Financing Agreement - National Bank of Canada and Recruitsoft (Canada) Corp.
APRIL 28, 2004
CORPORATION RECRUITSOFT (CANADA) INC. AND ITS ENGLISH VERSION,
RECRUITSOFT (CANADA) CORPORATION INC., WHOSE COMPANY NAME WILL BE
CHANGED TO TALEO (CANADA) INC.
330 St-Vallier East, Suite 400
Quebec City, Quebec
G1K 9C5
THIS TEXT IS THE ENGLISH OF
THE ORIGINAL FRENCH LETTER DATED
APRIL 28, 2004. IN CASE OF
DISCREPANCY BETWEEN THE TWO
VERSIONS, THE FRENCH VERSION SHALL
HAVE PRECEDENCE.
Attn.: Mr. Jean Lavigueur, CA, CFO
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RE: OFFER OF RENEWAL AND ADDITIONAL FINANCING
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Dear Mr. Lavigueur,
We are pleased to present to you the terms and conditions under which NATIONAL
BANK OF CANADA (THE "BANK") agrees to make the financing below available to
CORPORATION RECRUITSOFT (CANADA) INC AND ITS VERSION RECRUITSOFT (CANADA)
CORPORATION, WHOSE COMPANY NAME WILL BE CHANGED TO TALEO (CANADA) INC., (THE
"BORROWER") the following credit facilities:
"A" $500,000 Operating credit (renewal)
"B" $49,999 Demand loan (capital expenditures) original amount: $500,000 (existing)
"C" $63,333 Letter of guarantee (new)
"D" $2,250,000 Term loan (original amount: $2,500,000) (existing)
"E" $400,000 MasterCard Purchasing Card (increase)
"F" $2,400,000 Term loan (capital expenditures) (new)
"G" $1,900,000 Demand loan (refundable tax credit financing) (new)
"H" $2,600,000 Demand loan (new) refinancing of White Amber debt (subsidiary)
"I" $500,000 Exchange risk
-----------------
$10,663,333
Under the terms of the initial offer of financing dated November 24, 1999 (the
"Offer of Financing") and the addenda and/or amendments dated June 28, 2000 and
October 19, 2001, the Bank agrees to renew in favour of the Borrower the
$500,000 operating credit under the same terms and conditions as those contained
in the Offer of Financing and any addenda and amendments thereto, subject
hereto.
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1. FACILITY "A" - OPERATING CREDIT: $500,000
1.1. CREDIT FACILITY
Subject to the provisions hereof, the Bank agrees to renew the
operating credit facility made available to the Borrower for a
principal amount not exceeding $500,000 IN CANADIAN DOLLARS AND/OR
THE EQUIVALENT IN US DOLLARS, which is to be used to finance the
Borrower's usual operating requirements.
1.2. FINANCING OPTIONS
Subject to the terms and conditions hereof, the Borrower may use and
re-use this credit facility, up to the maximum allowed, by means of
VARIABLE-RATE advances.
1.3. INTEREST RATE
The variable-rate advances shall bear interest, from the time of
disbursement until payment in full, at the Canadian Prime rate of
the Bank plus 0.50%, or 4.25% as at the date hereof. Interest shall
be calculated daily and payable monthly on the 26th day of each
month.
1.4. DISBURSEMENT AND REPAYMENT
The credit facility is repayable on demand and may be reviewed
periodically by the Bank, the next review being scheduled on or
before MARCH 31, 2005.
Disbursements and payments shall be made or collected in equal
multiples of $5,000.
1.5. FINANCING CONDITIONS
Notwithstanding the amount of the credit facility, the aggregate
amount of advances shall at no time exceed the total of:
- 75% of the Borrower's CANADIAN receivables net of its deferred
income or that of Taleo Corporation, based in San Francisco,
California, (excluding holdbacks receivable, contra accounts
and receivables of White Amber Inc. USA, accounts of doubtful
quality and those aged 90 days or more); and
- 75% of the Borrower's U.S. receivables net of its deferred
income or that of Taleo Corporation, based in San Francisco,
California, or 90% IF INSURED BY EXPORT DEVELOPMENT CANADA
(EDC), (excluding holdbacks receivable, contra accounts and
receivables of White Amber Inc. USA accounts of doubtful
quality and those aged 90 days or more); and
<PAGE>
- 90% of the Borrower's foreign accounts receivable (other than
US$) net of its deferred income or that of Taleo Corporation,
based in San Francisco, California, if they are insured by
EDC; otherwise no value will be taken into consideration
(excluding holdbacks receivable, contra accounts and
receivables of White Amber Inc. USA accounts of doubtful
quality and all accounts aged 90 days or more).
The value of the Borrower's accounts receivable shall be established
monthly by taking into account claims ranking prior to the security
of the Bank e.g.: deductions at source, salaries, accrued vacation
pay, taxes.
Each month, on the 20TH day of the following month, the Borrower
shall furnish to the Bank a detailed list of its accounts receivable
by identifying accounts in Canadian, U.S. and foreign currencies,
insured accounts and its accounts payable according to age, and a
monthly statement form of the available credit limit accompanying
proof of payment of deductions at source, duly signed by the
party(ies) authorized to sign on behalf of the company.
2. FACILITY "B" - DEMAND LOAN: $49,999.91 (FOR CAPITAL EXPENDITURES)
2.1. CREDIT FACILITY
The loan currently disbursed in full, the balance of which is
$49,999.91 as at the date hereof, as per the renewal offer dated
June 17, 2002 and the addendum dated October 19, 2001 is currently
in force, the final payment being scheduled for June 30, 2004.
The Borrower repays the principal of the present demand loan by
means of equal and consecutive monthly installments of $16,666.67 on
the 30th day of each month. Interest is payable on the 26th day of
each month. The remaining amortization as at the date hereof is
three months.
3. FACILITY " C " - LETTER OF GUARANTEE: $63,333.33
3.1. CREDIT FACILITY
Subject to the provisions hereof, the Bank agrees to make available
to the Borrower a credit facility in the form of an irrevocable
letter of guarantee for an amount not exceeding $63,333.33 in
Canadian dollars in favour of the lessor. This letter of guarantee
was issued on April 8, 2004 in favour of the lessor "Societe en
commandite edifice Le Soleil."
This letter of guarantee, issued by the Bank as requested by the
Borrower, meets the following conditions :
- The aggregate amount of the letters of guarantee shall at no
time exceed $63,333.33;
- The period shall be no less than 30 days and no more than 365
days;
- The issuance fees of 1.50% per annum were charged to the
Borrower by the Bank on issuance of the letter of guarantee.
3.2. TERM
The letter of guarantee shall expire on April 1, 2005.
<PAGE>
4. FACILITY "D" - TERM LOAN: $2,250,000
4.1. CREDIT FACILITY
The loan, currently disbursed in full, the balance of which
$2,250,000 as at the date hereof, as per the offer of financing
dated March 28, 2003, is currently in force.
4.2. TERM
The loan shall expire on April 26, 2007.
5. FACILITY " E " - MASTERCARD PURCHASING CARD: $400,000
5.1. CREDIT FACILITY
The Bank agrees to make available to the Borrower the MasterCard
Purchasing Card for travel expenses and other purchases,
automatically payable via direct debit on the 7th day following the
end of each month.
6. FACILITY "F" - TERM LOAN: $2,400,000 (FOR CAPITAL EXPENDITURES)
6.1. CREDIT FACILITY
Subject to the provisions hereof, the Bank agrees to make available
to the Borrower a term loan for a principal amount of $2,400,000 in
Canadian dollars or the equivalent in U.S. dollars* to finance 80%
of the costs before taxes of equipment to be used for the Borrower's
operations (e.g., software, hardware, office automation processes,
office furniture) in Canada and in the United States.
*Equivalent in U.S. dollars: The rate of conversion will be
established by the Bank on the date of disbursements.
