EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
A COMPLETED AND ORIGINALLY EXECUTED COPY OF THIS SUBSCRIPTION AGREEMENT AND A
COMPLETED SCHEDULE A (IF THE PURCHASER IS A RESIDENT OF ONTARIO) MUST BE
DELIVERED BY NO LATER THAN 10:00 A.M. (TORONTO TIME) ON DECEMBER 8, 2003 TO:
STANDARD SECURITIES CAPITAL CORPORATION, 00 XXXXXXXX XXXXXX, XXXXXXX, XXXXXXX
X0X 0X0, ATTN: XXXXXXX XXXXXXXX, TEL: (000) 000-0000, FAX: (000) 000-0000.
--------------------------------------------------------------------------------
TO: WORKSTREAM INC.
AND TO: STANDARD SECURITIES CAPITAL CORPORATION
ISSUER: Workstream Inc. ISSUE: Common Shares
PRICE PER COMMON SHARE: U.S. $1.60
NUMBER OF COMMON SHARES PURCHASED:
------------------------------------------
TOTAL SUBSCRIPTION PRICE: $
--------------------------------------------------
NUMBER OF COMMON SHARES CURRENTLY OWNED (DIRECTLY AND INDIRECTLY):
-----------
NAME AND ADDRESS OF SUBSCRIBER:
Name: Address:
--------------------------------- --------------------------------
(Street Address)
--------------------------------- --------------------------------
(Official Capacity or Title if (City and Province or Country)
Subscriber is not an individual.)
--------------------------------
(Postal Code)
ALTERNATE REGISTRATION INSTRUCTIONS FOR COMMON SHARE CERTIFICATE: If other
than in the name of the Subscriber:
Name: Address:
--------------------------------- --------------------------------
(Street Address)
--------------------------------- --------------------------------
(City and Province or Country)
--------------------------------- --------------------------------
(Postal Code)
DELIVERY INSTRUCTIONS: The name and address (including contact name and
telephone number) of the person to whom the certificates representing the
securities are to be delivered, if other than the Subscriber:
Name: Address:
--------------------------------- --------------------------------
(Street Address)
Contact Name:
------------------------- --------------------------------
(City and Province or Country)
Telephone No.:
------------------------ --------------------------------
(Postal Code)
[PLEASE GO TO SIGNATURE LINE ON PAGE 14]
TERMS AND CONDITIONS OF SUBSCRIPTION
1. SUBSCRIPTION. The undersigned (the "PURCHASER") hereby tenders to Workstream
Inc. (the "CORPORATION") this subscription offer which, upon acceptance by the
Corporation, will constitute an agreement (the "SUBSCRIPTION AGREEMENT") of the
Purchaser with the Corporation to purchase from the Corporation and, on the part
of the Corporation, to sell to the Purchaser that number of Common Shares set
out on the face page of this Subscription Agreement (the "PURCHASER'S COMMON
SHARES") at the price (the "PURCHASE PRICE") of $1.60 per Common Share and equal
to the total subscription price set forth on the face page of this Subscription
Agreement, all on the terms and subject to the conditions set forth in this
Subscription Agreement.
2. AGENCY AGREEMENT. The Purchaser acknowledges that the Purchaser's Common
Shares will be issued in connection with the issue of up to a maximum of
$4,000,000 of Common Shares (the "OFFERING") to be sold by the Corporation by
private placement pursuant to an agency agreement (the "AGENCY AGREEMENT") to be
dated on or before the Closing Date (as defined below) between the Corporation,
and Standard Securities Capital Corporation (the "AGENT") and the Purchaser
acknowledges that the Offering may be done but is not required to be done
concurrently with a United States offering of up to $1,000,000 of the
Corporation's securities.
