EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of the 17th day of March, 2004.
BETWEEN:
WORKSTREAM USA, INC.,
a corporation incorporated under the laws of Delaware
(hereinafter referred to as the "Purchaser")
AND:
WORKSTREAM INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as "Workstream")
AND:
PEOPLEVIEW, INC.,
a corporation incorporated under the laws of the State of Nevada
(hereinafter referred to as the "Vendor")
WHEREAS:
A. The Vendor carries on the business of providing real-time decision support
for human capital management;
B. The Vendor wishes to sell and assign to the Purchaser, and the Purchaser
wishes to purchase and assume from Vendor certain of the assets of such
business on the terms and subject to the conditions hereinafter contained.
NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration paid by each of the parties
hereto to each of the other parties hereto (the receipt and sufficiency of which
are hereby acknowledged), it is agreed among the parties hereto as follows:
1. INTERPRETATION
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:
1.1.1. "Affiliate" of any person means any corporation
which, directly or indirectly, is controlled by,
controls or is under direct or indirect common
control with such person;
1.1.2. "Agreement", "hereto", "herein", "hereof",
"hereunder" and similar expressions refer to this
Asset Purchase Agreement and not any particular
paragraph or any particular portion of this agreement
and includes all schedules attached to this
agreement;
1.1.3. "Assumed Contracts" means all contracts, agreements,
orders, commitments and other engagements by or with
third parties relating to the Business which are
included in the Purchased Assets including, without
limitation, the Customer Contracts and the Leases all
of which, including amounts payable thereon, all of
which are listed in Schedule 1.1.3 attached hereto;
1.1.4. "Business" means the business carried on by the
Vendor which primarily involves the provision of
real-time decision support for human capital
management;
1.1.5. "Business Day" means a day other than a Saturday, a
Sunday or other day on which commercial banks in
Ottawa, Ontario, Canada are authorized or required by
law to close;
1.1.6. "Closing Date" means March 17, 2004, or such other
date as the Vendor and Purchaser may agree upon;
1.1.7. "Closing Time" means 2:00 o'clock in the afternoon on
the Closing Date or such other time on the Closing
Date as the parties hereto may agree upon;
1.1.8. "Commission" means the Securities and Exchange
Commission;
1.1.9. "Commission Documents" means all of the Purchaser's
filings with the Commission prior to the date hereof;
1.1.10. "Customer Contracts" means any and all agreements
entered into between the Vendor and one or more third
parties relating to the sale or provision of goods or
services by the Vendor to such third parties in
connection with the Business, including unfilled
orders, commitments and other engagements by or with
such third parties, all of which are listed in
Schedule 2.1.4 attached hereto;
1.1.11. "Encumbrances" means mortgages, charges, pledges,
security interests, liens, encumbrances, actions,
claims, demands and equities of any nature whatsoever
or howsoever arising and any rights or privileges
capable of becoming any of the foregoing;
1.1.12. Intentionally deleted;
1.1.13. "Governmental Authority" means any foreign, domestic,
federal, territorial, state or local governmental
authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory
organization, commission, tribunal or organization or
any regulatory, administrative or other agency, or
any political or other subdivision, department or
branch of any of the foregoing;
1.1.14. "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended;
1.1.15. "Interim Period" means the period from and including
the date of this Agreement to and including the
Closing Date;
1.1.16. "License Rights" means all license and distribution
rights relating to the Business described in Schedule
1.1.16 attached hereto;
1.1.17. "Lien" means, with respect to any asset, any
mortgage, lien, claim, pledge, charge, security
interest or other encumbrance of any kind in respect
of such asset;
1.1.18. "Material Adverse Effect" means with respect to a
Person or entity, a material adverse effect on the
assets, properties, business, operations, financial
condition or results of operations of such Person or
entity and its subsidiaries taken as a whole;
1.1.19. "Person" means and includes any individual,
corporation, general partnership, limited
partnership, limited liability company, limited
liability partnership, joint venture, syndicate,
association, trust, government, governmental agency
or board or commission or authority, and any other
form of entity or organization;
1.1.20. "Principal" means any manufacturer which the Vendor
represents in the sales and service of the
manufacturer's products;
1.1.21. "Purchase Price" means the sum of $1,000,000 which is
the amount, subject to adjustments as herein
provided, payable by the Purchaser to the Vendor for
all of the Purchased Assets, as provided herein;
1.1.22. "Purchased Assets" means the undertaking and assets
of the Business which are to be sold by the Vendor to
the Purchaser pursuant to Section 2;
1.1.23. "Vendor's Mediation Rights" means the vendor's
mediation rights as set out in section 12 of the
escrow agreement attached hereto as Schedule 1.1.23;
1.1.24. "Warranty Claim" means a claim made by either the
Purchaser or the Vendor based on or with respect to
the inaccuracy or non-performance or non-fulfilment
or breach of any representation or warranty made by
the other party contained in this Agreement or
contained in any document or certificate given in
order to carry out the transactions contemplated
hereby.
1.2. BEST OF KNOWLEDGE. Any reference herein to "the best of the
knowledge" of the Vendor will be deemed to mean the actual
knowledge of the Vendor and the knowledge which it would have
had if it had conducted an inquiry into the relevant subject
matter that a reasonably prudent person would have conducted
under similar circumstances.
1.3. SCHEDULES. The Schedules which are attached to this Agreement
are incorporated in this Agreement by reference and are deemed
to be part hereof.
1.4. CURRENCY. Unless otherwise indicated, all dollar amounts
referred to in this Agreement are in lawful money of the
United States of America.
1.5. CHOICE OF LAW AND ATTORNMENT. This Agreement shall be governed
by and construed and enforced in accordance with the laws of
the 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.
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;
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 "PeopleView,
Inc." or any variation of same (Notwithstanding the
transfer of all rights in and title to the name
"PeopleView, Inc., the Purchaser acknowledges that
the Vendor's corporate name shall continue to be
"PeopleView, Inc." until such time as the Vendor is
able to change its corporate name. The Vendor
undertakes and agrees to effect the change of its
corporate name to something that does not contain the
name "PeopleView, Inc" or any variation thereof, as
soon as practicably possible);
2.1.6. Technology, Intellectual Property and Software: all
of its world wide right, title and interest in and to
any intellectual property rights including but not
limited to all trade secrets, research data, designs,
proprietary know-how, technical information,
specifications and materials in whatever form or
media recording or evidencing technology or
proprietary information used in or relating to the
Business, and all rights and interests in and to all
inventions, patents, applications for patents,
copyrights, trade marks, trade mark registrations,
trade names, logos, industrial designs, design
patents, and other intellectual property used in or
relating to the Business, and all computer software
and any intellectual or industrial property of any
nature whatsoever which it may have in any components
or features of the computer software used in the
Business including the software products known as
Climate Sight, Skill Sight, Performance Sight,
Compliance Sight and HCM TOOLS and including all
related codes, related source, object or any
application codes, specifications, documentation,
revisions, enhancements and modifications thereto, in
whatever form and media to which the Vendor has any
right or interest for the full duration of all such
rights, and any renewals or extensions thereof, all
of which is listed in Schedule 2.1.6 attached hereto;
2.1.7. Licence Rights: all licence and distribution rights
relating to the Business granted to the Vendor by any
third party under all contracts and agreements
(written or oral), all of which are listed in
Schedule 1.1.16 attached hereto;
2.1.8. Regulatory Licenses: all licenses, registrations and
qualifications of the Business required by any
governmental or regulatory authority, to the extent
transferable;
2.1.9. Supply Contracts: the full benefit of all contracts
providing for the supply of goods and services to the
Business, subject to the Purchaser's review and
acceptance of such contracts and agreements prior to
the Closing Date; and
2.1.10. Warranty Rights and Maintenance Contracts: the full
benefit of all warranties and warranty rights
(express and implied) against manufacturers or
sellers which apply to any of the Purchased Assets
and all maintenance contracts on machinery, equipment
and the other Purchased Assets, subject to the
Purchaser's review and acceptance of such contracts
and agreements prior to the Closing Date.
2.2. UNASSIGNABLE CONTRACTS. If any rights, benefits or remedies
(the "Rights") under any Assumed Contracts are not assignable
by the Vendor to the Purchaser without the written consent of
the other party thereto (the "Third Party") and such consent
is not obtained, then, unless the Purchaser exercises its
rights under Section 6.2,
2.2.1. the Vendor will hold the Rights for the benefit of
the Purchaser,
2.2.2. the Vendor will, at the request and expense and under
the direction of the Purchaser, in the name of the
Vendor or otherwise as the Purchaser shall specify,
take all such actions and do all such things as
shall, in the opinion of the Purchaser, be necessary
or desirable in order that the obligations of the
Vendor under such Assumed Contracts may be performed
in a manner such that the value of the Rights shall
be preserved and shall enure to the benefit of the
Purchaser and such that all moneys receivable under
the Assumed Contracts may be received by the
Purchaser,
2.2.3. the Vendor will promptly pay over to the Purchaser
all such moneys collected by the Vendor in respect of
such Assumed Contracts, and
2.2.4. to the extent permitted by the Third Party and
provided, in the Purchaser's opinion, it would not be
prejudicial to the Purchaser's rights to do so, the
Purchaser will perform the obligations under such
Assumed Contracts on behalf of the Vendor, and will
indemnify the Vendor against all liabilities, costs
and expenses incurred by the Vendor in performing
such obligations.
2.3. EXCLUDED LIABILITIES AND INDEMNITY. The Purchaser will not
assume and will not be liable for, and the Vendor will
indemnify the Purchaser from and against, all obligations,
commitments and liabilities of and claims against the Vendor
(whether absolute, accrued or contingent) relating to the
Business. Without limiting the generality of the foregoing, it
is agreed that the Purchaser will have no liability for any of
the following obligations or liabilities:
2.3.1. all liabilities in respect of all indebtedness of the
Vendor to all persons;
2.3.2. all product liability claims and liabilities for
warranty or product return claims relating to any
product or service of the Business produced, sold,
performed or delivered prior to the Closing Date;
2.3.3. all liabilities for all taxes, duties, levies,
assessments and other such charges, including any
penalties, interests and fines with respect thereto,
payable by the Vendor to any federal, state,
municipal or other government or governmental agency,
authority, board, bureau or commission, domestic or
foreign, including, without limitation, any taxes in
respect of or measured by the sale, consumption or
performance by the Vendor of any product or service
prior to the Closing Date or any similar legislation
in respect of all remuneration payable to all persons
employed in the Business prior to the Closing Date;
2.3.4. all other liabilities of any nature whatsoever, known
or unknown, due or to become due, not expressly
assumed by Purchaser pursuant to this Agreement.
2.4. PURCHASE PRICE. The price payable by the Purchaser to the
Vendor for the Purchased Assets will be equal to the sum of:
the value of the Workstream Shares (as defined in section
2.5.1 herein), the value of the Warrant (as defined in section
2.5.2 herein) and $300,000.00.