6.2. TERM
The loan is granted for a period of 36 months.
6.3. INTEREST RATE
This variable-rate loan shall bear interest from the date of
disbursement until payment in full, at the Canadian Prime rate of
the Bank plus 1.00%, or 4.75% as at the date hereof, calculated
daily. Interest shall be payable monthly on the 26th day of each
month as of the 26th day of the month following the first
disbursement(s).
6.4. DISBURSEMENT
The Borrower shall use the amount made available to it by WAY OF A
MAXIMUM OF TWO PROGRESS ADVANCES corresponding to 80% of the value
of the cost before taxes, on or before July 31, 2004, subject to
meeting the conditions specified herein and executing any document
that may reasonably be requested by the Bank, including, but not
limited to, a term note. Any sum hereunder which has not been
advanced to the Borrower on that date
<PAGE>
shall no longer be available to the Borrower and the Bank shall have
no further obligation to advance such sum to the Borrower.
6.5. REPAYMENT
The Borrower shall repay the principal of this term loan based on an
amortization of 36 months in 36 equal and consecutive monthly
installments of $66,666.67, which shall be payable on the 26th day
of each month as of the month following the first disbursement. The
balance of principal, interest, fees and incidental charges on the
loan shall be repaid in full with the last installment, namely, on
the term expiry date, without further notice.
6.6. PREPAYMENT
The Borrower may repay all or part of the variable-rate term loan at
any time without penalty, provided the repayment is from funds
generated by the company or from the proceeds of a capital stock
issue. If repayment is directly or indirectly from any other source,
a penalty of three months' interest shall then be payable and
deducted by the Bank from the repayment. Partial repayments shall be
applied to the last installment of principal and/or interest or to
any other sum due by the Borrower, at the Bank's discretion.
7. FACILITY "G" - TERM LOAN: $1,900,000 (TAX CREDITS)
7.1. CREDIT FACILITY
Subject to the provisions hereof, the Bank agrees to make available
to the Borrower a term loan for an amount of $1,900,000 in Canadian
dollars to finance an amount not exceeding 75% of refundable federal
and provincial tax credits for the fiscal year ending December 31,
2003.
7.2. TERM
The loan is repayable no later than October 31, 2004.
<PAGE>
7.3. INTEREST RATE
This variable-rate loan shall bear interest from the time of
disbursement until payment in full, at the Canadian Prime rate of
the Bank plus 1.00%, or 4.75% as at the date hereof, calculated
daily. Interest shall be payable monthly on the 26th day of each
month as of the 26th day of the month following disbursement.
7.4. DISBURSEMENT
7.4.1 The Borrower shall use the amount made available to it by way
a single advance subject to meeting the conditions stipulated
herein and executing any document that may reasonably be
requested by the Bank, including, but not limited to, a demand
note. Any sum hereunder which has not been advanced to the
Borrower by OCTOBER 31, 2004 shall no longer be available to
the Borrower and the Bank shall have no further obligation to
advance such sum to the Borrower.
7.4.2 The loan disbursements shall not exceed seventy-five per cent
(75%) of refundable tax credits, less income taxes payable as
at December 31, 2003, and as indicated in the audited annual
financial statements as at December 31, 2003 (US $1,987,000
dollars X 75% = US $1,490,000, the maximum amount of
financing). This amount will be converted into Canadian
dollars on the day it is disbursed by the Bank and shall not
exceed the authorized amount, namely, $1,900,000 in Canadian
dollars.
7.5. REPAYMENT
7.5.1. The Borrower shall repay the portion of the loan that was
granted in relation to the tax credits requested on the
earliest of the following dates but no later than OCTOBER 31,
2004:
7.5.1.1. as of the date the Borrower files an income tax
return, if, at that time, there is compensation for
a tax credit receivable that is applied against
income tax otherwise payable; or
7.5.1.2. as of the date the Borrower is required to file an
income tax return, if such return has not actually
been filed; or
7.5.1.3. as of the date that a refund of an amount related to
a tax credit is received from the competent
authorities;
7.5.2. The Borrower may, at its option, repay the Bank following the
initial public offering (IPO);
7.5.3. The company may repay all or part of the loan at any time
without penalty provided the repayment is from funds
generated by the company. If the repayment is from a
refinancing from another financial institution, a penalty of
three months' interest shall then be payable.
7.5.4. The company undertakes to apply any cheque or amount that it
receives in the form of a refundable tax credit in relation
to this loan solely to the balance of said loan, failing
which the Bank may demand that said loan be repaid within ten
(10)
<PAGE>
days of such default.
7.5.5. The company's loan shall become due and payable within ten
(10) days of any event of default or failure to respect the
commitments or obligations under this loan and any amendment
thereto, as applicable.
8. FACILITY "H" - DEMAND LOAN: $2,600,000
8.1. CREDIT FACILITY
Subject to the provisions hereof, the Bank agrees to make available
to the Borrower a demand loan in the amount of $2,600,000 IN
CANADIAN DOLLARS OR THE EQUIVALENT IN U.S. DOLLARS* to temporarily
finance the repayment of the debt, prior to the IPO, owed by White
Amber to Commerica (US$1,550,776) and Sunguard (US$433,776).
*The equivalent in U.S. dollars: The rate of conversion shall be
established by the Bank on the date of disbursement
Any residual unpaid balance shall be paid directly by the Borrower
from its working capital.
8.2. TERM
The loan is repayable no later than September 30, 2004.
8.3. INTEREST RATE
This variable-rate loan shall bear interest from the date of
disbursement until payment in full, at the Canadian Prime rate of
the Bank plus 1.50%, or 5.50% as at the date hereof, calculated
daily. Interest shall be payable monthly on the 26th day of each
month as of the 26th day of the month following the disbursement.
8.4. DISBURSEMENT
8.4.1.1. The Borrower shall use the amount made available to it by
way of a single advance to repay in full the advances of
the above creditors. The Bank shall, via the law firm
mandated by it, take charge of the final settlement of the
transaction.
<PAGE>
8.5. REPAYMENT
8.5.1. The Borrower shall repay the portion of the loan that was
granted by September 30, 2004 or earlier, namely, on the date
of the Borrower's IPO.
8.5.2. In the event of non-repayment on September 30, 2004, the
Borrower undertakes:
- to make a monthly payment on principal, starting on October
26, 2004, in the amount of $100,000;
- to apply against the principal the surplus tax credits
receivable for fiscal 2003, approximately $663,000 (after
repayment of Facility G);
- to repay the remaining balance of the loan in full no later
than October 31, 2005, namely, approximately $737,000, from
its tax credits refunded for fiscal 2004 or from the
company's working capital.
8.5.3. The company may repay all or part of the loan at any time
without penalty provided the repayment is from internally
generated funds, proceeds of the IPO or other sources of cash
from shareholders. If the repayment is from refinancing
granted by another financial institution, a penalty of three
months' interest shall then be payable.
8.5.4. The company's loan shall become due and payable within ten
(10) days of any event of default or failure to respect the
commitments or obligations under this loan and any amendment
thereto, as applicable.
9. FACILITY "I" - EXCHANGE RISK: $500,000
9.1. CREDIT FACILITY
Subject to the terms and conditions hereof, the Bank agrees to make
available to the Borrower a currency conversion risk facility in an
amount not exceeding $500,000 IN CANADIAN DOLLARS, which shall serve
to enable the Borrower to conclude transactions with the Bank for
contracts with respect to the sale or purchase of foreign currencies
freely negotiated by the Bank, the whole subject to the following
conditions:
9.1.1. The Borrower may buy or sell foreign currencies through the
Bank, giving prior notice thereof to the Bank, in accordance
with the customs and practices of the market, specifying the
amount, currency and effective date of delivery of the chosen
currency;
9.1.2. The maximum amount of foreign currency that the Borrower may
buy or sell hereunder shall not exceed the permitted amount,
as determined hereinafter; the said permitted amount shall be
determined by the Bank by multiplying the face value of the
chosen currency by the level of risk, as per the schedule in
effect at the Bank expressed as a percentage.
