EXHIBIT 10.20
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is effective as of May
30, 2003 by and among Workstream Inc., a Canada corporation, with offices at 495
March Road, Suite 300, Ottawa, Ontario, Canada K2K-3G1 (the "COMPANY"), and
_____________ (the "PURCHASER").
RECITALS
WHEREAS the Purchaser desires to purchase from the Company, and the Company
desires to sell to the Purchaser, (a) 333,334 Common Shares of the Company (the
"Shares") and (b) warrants to purchase 166,667 Common Shares of the Company, in
the form attached hereto as Exhibit A (the "Warrant").
AGREEMENT
In consideration of the mutual promises contained herein and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
to this Agreement agree as follows:
1. PURCHASE AND SALE OF SHARES. ISSUE OF WARRANT.
(a) PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
of this Agreement, the Purchaser agrees to purchase at the Closing (hereinafter
defined) and the Company agrees to sell and issue to the Purchaser the Shares.
The purchase price for the Shares shall be U.S.$0.75 per Share.
(b) ISSUANCE OF WARRANT. Concurrently with the purchase and sale of
the Shares, the Purchaser shall be issued the Warrant.
(c) CLOSINGS: DELIVERY. The purchase and sale of the Shares shall take
place at the offices of Perley-Robertson, Hill & McDougall LLP, 90 Sparks
Street, 4th Floor, Ottawa, Ontario K1P 1E2, at 10:00 a.m., on the 31st day of
May, 2003, or at such other time and place as the Company and the Purchaser
mutually agree upon, orally or in writing (which time and place shall be
designated as the "Closing"). At the Closing, the Company shall deliver to the
Purchaser, against payment of the purchase price by check or by wire transfer to
the Company's bank account, the Shares to be purchased by the Purchaser and the
Warrant to be issued to the Purchaser.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on
the Schedule of Exceptions attached as SCHEDULE 1 hereto, the Company hereby
represents and warrants to the Purchaser as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
corporation duly incorporated validly existing and in good standing under the
laws of Canada and has all requisite corporate authority to own, lease and
operate its properties and assets and to carry on its business as now being
conducted. The Company is duly qualified or licensed as a foreign corporation
and is in good standing in all jurisdictions where the nature of its business or
property makes such qualification or licensing necessary and where the failure
to do so would have a material adverse effect on its condition (financial or
otherwise), business, properties, assets, liabilities (including contingent
liabilities), results of operations or current prospects of the Company and its
subsidiaries, taken as a whole (hereinafter a "Material Adverse Effect"). The
Company has made available to the Purchaser copies of its Articles of
Incorporation and Bylaws. Said copies are true, correct and complete and contain
all amendments through the Closing. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
partnership, limited liability company, association or other business entity.
The Company is not a participant in any joint venture or similar arrangement.
(b) CORPORATE POWER. The Company will have at the Closing all
requisite legal and corporate power to execute and deliver this Agreement and
the Warrant and to consummate any other transactions contemplated by the terms
of this Agreement and the Warrant, and to carry out and perform its obligations
under the terms of this Agreement and the Warrant.
(c) AUTHORIZATION, ENFORCEMENT. (i) The execution and delivery of the
Agreement and the Warrant by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required, and (ii) the
Agreement and Warrant have been duly executed and delivered by the Company, and
at the Closing shall constitute valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
(d) CAPITALIZATION
(i) CAPITAL STOCK. The authorized capital stock of the Company
consists of an unlimited number of shares of Common Shares of which 20,339,108
shares will be issued and outstanding immediately prior to the Closing and an
unlimited number of shares of Class A, Series A Preferred Shares of which 0
shares are currently issued and outstanding. The outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are fully
paid and nonassessable, and were issued in compliance with all applicable
federal and state securities laws.
(d) SOLVENCY. The Company is solvent after giving effect to the
transactions contemplated by this Agreement and Warrant.
(e) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Warrant by the Company and the consummation by the Company of
the transactions
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contemplated herein do not and will not (i) violate any provision of the
Company's Charter or Bylaws, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party, (iii) create or impose a lien, charge or encumbrance on any property of
the Company under any agreement or any commitment to which the Company is a
party or by which the Company is bound or by which any of its respective
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or other foreign statute, rule, regulation, order, judgment or
decree (including any federal or state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries are bound or affected, except,
in all cases, for such conflicts, defaults, termination, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company is not
being conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for violations which singularly or in the aggregate
do not and will not have a Material Adverse Effect. The Company is not required
under any federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Warrant, or issue and sell the Shares or
Warrant in accordance with the terms hereof (other than any filings which may be
required to be made by the Company with the SEC or state securities
administrators ); PROVIDED, HOWEVER, that for purpose of the representations
made in this sentence, the Company is assuming and relying upon the accuracy of
the relevant representations and agreements of the Purchaser herein.