2.5. PAYMENT OF PURCHASE PRICE. Purchaser and Vendor mutually agree
that the Purchase Price, less the Hold Back Shares (as
hereinafter defined) and the Hold Back Funds (as hereinafter
defined), will be paid and satisfied at the Closing Time as
follows:
2.5.1. by delivery to the Vendor of that number of shares
(rounded up to a whole share) of 350,000 common
shares, no par value (the "Shares" or the "Workstream
Shares"), of Workstream; provided, however, that the
Purchaser shall deposit 50,000 of the Workstream
Shares (the "Hold Back Shares") into an escrow
account reasonably approved by the parties until the
Purchaser, in its reasonable discretion and subject
to Vendor's Mediation Rights, within 90 days of the
Closing Date, has satisfied itself of the following:
2.5.1.1. that all proprietary issues relating to
the Intellectual Property (as
hereinafter defined) have been resolved,
namely:
2.5.1.1.1. that the Vendor rightfully owns
or has valid rights to the
Intellectual Property; and
2.5.1.1.2. that the Intellectual Property
does not infringe on any
patent, trade mark, trade name,
copyright, industrial design,
trade secret or other
Intellectual Property or
propriety right of any other
person.
2.5.1.2. that all computer systems and application
software, including without limitation, the
software products known as Climate Sight,
Skill Sight, Performance Sight, Compliance
Sight and HCM TOOLS and all documentation
relating thereto and the latest revisions of
all related object and source codes
therefor, forming part of the Purchased
Assets and contained in Schedule 2.1.13 or
Schedule 2.1.6 attached hereto, are fully
functional, merchantable and fit for the
purpose for which they were intended; and
2.5.2. by delivery to the Vendor of a warrant to purchase
50,000 common shares (the "Warrant Shares"), no par
value in Workstream at a purchase price of $3.00 per
common share (the "Warrant"). The form of Warrant is
attached hereto as Schedule 2.5.2; and
2.5.3. by delivery to the Vendor of the balance of $300,000,
by way of certified check or bank draft, less $50,000
(the "Hold Back Funds") which shall be deposited by
the Purchaser on account of the Accounts Receivable
into an escrow account reasonably approved by the
parties until the following has occurred: The
Purchaser shall have the right, by written notice to
the Vendor given on or after ninety (90) days, but no
later than 120 days, following the Closing Date (the
"Repurchase Date"), to require the Vendor to
repurchase for cash all of the Accounts Receivable
that are at the Repurchase Date uncollected. The
terms governing the repurchase by the Vendor of the
uncollected Accounts Receivables are as follows:
2.5.3.1. the Vendor shall repurchase all uncollected
Accounts Receivable at a purchase price (the
"Repurchase Price") equal to their aggregate
face value, and the Repurchase Price shall
be paid and satisfied at the Repurchase Date
by deducting the Repurchase Price from the
Hold Back Funds. The Purchaser hereby
acknowledges and agrees that if the
Repurchase Price exceeds the amount of Hold
Back Funds, the Vendor shall, not be
required to pay to the Purchaser any
additional amounts with respect to such
uncollected Accounts Receivable, and such
uncollected Accounts Receivable shall be the
sole responsibility of the Purchaser.
2.5.3.2. the Purchaser shall execute and deliver to
the Vendor, at the cost of the Vendor, all
instruments as shall be reasonably necessary
to effectively vest in the Vendor all of the
right, title and interest of the Purchaser
with respect to any uncollected Accounts
Receivable repurchased by the Vendor
pursuant to this subsection.
2.5.4. the Vendor, the Purchaser and Workstream shall
execute and deliver to each other the escrow
agreement attached hereto as Schedule 1.1.23;
2.6. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets in the manner provided by
Schedule 2.6 attached hereto. The Vendor and the Purchaser
shall file their respective tax returns prepared in accordance
with such allocation.
2.7. PAYMENT OF TAXES. The Vendor shall be liable for and shall pay
all applicable federal and state sales taxes, excise taxes and
all other taxes, duties and other like charges properly
payable on and in connection with the conveyance and transfer
of the Purchased Assets to the Purchaser. The Purchaser will
do and cause to be done such things as are reasonably
requested to enable the Vendor to comply with such obligation
in an efficient manner.
3. REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES BY THE VENDOR. The Vendor
hereby represents and warrants to the Purchaser and Workstream
as follows, and confirm that the Purchaser and Workstream is
relying upon the accuracy of each of such representations and
warranties in connection with the purchase of the Purchased
Assets and the completion of the other transactions hereunder:
3.1.1. Corporate Authority and Binding Obligation. The
Vendor has good right, full corporate power and
absolute authority to enter into this Agreement and
to sell, assign and transfer the Purchased Assets to
the Purchaser in the manner contemplated herein and
to perform all of the Vendor's obligations under this
Agreement. The Vendor and its shareholders and board
of directors have taken all necessary or desirable
actions, steps and corporate and other proceedings to
approve or authorize, validly and effectively, the
entering into of, and the execution, delivery and
performance of, this Agreement and the sale and
transfer of the Purchased Assets by the Vendor to the
Purchaser. This Agreement is a legal, valid and
binding obligation of the Vendor, enforceable against
it in accordance with its terms.
3.1.2. No Other Purchase Agreements. No person has any
agreement, option, understanding or commitment, or
any right or privilege (whether by law, pre-emptive
or contractual) capable of becoming an agreement,
option or commitment, for the purchase or other
acquisition from the Vendor of any Purchased Assets,
or any rights or interest therein, other than in the
ordinary course of the Business.
3.1.3. Contractual and Regulatory Approvals. Except as
specified in Schedule 3.1.3 attached hereto, the
Vendor is not under any obligation, contractual or
otherwise, to request or obtain the consent of any
person, and no permits, licences, certifications,
authorizations or approvals of, or notifications to,
any federal, state, municipal or local government or
governmental agency, board, commission or authority
are required to be obtained by the Vendor,
3.1.3.1. in connection with the execution, delivery
or performance by the Vendor of this
Agreement or the completion of any of the
transactions contemplated herein,
3.1.3.2. to avoid the loss of any permit, licence,
certification or other authorization
relating to the Purchased Assets, or
3.1.3.3. in order that the authority of the Purchaser
to carry out the Assumed Contracts in this
ordinary course and in the same manner as
presently carried out by the Vendor.
Complete and correct copies of any agreements under
which the Vendor is obligated to request or obtain
any such consent have been provided to the Purchaser.
3.1.4. Status and Governmental Licences.
3.1.4.1. The Vendor is a corporation duly
incorporated, validly existing and in good
standing in all respects under the laws of
its jurisdiction of incorporation. The
Vendor has all necessary corporate power to
own, lease and operate its assets,
properties and business and to carry on its
business as it is now being conducted and is
in good standing in every jurisdiction in
which the nature of its business or the
location of its properties requires such
qualification or licensing. Schedule 3.1.4
attached hereto sets forth all jurisdictions
in which the Vendor is qualified or licensed
to do business as a corporation.
3.1.4.2. The Vendor holds all necessary licences,
registrations and qualifications in each
jurisdiction in which,
(i) it owns or leases any of the
Purchased Assets, or
(ii) the nature of the Purchased Assets
or any part thereof, makes such
qualification necessary or
desirable to enable the Purchased
Assets to be owned, leased and/or
operated.
All of the Vendor's licences, registrations and
qualifications are listed in Schedule 3.1.4 attached
hereto and are valid and subsisting. Complete and
correct copies of the licences, registrations and
qualifications have been delivered to the Purchaser.
The Vendor is in compliance with all terms and
conditions of the licences, registrations and
qualifications. There are no proceedings in progress,
pending or, to the best of the knowledge of the
Vendor, threatened, which could result in the
revocation, cancellation or suspension of any of the
licences, registrations or qualifications.
3.1.5. Compliance with Constating Documents, Agreements and
Laws. The execution, delivery and performance of this
Agreement and each of the other agreements
contemplated or referred to herein by the Vendor, and
the completion of the transactions contemplated
hereby, will not constitute or result in a violation,
breach or default, or cause the acceleration of any
obligations under:
3.1.5.1. any term or provision of any of the
articles, by-laws or other constating
documents of the Vendor,
3.1.5.2. subject to obtaining the contractual
consents referred to in Schedule 3.1.3 , the
terms of any indenture, agreement (written
or oral), instrument or understanding or
other obligation or restriction to which the
Vendor is a party or by which it is bound
including, without limitation, any of the
Assumed Contracts, or
3.1.5.3. subject to obtaining the regulatory consents
referred to in Schedule 3.1.3, any term or
provision of any of the Licences or any
order of any court, governmental authority
or regulatory body or any law or regulation
of any jurisdiction in which the Business is
carried on.
3.1.5.4. Absence of Undisclosed Liabilities. There
are no liabilities (contingent or otherwise)
of the Vendor of any kind whatsoever in
respect of which the Purchaser may become
liable on or after the consummation of the
transactions contemplated by this Agreement.
3.1.6. Litigation. Except for the matters referred to in
Schedule 3.1.6 attached hereto, there are no actions,
suits or proceedings, judicial or administrative
(whether or not purportedly on behalf of the Vendor)
pending or, to the best of the knowledge of the
Vendor, threatened, by or against or affecting the
Vendor which may affect the Purchased Assets, at law
or in equity, or before or by any court or any
federal, state, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign. Except for the
matters referred to in Schedule 3.1.6 there are no
grounds on which any such action, suit or proceeding
might be commenced with any reasonable likelihood of
success.
3.1.7. Title to Purchased Assets. The Vendor is the owner of
and has good and marketable title to all of the
Purchased Assets free and clear of all Liens.
3.1.8. Works Orders and Deficiencies. There are no
outstanding work orders, non-compliance orders,
deficiency notices or other such notices relative to
the Purchased Assets which have been issued by any
regulatory authority, police or fire department,
sanitation, environment, labour, health or other
governmental authorities or agencies. There are no
matters under discussion with any such department or
authority relating to work orders, non-compliance
orders, deficiency notices or other such notices.
None of the Purchased Assets are being operated, in a
manner which is in contravention of any statute,
regulation, rule, code, standard or policy.
3.1.9. Leases of Personal Property. Schedule 3.1.9 attached
hereto describes all leases of equipment and vehicles
relating to or included in the Purchased Assets.
Complete and correct copies of those leases have been
provided to the Purchaser. The Vendor is entitled to
all rights and benefits as lessee under those leases,
and the Vendor has not sublet, assigned, licensed or
otherwise conveyed any rights in those leases or in
the property leased thereunder to any other person.
All payments and other obligations required to be
paid and performed by the Vendor under those leases
have been duly paid and performed; the Vendor is not
in default of any its obligations under those leases;
and, to the best of the knowledge of the Vendor, none
of the lessors or any other parties to those leases
are in default of any of their obligations under
those leases. The Vendor is entitled to assign all of
its right and interest under those leases and in and
to the property leased thereunder to the Purchaser
subject to obtaining the consents referred to in
Schedule 3.1.3 attached hereto. Subject to obtaining
such consents, the terms and conditions of those
leases will not be affected by, nor will any of those
leases be in default as a result of, the completion
of the transaction contemplated hereunder.
