Brainhunter Inc.

Brainhunter Inc.

August 28, 2009 19:30 ET

Brainhunter Announces Notice of Event of Default

TORONTO, ONTARIO--(Marketwire - Aug. 28, 2009) -


Brainhunter Inc. ("Brainhunter" or the "Company") (TSX:BH) today announced that it has received written notice from its chartered bank that the Company is in default under the Standstill Agreement executed on April 3, 2009, as amended on July 29, 2009 (the "Standstill Agreement") for failure to comply with certain covenants, including covenants relating to the financial position and results of operation of the Company, as well as the obtaining of a letter of intent for the sale or refinancing of the Company in a timely manner.

As a result of the foregoing covenant breaches under the Standstill Agreement, an Enforcement Event has occurred under the Standstill Agreement and the Company is prohibited from making any distribution to the holders of its approximately $10.7 million in term promissory notes. In addition, the Company's bank has delivered a Senior Default Notice to the term promissory noteholders advising that due to the Company's default, the Company is prohibited from making, and the term promissory noteholders shall not accept, any payment of any distribution until the bank has been paid in full.

In the bank's default notice letter, it states that although the bank does not waive any of its Enforcement Rights, it does not anticipate pursuing its Enforcement Rights in the immediate future. To date, the bank has not exercised its Enforcement Rights or demanded repayment of the principal owing on the $26 million operating credit facility.

As previously disclosed, certain events of default are also continuing between the Company and its term lender under its $5.6 million subordinated term debenture. To date, the Company's term lender has refrained from exercising its enforcement rights.

The Company has received several proposals from parties with respect to the previously announced process to seek strategic or refinancing alternatives. The Company continues to explore and discuss these proposals with the respective interested parties.

Brainhunter continues to take steps to reduce its operating costs and improve efficiencies. It also continues to review strategic alternatives and evaluate various expressions of interest with Ernst & Young Orenda Corporate Finance, its advisor in this process.

Business Overview

Brainhunter Inc. ("Brainhunter" or the "Company") is specialized in the provision of staffing solutions (contingent staffing, managed staffing, permanent staffing and staffing software solutions) to major companies and governments in Canada and the U.S. Currently, the largest part of the business is providing IT and engineering staffing consultants, on a contract basis, to major companies and government entities in Canada. The Company also sells recruiting related software including applicant tracking systems ("ATS"), vendor management software ("VMS"), and job board software. Brainhunter deploys over 1,400 contractors with an internal staff of over 170 personnel. Operations are ISO 9001:2000 Certified.

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