3. (A) DEFINITIONS. In this Subscription Agreement, unless the context otherwise
requires:
"AFFILIATE", "DISTRIBUTION" and "INSIDER" have the respective
meanings ascribed to them in the Securities Act (Ontario);
"CANADIAN SECURITIES LAWS" means, collectively, the applicable
securities laws of the Designated Province and the regulations and
rules made and forms prescribed thereunder together with all
applicable published policy statements, blanket orders, rulings and
notices of the Ontario Securities Commission;
"CLOSING" means the completion of the issue and sale by the
Corporation and the purchase by the Purchasers of the Common Shares
pursuant to the Agency Agreement and this Subscription Agreement;
"CLOSING DATE" means December 9, 2003 or such other date as the
Corporation and the Agent may agree pursuant to the Agency
Agreement;
"CLOSING TIME" means 9:00 a.m. (Toronto time) on the Closing Date or
such other time as the Corporation and the Agent may agree pursuant
to the Agency Agreement;
"COMMON SHARES" means common shares, no par value per share, in the
capital of the Corporation;
"DESIGNATED PROVINCE" means the Province of Ontario;
"MATERIAL" means material in relation to the Corporation and its
subsidiaries considered on a consolidated basis;
"MATERIAL CHANGE" means any change in the business, operations,
assets, liabilities, ownership or capital of the Corporation (except
the transactions contemplated herein) that would reasonably be
expected to have a significant effect on the market price or value
of the Common Shares and includes a decision to implement such a
change made by the board of directors of the Corporation or by
-1-
senior management of the Corporation who believe that confirmation
of the decision by the board of directors is probable;
"ONTARIO ACCREDITED INVESTOR STATUS CERTIFICATE" means the
accredited investor status certificate, in the form of Schedule A
attached hereto, required to be completed by each Purchaser;
"PRIVATE PLACEMENT EXEMPTIONS" means the exemptions to the
prospectus and registration requirements under Canadian Securities
Laws;
"PURCHASER'S COMMON SHARES" means Common Shares subscribed for by
the Purchaser;
"PURCHASERS" means all purchasers of the Common Shares including the
Purchaser;
"SEC" means the United States Securities and Exchange Commission;
"SEC FILINGS" means the Corporation's most recent Form 20-F for the
fiscal year ended May 31, 2003 and all other reports, schedules,
forms or statements filed by the Corporation or its subsidiaries
with the SEC under the 1933 Act or the 1934 Act on or during the 18
months preceding the date hereof;
"STOCK EXCHANGES" means the NASDAQ Small Cap Market and the Boston
Stock Exchange;
"SUBSIDIARIES" has the meaning ascribed to such term in the Canada
Business Corporations Act;
"U.S. SECURITIES LAWS" means, collectively, the 1933 Act and the
1934 Act as well as all applicable federal and state securities laws
in the United States, including all "Blue Sky" laws, and all
regulations and forms prescribed thereunder, together with all
applicable published policy statements, releases and rulings of the
SEC and any applicable state securities regulatory authorities, and
together with all published policies, rules and regulations of the
Stock Exchange;
"1933 ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder; and
"1934 ACT" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
(B) GENDER AND NUMBER. Words importing the singular number only shall
include the plural and vice versa, words importing the masculine gender shall
include the feminine gender and words importing persons shall include firms and
corporations and vice versa.
(C) CURRENCY. Unless otherwise stated, all amounts expressed herein in
terms of money refer to the lawful currency of the United States and all payment
to be made hereunder shall be made in such currency.
(D) HEADINGS. The division of the Subscription Agreement into Sections and
the use of headings are for convenience of reference only and shall not affect
the interpretation of this Subscription Agreement.
-2-
4. DELIVERY AND PAYMENT. The Purchaser agrees that the following shall be
delivered to the Agent at the address and by the date and time set out on the
face page hereof, or such other time, date or place as the Agent may advise:
(a) a completed and duly signed copy of this Subscription Agreement;
(b) a completed and duly signed copy of the Ontario Accredited Investor
Status Certificate in form annexed as Schedule "A";
(c) a completed and duly signed copy of the Accredited Investor
Questionnaire in form annexed as Schedule "B";
(d) any other documents required by the applicable Canadian Securities
Laws and the U.S. Securities Laws which the Agent or the Corporation
request; and
(e) a certified cheque or bank draft made payable on or before the
Closing Date (or such other date as the Agent may advise) in same
day freely transferable United States funds at par in Toronto,
Ontario to "Standard Securities Capital Corporation" representing
the aggregate Purchase Price payable by the Purchaser for the
Purchaser's Common Shares, or such other method of payment of the
same amount against delivery of the Purchaser's Common Shares as the
Agent may accept.
The Purchaser acknowledges and agrees that such certificates and
other documents, when executed and delivered by the Purchaser, will form part of
and will be incorporated into this Subscription Agreement with the same effect
as if each constituted a representation and warranty or covenant of the
Purchaser hereunder in favour of the Corporation and the Agent. The Purchaser
consents to and hereby authorizes the filing of such certificates and other
documents as may be required to be filed with the Stock Exchanges or other
securities regulatory authority in connection with the transactions contemplated
hereby. The Purchaser acknowledges and agrees that this Subscription Agreement,
the Purchase Price and any other documents delivered in connection herewith will
be held by the Agent until such time as the conditions referred to in section 8
below are satisfied by the Corporation or waived by the Agent.
5. CLOSING. Subject to the satisfaction of the conditions referred to in
section 7 hereof, the transactions contemplated hereby will be completed at the
Closing at the offices of Fraser Xxxxxx Casgrain LLP in Toronto, Ontario and
Xxxxxx-Xxxxxxxxx, Hill & XxXxxxxxx LLP in Ottawa, Ontario at the Closing Time.
The Purchaser acknowledges that the Purchaser's Common Shares will
be available for delivery to it at the Closing against payment of the amount of
the aggregate Purchase Price (in fully transferable United States funds) for the
Purchaser's Common Shares.
The Agent is hereby appointed as the Purchaser's agent to represent
the Purchaser at the Closing for the purpose of all closing matters and
deliveries of documents and Purchaser's Common Shares and is hereby authorized
by the Purchaser for and on behalf of the Purchaser, to extend such time periods
and modify or waive such conditions as may be contemplated herein or in the
Agency Agreement or, in its absolute discretion, as it deems appropriate.