3.1.10. Intellectual Property.
3.1.10.1. Section 2.1.6 and Schedule 2.1.13 attached
hereto lists and contains a complete
description of:
(i) all patents, patent applications
and registrations, trade marks,
trade mark applications and
registrations, copyrights,
copyright applications and
registrations, trade names and
industrial designs, domestic or
foreign, owned or used by the
Vendor and included as part of the
Purchased Assets,
(ii) all trade secrets, know-how,
inventions and other intellectual
property owned or used by the
Vendor and included as part of the
Purchased Assets,
(iii) all computer systems and
application software, including
without limitation all
documentation relating thereto and
the latest revisions of all related
object and source codes therefor,
owned or used by the Vendor and
included as part of the Purchased
Assets,
(all of the foregoing being collectively
called the "Intellectual Property").
3.1.10.2. The Vendor has good and valid title to all
of the Intellectual Property, free and clear
of any and all Encumbrances, except in the
case of any Intellectual Property licensed
to the Vendor as disclosed in Schedule
2.1.13. Complete and correct copies of all
agreements whereby any rights in any of the
Intellectual Property have been granted or
licensed to the Vendor have been provided to
the Purchaser. No royalty or other fee is
required to be paid by the Vendor to any
other person in respect of the use of any of
the Intellectual Property except as provided
in such agreements delivered to the
Purchaser. The Vendor has protected its
rights in the Intellectual Property in the
manner and to the extent described in
Schedule 2.1.13. Except as indicated in
Schedule 2.1.13, the Vendor has the
exclusive right to use all of the
Intellectual Property and has not granted
any licence or other rights to any other
person in respect of the Intellectual
Property. Complete and correct copies of all
agreements whereby any rights in any of the
Intellectual Property have been granted or
licensed by the Vendor to any other person
have been provided to the Purchaser. The
Vendor is entitled to assign all of its
rights and interest in and to the
Intellectual Property to the Purchaser
subject to obtaining the consents referred
to in Schedule 3.1.3 attached hereto.
3.1.10.3. Subject to obtaining the aforesaid
consents, and except as disclosed in
Schedule 2.1.6, there are no restrictions on
the ability of the Vendor or any successor
to or assignee from the Vendor to use and
exploit all rights in the Intellectual
Property. All statements contained in all
applications for registration of the
Intellectual Property were true and correct
as of the date of this Agreement of such
applications. Each of trade marks and trade
names included in the Intellectual Property
is in use.
3.1.10.4. The use of the Intellectual Property does
not infringe, and the Vendor has not
received any notice, complaint, threat or
claim alleging infringement of, any patent,
trade mark, 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. The Vendor is not, in
relation to any part of the Purchased Assets, a
partner or participant in any partnership, joint
venture, profit-sharing arrangement or other
association of any kind and is not party to any
agreement under which the Vendor agrees to carry on
any part of the Business in such manner or by which
the Vendor agrees to share any revenue or profit
relating to the Purchased Assets with any other
person.
3.1.13. Customers. The Vendor has delivered to the Purchaser
a true and complete list of all customers of the
Business, as it relates to the Purchased Assets, as
of the date of this Agreement. The Vendor is the sole
and exclusive owner of, and has the unrestricted
right to use, such customer list. Other than as set
forth on Schedule 3.1.13, neither the customer list
nor any information relating to the customers of the
Business, as they related to the Purchased Assets,
have, within three years prior to the date of this
Agreement, been made available to any person other
than the Purchaser. The Vendor has no knowledge of
any facts which could reasonably be expected to
result in the loss of any customers or sources of
revenue of the Business which, in the aggregate,
would materially affect the Purchased Assets.
3.1.14. Warranties and Discounts. Except as described in
Schedule 3.1.14 attached hereto,
3.1.14.1. the Vendor has not given any guarantee or
warranty in respect of any of the products
sold or the services provided as part of the
Purchased Assets, except warranties made in
the form of the standard written warranty, a
copy of which has been provided to the
Purchaser, and except for warranties implied
by law;
3.1.14.2. except as set forth on Schedule 3.1.14.2,
during each of the three fiscal years of the
Vendor ended immediately preceding the date
, no claims have been made against the
Vendor for breach of warranty or contract
requirement or negligence or for a price
adjustment or other concession in respect of
any defect in or failure to perform or
deliver any products, services or work in
connection with the Purchased Assets which
had, in any such year, an aggregate cost
exceeding $1,000;
3.1.14.3. there are no repair contracts or
maintenance obligations in favor of the
customers or users of the Purchased Assets
except obligations incurred in accordance
with standard terms, a copy of which has
been provided to the Purchaser;
3.1.14.4. the Vendor is not now subject to any
agreement or commitment, and the Vendor has
not, within three years prior to the date of
this Agreement, entered into any agreement
with or made any commitment to any customer
of the Business in relation to the Purchased
Assets which would require the repurchase of
any products sold to such customers or
adjustment of any price or the granting of
any refund, discount or other concession to
such customer; and
3.1.14.5. the Vendor is not required to provide any
letters of credit, bonds or other financial
security arrangements in connection with any
transactions with any suppliers or customers
of the Business relating to the Purchased
Assets.
3.1.15. Licences, Agency and Distributorship Agreements.
Schedule 2.1.13 attached hereto lists all agreements
to which the Vendor is a party or by which it is
bound under which the right to manufacture, use or
market any product, service, technology, information,
data, computer hardware or software or other property
used in or produced or sold by the Business in
relation to the Purchased Assets has been granted,
licensed or otherwise provided to the Vendor or by
the Vendor to any other person, or under which the
Vendor has been appointed or any person has been
appointed by the Vendor as an agent, distributor,
licensee or franchisee for any of the foregoing.
Complete and correct copies of all of the agreements
relating to the License Rights have been provided to
the Purchaser. The Vendor is entitled to assign all
of its interest in the License Rights to the
Purchaser subject to obtaining the consents referred
to in Schedule 3.1.3 attached hereto. None of the
agreements relating to the License Rights grant to
any person any authority to incur any liability or
obligation or to enter into any agreement on behalf
of the Vendor.
3.1.16. Outstanding Agreements. The Vendor is not a party to
or bound by any outstanding or executory agreement,
contract or commitment, whether written or oral,
relating to the Purchased Assets, except for those
agreements set out in this Agreement or in the
Schedules hereto.
Complete and correct copies of each of the contracts,
leases and agreements described in the Schedules
attached hereto have been provided to the Purchaser.
3.1.17. Good Standing of Agreements. The Vendor is not in
material default or breach of any of its obligations
under any one or more contracts, agreements (written
or oral), commitments, indentures or other
instruments to which it is a party or by which it is
bound relating to the Purchased Assets, and there
exists no state of facts which, after notice or lapse
of time or both, would constitute such a default or
breach. All such contracts, agreements, commitments,
indentures and other instruments are now in good
standing and in full force and effect without
amendment thereto, the Vendor is entitled to all
benefits thereunder and, to the best of the knowledge
of the Vendor, the other parties to such contracts,
agreements, commitments, indentures and other
instruments are not in material default or breach of
any of their obligations thereunder. There are no
contracts, agreements, commitments, indentures or
other instruments relating to the Purchased Assets
under which the Vendor's rights or the performance of
its obligations are dependent on or supported by the
guarantee of or any security provided by any other
person.
3.1.18. Compliance with Laws. In relation to the Business,
the Vendor is not in violation of any federal, state
or other law, regulation or order of any government
or governmental or regulatory authority, domestic or
foreign.
3.1.19. Accounts Receivable. All Accounts Receivable are bona
fide and good and, subject to an allowance for
doubtful accounts taken in accordance with generally
accepted accounting principles, collectible without
set-off or counterclaim.
3.1.20. Copies of Documents. Complete and correct copies
(including all amendments) of all contracts, leases
and other documents referred to in this Agreement or
any Schedule hereto or required to be disclosed
hereby have been delivered to the Purchaser.
3.1.21. Disclosure. No representation or warranty contained
in this Section 3.1, and no statement contained in
any Schedule, certificate, list, summary or other
disclosure document provided or to be provided to the
Purchaser pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or
omits or will omit to state any material fact which
is necessary in order to make the statements
contained therein not misleading.
3.1.22. Recitals. The recitals set forth in the first page of
this Agreement are true and correct.
3.1.23. Antitrust. Any waiting period applicable to the
transactions contemplated herein under the HSR Act
shall have been terminated or shall have expired.
3.1.24. Federal Securities Act - Unregistered Shares. The
Vendor acknowledges that the Workstream Shares, the
Warrant and the Warrant Shares (collectively, the
"Securities") have not and are not being registered
under the Securities Act of 1933 as amended (the
"1933 Act"), and that accordingly the Securities are
not fully transferable except as permitted under the
various exemptions contained in the 1933 Act and the
rules of the Securities and Exchange Commission
interpreting the 1933 Act. The provisions contained
in this paragraph 3.1.24 are intended to ensure
compliance with the 1933 Act.
3.1.25. No Transfers in Violation of 1933 Act. The Vendor
covenants, warrants and represents that none of the
Securities that will be issued to it pursuant to this
Agreement will be offered, sold, assigned, pledged,
hypothecated, transferred, or otherwise disposed of
except after full compliance with all of the
applicable provisions of the 1933 Act and the rules
and regulations of the Securities and Exchange
Commission under the 1933 Act.
3.1.26. No Distribution of Securities to Public. The Vendors
represent and warrants to Workstream that it is
acquiring the Securities for its own account, for
investment, and not with a view to their resale or
other distribution; that it currently has no
intention of selling, transferring, hypothecating, or
otherwise disposing of all or any part of the
Securities at any particular time, for any particular
price, or on the happening of any particular event or
circumstances; and that Workstream is relying on the
truth and accuracy of these covenants, warranties,
and representations in issuing the Securities without
first registering them under the 1933 Act.
3.1.27. Investment Legend on Certificates. The Vendor agrees
not to sell, transfer, hypothecate or otherwise
dispose of any of the Securities received pursuant to
this Agreement unless and until it has: presented
Workstream with a written legal opinion in form and
substance satisfactory to the solicitors for
Workstream to the effect that the disposition is
permissible under the terms of the 1933 Act and
regulations interpreting the 1933 Act; has complied
with the registration and prospectus requirements of
the 1933 Act relating to the disposition ,or; has
presented Workstream satisfactory evidence that the
transfer will comply with Rule 144 under the 1933 Act
and therefore will be exempt from registration under
section 4(2) of the 1933 Act. The Vendor further
agrees that the certificates evidencing the
Securities it will receive shall contain the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION FOR THESE
SECURITIES UNDER THE ACT OR AN OPINION OF THE
COMPANY'S COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT."