9.1.3. For information purposes only: exchange contracts for less
than 12 months (net risk exchange: 10%) $500,000 risks
exchange in Canadian dollars corresponding to $5,000,000 in
of foreign exchange contracts in Canadian dollars;
<PAGE>
9.1.4. The Borrower undertakes to deposit in its current account,
sufficient amounts to pay for the foreign currencies bought
or sold, no later than the date of their delivery, failing
which, the Bank shall be authorized to make a variable-rate
advance in Canadian and/or U.S. dollars under Credit Facility
"A" hereof for an equivalent amount in US dollars/euros and/
or other currencies, which is necessary to pay for said
currencies and any fees and expenses incurred by the Bank due
to insufficient funds in the Borrower's US$ current account
on the date of delivery.
Moreover, if such advance exceeds the credit amount
authorized under Credit Facility "A" the Bank shall then be
authorized to debit said current account for an amount equal
to such excess amount; all overdrafts in the Borrower's
current account shall bear interest, until payment in full,
at the rate on overdrafts prevailing from time to time at the
Bank;
9.1.5. The Borrower shall execute, upon presentation, any agreement,
contract, document or other writing required by the Bank,
including, without limitation, the International Swap and
Derivatives Association (ISDA) contract, the International
Foreign Exchange Master Agreement (IFEMA) and confirmation,
as applicable, of such contract, in accordance with the
documents in use at the Bank, providing for, inter alia, the
terms and conditions, amount, currency and fees payable to
the Bank;
9.1.6. Acceptance by the Bank of any request for the sale or
purchase of foreign currencies is subject to the availability
of such funds on the foreign exchange market and approval of
each request is at the Bank's discretion.
9.2. TERM
This credit facility may be reviewed from time to time by the Bank
and may be revoked by the Bank at any time. The next review being
scheduled on or before March 31, 2005.
<PAGE>
10. SECURITY CURRENTLY IN FORCE
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that all representations
and warranties made in the initial offer of financing, dated November 24,
1999, and that all addenda and/or amendments dated June 28, 2000, as well
as security documents, continue to be true and accurate as at this date.
WITHOUT NOVATION
This renewal is carried out without novation or derogation of the
operating credit and all of the rights, mortgages, hypothecs guarantees,
recourses and ranking resulting from the Offer of Financing dated November
24, 1999 and its addenda and/or amendments dated June 28, 2000, as well as
security documents and other related documents.
10.1. FACILITY "A" - OPERATING CREDIT: $500,000$
10.1.1. First-ranking general movable hypothec on the universality
of the Borrower's claims, present and future, wherever the
debtors of claims may be. (This hypothec was signed on
August 17, 2000 and published in the Register of Personal
and Movable Real Rights on August 18, 2000 under No.
00-0238407-0001 for an original amount of $1,460,000.)
10.1.2. First-ranking general movable hypothec on the universality
of the Borrower's present and future inventories, wherever
they may be located. (This hypothec was signed on August 17,
2000 and published in the Register of Personal and Movable
Real Rights on August 18, 2000 under No. 00-0238407-0003 for
an original amount of $560,000.)
10.1.3. First-ranking general movable hypothec in the amount of
$500,000 on the universality of the Borrower's movable
property, corporeal and incorporeal. (This hypothec was
signed on August 17, 2000 and published in the Register of
Personal and Movable Real Rights on August 18, 2000 under
No. 00-0238407-0004 and will be cancelled once the new
financing structure is put into place and Credit Facility
"B" is paid in full.)
10.1.4. First-ranking security agreement on the accounts receivable
of Recruitsoft.Com Inc, San Francisco, CA (now known under
the name "Taleo Corporation") signed on August 17, 2000 in
the amount of $1,460,000.
10.1.5. General Security Agreement of the Borrower on the
universality of the Borrower's movable property registered
PPSA concerning the following addresses 101 Rolland-
Therrien, Longueuil, Quebec J4H 4B9 and 5025/5045 Orbitor
Drive, Building 9, Suite 401, Mississauga, Ontario L4W 4Y4
signed on August 17, 2000. (New addresses: 625 President
Kennedy, Suite 1000, Montreal, Quebec H3A 1K2 and 20 Ducan
Street, Suite 2000, Toronto, Ontario M5H 3G8).
10.1.6. First-ranking Security Agreement of Recruitsoft.Com Inc.,
San Francisco, CA (now known under the name of Taleo
Corporation) on the universality of the movable property in
the amount of $500,000 signed on August 17, 2000.
<PAGE>
10.1.7. First-ranking Security Agreement of Recruitsoft.Com Inc.,
San Francisco, CA (now known under the name of Taleo
Corporation) on the universality of inventories signed on
August 17, 2000.
10.1.8. First-ranking security on all stock in inventory on all
stock in inventory under section 427 of the Bank Act.
10.1.9. Guarantee of Recruitsoft Inc. (now Taleo Corporation) signed
on November 27, 2001 in the amount of $500,000 (To be
discharged).
10.2. FACILITY "B" - DEMAND LOAN (CAPITAL EXPENDITURES): $49,999.91
10.2.1. Second-ranking general movable hypothec on the universality
of the Borrower's movable property, corporeal and
incorporeal, in Canada and the United States, including
intellectual property signed on November 27, 2001. (To be
discharged when repaid in full and required before the date
this offer of financing comes into force.)
10.2.2. First-ranking general movable hypothec on specific equipment
signed on November 27, 2001. (To be discharged when repaid
in full and required before the date this offer of financing
comes into force.)
10.2.3. Security Agreement of Recruitsoft Inc. (now Taleo
Corporation, San Francisco, CA) on the inventory (To be
discharged when repaid in full and required before the date
this offer of financing comes into force.)
10.2.4. Commitment from Recruitsoft Inc. (now Taleo Corporation, San
Francisco, CA) to ensure the debt service. (To be discharged
when repaid in full and required before the date this offer
of financing comes into force.)
10.2.5. Guarantee of Recruitsoft Inc. (now Taleo Corporation). (To
be discharged when repaid in full and required before the
date this offer of financing comes into force).
10.3. FACILITY "C" - LETTER OF GUARANTEE: $63,333.33
10.3.1. First-ranking deposit security in the amount of $63,333.33
signed on April 5, 2004 and published in the Register of
Personal and Movable Real Rights on April 7, 2004 under No.
04-0192613-0001;
10.4. FACILITY "D" - TERM LOAN: $2,250,000 (CURRENTLY IN FORCE)
WITHOUT NOVATION OR DEROGATION FROM THE TERM LOAN CURRENTLY IN FORCE
AND ALL RIGHTS, HYPOTHECS, MORTGAGES, GUARANTEES, SURETYSHIPS,
REMEDIES AND RANKINGS RESULTING FROM THE OFFER OF FINANCING DATED
MARCH 28, 2003 AND AMENDMENT DATED MAY 21, 2003, AS WELL AS SECURITY
DOCUMENTS AND ANY OTHER WRITINGS RELATED THERETO.
10.4.1. First-ranking specific movable hypothec in the amount of
$2,500,000 on the Borrower's financed equipment (published
under No. 03-0327611-0001 dated
<PAGE>
June 26, 2003, covering the first disbursement).
10.4.2. First-ranking specific movable hypothec in the amount of
$2,500,000 on the Borrower's financed equipment (published
under No. 03-0603554-0001 dated November 12, 2003, covering
the second disbursement).
10.4.3. Security agreement under the Uniform Commercial Code "UCC"
covering specific assets (registered in United States) as
per respective registration districts.
10.4.4. Guarantee of Recruitsoft Inc. (now Taleo Corporation) (to be
discharged).