Without limiting the generality of the foregoing, the Agent is specifically and
exclusively authorized:
(a) to negotiate and waive, in whole or in part, or extend the time for
compliance with any of the Corporation's representations and
warranties, covenants or conditions contained in the Agency
Agreement including, without in any way limiting the generality of
the foregoing, extending the time for Closing all in such manner and
on such terms and conditions as the Agent may determine, acting
reasonably, and without in any way affecting the Purchaser's
obligations hereunder;
-3-
(b) to correct manifest errors or to complete omissions in the
information provided by the Purchaser in this Subscription
Agreement, the Schedules attached hereto and in any other forms
delivered by the Purchaser in connection with the transactions
contemplated hereby, if any;
(c) to act as the Purchaser's representative at the Closing to, among
other things, receive certificates representing the Common Shares
subscribed for by the Purchaser; and to swear, execute and file any
receipts or other required documentation on behalf of the Purchaser;
and
(d) to terminate this subscription on behalf of the Purchaser in the
event that any condition precedent to the completion of the Offering
as referred to in section 7 hereof has not been satisfied by the
date set therefore; and
(e) to negotiate the terms of a registration rights agreement to be
dated the date of Closing (the "REGISTRATION RIGHTS AGREEMENT") to
be entered into by and between the Corporation and the Agent (on
behalf of the Purchasers), and to execute same on behalf of the
Purchasers as their lawful attorney.
In addition, the Purchaser acknowledges and agrees that the Agent is
entitled to exercise or not to exercise, in its absolute discretion, the rights
of termination in the Agency Agreement.
The Purchaser will take up, purchase and pay for the Purchaser's
Common Shares at the Closing upon acceptance of this offer by the Corporation
and the satisfaction by the Corporation, or waiver on behalf of the Purchaser by
the Agent, of the conditions referred to in section 7 below.
The Corporation intends to use proceeds from the Offering to repay
debt, for working capital and general corporate purposes, including payment of
the costs incurred by the Corporation in connection with this Offering.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION. By accepting
this offer, the Corporation represents and warrants to the Purchaser as follows:
(a) the Corporation has been duly incorporated and is validly existing
and in good standing under the laws of Canada and has all requisite
corporate power to own, lease and operate its properties and assets
and to carry on its business as now being conducted and has full
capacity to enter into, and carry out its obligations under this
Subscription Agreement;
(b) each of the Corporation's material subsidiaries has been duly
incorporated and is validly existing in good standing under the law
of its jurisdiction and has all requisite corporate power to own,
lease and operate its property and assets and to carry on business
as now being conducted;
(c) on the Closing Date, the Corporation will have taken all corporate
steps and proceedings necessary to approve the transactions
contemplated hereby, including the execution and delivery of this
Subscription Agreement and the Agency Agreement and each of which
will constitute a legal and binding obligation of the Corporation
enforceable in accordance with its terms;
-4-
(d) the Corporation has complied and will comply with all applicable
U.S. Securities Law and Canadian Securities Laws in connection with
the offer, issuance and sale of the Common Shares hereunder. Neither
the Corporation nor anyone acting on its behalf, directly or
indirectly, excluding the Agent, has or will sell, offer to sell or
solicit offers in Canada to buy the Common 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 (other than the Purchaser), so as to bring the
issuance and sale of the Common Shares under the registration
provisions of the 1933 Act and applicable state securities laws.
Neither the Corporation nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or
sale of the Common Shares;
(e) no representation or warranty of the Corporation contained in this
Subscription Agreement and the exhibits and schedules attached
hereto and thereto, any certificate furnished or to be furnished to
the Purchaser at the Closing or other written information furnished
to the Purchaser or its counsel in connection with the transactions
contemplated by this Subscription Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which
they were made. There is no material fact known to the Corporation
that has not been disclosed herein, or in any other agreement,
document or written statement furnished by the Corporation to the
Purchaser in connection with the transactions contemplated hereby
and thereby which is specific to the Corporation, as opposed to the
industry in which the Corporation operates, and which materially
adversely affects or is reasonably likely to materially and
adversely affect the business, properties, assets or financial
condition of the Corporation;
(f) the Corporation will file, in connection with the issuance and sale
of the Common Shares, all required forms and reports under the
Canadian Securities Laws and the U.S. Securities Laws within the
time periods therein prescribed and shall pay all required fees in
connection therewith;
(g) the creation, issuance and sale of the Common Shares by the
Corporation does not and will not conflict with and does not and
will not result in a breach of any of the terms, conditions or
provisions of its constating documents or any agreement or
instrument to which the Corporation is a party;
(h) at the Closing, every consent, approval, authorization or order that
is required for the transactions herein contemplated to occur at the
Closing will have been obtained and will be in effect;
(i) the issued and outstanding Common Shares are listed and posted for
trading on the Stock Exchanges;
(j) to the best of the knowledge of the Corporation, no order ceasing or
suspending trading in the securities of the Corporation nor
prohibiting the sale of such securities or the Common Shares has
been issued to the Corporation or its directors, officers or
promoters and, no investigations or proceedings for such purposes
are pending or threatened;
(k) prior to the Closing Date, the Corporation will have obtained all
required approvals from the Stock Exchanges in order to permit the
completion of the transactions contemplated hereby;
-5-
(l) the Corporation has full corporate power and authority to undertake
the offering of the Common Shares contemplated hereby and, at the
Closing Time, the Common Shares will be duly and validly created,
authorized and issued as fully paid and non-assessable shares;
(m) the Corporation and its subsidiaries are the beneficial owners of or
have the right to acquire the interests in the properties, business
and assets referred to in the SEC Filings as being owned by the
Corporation or its subsidiaries;
(n) at the time of filing thereof, the SEC Filings complied as to form
in all material respects with the requirements of the 1934 Act or
the 1933 Act, as applicable, and did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading;
(o) the Corporation is eligible to use Form S-3 to register the
Registrable Securities (as such term is defined in the Registration
Rights Agreement) for sale by the Purchasers as contemplated by the
Registration Rights Agreement;
(p) the Corporation has filed in a timely manner all documents that
comprise the SEC Filings and that the Corporation is required to
file under the continuous disclosure provisions of the Canadian
Securities Laws and the U.S. Securities Laws and each of such
documents complied as to form in all material respects with all
applicable statutory requirements as of their respective filing
dates, and the information contained therein as of the date thereof
did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under
which the were made not misleading; and
(q) the authorized share capital of the Corporation consists of an
unlimited number of Common Shares and an unlimited number of Class A
Preferred Shares issuable in series of which, as of December 2,
2003, 23,200,659 Common Shares and 0 Class A Preferred Shares are
currently issued and outstanding as fully paid and non assessable,
and issued in material compliance with all applicable federal,
provincial and state securities laws.