Workstream shall also place a "stop transfer" order
against any transfer of the Securities until one of
the conditions set forth above has been met.
3.2. REPRESENTATIONS AND WARRANTIES BY THE PURCHASER AND/OR
WORKSTREAM. The Purchaser and/or Workstream hereby represents
and warrants to the Vendor as follows, and confirms that the
Vendor is relying on the accuracy of each of such
representations and warranties in connection with the sale of
the Purchased Assets and the completion of the other
transactions hereunder:
3.2.1. Corporate Authority and Binding Obligation. The
Purchaser is a corporation duly incorporated and
validly subsisting in all respects under the laws of
its jurisdiction of incorporation. The Purchaser has
good right, full corporate power and absolute
authority to enter into this Agreement and to
purchase the Purchased Assets from the Vendor in the
manner contemplated herein and to perform all of the
Purchaser's obligations under this Agreement. The
Purchaser and its shareholders and board of directors
have taken all necessary or desirable actions, steps
and corporate and other proceedings to approve or
authorize, validly and effectively, the entering into
of, and the execution, delivery and performance of,
this Agreement and the purchase of the Purchased
Assets by the Purchaser from the Vendor. This
Agreement is a legal, valid and binding obligation of
the Purchaser, enforceable against it in accordance
with its terms.
3.2.2. Contractual and Regulatory Approvals. Except as
specified in Schedule 3.2.2 attached hereto, the
Purchaser is not under any obligation, contractual or
otherwise to request or obtain the consent of any
person, and no permits, licences, certifications,
authorizations or approvals of, or notifications to,
any federal, state, municipal or local government or
governmental agency, board, commission or authority
are required to be obtained by the Purchaser in
connection with the execution, delivery or
performance by the Purchaser of this Agreement or the
completion of any of the transactions contemplated
herein. Complete and correct copies of any agreements
under which the Purchaser is obligated to request or
obtain any such consent have been provided to the
Vendor.
3.2.3. Capitalization. The authorized capital stock of
Workstream and the shares ther eof issued and
outstanding as of the date hereof are set forth on
Schedule 3.2.3 hereto. All of the outstanding shares
of Workstream have been duly and validly authorized.
Workstream is not a party to, and it has no knowledge
of, any agreement or understanding restricting the
voting or transfer of any shares of the capital stock
of Workstream. Except as set forth on the Commission
Documents or Schedule 3.2.3 hereto, the offer and
sale of all capital stock, convertible securities,
rights, warrants, or options of Workstream issued
prior to the Closing Date complied in all material
respects with all applicable federal and state
securities laws, and no holder of such securities has
a right of rescission or claim for damages with
respect thereto which could have a Material Adverse
Effect. The Purchaser has furnished or made available
to the Vendor true and correct copies of Workstream's
Articles of Incorporation as in effect on the date
hereof (the "Articles"), and Workstream's Bylaws as
in effect on the date hereof (the "Bylaws").
Workstream has provided the Vendor with copies of and
the Vendor has reviewed the following documents,
which have been filed by Workstream with the
Commission pursuant to the Securities Exchange Act of
1934: (i) Workstream's Annual Report on Form 10-K, as
amended, for the fiscal year ended May 31, 2003; (ii)
Workstream's Quarterly Reports on Form 10-Q for the
quarters ended August 31, 2003 and November 30, 2003;
and (iii) Workstream's proxy statement with respect
to its 2003 annual meeting.
3.2.4. Issuance of Securities. The Shares to be issued on
the Closing Date have been duly authorized by all
necessary corporate action and, when paid for or
issued in accordance with the terms hereof, the
Shares shall be validly issued and outstanding, fully
paid and nonassessable, and free from preemptive
rights, taxes upon issuance, liens and similar
charges caused by Workstream and entitled to all
applicable rights and preferences set forth in the
Articles. When the Warrant Shares are issued in
accordance with the terms of this Agreement and as
set forth in the Warrant, such shares will be duly
authorized by all necessary corporate action and
validly issued and outstanding, fully paid and
non-assessable, and free from preemptive rights,
taxes upon issuance, liens and other similar charges
caused by Workstream, and the holders shall be
entitled to all rights accorded to a holder of common
shares of Workstream.
3.2.5. No Conflicts. Except as set forth in Schedule 3.2.5
attached hereto, the execution, delivery and
performance of this Agreement by the Purchaser and
Workstream and the consummation by the Purchaser and
Workstream of the transactions contemplated herein
and therein do not and will not (i) violate any
provision of the Purchaser or Workstream's Articles
or Bylaws, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of
time or both would become a default) under, or give
to others any rights of termination, amendment,
acceleration or cancellation of, any agreement,
mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to
which the Purchaser or Workstream is a party or by
which any of its respective properties or assets are
bound, (iii) create or impose a lien, mortgage,
security interest, charge or encumbrance of any
nature whatsoever on any property of the Purchaser or
Workstream under any agreement or any commitment to
which the Purchaser or Workstream is a party or by
which the Purchaser or Workstream is bound or by
which any of its respective properties or assets are
bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and
state securities laws and regulations) applicable to
the Purchaser or Workstream or any of its
subsidiaries or by which any property or asset of the
Purchaser or Workstream or any of its subsidiaries
are bound or affected, except, in all cases other
than violations pursuant to clause (i) above, for
such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would
not, individually or in the aggregate, have a
Material Adverse Effect. The business of the
Purchaser or Workstream and its subsidiaries is not
being conducted in violation of any laws, ordinances
or regulations of any governmental entity, except for
possible violations which singularly or in the
aggregate do not and will not have a Material Adverse
Effect. The Purchaser or Workstream is not required
under federal, state or local law, rule or regulation
to obtain any consent, authorization or order of, or
make any filing or registration with, any court or
governmental agency in order for it to execute,
deliver or perform any of its obligations under this
Agreement, or issue and sell the Shares and the
Warrant Shares in accordance with the terms hereof or
thereof (other than any filings which may be required
to be made by the Purchaser or Workstream with the
Commission or state securities administrators
subsequent to a Closing, and any registration
statement which may be filed pursuant hereto);
provided that, for purposes of the representation
made in this sentence, the Purchaser and Workstream
is assuming and relying upon the accuracy of the
relevant representations and agreements of the Vendor
herein.
3.2.6. Commission Documents, Financial Statements. The
financial statements of the Purchaser or Workstream
furnished to the Vendor comply as to form in all
material respects with applicable accounting
requirements and the published rules and regulations
of the Commission or other applicable rules and
regulations with respect thereto. Such financial
statements have been prepared in accordance with
generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or
(ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be
condensed or summary statements), and fairly present
in all material respects the financial position of
the Purchaser and Workstream and its subsidiaries as
of the dates thereof and the results of operations
and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal
year-end audit adjustments).
3.2.7. Subsidiaries. The Commission Documents or Schedule
3.2.7 hereto sets forth each subsidiary of the
Purchaser and Workstream showing the jurisdiction of
its incorporation or organization and showing the
percentage of the Purchaser and Workstream's
ownership of the outstanding stock or other interests
of such subsidiary. For the purposes of this
Agreement, "subsidiary" shall mean any corporation or
other entity of which at least a majority of the
securities or other ownership interest having
ordinary voting power (absolutely or contingently)
for the election of directors or other persons
performing similar functions are at the time owned
directly or indirectly by the Purchaser and
Workstream and/or any of its other subsidiaries. All
of the outstanding shares of capital stock of each
subsidiary have been duly authorized and validly
issued, and are fully paid and non-assessable. Except
as disclosed on Schedule 3.2.7 there are no
outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by
or binding upon any subsidiary for the purchase or
acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into,
exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock.
Neither the Purchaser, Workstream nor any subsidiary
is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any
subsidiary or any convertible securities, rights,
warrants or options of the type described in the
preceding sentence. Neither the Purchaser, Workstream
nor any subsidiary is party to, nor has any knowledge
of, any agreement restricting the voting or transfer
of any shares of the capital stock of any subsidiary.
3.2.8. No Material Adverse Change. Since February 20, 2004,
the date through which the most recent report of
Workstream has been prepared and filed with the
Commission (a copy of which is included in the
Commission Documents) Workstream has not experienced
or suffered any Material Adverse Effect, except as
disclosed on Schedule 3.2.8 hereto.
3.2.9. No Undisclosed Events or Circumstances. No event or
circumstance has occurred or exists with respect to
the Purchaser, Workstream or its subsidiaries or
their respective businesses, properties, prospects,
operations or financial condition, which, under
applicable law, rule or regulation, requires public
disclosure or announcement by the Purchaser or
Workstream but which has not been so publicly
announced or disclosed.
3.2.10. Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the
knowledge of the Purchaser or Workstream, threatened
against the Purchaser, Workstream or any subsidiary
which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken
or to be taken pursuant hereto or thereto. To the
knowledge of the Purchaser and Workstream, there is
no action, suit, claim, investigation or proceeding
pending or threatened, against or involving the
Purchaser, Workstream, any subsidiary or any of their
respective properties or assets, except as set forth
in the Commission Document or Schedule 3.2.10 hereto.
There are no outstanding orders, judgments,
injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against
the Purchaser, Workstream or any subsidiary or any
officers or directors of the Purchaser, Workstream or
subsidiary in their capacities as such.
3.2.11. Compliance with Law. The business of the Purchaser,
Workstream and the subsidiaries has been and is
presently being conducted in accordance with all
applicable federal, state and local governmental
laws, rules, regulations and ordinances, except as
set forth in the Commission Documents or Schedule
3.2.11 hereto or such that, individually or in the
aggregate, the non-compliance therewith would not
have a Material Adverse Effect. The Purchaser,
Workstream and each of its subsidiaries have all
franchises, permits, licenses, consents and other
governmental or regulatory authorizations and
approvals necessary for the conduct of its business
as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations
and approvals, individually or in the aggregate,
could not reasonably be expected to have a Material
Adverse Effect.
3.2.12. Taxes. Except as set forth in the Commission
Documents or Schedule 3.2.12 hereto, the Purchaser,
Workstream and each of the subsidiaries has
accurately prepared and filed all federal, state and
other tax returns required by law to be filed by it,
has paid or made provisions for the payment of all
taxes shown to be due and all additional assessments,
and adequate provisions have been and are reflected
in the financial statements of the Purchaser,
Workstream and the subsidiaries for all current taxes
and other charges to which the Purchaser, Workstream
or any subsidiary is subject and which are not
currently due and payable. Except as disclosed on
Schedule 3.2.12 hereto, none of the federal income
tax returns of the Purchaser, Workstream or any
subsidiary have been audited by the Internal Revenue
Service. The Purchaser and Workstream has no
knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or
state) of any nature whatsoever, whether pending or
threatened against the Purchaser, Workstream or any
subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.
