FORBEARANCE AGREEMENT
EXHIBIT 10.1
This
Forbearance Agreement (the “Agreement”) is made as of this
____ day of June 2009 by and between Workstream Inc. (the “Company”) and the holder
listed on the signature page hereto (the “Holder”).
RECITALS
A. The
Company and the Holder entered into that certain Exchange Agreement dated as of
August 29, 2008 (the “Exchange Agreement”).
B. Simultaneously
with the consummation of the transactions contemplated by the Exchange
Agreement, the Holder exchanged its Special Warrant (as defined in the Exchange
Agreement) and its 2007 Warrant (as defined in the Exchange Agreement) with the
Company for a Note (as defined in the Exchange Agreement) in the original
principal amount of $_________ and a Warrant (as defined in the Exchange
Agreement).
C. During
and only during the period beginning on the date of this Agreement and ending on
the fifteen (15) day anniversary of the date hereof (such period is referred to
herein as the “Standstill
Period” and such scheduled ending date is referred to herein as the
“Scheduled Standstill
Expiration Date”), the Holder is willing
to temporarily forbear from exercising certain rights and remedies under Section
3(b) of the Note on the terms, conditions, and provisions contained in this
Agreement and engage in discussions with the Company regarding a potential
restructuring of the Holder’s Note.
AGREEMENTS
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Acknowledgment of Events of
Default. The Company acknowledges and agrees that:
(i) an
Event of Default (as defined in the Note) has occurred prior to the date hereof
under Section 3(a)(i) of the Note as a result of the suspension from trading of
the Common Shares (as defined in the Note) on an Eligible Market (as defined in
the Note) for a period of five (5) consecutive Trading Days (as defined in the
Note);
(ii) an
Event of Default has occurred prior to the date hereof under Section 3(a)(vi) of
the Note as a result of clause (i) above causing an Event of Default to occur
under the Other Notes (as defined in the Note);
(iii) an
Event of Default will occur under Section 3(a)(vii) of the Note upon the
delisting of the Common Shares from the Principal Market (as defined in the
Exchange Agreement), resulting in a material breach by the Company of Section
4(c) of the Exchange Agreement;
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(iv) an
Event of Default will occur under Section 3(a)(i) of the Note upon the failure
of the Common Shares to be listed on an Eligible Market for a period of five (5)
consecutive Trading Days;
(v) an
Event of Default will occur under Section 3(a)(ii) of the Note as a result of
the suspension and the delisting of the Common Shares from an Eligible Market
because immediately following such suspension and delisting the Common Shares
will not be listed on a designated exchange for purposes of the Income Tax Act
(Canada); and
(vi) an
Event of Default will occur under Section 3(a)(vi) of the Note as a result of
each of clauses (iii) through (v) above causing an Event of Default to occur
under the Other Notes.
For
purposes of this Agreement, (i) the Events of Default listed in clauses (i) and
(ii) above are collectively referred to herein as the “Existing Events of Default”
and each is individually referred to herein as an “Existing Event of Default;”
(ii) the Events of Default listed in clauses (iii) through (vi) above are
collectively referred to herein as the “Imminent Events of Default” and each is
individually referred to herein as an “Imminent Event of Default;” and (iii)
the Existing Events of Default and the Imminent Events of Default are
collectively referred to herein as the “Defaults” and each is
individually referred to herein as a “Default.” The Company
represents and warrants to the Holder that (a) no other Event of Default has
occurred other than the Existing Events of Default; (b) no other breach by the
Company or any of its Subsidiaries of their respective obligations has occurred
under any of the Transaction Documents; (c) to the best knowledge of the
Company, no other Event of Default is imminent other than the Imminent Events of
Default; and (d) the Company has no knowledge of any fact, event or circumstance
that could reasonably be expected to result in the occurrence of an Event of
Default at any time during the thirty (30) day period following the date hereof
other than the Imminent Events of Default.
2.Forbearance; Standstill
Termination. Unless and until a Standstill Termination (as defined below)
occurs, during the Standstill Period, the Holder will not exercise any of its
rights or remedies under Section 3(b) of the Note solely with respect to the
Defaults. Upon the occurrence of a Standstill Termination, the Standstill Period
shall be automatically terminated and the Holder shall then be permitted and
entitled to immediately exercise all of its rights and remedies under
Section 3(b) of the Note with respect to each of the Defaults. “Standstill Termination” shall
mean the earlier to occur of (i) the Scheduled Standstill Expiration Date or
(ii) the occurrence of any Event of Default after the date hereof (other than an
Imminent Event of Default).
3.No Waiver; Reservation of
Rights. The Company acknowledges that the Holder is not waiving any of
the Defaults but is simply agreeing to forbear from exercising its rights and
remedies with respect to the Defaults during the Standstill Period to the extent
expressly set forth in this Agreement. Without limiting the generality of the
foregoing, the Company acknowledges and agrees that immediately upon the
occurrence of a Standstill Termination, the Holder shall have all of its rights
and remedies with respect to the Defaults to the same extent, and with the same
force and effect, as if the forbearance had not occurred. The Company will not
assert that
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(i) the
Holder is obligated in any way to continue beyond the occurrence of a Standstill
Termination to forbear from enforcing its rights or remedies under Section 3(b)
of the Note with respect to any of the Defaults or (ii) the Holder is not
entitled to act on any of the Defaults after the occurrence of a Standstill
Termination as if the Standstill Period never existed, and the Company hereby
forever waives any right to assert either of the foregoing in clauses (i) and
(ii) with regard to the specific forbearance granted pursuant to this Agreement.