The Corporation agrees that the Purchaser will have the benefit of
all the representations, warranties and covenants given by the Corporation in
the Agency Agreement and further agrees that all such representations,
warranties and covenants will be deemed to be incorporated herein as if they
were reproduced in their entirety, with such changes as are necessary in order
to reflect that such representations, warranties and covenants are being made by
the Corporation to the Purchaser.
7. CONDITIONS OF CLOSING. The obligations of the Purchaser to complete the
purchase of the Common Shares as contemplated hereby shall be conditional upon
the fulfilment at or before the Closing Time of each of the conditions of the
Closing set forth in the Agency Agreement except those conditions that are
waived by the Agent.
The Purchaser acknowledges and agrees that as the initial sale of
the Purchaser's Common Shares will not be qualified by a prospectus, such sale
is subject to the condition that the Purchaser (or, if applicable, any others
for whom the Purchaser is contracting hereunder) sign and return to the
Corporation or the Agent all relevant documentation required by the Canadian
Securities Laws and the U.S. Securities Laws. The Purchaser acknowledges and
agrees that the Corporation may be required to provide to the Ontario Securities
Commission and to the Stock Exchanges and to the SEC a list setting forth the
identities of the beneficial purchasers of the Common Shares. Notwithstanding
-6-
that the Purchaser may be purchasing Common Shares as an agent on behalf of an
undisclosed principal, the Purchaser agrees to provide, on request, particulars
as to the identity of such undisclosed principal as may be required by the Agent
or the Corporation in order to comply with the foregoing requirements.
8. ACCEPTANCE OR REJECTION. The Corporation will have the right to accept or
reject this offer in whole or in part at any time at or prior to the Closing
Time. The Purchaser acknowledges and agrees that the acceptance of this offer
will be conditional upon the sale of the Purchaser's Common Shares to the
Purchaser being exempt from any prospectus or offering memorandum requirements
of all applicable U.S. Securities Laws and Canadian Securities Laws and the
equivalent provisions of securities laws of any other applicable jurisdiction.
The Corporation will be deemed to have accepted this offer upon the
Corporation's execution of the acceptance form at the end of this Agreement and
the delivery at the Closing of the certificate representing the Purchaser's
Common Shares to or upon the direction of the Agent in accordance with the
provisions hereof.
9. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser represents and
warrants to the Corporation and the Agent, as representations and warranties
that are true as of the date of this offer and will be true as of the Closing
Date, that:
(a) AUTHORIZATION AND EFFECTIVENESS. If the Purchaser is an individual,
it is of the full age of majority and has all requisite legal
capacity and competence to execute and deliver this Agreement and to
observe and perform its covenants and obligations hereunder, or if
the Purchaser is a corporation, the Purchaser is a validly existing
corporation, has the necessary corporate capacity and authority to
execute and deliver this Subscription Agreement and to observe and
perform its covenants and obligations hereunder and has taken all
necessary corporate action in respect thereof, or, if the Purchaser
is a partnership, syndicate or other form of unincorporated
organization, the Purchaser has the necessary legal capacity and
authority to execute and deliver this Subscription Agreement and to
observe and perform its covenants and obligations hereunder and has
obtained all necessary approvals in respect thereof, and, in any
case, upon acceptance by the Corporation, this offer will constitute
a legal, valid and binding contract of the Purchaser enforceable
against the Purchaser in accordance with its terms and will not
result in a violation of any of the Purchaser's constating documents
(if applicable) or any agreement to which the Purchaser is a party
or by which it is bound;
(b) RESIDENCE. The Purchaser is a resident of the jurisdiction referred
to under "Name and Address of Subscriber" set out on the face page
hereof and: (i) is not a resident of any other jurisdiction nor is
it purchasing the Purchaser's Common Shares for the account or
benefit of a resident of any other jurisdiction; (ii) was not
offered the Common Shares in another jurisdiction in Canada or the
United States; (iii) did not execute or deliver this Subscription
Agreement in another jurisdiction; and (iv) is not a U.S. Person (as
such term is defined in Regulation S under the 0000 Xxx) and the
Common Shares are not being acquired by it for or on behalf of a
U.S. Person.