3.2.13. Operation of Business. The Purchaser, Workstream and
each of the subsidiaries owns or possesses all
patents, trademarks, domain names (whether or not
registered) and any patentable improvements or
copyrightable derivative works thereof, websites and
intellectual property rights relating thereto,
service marks, trade names, copyrights, licenses and
authorizations and all rights with respect to the
foregoing, which are necessary for the conduct of its
business as now conducted without any conflict with
the rights of others except as disclosed in the
Commission Documents or on Schedule 3.2.13.
3.2.14. Books and Record Internal Accounting Controls. The
records and documents of the Purchaser, Workstream
and its subsidiaries accurately reflect in all
material respects the information relating to the
business of the Purchaser, Workstream and the
subsidiaries, the location and collection of their
assets, and the nature of all transactions giving
rise to the obligations or accounts receivable of the
Purchaser, Workstream or any subsidiary. The
Purchaser, Workstream and each of its subsidiaries
maintain a system of internal accounting controls
sufficient, in the judgment of the Purchaser and
Workstream's board of directors, to provide
reasonable assurance that (i) transactions are
executed in accordance with management's general or
specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of
financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted
only in accordance with management's general or
specific authorization and (iv) the recorded
accountability for assets is compared with the
existing assets at reasonable intervals and
appropriate actions is taken with respect to any
differences.
3.2.15. Material Agreements. Except as set forth in the
Commission Documents or on Schedule 3.2.15 hereto,
neither the Purchaser, Workstream nor any subsidiary
is a party to any written or oral contract,
instrument, agreement, commitment, obligation, plan
or arrangement, a copy of which would be required to
be filed with the Commission as an exhibit to a
registration statement on Form S-3 or applicable form
(collectively, "Material Agreements"). Except as set
forth in the Commission Documents or on Schedule
3.2.15 hereto, the Purchaser, Workstream and each of
its subsidiaries has in all material respects
performed all the obligations required to be
performed by them to date under the foregoing
agreements, have received no notice of default and,
to the best of the Purchaser and Workstream's
knowledge are not in default under any Material
Agreement now in effect, the result of which could
cause a Material Adverse Effect. No written or oral
contract, instrument, agreement, commitment,
obligation, plan or arrangement of the Purchaser,
Workstream or of any subsidiary limits or shall limit
the payment of dividends on Workstream's common
shares.
3.2.16. Securities Act of 1933. The Purchaser and Workstream
have complied and will comply in all material
respects with all applicable federal and state
securities laws in connection with the issuance of
the Shares and the Warrants hereunder. Neither the
Purchaser or Workstream nor anyone acting on their
behalf, directly or indirectly, has or will sell,
offer to sell or solicit offers to buy any of the
Shares, or similar securities to, or solicit offers
with respect thereto from, or enter into any
preliminary conversations or negotiations relating
thereto with, any person, or has taken or will take
any action so as to bring the issuance and sale of
any of the Shares under the registration provisions
of the Securities Act and any other applicable
federal and state securities laws.
3.2.17. Governmental Approvals. Except as set forth in the
Commission Documents or on Schedule 3.2.17 hereto,
and except for the filing of any notice prior or
subsequent to the Closing Date that may be required
under applicable state or federal securities laws
(which if required, shall be filed on a timely
basis), no authorization, consent, approval, license
exemption of, filing or registration with any court
or governmental department, commission, board,
bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in
connection with, the execution or delivery of the
Shares, or for the performance by the Purchaser or
Workstream of its obligations under this Agreement.
3.2.18. Investment Company Act Status. The Purchaser and
Workstream is not, and as a result of and immediately
upon the Closing Date will not be, an "investment
company" or a company "controlled" by an "investment
company," within the meaning of the Investment
Company Act of 1940, as amended.
3.2.19. Dilutive Effect. Workstream understands and
acknowledges that the number of the Warrant Shares
issuable upon exercise of the Warrant will increase
in certain circumstances.
4. SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES
4.1. SURVIVAL OF WARRANTIES BY THE VENDOR. The representations and
warranties made by the Vendor and contained in this Agreement,
or contained in any document or certificate given in order to
carry out the transactions contemplated hereby, will survive
the closing of the purchase of the Purchased Assets provided
for herein and, notwithstanding such closing or any
investigation made by or on behalf of the Purchaser,
Workstream or any other person or any knowledge of the
Purchaser, Workstream or any other person, shall continue in
full force and effect for the benefit of the Purchaser or
Workstream, except that no Warranty Claim may be made or
brought by the Purchaser or Workstream after the date which is
two years following the Closing Date.
After the expiration of the period of time referred to in this
section 4.1, the Vendor will be released from all obligations
and liabilities in respect of the representations and
warranties made by the Vendor and contained in this Agreement
or in any document or certificate given in order to carry out
the transactions contemplated hereby except with respect to
any claims made by the Purchaser and/or Workstream in writing
prior to the expiration of such period.
4.2. SURVIVAL OF WARRANTIES BY PURCHASER AND WORKSTREAM. The
representations and warranties made by the Purchaser and/or
Workstream and contained in this Agreement or contained in any
document or certificate given in order to carry out the
transactions contemplated hereby will survive the closing of
the purchase and sale of the Purchased Assets provided for
herein and, notwithstanding such closing or any investigation
made by or on behalf of the Vendor or any other person or any
knowledge of the Vendor or any other person, shall continue in
full force and effect for the benefit of the Vendor except
that no Warranty Claim may be made or brought by the Vendor
after the date which is two years following the Closing Date.
After the expiration of the period of time referred to in this
section 4.2, the Purchaser and Workstream will be released
from all obligations and liabilities in respect of the
representations and warranties made by the Purchaser and/or
Workstream and contained in this Agreement or in any document
or certificate given in order to carry out the transactions
contemplated hereby except with respect to any claims made by
the Purchaser and/or Workstream in writing prior to the
expiration of such period.
4.3. LIMITATIONS ON WARRANTY CLAIMS.
4.3.1. The Purchaser and/or Workstream shall not be entitled
to make a Warranty Claim if the Purchaser and/or
Workstream has been advised in writing or otherwise
has actual knowledge prior to the Closing Time of the
inaccuracy, non-performance, non-fulfilment or breach
which is the basis for such Warranty Claim and the
Purchaser and/or Workstream completes the
transactions hereunder notwithstanding such
inaccuracy, non-performance, non-fulfilment or
breach.
4.3.2. The amount of any damages which may be claimed by the
Purchaser and/or Workstream pursuant to a Warranty
Claim shall be calculated to be the cost or loss to
the Purchaser and/or Workstream after giving effect
to any insurance proceeds available to the Purchaser
and/or Workstream in relation to the matter which is
the subject of the Warranty Claim.
4.3.3. The Purchaser and/or Workstream shall not be entitled
to make any Warranty Claim until the aggregate amount
of all damages, losses, liabilities and expenses
incurred by the Purchaser and/or Workstream as a
result of all misrepresentations and breaches of
warranties contained in this Agreement or contained
in any document or certificate given in order to
carry out the transactions contemplated hereby, after
taking into account section 4.3.2 of this section, is
equal to $15,000. After the aggregate amount of such
damages, losses, liabilities and expenses incurred by
the Purchaser and/or Workstream exceeds $15,000, the
Purchaser and/or Workstream shall only be entitled to
make Warranty Claims to the extent that such
aggregate amount, after taking into account the
provisions of section 4.3.2 of this section, exceeds
$15,000.
4.3.4. Notwithstanding any other provisions of this
Agreement or of any agreement, certificate or other
document made in order to carry out the transactions
contemplated hereby, the maximum aggregate liability
of the Vendor together in respect of all Warranty
Claims by the Purchaser and/or Workstream will be
limited to an amount equal to the Purchase Price.
5. COVENANTS
5.1. COVENANTS BY THE VENDOR. The Vendor covenants to the Purchaser
and Workstream that it will do or cause to be done the
following:
5.1.1. Investigation of Business and Examination of
Documents. During the Interim Period, the Vendor will
provide access to and will permit the Purchaser,
through its representatives, to make such
investigation of, the operations, properties, assets
and records of the Business and of its financial and
legal condition as the Purchaser deems necessary or
advisable to familiarize itself with such operations,
properties, assets, records and other matters
relating to the Purchased Assets. Without limiting
the generality of the foregoing, during the Interim
Period the Vendor will permit the Purchaser and its
representatives to have access to the premises used
in connection with the Business and will produce for
inspection and provide copies to the Purchaser of:
5.1.1.1. all agreements and other documents referred
to in Section 3.1 or in any of the Schedules
attached hereto and all other documents of
or in the possession of the Vendor relating
to the Purchased Assets; and
5.1.1.2. all other information which, in the
reasonable opinion of the Purchaser's
representatives, is required in order to
make an examination of the Purchased Assets.
5.1.2. such investigations and inspections shall not
mitigate or affect the representations and warranties
of the Vendor hereunder, which shall continue in full
force and effect.
5.1.3. Transfer of Purchased Assets. At or before the
Closing Time, the Vendor will cause all necessary
steps and corporate proceedings to be taken in order
to permit the Purchased Assets to be duly and
regularly transferred to the Purchaser.
5.1.4. Forms of Conveyance. At the Closing Time, the Vendor
will deliver to the Purchaser good and marketable
title to and exclusive possession of the Purchased
Assets, free and clear of any and all Encumbrances.
At the Closing Time, the Vendor will execute and
deliver to the Purchaser one or more forms of general
conveyance, or bills of sale, deeds, transfers and
other documents reasonably requested by the Purchaser
in respect of the assignment, conveyance, transfer
and delivery of the Purchased Assets to the Purchaser
in form which is registrable and acceptable to the
Purchaser.
5.1.5. Transfer of Assumed Contracts. At the Closing Time,
the Vendor will deliver to the Purchaser:
5.1.5.1. an executed original of each of the Assumed
Contracts,
5.1.5.2. one or more forms of assignment of the
Assumed Contracts in form acceptable to the
Purchaser, and
5.1.5.3. consents to the assignment of all of the
Assumed Contracts under which consent is
required executed by all persons whose
consent is required in form acceptable to
the Purchaser.
5.1.6. Transmittal Letter. At the Closing Time, the Vendor
will deliver to the Purchaser a transmittal letter
for the subscription for the common shares in
Workstream issuable pursuant to this Agreement, in a
form and content acceptable to solicitors for the
Purchaser.
5.2. COVENANTS BY THE PURCHASER AND/OR WORKSTREAM. The Purchaser
and/or Workstream covenants to the Vendor that it will do or
cause to be done the following:
5.2.1. Confidentiality. Prior to the Closing Time and, if
the transaction contemplated hereby is not completed,
at all times after the Closing Time, the Purchaser
will keep confidential all information obtained by it
relating to the Purchased Assets and Business, except
such information which:
5.2.1.1. prior to the date of this Agreement was
already in the possession of the Purchaser,
as demonstrated by written records,
5.2.1.2. is generally available to the public, other
than as a result of a disclosure by the
Purchaser, or
5.2.1.3. is made available to the Purchaser on a
non-confidential basis from a source other
than the Vendor, or its representatives.