10.5. FACILITY "E" - MASTER CARD PURCHASING CARD: $400,000
10.5.1. Movable hypothec on the universality of the present and
future claims, wherever the debtors of such claims may be,
in the amount of $250,000, signed on July 19, 2002 and
published in the Register of Personal and Movable Real
Rights on October 15, 2002 (to be discharged).
10.5.2. First-ranking deposit security No. 559022683807 in the
amount of $125,000, signed on July 19, 2002 and published in
the Register of Personal and Movable Real Rights on October
11, 2002 under No. 02-0457393-0001 (to be cancelled).
10.5.3. Guarantee of Recruitsoft Inc. (now Taleo Corporation),
signed on July 19, 2002, in the amount of $250,000 (to be
discharged).
11. SECURITY
As general and continuing security for the performance by the Borrower of
all its obligations, present and future, towards the Bank, including,
without limitation, the repayment of advances granted hereunder and the
payment of interest, fees and incidental charges provided for hereunder
and under the security documents, the Borrower undertakes to grant to the
Bank the following security, if deemed satisfactory by the Bank, in
accordance with the forms in use at the Bank:
11.1. FACILITY "A" OPERATING CREDIT: $500,000
FACILITY "B" DEMAND LOAN: $49,999.91 (UNTIL REPAYMENT DATE)
FACILITY "C" LETTER OF GUARANTEE: $63,333.33
FACILITY "D" TERM LOAN: $2,250,000
FACILITY "E" MASTERCARD PURCHASING CARD: $400,000
FACILITY "F" TERM LOAN FOR CAPITAL EXPENDITURES: $2,400,000
FACILITY "G" DEMAND LOAN: $1,900,000
FACILITY "H" DEMAND LOAN: $2,600,000 AND
FACILITY "I" EXCHANGE RISK: $500,000
11.1.1. First-ranking general hypothec in the amount of $10,663,333
on the universality of the Borrower's movable and immovable
property, present and future.
11.1.2. Guarantee from Taleo Corporation, San Francisco, California
supported by a security agreement in the amount of
$10,663,333 (universality of movable and immovable property,
present and future).
<PAGE>
11.1.3. Guarantee from White Amber Inc., New York, USA supported by
a security agreement USA in the amount of $10,663,333
(universality of movable and immovable property, present and
future).
11.1.4. Negative pledge: Commitment by the Borrower and Taleo
Corporation, San Francisco, CA not to pledge intellectual
property as security without the written consent of the
Bank.
11.1.5. Guarantee from 9090-5415 Quebec Inc. in the amount of
$10,663,333.
11.1.6. Commitment to the effect that Taleo Corporation, San
Francisco, California will ensure the debt service of Taleo
(Canada) Inc. (formerly Corporation Recruitsoft (Canada)
Inc. and its English version, Recruitsoft (Canada)
Corporation Inc.).
11.1.7. First-ranking general hypothec on the universality of the
movable and immovable property, corporeal and incorporeal,
and the intellectual property, present and future, of the
Borrower and Taleo Corporation, San Francisco, CA, wherever
it may be, and whatever its purpose, type, form or format,
including, without limitation, all brand names, trademarks,
patents, licences, secrets, copyrights, industrial designs
and permits, registered or not, as well as any version,
present and future of computer software, or digital or
interactive programming products of Taleo Corporation, San
Francisco, CA, as well as the Security Agreement under the
Uniform Commercial Code ("UCC") on specific equipment
(registered in the United States) as per respective
registration districts.
The security described in 11.1.6 shall be registered only in
the event that an IPO for a minimum net amount of
$25,000,000 (i.e., after all dividends payable further to an
IPO), does not take place before September 30, 2004.
The security described in 11.1.6 shall be kept in escrow by
our lawyers.
11.1.8. Security with respect to insurance policies on the property
given as security to the Bank, up to the full insurable
value thereof.
11.1.9. Rider designating the Bank as beneficiary of all rights,
titles and interest in the proceeds of the insurance
covering all property given as security to the Bank, up to
the full insurable value thereof.
12. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Bank that:
12.1. It is a duly constituted or incorporated, and registered and
organized business in compliance with the legislation governing it,
and that it has the powers, permits and licenses required to operate
its business or enterprise and to own, manage and administer its
property;
12.2. It is not involved in any dispute or legal proceedings likely to
materially affect its financial position or its capacity to operate
its business;
12.3. It has valid title to all its goods and property, which have a good
market value and are free and clear of any prior claims, mortgages,
hypothecs, charges or other similar encumbrances other than the
mortgages, hypothecs and other charges previously granted to the
Bank;
<PAGE>
12.4. It is not in default under the contracts to which it is a party or
under the applicable legislation and regulations governing the
operation of its business or its property, including, without
limitation, all environmental requirements; and
12.5. Any taxes, assessments, deductions at source, income taxes or other
levies, the payment of which is secured by a legal privilege, prior
claim or legal hypothec, have been/will be paid by the Borrower
without subrogation or consolidation.
13. CONDITIONS PRECEDENT TO ANY DISBURSEMENT OF FUNDS
Before any disbursement, renewal or maintenance of this credit facility,
the Borrower shall meet the following conditions to the satisfaction of
the Bank:
13.1. The Borrower shall sign all documents that the Bank may reasonably
request in order to give full effect to the provisions hereof;
13.2. The Borrower and the guarantors, as applicable, shall meet all of
the conditions hereof and execute all documents that the Bank may
reasonably request in order to give full effect to the provisions
hereof;
13.3. All collateral security shall be duly registered in accordance with
the above-mentioned ranking and any other required formality shall
be fulfilled, as applicable;
13.4. The Borrower shall furnish to the Bank any other document,
certificate and opinion that it may reasonably require, including,
but not limited to, any incorporating instrument related to the
Borrower and the guarantor, and any other document and opinion
related to the hypothecated property, as applicable;
13.5. The Borrower shall furnish to the Bank the annual financial
statements of 9090-5415 Quebec Inc;
13.6. Total repayment of Facility "B".
14. CONDITIONS PRECEDENT TO DISBURSEMENT OF FUNDS SPECIFIC TO FACILITY "F" TERM
LOAN: $2,400,000
14.1. The Borrower shall furnish to the Bank its invoices and proof of
payment by location of installation.
15. CONDITIONS PRECEDENT TO DISBURSEMENT OF FUNDS SPECIFIC TO FACILITY "G"
DEMAND LOAN: $1,900,000
15.1. The Borrower shall furnish to the Bank its audited consolidated
financial statements (received).
16. CONDITIONS PRECEDENT TO DISBURSEMENT OF FUNDS SPECIFIC TO FACILITY "H"
DEMAND LOAN: $2,600,000
16.1. The Borrower shall furnish to the Bank the statements of account of
Sungard and Comerica, for the repayment of advances using Credit
Facility "H";
<PAGE>
16.2. The Borrower shall furnish to the Bank written confirmation from the
lenders (Sungard and Comerica) to the effect that once the advances
are repaid, they undertake to disburse the cash amounts held as
security and to cancel the registered security;
16.3. The disbursement shall be controlled by a law firm mandated by the
Bank;
16.4. On signing hereof, the Borrower undertakes to disburse all surplus
amounts required over and above the financing granted by the Bank
(Credit Facility "H"), as applicable, to obtain cancellation of the
security and repay the amount guaranteed by Taleo Corporation;
17. LOAN INSURANCE PROPOSAL
Refer to Appendix 1.