(c) PURCHASING FOR INVESTMENT ONLY. The Purchaser is purchasing the
Purchaser's Common Shares for investment only and not with a view to
resale or distribution in contravention of the Canadian Securities
Laws or the U.S. Securities Laws and the Purchaser has no present
intention of selling, granting any participation in, or otherwise
distributing the same in violation of the Canadian Securities Laws
or the U.S. Securities Laws;
(d) PURCHASING AS AGENT OR TRUSTEE. In the case of the purchase by the
Purchaser of the Purchaser's Common Shares as agent or trustee as
contemplated herein, for any principal whose identity is disclosed
-7-
or undisclosed or identified by account number only, the Purchaser
has due and proper authority to act as agent or trustee for and on
behalf of such beneficial purchaser in connection with the
transactions contemplated hereby.
(e) PURCHASER HAS BENEFIT OF STATUTORY PRIVATE PLACEMENT EXEMPTIONS. The
Purchaser:
(i) the Purchaser is purchasing as principal and not for the
benefit of any other person, and is an "accredited investor"
as such term is defined in Ontario Securities Commission Rule
45-501 and specifically represents and warrants that one or
more of the categories set forth in the Ontario Accredited
Investor Status Certificate correctly, and in all respects,
describes the Purchaser, and will describe the Purchaser as at
Closing, and the Purchaser has so indicated by marking the box
next to the category which so describes it and executing and
delivering a copy of the Ontario Accredited Investor Status
Certificate;
(ii) has status as an exempt purchaser or the equivalent under the
securities legislation applicable to it, which status has the
effect of eliminating any requirement for a prospectus in
respect of the purchase of Common Shares by the Purchaser and
shall deliver to the Corporation such further particulars of
the Purchaser's exempt purchaser status as the Corporation may
reasonably request; or
(iii) is purchasing pursuant to a statutory exemption or an
exemption order permitting such purchase, which exemption or
order has the effect of eliminating any requirement for a
prospectus or similar disclosure document in respect of the
purchase of Common Shares by the Purchaser, and shall deliver
to the Corporation such further particulars of the
exemption(s) or order(s) and the Purchaser's qualifications
thereunder as the Corporation may request.
(f) ABSENCE OF OFFERING MEMORANDUM. Except for this Subscription
Agreement and the Disclosure Documents (as defined below), the only
documents, if any, delivered or otherwise furnished to the Purchaser
in connection with such offering and sale was a term sheet provided
by the Agent and publicly available research reports, memoranda and
other materials concerning the Corporation which have not been
prepared for delivery to, and review by, prospective purchasers in
order to assist such purchasers in making an investment decision in
respect of the Common Shares, which documents the Purchaser
acknowledges do not, individually or collectively, constitute an
offering memorandum or similar document and have not been
independently verified by the Agent;
(g) NO UNDISCLOSED INFORMATION. The Purchaser's Common Shares are not
being purchased by the Purchaser as a result of any material
information concerning the Corporation that has not been publicly
disclosed and the Purchaser's decision to tender this offer and
acquire the Purchaser's Common Shares has not been made as a result
of any oral or written representation as to fact or otherwise made
by or on behalf of the Corporation, the Agent or any other person
and is based entirely upon currently available public information
concerning the Corporation;
(h) INVESTMENT SUITABILITY. The Purchaser has such knowledge and
experience in financial and business affairs as to be capable of
evaluating the merits and risks of the investment hereunder in the
Purchaser's Common Shares and is able to bear the economic risk of
loss of such investment; and
-8-
(i) LEGAL ADVISORS. In connection with the Purchaser's investment in the
Common Shares, the Purchaser has not relied upon the Corporation or
the Corporation's legal counsel or advisors or the Agent or the
Agent's legal counsel or advisors for investment, legal or tax
advice, and has, if desired, in all cases sought the advice of the
Purchaser's own personal investment advisor, legal counsel and tax
advisors, and the Purchaser is either experienced in or
knowledgeable with regard to the affairs of the Corporation or,
either alone or with its professional advisors, is capable by reason
of knowledge and experience in financial and business matters in
general, and investments in particular, of evaluating the merits and
risks of an investment in the Common Shares, and it is able to bear
the economic risk of an investment in the Common Shares and can
otherwise be reasonably assumed to have the capacity to protect its
own interest in connection with the investment.
(j) ACCREDITED INVESTOR STATUS. The Purchaser:
(i) is an "Accredited Investor," as such term is defined in Rule
501 of Regulation D of the 1933 Act, as evidenced in the
questionnaire attached as Schedule B to this Subscription
Agreement (the "Investor Questionnaire");
(ii) represents and warrants that the information provided to the
Corporation in the Investor Questionnaire, and any other
information provided to the Corporation by the Purchaser, is
true, complete and correct in all material respects; and
(iii) understands that the Common Shares are being offered and sold
in reliance upon specific exemptions from the registration
requirements of United States federal and state securities
laws and that the Corporation is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgements and understandings set forth herein and in
the Investor Questionnaire in order to determine the
applicability of such exemptions and the suitability of the
undersigned to acquire the Common Shares;
(k) SECURITIES FILINGS. The Purchaser acknowledges that it has been
provided with the opportunity to review and to receive copies of the
following documents, which have been filed by the Corporation with
the SEC pursuant to the 1934 Act (collectively, the "Disclosure
Documents"): (i) the Corporation's Annual Report on Form 10-K, as
amended, for the fiscal year ended May 31, 2003; (ii) the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
August 31, 2003; and (iii) the Corporation's proxy statement with
respect to its 2003 annual meeting; and
(l) ACCESS TO INFORMATION. The Purchaser acknowledges that it has been
afforded the opportunity to ask questions of, and receive answers
from, the Corporation concerning the Purchaser's Common Shares and
the terms and conditions of the offering and to obtain any
additional information the Purchaser may consider necessary in
making an informed investment decision or in order to verify the
accuracy of any information set forth in this Subscription Agreement
or otherwise provided to the Purchaser.