5.2.1.4. The Purchaser further agrees that such
information will be disclosed only to those
of its employees and representatives of its
advisors who need to know such information
for the purposes of evaluating and
implementing the transaction contemplated
hereby. Notwithstanding the foregoing
provisions of this paragraph, the obligation
to maintain the confidentiality of such
information will not apply to the extent
that disclosure of such information is
required in connection with governmental or
other applicable filings relating to the
transactions hereunder, provided that, in
such case, unless the Vendor otherwise
agrees, the Purchaser will, if possible,
request confidentiality in respect of such
governmental or other filings. If the
transactions contemplated hereby are not
consummated for any reason, the Purchaser
will return forthwith, without retaining any
copies, all information and documents
obtained from the Vendor.
6. CONDITIONS
6.1. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.
Notwithstanding anything herein contained, the obligation of
the Purchaser and/or Workstream to complete the transactions
provided for herein will be subject to the fulfilment of the
following conditions by the Vendor at or prior to the Closing
Time and the Vendor covenants to ensure that such conditions
are fulfilled.
6.1.1. Accuracy of Representations and Warranties and
Performance of Covenants. The representations and
warranties of the Vendor contained in this Agreement
or in any documents delivered in order to carry out
the transactions contemplated hereby shall be true
and accurate on the date and at the Closing Time with
the same force and effect as though such
representations and warranties had been made as of
the Closing Time (regardless of the date as of which
the information in this Agreement or in any Schedule
or other document made pursuant hereto is given). In
addition, the Vendor shall have complied with all
covenants and agreements herein agreed to be
performed or caused to be performed by them at or
prior to the Closing Time. In addition, the Vendor
shall have delivered to the Purchaser a certificate
in the form of Schedule 6.1.1 attached hereto
confirming that the facts with respect to each of
such representations and warranties by the Vendor are
as set out herein at the Closing Time and that the
Vendor has performed all covenants required to be
performed by them hereunder.
6.1.2. Material Adverse Changes. During the Interim Period
there will have been no change in the Purchased
Assets, howsoever arising, except changes which have
occurred in the ordinary course of the Business and
which, individually or in the aggregate, have not
affected and may not affect the Purchased Assets in
any material adverse respect. Without limiting the
generality of the foregoing, during the Interim
Period no damage to or destruction of any material
part of the Purchased Assets shall have occurred,
whether or not covered by insurance.
6.1.3. No Restraining Proceedings. No order, decision or
ruling of any court, tribunal or regulatory authority
having jurisdiction shall have been made, and no
action or proceeding shall be pending or threatened
which, in the opinion of counsel to the Purchaser, is
likely to result in an order, decision or ruling,
6.1.3.1. to disallow, enjoin, prohibit or impose any
limitations or conditions on the purchase
and sale of the Purchased Assets
contemplated hereby or the right of the
Purchaser to own the Purchased Assets; or
6.1.3.2. to impose any limitations or conditions
which may have a Material Adverse Effect on
the Purchased Assets.
6.1.4. Consents. All consents required to be obtained in
order to carry out the transactions contemplated
hereby in compliance with all laws and agreements
binding on the parties hereto shall have been
obtained, including the consents referred to in
Schedules 3.1.3 and 3.2.2 attached hereto.
6.1.5. Opinion of Vendor's Counsel. At the Closing Time, the
Purchaser shall have received an opinion of legal
counsel for the Vendor in the form of the draft
opinion attached hereto as Schedule 6.1.5, which
opinion may rely on certificates of one or more
senior officers of the Vendor as to factual matters
and may rely upon opinions of local counsel with
respect to matters governed by laws other than the
laws of the State of Nevada and the federal laws of
United States applicable in the State of Nevada.
6.1.6. Assignment and Waiver of Intellectual Property
Rights. At the Closing Time, the Vendor shall have
delivered to the Purchaser a certificate of the
Vendor in the form of the draft attached hereto as
Schedule 6.1.6, whereby the Vendor assigns all of its
intellectual property rights in the assets listed in
Schedule 2.1.6 (the "IP Assets").
6.1.7. Further Assurances. On and at any time after the
Closing Time, the Vendor shall furnish the Purchaser
at no additional charge with such further written
documentation in order to enable the Purchaser to
establish, prove or perfect the Purchaser's ownership
of any of the assets herein conveyed.
6.1.8. Escrow Agreement. The Vendor, the Purchaser and
Workstream shall have entered into the escrow
agreement attached hereto as Schedule 1.1.23.
6.2. WAIVER OR TERMINATION BY PURCHASER AND/OR WORKSTREAM. The
conditions contained in Section 6.1 are inserted for the
exclusive benefit of the Purchaser and/or Workstream and may
be waived in whole or in part by the Purchaser and/or
Workstream at any time. The Vendor acknowledges that the
waiver by the Purchaser and/or Workstream of any condition or
any part of any condition shall constitute a waiver only of
such condition or such part of such condition, as the case may
be, and shall not constitute a waiver of any covenant,
agreement, representation or warranty made by the Vendor
herein that corresponds or is related to such condition or
such part of such condition, as the case may be. If any of the
conditions contained in Section 6.1 are not fulfilled or
complied with as herein provided, the Purchaser and/or
Workstream may, at or prior to the Closing Time at its option,
rescind this Agreement by notice in writing to the Vendor and
in such event the Purchaser and Workstream shall be released
from all obligations hereunder and, unless the condition or
conditions which have not been fulfilled are reasonably
capable of being fulfilled or caused to be fulfilled by the
Vendor, then the Vendor shall also be released from all
obligations hereunder.
6.3. CONDITIONS TO THE OBLIGATIONS OF THE VENDOR. Notwithstanding
anything herein contained, the obligations of the Vendor to
complete the transactions provided for herein will be subject
to the fulfilment of the following conditions at or prior to
the Closing Time, and the Purchaser and/or Workstream will use
its best efforts to ensure that such conditions are fulfilled.
6.3.1. Accuracy of Representations and Warranties and
Performance of Covenants. The representations and
warranties of the Purchaser and Workstream contained
in this Agreement or in any documents delivered in
order to carry out the transactions contemplated
hereby will be true and accurate on the date and at
the Closing Time with the same force and effect as
though such representations and warranties had been
made as of the Closing Time (regardless of the date
as of which the information in this Agreement or any
such Schedule or other document made pursuant hereto
is given). In addition, the Purchaser and Workstream
shall have complied with all covenants and agreements
herein agreed to be performed or caused to be
performed by it at or prior to the Closing Time. In
addition, the Purchaser and Workstream shall have
delivered to the Vendor a certificate in the form of
Schedule 6.3.1 attached hereto confirming that the
facts with respect to each of the representations and
warranties of the Purchaser and Workstream are as set
out herein at the Closing Time and that the Purchaser
and Workstream has performed each of the covenants
required to be performed by it hereunder.
6.3.2. No Restraining Proceedings. No order, decision or
ruling of any court, tribunal or regulatory authority
having jurisdiction shall have been made, and no
action or proceeding shall be pending or threatened
which, in the opinion of counsel to the Vendor, is
likely to result in an order, decision or ruling, to
disallow, enjoin or prohibit the purchase and sale of
the Purchased Assets contemplated hereby.
6.3.3. Consents. All consents required to be obtained in
order to carry out the transactions contemplated
hereby in compliance with all laws and agreements
binding upon the parties hereto shall have been
obtained, including the consents referred to in
Schedules 3.1.3 and 3.2.2 attached hereto.
6.3.4. Revenue Sharing Agreement. The Vendor and Purchaser
shall have entered into a revenue sharing agreement
in substantially the same form as attached hereto as
Schedule 6.3.4.
6.3.5. Escrow Agreement. The Vendor, the Purchaser and
Workstream shall have entered into the escrow
agreement attached hereto as Schedule 1.1.23.
6.3.6. No Suspension, Etc. From the date hereof to the
Closing Date, trading in Workstream's common shares
shall not have been suspended by the Commission, and,
at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg
Financial Markets ("Bloomberg") shall not have been
suspended or limited, or minimum prices shall not
have been established on securities whose trades are
reported by Bloomberg, or on the New York Stock
Exchange, nor shall a banking moratorium have been
declared either by the United States, or New York
State authorities.
6.3.7. Stock and Warrant Certificates. Workstream shall have
executed and be prepared to deliver to the Vendor,
the certificates for the Workstream Shares being
received by the Vendor at the Closing Date.
6.3.8. Resolutions. Prior to the Closing, the Board of
Directors of the Purchaser and Workstream shall have
adopted resolutions consistent with this Agreement in
a form reasonably acceptable to the Vendor (the
"Resolutions").
6.3.9. Reservation of Shares. As of the Closing Date,
Workstream shall have reserved out of its authorized
and unissued common shares, solely for the purpose of
effecting the issuance of the Workstream Shares and
the exercise of the Warrant, a number of shares of
common shares equal to at least 100% of the shares of
common shares which would be issuable upon issuance
of the Workstream Shares and upon exercise of the
Warrant following the Closing Date (after giving
effect to the Workstream Shares and Warrant to be
issued on the Closing Date and assuming all such
Workstream Shares and Warrant were fully issuable and
exercisable, as applicable, on such date regardless
of any limitation on the timing or amount of such
issuances or exercises).
6.4. WAIVER OR TERMINATION BY VENDOR. The conditions contained in
Section 6.3 are inserted for the exclusive benefit of the
Vendor and may be waived in whole or in part by the Vendor at
any time. The Purchaser and Workstream acknowledges that the
waiver by the Vendor of any condition or any part of any
condition shall constitute a waiver only of such condition or
such part of such condition, as the case may be, and shall not
constitute a waiver of any covenant, agreement, representation
or warranty made by the Purchaser and/or Workstream herein
that corresponds or is related to such condition or such part
of such condition, as the case may be. If any of the
conditions contained in Section 6.3 are not fulfilled or
complied with as herein provided, the Vendor may, at or prior
to the Closing Time at their option, rescind this Agreement by
notice in writing to the Purchaser and Workstream and in such
event the Vendor shall each be released from all obligations
hereunder and, unless the condition or conditions which have
not been fulfilled are reasonably capable of being fulfilled
or caused to be fulfilled by the Purchaser and/or Workstream,
then the Purchaser and Workstream shall also be released from
all obligations hereunder.
7. CLOSING
7.1. CLOSING ARRANGEMENTS. Subject to the terms and conditions ,
the transactions contemplated herein shall be closed at the
Closing Time at the offices of Perley-Robertson, Hill &
McDougall LLP, 90 Sparks Street, 4th Floor, Ottawa, ON K1P
1E2, Canada or at such other place or places as may be
mutually agreed on by the Vendor and the Purchaser.
7.2. DOCUMENTS TO BE DELIVERED. At or before the Closing Time, the
Vendor shall execute, or cause to be executed, and shall
deliver, or cause to be delivered, to the Purchaser all
documents, instruments and things which are to be delivered by
the Vendor pursuant to the provisions of this Agreement, and
the Purchaser and/or Workstream shall execute, or cause to be
executed, and shall deliver, or cause to be delivered, to the
Vendor all cheques or bank drafts and all documents,
instruments and things which the Purchaser and/or Workstream
is to deliver or to cause to be delivered pursuant to the
provisions of this Agreement.