(f) COMPLIANCE WITH LAW. The Company has all franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals necessary for the conduct of its business as now being conducted by it
unless the failure to possess such franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(g) SEC REPORTS. The Company has filed in a timely manner all
documents that the Company was required to file under the Exchange Act during
the 12 months preceding the date of this Agreement and such documents complied
as to form in all material respects with the SEC's requirements as of their
respective filing dates, and the information contained therein as of the date
thereof did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made not
misleading.
(h) BOOKS AND RECORDS. The records and documents of the Company
accurately reflect in all material respects the information relating to the
business of the Company, the location and collection of its assets, and the
nature of all transactions giving rise to the obligations or accounts receivable
of the Company.
(i) SECURITIES LAWS. The Company has complied and will comply with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the
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Shares and Warrant hereunder. Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy the Shares or the Warrant or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the Purchaser), so as
to bring the issuance and sale of the Shares or the Warrant under the
registration provisions of the Securities Act and applicable state securities
laws. Neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Shares or the Warrant.
(j) BROKERS OR FINDERS; OTHER OFFERS. The Company has not incurred,
and will not incur, directly or indirectly, as a result of any action taken by
the Company, any liability for brokerage or finder's fees or agent's commissions
or any similar charges in connection with this Agreement or the Warrant.
(k) DISCLOSURE. The Company has fully provided the Purchaser with all
the information which the Purchaser has requested for deciding whether to
acquire the Shares or the Warrant and all information which the Company believes
is reasonably necessary to enable the Purchaser to make such decision. No
representation or warranty of the Company contained in this Agreement or the
Warrant and the exhibits and schedules attached hereto and thereto, any
certificate furnished or to be furnished to the Purchaser at the Closing or
other written information furnished to the Purchaser or its counsel in
connection with the transactions contemplated by this Agreement or the Warrant
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. There is no
fact known to the Company that has not been disclosed herein, or in any other
agreement, document or written statement furnished by the Company to the
Purchaser in connection with the transactions contemplated hereby and thereby
which is specific to the Company, as opposed to the industry in which the
Company operates, and which materially adversely affects or is reasonably likely
to materially and adversely affect the business, properties, assets or financial
condition of the Company
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company that:
(a) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares and the Warrant to
be acquired by the Purchaser will be acquired for investment for the Purchaser's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser has not been formed for the specific purpose of acquiring the Shares
or Warrant.
(b) KNOWLEDGE. The Purchaser is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Shares and Warrant.
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(c) RESTRICTED SECURITIES. The Purchaser understands that the Shares
and Warrant have not been, and will not be, registered under the Securities Act
of 1933, as amended (the "Securities Act"), by reason of a specific exemption
from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Purchaser's representations as expressed herein. The Purchaser understands
that the Shares and Warrant are "restricted securities" under applicable U.S.
federal and state securities laws and that, pursuant to these laws, the
Purchaser must hold the Shares and Warrant indefinitely unless the Shares and
Warrant are registered with the Securities and Exchange Commission and qualified
by state authorities, or an exemption from such registration and qualification
requirements is available. The Purchaser acknowledges that the Company has no
obligation to register or qualify the Shares and Warrant for resale. The
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares and Warrant, and on requirements relating to the Company which
are outside of the Purchaser's control, and which the Company is under no
obligation and may not be able to satisfy.
(d) NO PUBLIC MARKET. The Purchaser understands that no public market
now exists for the Shares and Warrant and that the Company has made no
assurances that a public market will ever exist for the Shares and Warrant.
(e) LEGENDS. The Purchaser understands that the Shares and Warrant may
bear one or all of the following legends.
(i) "THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT FOR A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
AFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT.
(ii) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the Shares represented by the certificate so
legended.
(f) ACCREDITED INVESTOR. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
4. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of the Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 hereof shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
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(b) QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares and Warrant pursuant to this Agreement shall be obtained and
effective as of the Closing.
(c) PERFORMANCE; PROCEEDINGS AND DOCUMENTS. The Company shall
have performed and complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing and all corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchaser, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
(d) COMPLIANCE CERTIFICATE. The Company shall deliver to the
Purchaser at the Closing a certificate dated as of the Closing and signed on its
behalf by one of the Company's executive officers certifying that the conditions
specified in Sections 4(a), (b) and (c) have been fulfilled.