The Purchaser acknowledges and agrees that the foregoing
representations and warranties are made by it with the intention that they may
be relied upon in determining its eligibility or (if applicable) the eligibility
of others on whose behalf it is contracting hereunder to purchase the
Purchaser's Common Shares under relevant securities legislation. The Purchaser
further agrees that by accepting delivery of the Purchaser's Common Shares on
the Closing Date, it shall be representing and warranting that the foregoing
-9-
representations and warranties are true and correct as at the Closing Date with
the same force and effect as if they had been made by the Purchaser at the time
of the Closing and that they shall survive the purchase by the Purchaser of the
Purchaser's Common Shares and shall continue in full force and effect
notwithstanding any subsequent disposition by the Purchaser of the Purchaser's
Common Shares. The Purchaser undertakes to notify the Corporation immediately of
any change in any representation, warranty or other information relating to the
Purchaser set forth herein which takes place prior to the Closing Time.
10. PURCHASER'S ACKNOWLEDGEMENTS.
(a) PRIVATE PLACEMENT EXEMPTIONS. The Purchaser hereby acknowledges and
agrees that the Offering is being made pursuant to Private Placement
Exemptions. As a result of the Corporation's reliance on Private
Placement Exemptions, the Common Shares will be subject to
restrictions on resale and transferability contained in applicable
securities legislation, as well as any restrictions on resale and
transferability imposed by the Stock Exchanges. The Common Shares
may not be sold or otherwise transferred unless the sale or transfer
is made in accordance with the provisions of all applicable
securities laws and Stock Exchanges requirements. Such restrictions
will require the appropriate legending of the Common Shares.
(b) RESTRICTED SECURITIES. The Purchaser understands that the Common
Shares have not been registered under the 1933 Act, by reason of a
specific exemption from the registration provisions of the 1933 Act
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the Purchaser's
representations as expressed herein. The Purchaser understands that
the Common Shares are "restricted securities" under applicable U.S.
Securities Laws and that, pursuant to those laws, the Purchaser must
hold the Common Shares indefinitely unless the Common Shares are
registered with the Securities and Exchange Commission and qualified
by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledge
that the Corporation has under the terms of the Agency Agreement an
obligation to use its commercial best efforts to register or qualify
the Common Shares for resale within 45 days following Closing as
more specifically provided for in the Agency Agreement and the
Registration Rights Agreement.
(c) NO APPROVAL BY GOVERNMENT AUTHORITY. No agency, governmental
authority, regulatory body, stock exchange or other entity has made
any finding or determination as to the merit for investment of, nor
have any such agencies or governmental authorities made any
recommendation or endorsement with respect to, the offer and sale of
the Common Shares;
(d) ACCESS TO INFORMATION. The Purchaser has had access to and has
received all such information concerning the Corporation that the
Purchaser has considered necessary in connection with the
Purchaser's investment decision;
(e) RELIANCE. The Corporation and the Agent will rely on the
acknowledgments, representations and warranties made herein or
otherwise provided by the Purchaser to the Corporation in completing
the sale and issue of the Common Shares to the Purchaser; and
(f) FILING OF FORM 45-501F2. As a resident of the Province of Ontario,
the Purchaser acknowledges that it must file a report on Form
45-501F2 with the Ontario Securities Commission, within 10 days of
any disposition of the Purchaser's Common Shares.
-10-
11. NO INVESTIGATION BY THE AGENT. The Purchaser acknowledges and agrees that
the Agent assumes no responsibility or liability of any nature whatsoever for
the accuracy or adequacy of the SEC Filings or any publicly available
information concerning the Corporation or as to whether all information
concerning the Corporation required to be disclosed by the Corporation has been
generally disclosed. The Purchaser further acknowledges and agrees that the
Agent has not engaged in or conducted any independent investigation with respect
to the Corporation or any such information contained in the SEC Filings.
12. PURCHASER'S EXPENSES. The Purchaser acknowledges and agrees that except as
otherwise provided herein or in the Agency Agreement, all costs and expenses
incurred by the Purchaser (including any fees and disbursements of special
counsel retained by the Purchaser) relating to the purchase of the Common Shares
shall be borne by the Purchaser.
13. RESALE RESTRICTIONS. The Purchaser understands and acknowledges that the
Purchaser's Common Shares will be subject to certain resale restrictions under
applicable Canadian Securities Laws and U.S. Securities Laws and the Purchaser
agrees to comply with such restrictions. The Purchaser also acknowledges that it
has been advised to consult its own legal advisors with respect to applicable
resale restrictions and that it is solely responsible (and neither the
Corporation nor the Agent are in any manner responsible) for complying with such
restrictions.