8. INDEMNIFICATION AND SET-OFF
8.1. INDEMNITY BY THE VENDOR AND THE PURCHASER.
8.1.1. The parties hereto (in this Section 8, an
"Indemnifying Party") covenant and agree to indemnify
and save each other (in this Section 8, each being
referred to as an "Indemnified Party") harmless from
and against any claims, demands, actions, causes of
action, damage, loss, deficiency, cost, liability and
expense which may be made or brought against the
Indemnified Party or which the Indemnified Party may
suffer or incur as a result of, in respect of or
arising out of:
8.1.1.1. any non-performance or non-fulfilment of any
covenant or agreement on the part of the
Indemnifying Party contained in this
Agreement or in any document given in order
to carry out the transactions contemplated
hereby;
8.1.1.2. any misrepresentation, inaccuracy,
incorrectness or breach of any
representation or warranty made by the
Indemnifying Party contained in this
Agreement or contained in any document or
certificate given in order to carry out the
transactions contemplated hereby;
8.1.1.3. any non-compliance with any federal, state,
local, municipal, foreign, international or
other administrative order, constitution,
law, ordinance, statute, or treaty
applicable to Indemnifying Party in the
carrying out of the transaction contemplated
herein; and
8.1.1.4. all costs and expenses including, without
limitation, attorney's fees, incidental to,
arising from or in respect of the foregoing.
8.1.2. The obligations of indemnification by the
Indemnifying Party pursuant to paragraph 8.1.1 of
this section will be:
8.1.2.1. subject to the limitations referred to in
Sections 4.1 and 4.2 with respect to the
survival of the representations and
warranties by the Indemnifying Party;
8.1.2.2. subject to the limitations referred to in
Section 4.3; and
8.1.2.3. subject to the provisions of Section 8.3.
8.2. INDEMNITY OF THE VENDOR.
8.2.1. The Vendor hereby further agrees to indemnify and
save the Purchaser and Workstream (collectively, in
this Section 8, the "Purchaser") harmless from and
against any claims, demands, actions, causes of
action, damage, loss, deficiency, cost, liability and
expense which may be made or brought against the
Purchaser or which the Purchaser may suffer or incur
as a result of, in respect of or arising out of:
8.2.1.1. any claim for a debt, obligation or
liability which is not specifically assumed
by the Purchaser pursuant to this Agreement;
8.2.1.2. any suit, action, proceeding, claim,
investigation pending or threatened against
or affecting the Purchased Assets or the
Business, regardless of whether such is
disclosed in a Schedule hereto, that arises
from the conduct of the Business prior to
the Closing Date; and
8.2.1.3. all costs and expenses including, without
limitation, attorney's fees, incidental to,
arising from or in respect of the foregoing.
8.2.2. The obligations of indemnification by the Vendor
pursuant to paragraph 8.2.1 of this section will be:
8.2.2.1. subject to the limitations referred to in
Section 4.1 with respect to the survival of
the representations and warranties by the
Vendor;
8.2.2.2. subject to the limitations referred to in
Section 4.3; and
8.2.2.3. subject to the provisions of Section 8.3.
8.3. PROVISIONS RELATING TO INDEMNITY CLAIMS. The following
provisions will apply to any claim by the Indemnified Party or
the Purchaser, whatever the case may be, for indemnification
by the Indemnifying Party or the Vendor, whatever the case may
be, pursuant to Sections 8.1 and 8.2 (an "Indemnity Claim").
8.3.1. Promptly after becoming aware of any matter that may
give rise to an Indemnity Claim, the Indemnified
Party or the Purchaser will provide to the
Indemnifying Party or the Vendor written notice of
the Indemnity Claim specifying (to the extent that
information is available) the factual basis for the
Indemnity Claim and the amount of the Indemnity Claim
or, if an amount is not then determinable, an
estimate of the amount of the Indemnity Claim, if an
estimate is feasible in the circumstances.
8.3.2. If an Indemnity Claim relates to an alleged liability
to any other person (a "Third Party Liability"),
including without limitation any governmental or
regulatory body or any taxing authority, which is of
a nature such that the Indemnified Party or the
Purchaser is required by applicable law to make a
payment to a third party before the relevant
procedure for challenging the existence or quantum of
the alleged liability can be implemented or
completed, then the Indemnified Party or the
Purchaser may, notwithstanding the provisions of
sections 8.3.3. and 8.3.4 of this section, make such
payment and forthwith demand reimbursement for such
payment from the Indemnifying Party or the Vendor in
accordance with this Agreement; provided that, if the
alleged Third Party Liability as finally determined
on completion of settlement negotiations or related
legal proceedings is less than the amount which is
paid by the Indemnifying Party or the Vendor in
respect of the related Indemnity Claim, then the
Indemnified Party or the Purchaser shall forthwith
following the final determination pay to the
Indemnifying Party or the Vendor the amount by which
the amount of the Third Party Liability as finally
determined is less than the amount which is so paid
by the Indemnifying Party or the Vendor.
8.3.3. The Indemnified Party or the Purchaser shall not
negotiate, settle, compromise or pay (except in the
case of payment of a judgement) any Third Party
Liability as to which it proposes to assert an
Indemnity Claim, except with the prior consent of the
Indemnifying Party or the Vendor (which consent shall
not be unreasonably withheld or delayed), unless
there is a reasonable possibility that such Third
Party Liability may materially and adversely affect
the Purchased Assets or the Indemnified Party or the
Purchaser, in which case the Indemnified Party or the
Purchaser shall have the right, after notifying the
Indemnifying Party or the Vendor, to negotiate,
settle, compromise or pay such Third Party Liability
without prejudice to its rights of indemnification
hereunder. The Indemnified Party or the Purchaser
shall notify the Indemnifying Party or the Vendor
within one (1) week of any third party claims being
asserted.
8.3.4. With respect to any Third Party Liability, provided
the Indemnifying Party or the Vendor first admit the
Indemnified Party's or the Purchaser's right to
indemnification for the amount of such Third Party
Liability which may at any time be determined or
settled, then, in any legal, administrative or other
proceedings in connection with the matters forming
the basis of the Third Party Liability, the following
procedures will apply:
8.3.4.1. except as contemplated by subparagraph
8.3.4.3 of this section, the Indemnifying
Party or the Vendor will have the right to
assume carriage of the compromise or
settlement of the Third Party Liability and
the conduct of any related legal,
administrative or other proceedings, but the
Indemnified Party or the Purchaser shall
have the right and shall be given the
opportunity to participate in the defence of
the Third Party Liability, to consult with
the Indemnifying Party or the Vendor in the
settlement of the Third Party Liability and
the conduct of related legal, administrative
and other proceedings (including
consultation with counsel) and to disagree
on reasonable grounds with the selection and
retention of counsel, in which case counsel
satisfactory to the Indemnifying Party or
the Vendor and the Indemnified Party or the
Purchaser shall be retained by the
Indemnifying Party or the Vendor;
8.3.4.2. the Indemnifying Party or the Vendor will
co-operate with the Indemnified Party or the
Purchaser in relation to the Third Party
Liability, will keep it fully advised with
respect thereto, will provide it with copies
of all relevant documentation as it becomes
available, will provide it with access to
all records and files relating to the
defence of the Third Party Liability and
will meet with representatives of the
Indemnified Party or the Purchaser at all
reasonable times to discuss the Third Party
Liability; and
8.3.4.3. notwithstanding subparagraphs 8.3.4.1 and
8.3.4.2 of this paragraph, the Indemnifying
Party or the Vendor will not settle the
Third Party Liability or conduct any legal,
administrative or other proceedings in any
manner which could, in the reasonable
opinion of the Indemnified Party or the
Purchaser, have a material adverse affect on
the Purchased Assets or the Indemnified
Party or the Purchaser, except with the
prior written consent of the Indemnified
Party or the Purchaser.
8.3.5. If, with respect to any Third Party Liability, the
Indemnifying Party or the Vendor does not admit the
Indemnified Party's or the Purchaser's right to
indemnification or decline to assume carriage of the
settlement or of any legal, administrative or other
proceedings relating to the Third Party Liability,
then the following provisions will apply:
8.3.5.1. the Indemnified Party or the Purchaser, at
its discretion, may assume carriage of the
settlement or of any legal, administrative
or other proceedings relating to the Third
Party Liability and may defend or settle the
Third Party Liability on such terms as the
Indemnified Party or the Purchaser, acting
in good faith, considers advisable; and
8.3.5.2. any cost, lost, damage or expense incurred
or suffered by the Indemnified Party or the
Purchaser in the settlement or defence of
such Third Party Liability or the conduct of
any legal, administrative or other
proceedings shall be added to the amount of
the Indemnity Claim.
8.3.6. RIGHT OF SET-OFF. The Purchaser shall have the right
to satisfy any amount from time to time owing by it
to the Vendor by way of set-off against any amount
from time to time owing by the Vendor to the
Purchaser, including any amount owing to the
Purchaser pursuant to the Vendor's, or the Vendor's
as Indemnifying Party, indemnification pursuant to
Sections 8.1 and/or 8.2.
9. GENERAL PROVISIONS
9.1. FURTHER ASSURANCES. Each of the Vendor and the Purchaser
hereby covenants and agrees that at any time and from time to
time after the Closing Date it will, on the request of the
others, do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged and delivered all such further
acts, deeds, assignments, transfers, conveyances and
assurances as may be required for the better carrying out and
performance of all the terms of this Agreement.
9.2. NOTICES
9.2.1. Any notice, designation, communication, request,
demand or other document, required or permitted to be
given or sent or delivered hereunder to any party
hereto shall be in writing and shall be sufficiently
given or sent or delivered if it is:
9.2.1.1. delivered personally to an officer or
director of such party,
9.2.1.2. sent to the party entitled to receive it by
registered mail, postage prepaid, or
9.2.1.3. sent by telecopy machine.
9.2.2. Notices shall be sent to the following addresses or
telecopy numbers:
in the case of the Vendor:
PEOPLEVIEW, INC.
27130A Paseo Espada, Suite 1427
San Juan Capistrano
California 92675
Attention: Joseph J. Flynn
Facsimile: 949 481 8875
With a copy to:
---------------
RICHARDSON LAW GROUP
880 Apollo Street, Suite 334
El Segundo, CA 90245
Attention: Eric W. Richardson
Fax: 310 606 5556
in the case of the Purchaser or Workstream:
495 March Road, Suite 300
Ottawa, ON K2K 3G1
Attention: Michael F. Mullarkey
Facsimile: 613-270-0774
With a copy to:
Perley-Robertson, Hill & McDougall LLP
90 Sparks Street, 4th Floor
Ottawa, ON K1P 1E2
Attention: Michael A. Gerrior
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
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.