18. POSITIVE COVENANTS
During the entire term of this financing agreement, the Borrower shall:
18.1. Use the proceeds of the financing for the purposes provided for
herein;
18.2. Operate its business in a diligent and continuous manner;
18.3. Keep and maintain proper books of account and other accounting
records in accordance with generally
accepted accounting principles;
18.4. Furnish to the Bank its internal monthly financial statements within
20 days of the end of each month together with the following lists:
receivables by currency, EDC-insured receivables, uninsured
receivables and consolidated receivables; accounts payable, proof of
EDC insurability and copies of invoices for amounts in excess of
$15,000, as well as a monthly statement of the available credit
limit duly signed by the party(ies) authorized to sign on behalf of
the company;
18.5. The Borrower shall furnish to the Bank copies of all the usual
documents concerning the administration of the EDC loan insurance
policy;
18.6. The Borrower undertakes to sign Form E6 to authorize EDC to forward
all information required by the Bank;
18.7. Furnish to the Bank two copies of its audited annual consolidated
financial statements within 90 days of the end of its fiscal year
together with monthly budget and cash flow projections for the
following year;
18.8. At all times, give the Bank's representatives the right to inspect
its establishments and provide access thereto, and further permit
the Bank's representatives to examine its books of account and other
records, and take excerpts therefrom or make copies thereof;
18.9. Maintain, at all times, insurance coverage on its property against
loss or damage caused by fire and any other risk as is customarily
maintained by companies carrying on a similar business;
18.10. Maintain, at all times for the duration of this financing
agreement, the following financial ratios:
<PAGE>
18.10.1. a WORKING CAPITAL RATIO GREATER THAN 1.0:1.0 (MINIMUM
$2,000,000 IN US DOLLARS), defined as total current assets
over total current liabilities;
18.10.2. NET SHAREHOLDERS' EQUITY GREATER THAN OR EQUAL TO
$6,000,000 IN US DOLLARS, defined as follows: (i) the
principal paid by the Borrower for capital stock issued,
paid and outstanding; (ii) the Borrower's retained
earnings; and (iii) the amount of the Borrower's
subordinated debt. The following are excluded from the
shareholders' equity: (a) the amount of all subsidies
(without excluding the amount of any such subsidy from
other balance sheet entries, such as retained earnings
and, as applicable, the cost of property acquired in full
or in part by way of such subsidy) received by the
Borrower; (b) all deferred income taxes, any component
resulting from a revaluation of assets; (c) all intangible
assets; and (d) all inter-company accounts;
18.10.3. a TOTAL DEBT RATIO (BEARING INTEREST) TO USD CONSOLIDATED
NET WORTH NO HIGHER THAN 1.25:1.00, defined as total
liabilities (excluding total non-interest bearing
liabilities such as accounts receivable and deferred
income) divided by the total of shareholders' equity plus
subordinated debt less intangible assets, advances to
directors and/or shareholders and accounts receivable from
or advances to affiliated companies;
18.11. Pay, when due, all taxes, assessments, deductions at source, income
tax or levies for which payment is guaranteed by legal privilege or
legal hypothec, without subrogation or consolidation;
18.12. Furnish to the Bank any other document that it may reasonably
require;
18.13. Conduct all or the greater part of its banking business with the
Bank;
18.14. Obtain and maintain in effect the permits and licences required for
the operation of its company;
18.15. Notify the Bank forthwith of any default or event which, following
a notice or an expiry of a deadline, could constitute an event of
default.
19. NEGATIVE COVENANTS
The Borrower undertakes to refrain from carrying out the following
transactions or operations without obtaining the prior written consent of
the Bank:
19.1. Materially change the nature of its operations or business;
19.2. Change the control of the company, merge with another company,
dissolve or wind up the company;
19.3. Create or permit the existence of security interests in property
granted as security to the Bank;
19.4. Grant advances to its officers, directors, shareholders or related
persons other than in the normal course of its business;
19.5. Grant financial assistance, an investment or a guarantee on behalf a
third party;
<PAGE>
19.6. Declare or pay out dividends on its shares, purchase or sell its
shares, or otherwise reduce its capital.
20. ENVIRONMENTAL OBLIGATIONS
20.1. The Borrower shall comply with the requirements of all legislative
and regulatory environmental provisions (the "Environmental
Requirements") and shall at all times maintain the authorizations,
permits and certificates required under these provisions.
20.2. The Borrower shall immediately notify the Bank in the event a
contaminant spill or emission occurs or is discovered with respect
to its property, operations or those of any neighbouring property.
In addition, it shall report to the Bank forthwith any notice,
order, decree or fine that it may receive or be ordered to pay with
respect to the Environmental Requirements relating to its business
or property.
20.3. At the request of and in accordance with the conditions set forth by
the Bank, the Borrower shall, at its own cost, provide any
information or document which the Bank may require with respect to
its environmental situation, including any study or report prepared
by a firm acceptable to the Bank. In the event that such studies or
reports reveal that any Environmental Requirements are not being
respected, the Borrower shall effect the necessary work to ensure
that its business and property comply with the Environmental
Requirements within a period acceptable to the Bank.
20.4. The Borrower undertakes to indemnify the Bank for any damage which
the Bank may suffer or any liability which it may incur as a result
of any non-compliance with Environmental Requirements.
20.5. The provisions, undertakings and indemnification set out in this
section shall survive the satisfaction and release of the security,
and payment and satisfaction of the indebtedness and liability of
the Borrower to the Bank pursuant to the terms hereof.
21. DEFAULT
21.1. EVENTS OF DEFAULT
The occurrence of one or more of the following events shall constitute a
default under this Offer:
21.1.1. If the Borrower fails to make a payment of principal,
interest, fees, incidental charges or any other amount
which may become due hereunder or under any of the
security documents, when they become due and payable;
21.1.2. If the Borrower and/or the guarantors fail to perform or
otherwise breach any obligation hereunder or pursuant to
any of the security documents or any other related
document;
21.1.3. If the Borrower and/or any guarantor, if applicable,
becomes insolvent, bankrupt or is in the process of
winding up, assigns its assets for the benefit of its
creditors, files a proposal or gives notice of its
intention to file such proposal or if a material, adverse
change occurs in the financial position or operations of
the Borrower;
<PAGE>
21.1.4. If proceedings are instituted by the Borrower and/or any
guarantor, if applicable, or a third party for the
Borrower's and/or any guarantor's dissolution, winding-up
or re-organization of its operations or the arrangement or
readjustment of its debts;
21.1.5. If a creditor, trustee in bankruptcy, sequestrator,
receiver or trustee takes possession of the Borrower's and
/or any guarantor's assets or, in the opinion of the Bank,
a major portion thereof or if such assets are subject to
a prior notice of the exercise of a hypothecary right or a
notice to withdraw authorization to collect claims or are
seized;
21.1.6. If the Borrower and/or any guarantor is in default under
the terms of any other contracts, agreements or writings
with the Bank or any other bank or financial institution
or any other creditor with rights to the assets of the
Borrower and/or any guarantor, as applicable;
21.1.7. If any representation or warranty made by the Borrower
and/or any guarantor herein or in a security document or
any other document furnished to the Bank in connection
herewith proves to be incorrect or erroneous; or
21.1.8. If the Bank receives from any present or future guarantor
a notice proposing to terminate, limit or otherwise modify
such guarantor's liability hereunder, under a security
document, or under any other related document.