(e) SECRETARY'S CERTIFICATE. The Purchaser shall have received a
certificate of the Secretaries or Assistant Secretaries of the Company (the
"Bring-Down Certificate"), in form and substance satisfactory to the Purchaser,
certifying as follows:
(i) that attached thereto are true and complete
copies of the Articles and Bylaws of the Company; and
(ii) that attached thereto are true and complete
copies of the resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance of
this Agreement, instruments and certificates required to be
executed by it in connection herewith and approving the
consummation of the transactions in the manner contemplated
hereby including, but not limited to, the authorization and
issuance of the Shares.
(f) DELIVERY OF SHARES AND WARRANTS. The Purchaser shall have
received the Shares and Warrant which the Purchaser is purchasing hereunder.
(g) REGISTRATION RIGHTS. The Company shall prepare, and, as soon
as practicable but in no event later than one hundred and twenty
(120) days from the execution of this Agreement, file with the
SEC a registration statement or registration statements (as is
necessary) on Form S-3 or such other appropriate form covering
the resale of (a) all of the Shares; and (b) any common shares of
the Company issued or issuable upon the proper exercise of the
Warrant (the "Conversion Shares") (collectively the Conversion
Shares and the Shares shall hereafter be referred to as the
"Registrable Securities"). The initial registration statement
prepared pursuant hereto shall register for resale that number of
common shares of the Company equal to the number of Registrable
Securities as of the date immediately preceding the date the
registration statement is initially filed with the SEC. The
Company shall use its reasonable best efforts to have the
registration statement declared effective by the SEC as soon a
practicable after the date of filing.
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5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
the Company to the Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchaser contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.
(b) PERFORMANCE OF OBLIGATIONS. The Purchaser shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by him/her/it on or before the Closing, and the Purchaser shall
have delivered payment to the Company in respect of its purchase of the Shares
and Warrant.
(c) QUALIFICATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares and Warrant pursuant to this Agreement shall be obtained and effective as
of the Closing.
6. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(b) GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the Province of Ontario and the Country of Canada applicable therein, without
giving effect to principles of conflicts of law. In addition, the parties hereto
agree that (i) any legal suit, action or proceeding arising out of or relating
to this Agreement shall be instituted exclusively in the Ontario Superior Court
of Justice in Ottawa, Ontario, Canada, (ii) waive any objection which the
parties may have now or hereafter based upon forum non conveniens or to the
venue of any such suit, action or proceeding, and (iii) irrevocably consent to
the jurisdiction of the Ontario Superior Court of Justice in Ottawa, Ontario,
Canada in any such suit, action or proceeding. FURTHER, THE PARTIES HERETO
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION TO ENFORCE THIS AGREEMENT AND IN
CONNECTION WITH ANY DEFENSE, COUNTERCLAIM OR CROSS CLAIM ASSERTED IN ANY SUCH
ACTION.
(c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
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(d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) SURVIVAL. The warranties, representations, agreements and
covenants of the Company contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
(f) NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified as such party's address as set forth below or as subsequently
modified by written notice.
(g) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or waived only with the written consent of the Company and the Purchaser.
(h) SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then such provision shall be
excluded form this Agreement, and the balance of the Agreement shall be
enforceable in accordance with its terms.
(i) ENTIRE AGREEMENT. This Agreement, and the documents referred to
herein, constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
(j) EXPENSES. The Company and the Purchaser shall pay their respective
costs and expenses incurred with respect to the negotiation, execution, delivery
and performance of this Agreement.
(k) WIRE INSTRUCTIONS. If payment by the Purchaser of the purchaser
price is to be by wire transfer, then the purchase price shall be wired to:
[Company wiring instructions]
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
WORKSTREAM INC.
By: /s/ Michael Mullarkey
-------------------------------
Name: Michael Mullarkey
Title: Chairman and CEO
PURCHASER:
By:
-------------------------------
Name:
Title: Purchaser
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
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SCHEDULE 1
SCHEDULE OF EXCEPTIONS
SCHEDULE A
PURCHASERS OF WORKSTREAM INC. COMMON SHARES AND WARRANTS
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NO. OF
NO. OF WARRANTS TO PURCHASE
NAME COMMON SHARES COMMON SHARES
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Countrywide Partners LLC 333,334 166,667
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Platinum Value Arbitrage Fund, LP 333,334 166,667
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