For purposes of complying with the Canadian Securities Laws and
Multilateral Instrument 45-102 Resale of Securities, and the Purchaser
understands and acknowledges that upon their issuance the certificates
representing the Common Shares shall bear the following legends:
(i) "UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE THE EARLIER OF (I) THE
DATE THAT IS 12 MONTHS AND A DAY AFTER THE DATE THE ISSUER FIRST BECAME A
REPORTING ISSUER IN ANY OF ALBERTA, BRITISH COLUMBIA, MANITOBA, NOVA
SCOTIA, ONTARIO, QUEBEC AND SASKATCHEWAN, IF THE ISSUER IS A SEDAR FILER;
AND (II) THE DATE THAT IS 12 MONTHS AND A DAY AFTER THE LATER OF (A) THE
DISTRIBUTION DATE, AND (B) THE DATE THE ISSUER BECAME A REPORTING ISSUER
IN THE LOCAL JURISDICTION OF THE PURCHASER OF THE SECURITIES THAT ARE THE
SUBJECT OF THE TRADE."
(ii) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, HAVE BEEN TAKEN FOR
INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION
STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED WITH
RESPECT TO THESE SHARES, IS THEN IN EFFECT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS THEN IN FACT APPLICABLE TO THE
OFFER OR SALE."
If required by the authorities of any state in connection with the issuance and
sale of Common Shares, the legend required by such state authority under
applicable "Blue Sky" laws.
14. Upon Rule 144(k) under the 1933 becoming available, the Corporation shall,
upon an Purchaser's written request, promptly cause certificates evidencing the
Common Shares to be replaced with certificates which do not the restrictive
legend set forth in Section 13(b).
15. LEGAL AND TAX ADVICE. The Purchaser acknowledges and agrees that it is
solely responsible for obtaining such legal advice and tax advice as it
-11-
considers appropriate in connection with the execution, delivery and performance
by it of this Subscription Agreement and the completion of the transactions
contemplated hereby.
16. NO STATUTORY RIGHT OF RESCISSION OR DAMAGES; ADDITIONAL ACKNOWLEDGEMENTS.
The Purchaser acknowledges and agrees that: (a) no securities commission or
similar regulatory authority has reviewed or passed on the merits of the
Purchaser's Common Shares; (b) there is no government or other insurance
covering the Purchaser's Common Shares; (c) the purchase of the Purchaser's
Common Shares is a speculative investment and there are risks associated with
the purchase of the Purchaser's Common Shares; (d) there are restrictions on the
Purchaser's ability to resell the securities comprising the Purchaser's Common
Shares, and it is the responsibility of the Purchaser to determine what those
restrictions are and to comply with them before selling such securities, and (e)
the Corporation has advised the Purchaser that the Corporation is relying on an
exemption from the requirements to provide the Purchaser with a prospectus and
to sell securities through a person registered to sell securities under the
Canadian Securities Laws and, as a consequence of acquiring Common Shares
pursuant to the Private Placement Exemptions: (i) the Purchaser may not receive
information that might otherwise be required to be provided to it under the
Canadian Securities Laws; and (ii) certain protections, rights and remedies
provided by the Canadian Securities Laws, including statutory rights of
rescission or damages, will not be available to the Purchaser.
17. NO REVOCATION. The Purchaser agrees that this offer is made for valuable
consideration and may not be withdrawn, cancelled, terminated or revoked by the
Purchaser without the consent of the Corporation.
18. INDEMNITY. Each of the Agent and the Corporation is entitled to rely on the
statements, representations, warranties and covenants of the Purchaser contained
in this Subscription Agreement including the schedules attached hereto. The
Purchaser agrees to indemnify and hold harmless the Corporation and the Agent
and their respective directors, officers, employees, agents, advisers and
shareholders from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, law suit, administrative proceeding or investigation whether
commenced or threatened) arising out of or based upon any representation or
warranty of the Purchaser contained herein or in any document furnished by the
Purchaser to the Corporation or the Agent in connection herewith being untrue in
any material respect or any breach or failure by the Purchaser to comply with
any covenant or agreement made by the Purchaser herein or in any document
furnished by the Purchaser to the Corporation or the Agent in connection
herewith.
19. MODIFICATION. Subject to the terms hereof, neither this Subscription
Agreement nor any provision hereof shall be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.
20. ASSIGNMENT. The terms and provisions of this Subscription Agreement shall be
binding upon and enure to the benefit of the Purchaser, the Corporation and
their respective successors, heirs, executors, legal personal representatives
and assigns; provided that this Subscription Agreement shall not be assignable
by any party without the prior written consent of the other party.
21. MISCELLANEOUS. All representations, warranties, agreements and covenants
made or deemed to be made by the Purchaser herein will survive the execution and
delivery, and acceptance, of this offer and the Closing. This Subscription
Agreement may be executed in any number of counterparts, each of which when
delivered, either in original or facsimile form, shall be deemed to be an
original and all of which together shall constitute one and the same document.
-12-
22. GOVERNING LAW. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein. The Purchaser on its own behalf and, if
applicable, on behalf of others for whom it is contracting hereunder, hereby
irrevocably attorns to the jurisdiction of the courts of the Province of Ontario
with respect to any matters arising out of this Subscription Agreement.