21.2. RIGHTS AND REMEDIES OF THE BANK IN THE EVENT OF DEFAULT
Subject to its other rights and remedies, in the event of default:
21.2.1. The Bank may declare due and payable all of the Borrower's
monetary obligations that have not matured and may claim from
the Borrower and/or any guarantor, without any other notice, the
immediate payment of principal, interest, fees and incidental
charges, including all the expenses incurred by the Bank for the
purposes of collecting or protecting the debt, and the execution
of any other obligation of the Borrower and/or any guarantor;
21.2.2. The Borrower shall lose all rights and privileges hereunder,
including, but not limited to, the right to receive additional
advances;
21.2.3. The Bank may charge the Borrower reasonable fees for analysis,
administration and follow-up and may even incur and pay any
reasonable sum for services rendered (including legal,
accounting and any other professional fees for which services
may be required or deemed necessary) in relation to the
realization, sale, transfer, delivery or payment to be made with
respect to exercising all security held by the Bank and may
retain such fees and disbursements from the proceeds of the
realization of security;
21.2.4. Any amount collected or received by the Bank, including the
balance of the proceeds of any security realized, may be
retained by the Bank and may, at the Bank's option, be applied
to any part of the debt owed by the Borrower to the Bank;
21.2.5. Any sum incurred and paid by the Bank in order to realize,
protect or preserve any security pledged by the Borrower to the
Bank under this agreement or required by law shall bear interest
at the Canadian Prime rate of the Bank, plus X% annually
<PAGE>
until said sum is paid;
21.2.6. The foregoing provisions shall be applied regardless of whether
any of the bearers of bankers' acceptances, issued under the
terms and conditions hereof, has requested full or partial
payment or has requested only partial payment from the Bank.
21.3. WAIVER, OMISSION AND CUMULATIVE REMEDIES
21.3.1. The Bank may set deadlines, take or waive security, accept
compromises, grant a discharge and recognition of cancellation
and do business with the Borrower as it deems appropriate
without such action reducing the Borrower's responsibility or
affecting the rights of the Bank with respect to the security
provided hereunder.
21.3.2. Any omission on the part of the Bank to notify the Borrower and/
or any guarantor of any case of default under the terms and
conditions hereof or to exercise its rights hereunder shall not
be considered a waiver on the part of the Bank of its right to
exercise its recourse in such case of default or to exercise any
right.
21.3.3. Acceptance by the Bank, following a default by the Borrower, of
an amount owed to it, or the exercise by the Bank of any
recourse or right shall not prevent the Bank from exercising any
other right or recourse, the rights and recourses of the Bank
being cumulative and non-interchangeable, and in addition to and
not in substitution of, any other right or recourse by the Bank,
whether by agreement or otherwise provided for by law.
22. SUNDRY
22.1. DEFINITIONS
For the purposes hereof, the terms and expressions hereinafter
listed shall be defined as follows:
"CANADIAN PRIME RATE" means the annual variable interest rate
published by the Bank from time to time and used by the Bank to
determine the interest rates on commercial loans granted by it in
Canadian dollars in Canada.
22.2. ACCOUNTING TERMS
Each accounting term used herein shall have the meaning ascribed to
it in accordance with the generally accepted accounting principles
of the Canadian Institute of Chartered Accountants.
22.3. CURRENCY AND PLACE OF PAYMENT
All sums due by the Borrower hereunder must be paid by the Borrower
to the Bank in Canadian dollars.
22.4. CALCULATION OF INTEREST AND ARREARS
22.4.1. Unless otherwise provided for herein, interest on any
amount due hereunder shall be calculated daily and not in
advance on the basis of a 365-day year.
<PAGE>
22.4.2. For the purposes of the Interest Act (Canada) in the case
of a leap year, the annual interest rate corresponding to
the interest calculated on the basis of a 365-day year is
equal to the interest rate thus calculated multiplied by
366 and divided by 365.
22.4.3. Any amount of principal, interest, commission or discount
or an amount of any other nature remaining unpaid at
maturity shall bear interest at the rate provided for
herein, it being understood that said interest rate on
arrears shall not exceed the maximum rate provided for by
law, if applicable.
22.4.4. Interest on arrears shall be compounded monthly and
payable on demand.
22.5. ADDITIONAL CHARGES
The Borrower undertakes to pay the Bank the charges below, as
determined by the Bank:
22.5.1. In the event that a law, regulation, administrative policy
or guideline results in an increase in the cost of credit
for the Bank (particularly as a result of the imposition
of reserves, taxes or requirements with respect to the
Bank's capital adequacy), the Borrower shall pay this
additional cost on demand; and
22.5.2. The Borrower shall pay all taxes or additional charges
that could result from the application of the goods and
services tax (Canada), the provincial sales tax (Quebec),
or any other similar federal, provincial or municipal law.
22.6. ASSIGNMENT
No rights or obligations of the Borrower hereunder and no proceeds
of the loan may be transferred or assigned by the Borrower. Any such
transfer or assignment shall be null and void insofar as the Bank is
concerned and shall render any balance then outstanding on the loan
immediately due and payable at the Bank's option and release the
Bank from any and all obligations of making any further advances
hereunder.
22.7. RECORDS
The Bank shall keep records evidencing the transactions performed
hereunder. Such records shall be presumed to reflect these
transactions and shall constitute conclusive evidence of the amounts
due to the Bank.
22.8. ACCOUNT DEBITS
The Borrower irrevocably authorizes the Bank to debit periodically
or from time to time any bank account it maintains at the Bank in
order to pay all or part of the amounts it may owe to the Bank
hereunder.
22.9. NON-BUSINESS DAY
If the date provided for an installment of principal or interest
hereunder is not a business day, such installment shall be paid on
the first business day thereafter.
22.10. FINAL AGREEMENT AND INTERPRETATION
Upon its acceptance and execution by the Borrower, this Offer shall
constitute the final agreement between the parties, with the
exception of any subsequent written amendments agreed to by the
parties, and shall supersede any other previous verbal or written
agreement
<PAGE>
between the parties with respect to the financing provided for
herein.
Notwithstanding the foregoing, this Offer does not create novation
or an exception to the mortgages, hypothecs, rights and remedies of
the Bank under the deeds, notes and security documents required
hereunder which were signed by the Borrower or the guarantor prior
to the date hereof. The Borrower hereby acknowledges and declares
that the mortgages, hypothecs, rights and remedies of the Bank under
said deeds, notes and security documents have not been amended and
that they secure its obligations hereunder.
22.11. OTHER DOCUMENTS
The Borrower and the guarantors, if applicable, shall do all things
and execute all documents deemed necessary or appropriate by the
Bank for the purposes of giving full force and effect to the terms,
conditions, undertakings and security granted or to be granted
hereunder.
22.12. JOINT AND SEVERAL LIABILITY/SOLIDARITY
If more than one person is designated as the Borrower or the
guarantor, each such person shall be jointly and severally or
solidarily liable for the obligations set out herein and in the
security documents.
22.13. VALIDITY OF PROVISIONS HEREOF
Any court decision to the effect that any of the provisions hereof
is null or void in no way affects the remaining provisions hereof or
their validity or executory force.
22.14. REVIEW
The terms and conditions of the credits granted by the Bank to the
Borrower hereunder are subject to a periodic review, at the Bank's
discretion.
22.15. AMENDMENTS
Any amendment to this Offer or resulting waiver of a right hereunder
is without effect unless it is explicitly stated in a written
document signed by the parties.
22.16. COPIES
This Offer may be signed in an indeterminate number of copies, each
of which is deemed to constitute an original, but all of which
constitute a single document.
23. ACCESS TO INFORMATION
The Borrower and the guarantors hereby authorize any personal information
agent, financial institution, creditor, tax authority, employer or any
other person, including any public entity, holding information concerning
the Borrower or its property, more particularly any financial information
or information with respect to any undertaking or guarantee given by the
Borrower, to supply such information to the Bank in order to verify the
accuracy of all information furnished or to be furnished from time to time
to the Bank and to ensure the solvency of the Borrower at all times.
24. FEES
<PAGE>
The Borrower undertakes to pay non-refundable fees of $23,500 on
acceptance of this Offer of Financing.
The taking of security (in Canada and the United States) shall be
completed by a law firm accredited and mandated by the Bank to do so at
the Borrower's expense.
Any fees and legal costs incurred in the preparation and registration or
publication of the security documents and any other document related
thereto shall be payable by the Borrower, whether or not the financing is
completed.
25. GOVERNING LAW
This Offer shall be governed and construed in accordance with the laws of
the province of Quebec.