9.9. ENTIRE AGREEMENT. This Agreement and the Schedules referred to
herein constitute the entire agreement between the parties
hereto and supersede all prior agreements, representations,
warranties, statements, promises, information, arrangements
and understandings, whether oral or written, express or
implied, with respect to the subject-matter . None of the
parties hereto shall be bound or charged with any oral or
written agreements, representations, warranties, statements,
promises, information, arrangements or understandings not
specifically set forth in this Agreement or in the Schedules,
documents and instruments to be delivered on or before the
Closing Date pursuant to this Agreement. The parties hereto
further acknowledge and agree that, in entering into this
Agreement and in delivering the Schedules, documents and
instruments to be delivered on or before the Closing Date,
they have not in any way relied, and will not in any way rely,
on any oral or written agreements, representations,
warranties, statements, promises, information, arrangements or
understandings, express or implied, not specifically set forth
in this Agreement or in such Schedules, documents or
instruments.
9.10. WAIVER. Any party hereto which is entitled to the benefits of
this Agreement may, and has the right to, waive any term or
condition at any time on or prior to the Closing Time;
provided, however, that such waiver shall be evidenced by
written instrument duly executed on behalf of such party.
9.11. AMENDMENTS. No modification or amendment to this Agreement may
be made unless agreed to by the parties hereto in writing.
9.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
New York, without giving effect to the choice of law
provisions.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
under seal as of the day and year first above written.
WORKSTREAM USA, INC.
Per: /s/ Michael Mullarkey
---------------------------------
Name: Michael Mullarkey
Title: CEO
I have authority to bind the corporation.
WORKSTREAM INC.
Per: /s/ Michael Mullarkey
---------------------------------
Name: Michael Mullarkey
Title: CEO
I have authority to bind the corporation.
PEOPLEVIEW, INC.
Per: /s/ Joseph J. Flynn
---------------------------------
Name: Joseph J. Flynn
Title: Chairmain and CEO
I have authority to bind the corporation.
SCHEDULES
ADDENDUM TO ASSET PURCHASE AGREEMENT
AND ESCROW AGREEMENT
This Addendum dated as of May 27, 2004 (this "Addendum") amends and modifies the
the Asset Purchase Agreement dated March 17th, 2004 between Workstream Inc.,
Workstream USA, Inc. and PeopleView, Inc. (the "Asset Purchase Agreement") and
the Escrow Agreement dated March 17th, 2004 between Workstream Inc., Workstream
USA, Inc., PeopleView, Inc. and Borden Ladner Gervais LLP as Escrow Agent (the
"Escrow Agreement").
PEOPLEVIEW, INC. HEREBY AGREES TO THE FOLLOWING ADJUSTMENTS IN THE
PURCHASE PRICE OF THE AFOREMENTIONED ASSET PURCHASE AGREEMENT:
1. PEOPLEVIEW, INC. AGREES THAT THE STOCK CONSIDERATION WILL BE REDUCED
FROM 350,000 COMMON SHARES, AS STATED IN SECTION 2.5.1 OF THE ASSET
PURCHASE AGREEMENT TO 262,500 COMMON SHARES, EFFECTIVELY EQUALING
75% OF THE ORIGINAL AMOUNT OF THE ASSET PURCHASE AGREEMENT.
2. IN ADDITION, PEOPLEVIEW, INC. AGREES TO FURTHER REDUCE THE AMOUNT OF
COMMON SHARES THEY ANTICIPATE TO RECEIVE BY $39,000 OR 15,600 COMMON
SHARES AT $2.50 PER SHARE. THIS AMOUNT IS EQUAL TO THE TOTAL AMOUNT
OF OUTSTANDING INVOICES OWED BY PEOPLEVIEW TO PROSYS, INC. FOR THE
FINAL DEVELOPMENT AND DELIVERY OF THE HCM TOOLS ASSET. THESE
INVOICES ARE ATTACHED AS SCHEDULE A TO THIS ADDENDUM.
3. THE ACTIONS DESCRIBED IN PARAGRAPHS 1 AND 2 HEREIN WILL BRING THE
TOTAL AMOUNT OF COMMON SHARES TO BE DELIVERED BY WORKSTREAM INC. TO
PEOPLEVIEW, INC. AS PART OF THE ASSET PURCHASE AGREEMENT TO 246,900
COMMON SHARES.
4. PEOPLEVIEW, INC. AGREES TO FORGO THE "CASH HOLD BACK FUNDS" OF
$50,000 AS STATED IN SECTION 2.5.3 OF THE ASSET PURCHASE AGREEMENT.
5. WORKSTREAM INC. AGREES TO UPHOLD SECTION 2.5.2 OF THE ASSET PURCHASE
AGREEMENT, WHICH STATES "BY DELIVERY TO THE VENDOR OF A WARRANT TO
PURCHASE 50,000 COMMON SHARES (THE "WARRANT SHARES"), NO PAR VALUE
IN WORKSTREAM AT A PURCHASE PRICE OF $3.00 PER COMMON SHARE (THE
"WARRANT").
6. WORKSTREAM, INC. AGREES TO DELIVER THE SHARE CERTIFICATES AND THE
WARRANT AGREEMENT WITHIN SEVEN (7) DAYS OF THE EXECUTION OF THIS
ADDENDUM.
7. THE PARTIES TO THE ESCROW AGREEMENT AGREE TO: (A) DELETE RECITAL D
AND ALL MENTION OF THE "HOLD BACK FUNDS" FROM THE ESCROW AGREEMENT;
AND (B) DELETE SECTION 4 AND SCHEDULE "B" OF THE ESCROW AGREEMENT IN
ITS ENTIRETY.
8. EXCEPT AS MODIFIED HEREBY, THE ASSET PURCHASE AGREEMENT AND THE
ESCROW AGREEMENT CONTINUES IN FULL FORCE AND EFFECT, UNMODIFIED IN
ANY WAY.
9. ALL CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN WILL HAVE THE
MEANINGS GIVEN TO SUCH TERMS IN THE ASSET PURCHASE AGREEMENT.
10. THIS ADDENDUM SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CONFLICTS OF LAW PROVISIONS THEREOF.
11. THIS ADDENDUM MAY BE EXECUTED IN TWO OR MORE COUNTERPARTS, EACH OF
WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH TOGETHER SHALL
CONSTITUTE ONE AND THE SAME AMENDMENT.
12. EACH OF WORKSTREAM INC. AND WORKSTREAM USA, INC., (EACH, A
"RELEASOR"), FOR GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF
WHICH IS HEREBY ACKNOWLEDGED, RELEASES AND DISCHARGES, AS OF THE
DATE OF THIS ADDENDUM, PEOPLEVIEW, INC. AND PEOPLEVIEW INC.'S PAST
AND PRESENT EMPLOYEES, OFFICERS, DIRECTORS, SHAREHOLDERS,
SUCCESSORS, PREDECESSORS, AFFILIATES, SUBSIDIARIES, PARENT
COMPANIES, ASSIGNS, AND EVERY OTHER INDIVIDUAL, PERSON, CORPORATION,
PARTNERSHIP, PROPRIETORSHIP AND OTHER ENTITY IN THE WORLD, INCLUDING
BUT NOT LIMITED TO ALL GOVERNMENTAL BODIES, DEPARTMENTS AND AGENCIES
(ALL COLLECTIVELY REFERRED TO HEREIN AS THE "RELEASED PARTIES") FROM
ALL OBLIGATIONS, ACTIONS, CAUSES OF ACTION, DEBTS, CLAIMS,
LIABILITIES, COVENANTS, CONTRACTS, CONTROVERSIES, AGREEMENTS,
PROMISES, CLAIMS FOR ATTORNEYS FEES AND COSTS (ALL COLLECTIVELY
REFERRED TO HEREIN AS THE "RELEASED CLAIMS"), WHICH SUCH RELEASOR,
SUCH RELEASOR'S HEIRS, EXECUTORS, ADMINISTRATORS SUCCESSORS AND
ASSIGNS EVER HAD, NOW HAVE OR HEREAFTER MAY HAVE ARISING OUT OF OR
RELATING TO THE FUNCTIONALITY, FITNESS, FEATURES, COMPLETION OR
NON-COMPLETION AND PERFORMANCE OF THE SOFTWARE PRODUCTS KNOWN AS
CLIMATE SIGHT, SKILL SIGHT, PERFORMANCE SIGHT, COMPLIANCE SIGHT AND
HCM TOOLS (TOO BROAD) THE RELEASORS EACH ACKNOWLEDGE AND AGREE AS
FOLLOWS:
(this makes no sense/ the Purchaser owns the Intellectual
Property) (Workstream cannot say this without doing extensive
searches)
o that all computer systems and application software, including
without limitation, the software products known as Climate
Sight, Skill Sight, Performance Sight, Compliance Sight and
HCM TOOLS and all documentation relating thereto and the
latest revisions of all related object and source codes
therefor, forming part of the Purchased Assets (what
Schedules?) are fully functional, merchantable and fit for the
purpose for which they were intended.
It is understood and agreed by Releasor that it may have
sustained damages, losses, costs or expenses for which it
might have made claims against the Released Parties that are
presently unknown or unsuspected and that such damages,
losses, costs and expenses may give rise to additional
damages, loses, costs or expenses in the future. It is
specifically acknowledged by Releasor that the foregoing
release and waiver set forth below has been agreed upon and
given in light of such facts and that the release is intended
to release the Released Parties from potential liabilities for
all such damages, losses, costs and expenses. Should any
provision, part or term of this Section 12 be declared or
determined by a court of competent jurisdiction to be illegal,
invalid or unenforceable, the legality, validity and
enforceability of the remaining parts, terms and provisions
should not be affected thereby, and said illegal, invalid or
unenforceable part, provision or term shall be deemed not to
be part of this Section 12.
Notwithstanding the aforementioned, the release described in
this Section 12 does not limit in any way the Releasors' right
to be indemnified pursuant to the Asset Purchase Agreement,
except with respect to any claims arising out of or relating
to the functionality, fitness, features, completion or
non-completion and performance of the software products known
as Climate Sight, Skill Sight, Performance Sight, Compliance
Sight and HCM TOOLS.
IN WITNESS WHEREOF THIS ADDENDUM HAS BEEN EXECUTED BY THE PARTIES HERETO
AS OF THE DATE FIRST SET FORTH ABOVE.
1 SIGNED, SEALED AND DELIVERED
PEOPLEVIEW, INC.
PER: /s/ Michael Mullarkey
-----------------------------------
TITLE: CEO
WORKSTREAM USA, INC.
PER: /s/ Michael Mullarkey
-----------------------------------
TITLE: CEO
WORKSTREAM INC.
PER: /s/ Borden Ladner Gervais LLP
-----------------------------------
TITLE: Escrow Agent
BORDEN LADNER GERVAIS LLP, as Escrow Agent
PER: /s/ Borden Ladner Gervais LLP
-----------------------------------
TITLE: Escrow Agent