after
notifying the Indemnifying Party or the Vendor, to negotiate,
settle, compromise or pay such Third Party Liability without
prejudice to its rights of indemnification hereunder. The
Indemnified Party or the Purchaser shall notify the
Indemnifying Party or the Vendor within one (1) week of any
third party claims being asserted.
8.3.4. With respect to any Third Party Liability, provided the
Indemnifying Party or the Vendor first admit the Indemnified
Party's or the Purchaser's right to indemnification for the
amount of such Third Party Liability which may at any time be
determined or settled, then, in any legal, administrative or
other proceedings in connection with the matters forming the
basis of the Third Party Liability, the following procedures
will apply:
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;
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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:
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.
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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 facsimile.
9.2.2. Notices shall be sent to the following addresses or telecopy
numbers:
in the case of the Vendor:
HRSOFT, LLC
00 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX
Attention: Xxxx Xxxxxxx
Facsimile: 000-000-0000
With a copy to:
OlenderFeldman, LLP
0000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
35
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.
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
36
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 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.
37
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 herein. 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 Province of Ontario,
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:
---------------------------------
Name:
Title:
I have authority to bind the corporation.
WORKSTREAM INC.
Per:
---------------------------------
Name:
Title:
I have authority to bind the corporation.
HRSOFT, LLC
Per:
---------------------------------
Name:
Title:
I have authority to bind the corporation.
SCHEDULES
