EXHIBIT 10.1
TERM NOTE
$1,287,901.04 Lake Forrest, Illinois January 31, 2003
FOR VALUE RECEIVED, WORKSTREAM INC., a corporation formed under the
laws of Canada ("WORKSTREAM"), WORKSTREAM USA, INC., a Delaware corporation
("USA"), ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation ("6Figures"), ICARIAN,
INC., a Delaware corporation ("ICARIAN"), REZLOGIC, INC., a Colorado corporation
("REZLOGIC"), THE OMNI PARTNERS, INC., a Florida corporation ("OMNI"), and XYLO,
INC., a Delaware corporation ("XYLO" and together with USA, 6Figures, Icarian,
RezLogic and Omni, the "COMPANIES") (the Companies together with Workstream, the
("BORROWERS"), jointly and severally, hereby promise to pay to the order of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an individual (the "HOLDER"), the principal amount of ONE
MILLION TWO HUNDRED EIGHTY SEVEN THOUSAND NINE HUNDRED ONE DOLLARS AND FOUR
CENTS ($1,287,901.04) (the "PRINCIPAL AMOUNT"), in lawful money of the United
States of America, at such place or places as the Holder may from time to time
designate, and at the times set forth in Section 1.1 below but in no event later
than January 31, 2008 (the "MATURITY DATE"). The Borrowers shall also pay
interest from the date hereof on the unpaid Principal Amount, in lawful money of
the United States of America on the dates and at the rates set forth in Section
1.2 below.
The Borrowers and ▇▇▇▇▇▇ each acknowledge and agree that the Principal
Amount represents certain indebtedness owned by the Borrowers to the Holder
prior to the date hereof and for which funds have already been advanced to the
Borrowers by the Lender. The Principal Amount is a continuing obligation of the
Borrowers to Holder, and nothing herein shall be construed to deem such
indebtedness paid or to otherwise release or terminate the Borrowers'
obligations with respect to the Principal Amount.
The following terms shall apply to this Note:
ARTICLE I
PRINCIPAL; INTEREST; GRACE PERIODS
1.1 PRINCIPAL PAYMENTS; PREPAYMENTS.
1.1.1 Subject to Paragraph 1.1.2 below, the Principal Amount shall be
paid in thirty six (36) equal monthly installments, commencing on the January
31, 2005 and ending on the Maturity Date, of THIRTY FIVE THOUSAND SEVEN HUNDRED
FIFTY EIGHT DOLLARS AND THIRTY SIX CENTS ($35,758.36) each.
1.1.2 The Borrowers shall have the right at any time, and from time to
time, to prepay all or any portion of the outstanding Principal Amount without
notice to Holder, and without penalty or premium. All prepayments shall be
applied first to accrued interest, and second to the outstanding Principal
Amount.
1.2 INTEREST RATE; DEFAULT INTEREST RATE.
1.2.1 Interest payable on the Principal Amount shall accrue at the
annual rate of eight percent (8%) per annum (the "INTEREST RATE"). Interest
shall be payable in arrears commencing on the first day of the calendar month
immediately following the date hereof and on the first business day of each
consecutive calendar month thereafter through and including the Maturity Date.
If the Maturity Date is not the first day of a calendar month, then the interest
on the outstanding Principal Amount shall be prorated and payable on the
Maturity Date. Interest shall be calculated on the basis of a three hundred
sixty-five (365) day year for the actual number of days elapsed in the period
during which it accrues.
1.2.2 If any Principal Amount is not paid when due, following the
expiration of any notice and cure or grace periods, whether on the Maturity
Date, by acceleration or otherwise, and, to the extent permitted by applicable
law, any unpaid interest on the Principal Amount, shall bear interest from the
date when due until such amounts are satisfied in full, at a rate equal to the
lesser of the Interest Rate plus two percent (2%) or the maximum interest rate
then permitted by applicable law (the "DEFAULT RATE").
1.3 PAYMENT GRACE PERIODS. The Borrower shall have a seven Business Days
(as defined below) grace period to pay any amounts due to Holder under this Term
Note. If an installment of the Principal Amount or interest thereon becomes due
and payable hereunder other than on a Business Day, then the due date of such
payment shall be extended to the next succeeding Business Day, and interest
shall be payable thereon during such extension at the Interest Rate or Default
Rate, as applicable. For purposes of this Term Note, the term "BUSINESS DAY"
shall mean a day that is not a Saturday, a Sunday or other day on which
commercial banks are required or permitted to be closed in the State of New
York.
ARTICLE II
OTHER TERMS AND CONDITIONS
2.1 PAYMENTS. The amount and date of all payments of the Principal Amount
and any interest thereon shall be entered by the Holder into Holder's records,
which records shall be conclusive evidence of the amount and date thereof absent
manifest error.
2.2 REPRESENTATIONS AND WARRANTIES. Each Borrower hereby represents and
warrants to Holder that (a) it has the corporate power and authority to enter
into this Term Note and perform its obligations hereunder; and (b) that this
Term Note represents a valid and binding obligation of such Borrower,
enforceable in accordance with its terms, but subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
2.3 SECURITY INTEREST. In order to secure the payment of Borrower's
obligations under this Term Note, the Holder has been granted a security
interest in certain assets of the Borrowers, as more fully described in (a) that
certain Security Agreement dated January 31, 2003 among the Companies and Holder
(the "U.S. SECURITY AGREEMENT"), and (b) that certain Security Agreement dated
January 31, 2003 between Workstream and Holder (the "CANADIAN SECURITY
AGREEMENT," and together with the U.S. Security Agreement, the "SECURITY
AGREEMENT").
