EXHIBIT 10.1
FORBEARANCE
AGREEMENT
This Forbearance Agreement (the “
Agreement ”) is made as of this ____ day of June 2009
by and between Workstream Inc. (the “ Company ”)
and the holder listed on the signature page hereto (the “
Holder ”).
RECITALS
A. The
Company and the Holder entered into that certain Exchange Agreement
dated as of August 29, 2008 (the “ Exchange
Agreement ”).
B. Simultaneously
with the consummation of the transactions contemplated by the
Exchange Agreement, the Holder exchanged its Special Warrant (as
defined in the Exchange Agreement) and its 2007 Warrant (as defined
in the Exchange Agreement) with the Company for a Note (as defined
in the Exchange Agreement) in the original principal amount of
$_________ and a Warrant (as defined in the Exchange
Agreement).
C. During
and only during the period beginning on the date of this Agreement
and ending on the fifteen (15) day anniversary of the date hereof
(such period is referred to herein as the “ Standstill
Period ” and such scheduled ending date is referred to
herein as the “ Scheduled Standstill Expiration Date
”), the Holder is willing to temporarily
forbear from exercising certain rights and remedies under Section
3(b) of the Note on the terms, conditions, and provisions contained
in this Agreement and engage in discussions with the Company
regarding a potential restructuring of the Holder’s
Note.
AGREEMENTS
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1.
Acknowledgment of Events of Default . The Company
acknowledges and agrees that:
(i) an
Event of Default (as defined in the Note) has occurred prior to the
date hereof under Section 3(a)(i) of the Note as a result of the
suspension from trading of the Common Shares (as defined in the
Note) on an Eligible Market (as defined in the Note) for a period
of five (5) consecutive Trading Days (as defined in the
Note);
(ii) an
Event of Default has occurred prior to the date hereof under
Section 3(a)(vi) of the Note as a result of clause (i) above
causing an Event of Default to occur under the Other Notes (as
defined in the Note);
(iii) an
Event of Default will occur under Section 3(a)(vii) of the Note
upon the delisting of the Common Shares from the Principal Market
(as defined in the Exchange Agreement), resulting in a material
breach by the Company of Section 4(c) of the Exchange
Agreement;
(iv) an
Event of Default will occur under Section 3(a)(i) of the Note upon
the failure of the Common Shares to be listed on an Eligible Market
for a period of five (5) consecutive Trading Days;
(v) an
Event of Default will occur under Section 3(a)(ii) of the Note as a
result of the suspension and the delisting of the Common Shares
from an Eligible Market because immediately following such
suspension and delisting the Common Shares will not be listed on a
designated exchange for purposes of the Income Tax Act (Canada);
and
(vi) an
Event of Default will occur under Section 3(a)(vi) of the Note as a
result of each of clauses (iii) through (v) above causing an Event
of Default to occur under the Other Notes.
For purposes of
this Agreement, (i) the Events of Default listed in clauses (i) and
(ii) above are collectively referred to herein as the “
Existing Events of Default ” and each is individually
referred to herein as an “ Existing Event of Default
;” (ii) the Events of Default listed in clauses (iii) through
(vi) above are collectively referred to herein as the “
Imminent Events of Default ” and each is
individually referred to herein as an “ Imminent
Event of Default ;” and (iii) the Existing Events of
Default and the Imminent Events of Default are collectively
referred to herein as the “ Defaults ” and each
is individually referred to herein as a “ Default
.” The Company represents and warrants to the Holder that (a)
no other Event of Default has occurred other than the Existing
Events of Default; (b) no other breach by the Company or any of its
Subsidiaries of their respective obligations has occurred under any
of the Transaction Documents; (c) to the best knowledge of the
Company, no other Event of Default is imminent other than the
Imminent Events of Default; and (d) the Company has no knowledge of
any fact, event or circumstance that could reasonably be expected
to result in the occurrence of an Event of Default at any time
during the thirty (30) day period following the date hereof other
than the Imminent Events of Default.
2.
Forbearance; Standstill Termination . Unless and until a
Standstill Termination (as defined below) occurs, during the
Standstill Period, the Holder will not exercise any of its rights
or remedies under Section 3(b) of the Note solely with respect to
the Defaults. Upon the occurrence of a Standstill Termination, the
Standstill Period shall be automatically terminated and the Holder
shall then be permitted and entitled to immediately exercise all of
its rights and remedies under Section 3(b) of the Note with
respect to each of the Defaults. “ Standstill
Termination ” shall mean the earlier to occur of (i) the
Scheduled Standstill Expiration Date or (ii) the occurrence of any
Event of Default after the date hereof (other than an Imminent
Event of Default).
3.
No Waiver; Reservation of Rights . The Company acknowledges
that the Holder is not waiving any of the Defaults but is simply
agreeing to forbear from exercising its rights and remedies with
respect to the Defaults during the Standstill Period to the extent
expressly set forth in this Agreement. Without limiting the
generality of the foregoing, the Company acknowledges and agrees
that immediately upon the occurrence of a Standstill Termination,
the Holder shall have all of its rights and remedies with respect
to the Defaults to the same extent, and with the same force and
effect, as if the forbearance had not occurred. The Company will
not assert that
(i) the Holder
is obligated in any way to continue beyond the occurrence of a
Standstill Termination to forbear from enforcing its rights or
remedies under Section 3(b) of the Note with respect to any of the
Defaults or (ii) the Holder is not entitled to act on any of the
Defaults after the occurrence of a Standstill Termination as if the
Standstill Period never existed, and the Company her