If this Offer is satisfactory, please indicate your approval by returning
to us the copy attached in this regard, duly signed and initialled on each
page, before 5:00 p.m. on APRIL 28, 2004. After that date, the Bank
reserves the right to cancel or modify this Offer without notice.
We trust that our financial support will contribute to the success of your
company.
Yours very truly,
[NATIONAL BANK OF CANADA LOGO]
By: /s/ Allain Gallichan /s/ Sylvie Pelletier
--------------------- -----------------------------------
Allain Gallichan Sylvie Pelletier
Senior Account Manager Account Representative
(514) 523-4742 (514) 523-5045
alain.gallichan@bnc.ca sylvie.pelletier@bnc.ca
ACCEPTANCE
We declare that we have read this Offer, dated April 28, 2004 and we accept the
terms, conditions and obligations hereof.
EXECUTED AT _____________________, PROVINCE OF QUEBEC, THIS __________ DAY OF
________________, 200__.
CORPORATION RECRUITSOFT (CANADA) INC. AND ITS ENGLISH VERSION, RECRUITSOFT
(CANADA) CORPORATION INC., SOON TO BECOME TALEO (CANADA) INC.
By: /s/ Jean Laviqueur /s/ Sylvie Lauze
------------------------------ -------------------------------
By: By:
TITLE: TITLE:
<PAGE>
CONFIRMATORY AGREEMENT
BETWEEN: NATIONAL BANK OF CANADA, chartered bank governed by the Bank
Act (1991, c. 46), having a place of business at 150, blvd.
Rene-Levesque East, Quebec, Province of Quebec, G1R 5B1,
herein represented by Mr. ALAIN GALLICHAN, Senior Account
Manager, and Mrs. SYLVIE PELLETIER, Accounting Agent, duly
authorized as they so declare;
(hereinafter called the "LENDER");
AND: CORPORATION RECRUITSOFT (CANADA) INC. / RECRUITSOFT (CANADA)
CORPORATION INC., a corporation legally constituted under the
Quebec Companies Act (R.S.Q., c. C-38), having its head office
at 330, St-Vallier East, Suite 400, Quebec, Province of
Quebec, G1K 9C5, herein represented by MR. JEAN LAVIGUEUR,
Chief Financial Officer, and MRS. SYLVIE LAUZE, Director of
Finance, duly authorized to act herein by resolution of the
Board of Directors dated May 7, 2004;
(hereinafter called the "BORROWER");
AND: TALEO CORPORATION., a corporation legally constituted under
the laws of the State of Delaware, having its head office at
182 Second Street, 5th Floor, San Francisco, CA, 94105, herein
represented by MR. JEAN LAVIGUEUR, Chief Financial Officer,
and MRS. SYLVIE LAUZE, Director of Finance, duly authorized to
act herein by a written action of the Board of Directors dated
May 4, 2004;
(hereinafter called "TALEO");
AND: 9090-5415 QUEBEC INC., a corporation legally constituted under
the Quebec Companies Act (R.S.Q., c. C-38), having its head
office at 330, St-Vallier East, Suite 400, Quebec (Quebec) G1K
9C5, herein represented by MR. JEAN LAVIGUEUR, Chief Financial
Officer, and MRS. SYLVIE LAUZE, Director of Finance, duly
authorized to act herein by a resolution of the Board of
Directors dated May 7, 2004;
(hereinafter called "9090");
<PAGE>
-2-
AND: WHITE AMBER, INC., a corporation legally constituted under the
laws of the State of Delaware, having its head office at 1010
Northern Blvd., Suite 328 Great Neck, NY, 11021, herein
represented by MR. JEAN LAVIGUEUR, Chief Financial Officer,
and MRS. SYLVIE LAUZE, Director of Finance, duly authorized to
act herein by a written action of the Board of Directors dated
May 5, 2004;
(hereinafter called "WHITE AMBER");
(Taleo, 9090 and White Amber are hereinafter collectively
called the "INTERVENING PARTY")
WHEREAS the Bank addressed to the Borrower and the Intervening Party, on April
28th, 2004, an offer to finance, which was accepted on the same day (hereinafter
called the "OFFER TO FINANCE")
WHEREAS under the terms of the Offer to Finance, the Lender agreed:
i) to maintain in force an operating credit in an amount up to but not
exceeding the aggregate amount of FIVE HUNDRED THOUSAND CANADIAN DOLLARS
(CA$ 500,000) (the "CREDIT A") and/or the equivalent in US dollars;
ii) to maintain in force a demand credit facility which was originally to the
amount of FIVE HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 500,000) (the
"CREDIT B"), for which there was an amount of FORTY NINE THOUSAND NINE
HUNDRED NINETY-NINE CANADIAN DOLLARS (CA$ 49,999) still outstanding as of
April 28th, 2004;
iii) to grant a letter of guarantee for the aggregate amount of SIXTY THREE
THOUSAND THREE HUNDRED THIRTY-THREE CANADIAN DOLLARS (CA$ 63,333) (the
"CREDIT C");
iv) to maintain in force a term financing which was originally for the amount
of TWO MILLION FIVE HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 2,500,000) (the
"CREDIT D") for which there is an amount of TWO MILLION TWO HUNDRED FIFTY
THOUSAND CANADIAN DOLLARS (CA$ 2,250,000) still outstanding as of April
28th, 2004;
<PAGE>
-3-
v) to maintain in force a Master Card business purchasing up to but not
exceeding the aggregate amount of FOUR HUNDRED THOUSAND CANADIAN DOLLARS
(CA$ 400,000) (the "CREDIT E");
vi) to grant a term financing up to but not exceeding TWO MILLION FOUR HUNDRED
THOUSAND CANADIAN DOLLARS (CA$ 2,400,000) (the "CREDIT F") and/or the
equivalent in US dollars;
vii) to grant a demand credit facility up to but not exceeding the amount of
ONE MILLION NINE HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 1,900,000) (the
"CREDIT G");
viii) to grant a demand credit facility up to but not exceeding the amount of
TWO MILLION SIX HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 2,600,000) (the
"CREDIT H") and/or the equivalent in US dollars;
ix) to grant an Exchange Risk Credit up to but not exceeding FIVE HUNDRED
THOUSAND CANADIAN DOLLARS (CA$ 500,000) (the "CREDIT I");
all in favor of the Borrower (collectively referred to as the "CREDIT
FACILITIES").
WHEREAS the Credit Facility A is not a new addition to the Credit Facilities but
rather a maintenance of the existing operating credit in the amount of FIVE
HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 500,000) previously granted by the Lender
in favor the Borrower;
WHEREAS the Credit Facility E is not a new addition to the Credit Facilities but
rather a maintenance of the Master Card business credit in the amount of FOUR
HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 400,000) previously granted by the Lender
in favor the Borrower;
WHEREAS Credits C, F, G, H, and I are new credit facilities granted in favor of
the Borrower in excess of all the credit facilities previously granted by the
Lender to the Borrower;
WHEREAS the parties, by this agreement, wish to confirm their respective
commitments under the Offer to Finance and to complete some aspects of the said
Offer to finance with regard to the Credit Facilities.
<PAGE>
-4-
THE PARTIES AGREE TO THE FOLLOWING:
1. CONFIRMATION
1.1 The Offer to Finance and this confirmatory agreement together form the
credit agreement (the "CREDIT AGREEMENT") governing the terms, modes and
conditions concerning the Credit Facilities;
1.2 The Credit Agreement can only be modified or amended by a written document
signed by all the parties.
2. BANKING DOCUMENTS AND USUAL FORMS
2.1 The Borrower agrees to consent and to sign the banking agreements and the
usual forms in use from time to time for the Lender (collectively called
the "ACCESSORY AGREEMENTS") to record, to establish or to specify
different modes applicable to the Credit Facilities;
2.2 The Accessory Agreements are a part of the Credit Agreement, so novation
doesn't occur to any of the Borrower's obligations in regard to any of the
Credit Facilities, neither do they diminish the scope or the extent of the
Securities as well as the securities previously granted by the Borrower
and the Intervening Party in favor of the Lender regarding any of the
Credit Facilities.