2.4 SUBORDINATION. The obligations of the Borrowers and the rights of
Holder under this Term Note may be subordinated in right of payment, preference
or priority to the obligations of the Borrowers to any bank, financial
institution or other lender (collectively, the "LENDERS") which was extended, or
proposes to extend, a loan to the Borrowers. ▇▇▇▇▇▇ agrees to execute and
deliver such agreement and instruments as any such Lender may request from time
to time, and such amendments to, or legends on, this Term Note pertaining to
such subordination as such Lender may request to evidence ▇▇▇▇▇▇'s agreement
hereunder.
2.5 TERMINATION. Upon satisfaction in full of the Principal Amount and all
interest accrued thereon, Holder shall mark this Term Note "Paid in Full" and
return the original Term Note to the Borrowers (or if the original Term Note is
then unavailable, deliver to the Borrowers an Affidavit and Indemnity of Loss in
form and substance acceptable to the Borrowers).
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ARTICLE III
EVENTS OF DEFAULT; REMEDIES
3.1 EVENTS OF DEFAULT. The occurrence of any of the following events is an
Event of Default ("EVENT OF DEFAULT"):
3.1.1 The Borrowers fail to pay any installment of the Principal
Amount or interest thereon when due and such failure continues for a period of
seven Business Days after written notice of such failure has been delivered to
the Borrowers by the Holder.
3.1.2 A written notice of default is received by the Borrowers for the
failure to pay any amounts due under any other agreement or instrument for
borrowed money, and such failure continues after the expiration of any
applicable notice and cure or grace periods.
3.1.3 A default has occurred and is continuing under the Security
Agreement, which default has not been cured within any applicable notice and
cure or grace periods set forth therein.
3.1.4 If any Borrower shall make an assignment for the benefit of its
creditors, or files a voluntary petition under the bankruptcy code, any other
federal or state insolvency law, or apply for or consent to the appointment of a
receiver, trustee or custodian of all or part of its property.
3.1.5 If any Borrower shall file an answer admitting the jurisdiction
of a court and the material allegations of an involuntary petition filed against
it under the bankruptcy code, any other federal or state insolvency law, or
shall fail to have such petition dismissed within 60 calendar days after its
filing.
3.1.6 If an order for relief shall be entered against any Borrower
following the filing of an involuntary petition under the bankruptcy code, any
other federal or state insolvency law, or if an order shall be entered
appointing a receiver, trustee or custodian of all or parts of either of their
respective property.
3.2 REMEDIES. If an Event of Default occurs and is continuing, the Holder
may declare the Principal Amount and any accrued but unpaid interest thereon
then outstanding immediately due and payable, all without demand, presentment or
notice, all of which hereby are expressly waived.
ARTICLE IV
MISCELLANEOUS
4.1 ENTIRE AGREEMENT; AMENDMENT. This Term Note and the Security Agreement
constitute the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, whether written or oral, with respect to such subject matter.
The term "Term Note" and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented; PROVIDED that this
Term Note may only be amended or supplemented by a writing signed by the
Borrowers and Holder.
4.2 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
4.3 NOTICES. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
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normal business hours for the recipient, and if sent after regular business
hours for the recipient, then on the next Business Day, (c) five calendar days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one Business Day after deposit with a
nationally recognized overnight courier specifying next day delivery. All
communications shall be sent as follows (or to such other address as the
Borrowers or the Holder may designate in a notice delivered in accordance with
this Paragraph 4.3):
If to Holder: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrowers: Workstream Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇▇
Attn.: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
4.4 ASSIGNABILITY. This Term Note shall be binding upon the Borrowers and
each of their respective successors and assigns, and shall inure to the benefit
of the Holder and his heirs, representatives, successors and permitted assigns.
The Holder may assign his rights under this Term Note to a third party; PROVIDED
that ▇▇▇▇▇▇ notifies the Borrowers in writing prior of the assignment of this
Term Note and the identity of such assignee, and the Borrowers consent in
writing prior to such assignment. Any assignment or attempted assignment in
violation of this Section 4.4 shall be void ab initio.
4.5 GOVERNING LAW. This Term Note shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws. Any action brought by the Holder or the
Borrowers against the other concerning the transactions contemplated by this
Term Note shall be brought in the Federal or State courts of the State of New
York. The Holder and each Borrower agree to submit to the jurisdiction of such
courts. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. In the event that any provision of
this Term Note is found to be invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability of
any other provision of this Term Note.
4.6 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Term Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Term Note to
favor any party against the other.
4.7 COUNTERPARTS. This Term Note may be executed in one or more
counterparts (whether facsimile or original), each of which shall be deemed to
be an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Term Note to be
executed on the date and year first above written.
WORKSTREAM INC. XYLO, INC.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------- ------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: President
WORKSTREAM USA, INC.
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------ ------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
ICARIAN, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
REZLOGIC, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
THE OMNI PARTNERS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
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