The Company acknowledges that the Holder has made no representations as to what
actions, if any, the Holder will take upon the occurrence of a Standstill
Termination or the occurrence of any Event of Default after the date hereof
(other than an Imminent Event of Default) or any other breach of any of the
Transaction Documents (as defined in the Note) after the date hereof, and the
Holder does hereby specifically and fully reserve any and all rights, remedies,
and claims it has (after giving effect hereto) with respect to the Defaults and
each other Event of Default or each other breach under any of the Transaction
Documents that may occur. It is expressly understood and agreed that nothing
contained in this Agreement shall prohibit the Holder from exercising any rights
or remedies that may be available to the Holder under this Agreement, the Note,
any other Transaction Document or applicable law, other than its rights and
remedies under Section 3(b) of the Note solely with respect to the Defaults
during the Standstill Period as expressly contemplated hereby.
4.Existing Agreements; Entire
Agreement. Each of the Transaction Documents and each of the obligations
of the Company and its Subsidiaries thereunder and each of the rights of and
benefits to the Holder thereunder are, and shall continue to be, in full force
and effect and each is hereby ratified and confirmed in all respects. The
execution, delivery and effectiveness of this Agreement shall not operate as an
amendment or waiver of any right, power or remedy of the Holder under any
Transaction Document, nor constitute an amendment or waiver of any provision of
any Transaction Document and all of them shall continue in full force and
effect. This Agreement supersedes all other prior oral or written agreements
between the Holder and the Company solely with respect to the specific matters
contained herein, and this Agreement contains the entire understanding of the
parties with respect to the specific matters covered herein. The Recitals set
forth above are hereby incorporated into this Agreement by reference. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
5. Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original
thereof.
6. Headings;
Severability. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of
like import shall be construed broadly as if followed by the
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words
“without limitation.” The terms “herein,” “hereunder,” “hereof” and words of
like import refer to this entire Agreement instead of just the provision in
which they are found. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
7. Miscellaneous. The
Company hereby represents and warrants that it has the necessary power and
authority to execute, deliver, and perform the undertakings contained herein,
and that this Agreement constitutes the valid and binding obligation of the
Company enforceable against it in accordance with its terms. The parties hereto
hereby acknowledge and agree that this Agreement shall constitute a Transaction
Document for all purposes and that the Company’s breach of any representation,
warranty or covenant contained in this Agreement shall constitute an Event of
Default under Section 3(a)(vii) of the Note that is material and is not capable
of being cured. The provisions of this Agreement shall survive the termination
of the Standstill Period. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person (as defined in the Note), except the Persons expressly set forth in
Section 9 below, who shall be intended third party beneficiaries
thereof.
8. Governing Law; Jurisdiction;
Jury Trial. The parties hereby agree that pursuant to 735 Illinois
Compiled Statutes 105/5-5 they have chosen that all questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Illinois, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Illinois or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Xxxx County, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
9. RELEASE. FOR VALUE RECEIVED
(INCLUDING, WITHOUT LIMITATION, THE AGREEMENTS OF THE HOLDER IN THIS AGREEMENT),
THE COMPANY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES, HEREBY RELEASES THE
HOLDER AND ALL THE OTHER INDEMNITEES (AS DEFINED IN THE EXCHANGE AGREEMENT)
(COLLECTIVELY, THE “RELEASED
PARTIES”) OF AND
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FROM ANY
AND ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES, ACTS AND
OMISSIONS, LIABILITIES, AND OTHER CLAIMS OF EVERY KIND OR NATURE WHATSOEVER,
BOTH IN LAW AND IN EQUITY, KNOWN OR UNKNOWN, WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES NOW HAS OR EVER HAD AGAINST ANY OF THE RELEASED PARTIES ARISING OUT
OF OR RELATING TO ANY OF THE TRANSACTION DOCUMENTS (INCLUDING, WITHOUT
LIMITATION, ANY ARISING OUT OF OR RELATING TO THE NEGOTIATIONS IN CONNECTION
WITH THE DEFAULTS), AND THE COMPANY FURTHER ACKNOWLEDGES THAT, AS OF THE DATE
HEREOF, NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS ANY COUNTERCLAIM,
SET-OFF, OR DEFENSE AGAINST ANY OF THE RELEASED PARTIES, EACH OF WHICH THE
COMPANY HEREBY EXPRESSLY WAIVES ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES.
10. Disclosure. The
Company shall, on or before 8:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement file a Current Report on Form 8-K
describing the material terms of this Agreement in the form required by the 1934
Act (as defined in the Exchange Agreement) and attaching this, or a form of
this, Agreement as an exhibit thereto.
11. Terms. The Company
represents, warrants and covenants that neither the Company nor any of its
Subsidiaries has entered into, or will enter into, any agreement or instrument
with, or for the benefit of, any holder of Other Notes on terms or conditions
which are more favorable to any such holder than the terms and conditions
provided to, or for the benefit of, the Holder. To the extent the Company or any
Subsidiary enters into any agreement or instrument with, or for the benefit of,
any holder of Other Notes that contains any terms or conditions which are more
favorable to any such holder than the terms and conditions provided to, or for
the benefit of, the Holder (which shall be a breach of the immediately preceding
sentence), then the Holder, at its option, shall be entitled to the benefit of
such more favorable terms or conditions (as the case may be) and this Agreement
shall be automatically amended to reflect such more favorable terms or
conditions (as the case may be).
[signature page
follows]
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IN WITNESS WHEREOF, the Holder
and the Company have caused their respective signature page to this Agreement to
be duly executed as of the date first written above.
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By:____________________________________ |
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Its: |
[NOTE
HOLDER]
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By:____________________________________
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Its: |
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