23. FACSIMILE SUBSCRIPTIONS. The Corporation shall be entitled to rely on
delivery by facsimile machine of an executed copy of this Subscription
Agreement, including the completed Schedules hereto, and acceptance by the
Corporation of such facsimile copy shall be legally effective to create a valid
and binding agreement between the Purchaser and the Corporation in accordance
with the terms hereof.
24. ENTIRE AGREEMENT AND HEADINGS. This Subscription Agreement (including the
Schedules hereto) contains the entire agreement of the parties hereto relating
to the subject matter hereof and there are no representations, covenants or
other agreements relating to the subject matter hereof except as stated or
referred to herein or in the Agency Agreement. This Subscription Agreement may
be amended or modified in any respect by written instrument only. The headings
contained herein are for convenience only and shall not affect the meanings or
interpretation hereof.
25. AGENT'S FEE. The Purchaser acknowledges that the Corporation has retained
the Agent to act as the Agent in connection with the Offering. For the services
rendered by the Agent in such capacity, the Corporation has agreed to pay the
Agent a cash commission of 7.0% of the gross proceeds of the Offering received
by the Corporation. In addition, as part consideration for the services rendered
by the Agent, the Corporation has agreed, subject to regulatory approval, to
issue Agent's Warrants excersiable at any time up to 24 months following the
Closing Date entitling the Agent to purchase that number of Common Shares equal
to 10% of the number of Common Shares sold pursuant to the Offering at an
exercise price equal to $1.60 per Common Share. In addition, the Corporation
will pay the expenses of the Agent in connection with the Offering as set out in
the Agency Agreement.
26. SURVIVAL. This Subscription Agreement, including without limitation the
representation, warranties and covenants contained herein, shall survive and
continue in full force and effect for the twelve (12) month period following the
Closing Date, and shall be binding upon the Purchaser notwithstanding the
completion of the purchase of the Common Shares by the Purchaser pursuant
hereto, the completion of the Offering of the Common Shares and any subsequent
disposition in accordance with the applicable U.S. Securities Laws and Canadian
Securities Laws by the Purchaser of the Purchaser's Common Shares.
27. TIME OF ESSENCE. Time shall be of the essence of this Subscription
Agreement.
28. EFFECTIVE DATE. This Subscription Agreement is intended to and shall take
effect on the Closing Date, notwithstanding its actual date of execution or
delivery by any of the parties.
[Signatures on following page.]
-13-
IN WITNESS WHEREOF the undersigned has executed this Subscription Agreement on
the ____ day of December, 2003.
-------------------------------------- ----------------------------------------
Signature of Purchaser Name of Purchaser
(if an individual) (if not an individual)
Per:
-------------------------------------- -----------------------------------
Name of Purchaser (if an individual) Title
------------------------------------
Social Insurance Number
(if an individual)
ACCEPTANCE
The foregoing is acknowledged, accepted and agreed to this ____ day
of December, 2003
WORKSTREAM INC.
Per: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Authorized Signatory
-14-
SCHEDULE A
PURCHASERS OF WORKSTREAM INC. COMMON SHARES
--------------------------------------------------------------------------------
NAME NO. OF SHARES PURCHASE PRICE
--------------------------------------------------------------------------------
AGF Growth Equity Fund 660,400 $1,056,640
--------------------------------------------------------------------------------
BTR Global Arbitrage Trading Limited 468,750 $750,000
--------------------------------------------------------------------------------
Northern Rivers Innovation Fund 192,500 $308,000
--------------------------------------------------------------------------------
Delta One Northern Rivers Fund 19,250 $30,800
--------------------------------------------------------------------------------
Nadal Investments Limited 28,875 $46,200
--------------------------------------------------------------------------------
Xxxxx Xxxxxx 6,250 $10,000
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 12,500 $20,000
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 12,500 $20,000
--------------------------------------------------------------------------------
HJG Partnership 125,000 $200,000
--------------------------------------------------------------------------------
1120288 Ontario Ltd. 21,875 $35,000
--------------------------------------------------------------------------------
DGM Bank & Trust Inc. 71,875 $115,000
--------------------------------------------------------------------------------
Xxxxx XxXxxxxxxx 109,875 $175,800
--------------------------------------------------------------------------------
IG AGF CDN Diversified Growth Class 1,200 $1,920
--------------------------------------------------------------------------------
London Life Growth Equity Fund 97,500 $156,000
--------------------------------------------------------------------------------
GWL Growth Equity Fund 55,800 $89,280
--------------------------------------------------------------------------------
IG AGF Canadian Diversified Growth Fund 122,100 $195,360
--------------------------------------------------------------------------------
Front Street Investment Management Inc. 65,625 $105,000
--------------------------------------------------------------------------------
Casurina Performance Fund 98,125 $157,000
--------------------------------------------------------------------------------
Front Street Canadian Hedge 28,125 $45,000
--------------------------------------------------------------------------------
Delf Investment & Construction Inc. 31,250 $50,000
--------------------------------------------------------------------------------
Casurina Limited Partnership 251,875 $403,000
--------------------------------------------------------------------------------
Blumont Strategic Partnership 18,750 $30,000
--------------------------------------------------------------------------------