3. SITUATION OF THE EXISTING CREDIT FACILITIES AND SECURITIES
3.1 The Credit A is not in addition to any operating financing previously
granted by the Lender to the Borrower, which are included and continue
through the Credit A;
3.2 The Credit E is not in addition to any Master Card business credit
previously granted by the Lender to the Borrower, which are included and
continue through the Credit E;
3.3 The Credits B and D, which were previously granted to the Borrower, are
maintained in force and will, starting from the date of signature of this
agreement, be governed by the terms and conditions of this agreement.
4. SECURITIES
4.1 Concurrently with the signature of this agreement or, as the case may be,
as soon as possible afterward, the Borrower and/or the Intervening Party
commit to create,
<PAGE>
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to consent and, if required, to maintain in force and to renew the
securities described hereinafter (the "SECURITIES") in order to guarantee
the Credit Facilities:
CREDIT C
4.1.1 A first ranking movable hypothec in the amount of CA$ 63,333.33
charging a deposit registered at the Register of the Personal Real
Rights Movable on April 7, 2004, under the registration number
04-0192613-0001;
ALL CREDIT FACILITIES
4.1.2 A first ranking movable hypothec in the amount of CA$ 10,663,333
charging the universality of movable assets of the Borrower
excluding the intellectual property;
4.1.3 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable assets of the Borrower
excluding the intellectual property;
4.1.4 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable assets of the Borrower
excluding the intellectual property;
4.1.5 A guarantee of Taleo in the amount of CA$ 10,663,333;
4.1.6 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable property of Taleo excluding
the intellectual property;
4.1.7 A guarantee of White Amber in the amount of CA$ 10,663,333;
4.1.8 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of the movable property of White Amber
excluding the intellectual property;
4.1.9 A guarantee of 9090 in the amount of CA$ 10,663,333;
4.1.10 A negative pledge granted by the Borrower, Taleo and White Amber
on the intellectual property;
4.1.11 An undertaking of Taleo to make up insufficiency of the debt
servicing;
4.1.12 A first ranking movable hypothec in the amount of CA$ 10,663,333
charging the universality of movable assets of the Borrower;
<PAGE>
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4.1.13 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable assets of the Borrower;
4.1.14 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable assets of the Borrower;
4.1.15 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable assets of Taleo;
4.1.16 A first ranking security agreement in the amount of CA$ 10,663,333
charging the universality of movable assets of White Amber;
4.1.17 A guarantee in the amount of CA$ 10,663,333 concerning the
insurance policies of the Borrower and the Intervening Party.
4.2 Notwithstanding any provisions of the security to the contrary, the
hypothec and security agreements described in subsection 4.1.12, 4.1.13,
4.1.14, 4.1.15 and 4.1.16 of this agreement will only become in force and
be registered at the appropriate governmental agencies if the Borrower
does not successfully complete an initial public offering of a minimum of
CA$ 25,000,000 net on or before September 30, 2004. In the event of a
valid registration of the hypothec and security agreements described in
subsection 4.1.12, 4.1.13, 4.1.14, 4.1.15 and 4.1.16 the Lender agrees to
discharge and release the hypothec and security agreements described in
subsection 4.1.2, 4.1.3, 4.1.4, 4.1.6 and 4.1.8.
4.3 In the event that the Borrower and/or the Intervening Party acquire any
immovable property, the Borrower and/or the Intervening Party agree to
grant, without delay, the said immovable property in favor of the Lender
in order to guarantee the reimbursement of the Credit Facilities.
5. DISBURSEMENT OF THE CREDIT FACILITIES
5.1 The Lender may, in whole and/or in part, retain any advances on the Credit
Facilities and, at its sole discretion, put a term to the Credit
Facilities, if in its opinion:
5.1.1 the Borrower and/or the Intervening Party does not respect the
commitments, the representations, the securities or one or another
conditions of the Credit Agreement or of any other documents
constating the securities guaranteeing the reimbursement of the
Credit Facilities; or
5.1.2 the Borrower and/or its default under any provisions of the Credit
Agreement or of any documents constating one of the Securities; or
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5.1.3 a material adverse effect change, be it actual or imminent, may
happen, the appreciation of which is at the sole discretion of the
Lender; or
5.1.4 a pending litigation may have a negative effect on the Borrower's
property or business.
6. ADDITIONAL DOCUMENTS AND INFORMATION
6.1 The Borrower agrees to provide to the Lender, upon demand, all the
documentation and information which may reasonably be required regarding
the Borrower's business, including notably but not limitatively
information concerning the respect by the Borrower of the environmental
regulations.
7. MISCELLANEOUS
7.1 The Borrower's rights under the Credit Agreement and the Credit Facilities
can not be transferred without the Lender's previous written
authorization. Any unauthorized transfer is non-invocable by the Lender
and is renowned an event of default under the terms of the Credit
Agreement as well as the documents constating the Securities;
7.2 In addition to the provisions of the Credit Agreement from the first
disbursement of the Credit Facilities until the full reimbursement of the
said Credit Facilities, the Borrower will consent to and sign all
reasonable document and deeds required by the Lender: i) in order to make
up or renew the Securities; ii) to timely execute its commitments
following the Credit Agreement and the Accessory Agreements; iii) and if
the case arises, to notice the potential amendment agreed upon with regard
to any Credit Facilities granted by the Lender in favor of the Borrower;
7.3 The constating documents of the Securities as well as the Accessory
Agreements are not supposed to contradict the terms and conditions of the
Credit Agreement. Therefore, in case of incompatibility between the terms
and conditions of the Accessory Agreements, the constating documents of
the Securities and the Credit Agreement prevail over the Accessory
Agreements and the Credit Agreement prevail over the documents constating
the Securities;
7.4 Unless the Credit Agreement, the Accessory Agreements or the Securities
expressly state the opposite, the accounting terms, the financial ratios
and the calculations are established or, are applied in accordance with
the accounting principles generally accepted by the Canadian Chartered
Accountant Institute;
7.5 This agreement is binding for the signatory parties and their successors.
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7.6 The parties commit themselves to consent, to sign or to do every
reasonable action required in order to give effect or to complete this
agreement as well as any other agreements which were referred to
hereabove.
7.7 The parties hereto have expressly agreed that this agreement and all
deeds, documents or notices relating thereto be executed in English. Les
parties aux presentes ont expressement convenu que cet acte et tout autre
acte, document ou avis y afferent soient rediges en anglais.
8. INTERVENTION
8.1 The Intervening Party intervenes to this agreement, and by its
intervention commits itself towards the Lender to execute its obligations
in accordance with the present Credit Agreement and agrees to make no
modification to the content of this agreement without obtaining the
Lender's preliminary writtenconsent.
DULY SIGNED BY THE PARTIES in Quebec City, this May 7, 2004.
THE LENDER: THE BORROWER:
NATIONAL BANK OF CANADA CORPORATION RECRUITSOFT (CANADA) INC./
RECRUITSOFT (CANADA) CORPORATION INC.
BY: BY:
/s/ Alain Gallichan /s/ Jean Lavigueur
-------------------------------------- ---------------------------------------
ALAIN GALLICHAN JEAN LAVIGUEUR
/s/ Sylvie Pelletier /s/ Sylvie Lauze
-------------------------------------- ---------------------------------------
SYLVIE PELLETIER SYLVIE LAUZE
THE INTERVENING PARTY: THE INTERVENING PARTY:
TALEO CORPORATION 9090-5415 QUEBEC INC.
BY: BY:
/s/ Jean Lavigueur /s/ Jean Lavigueur
-------------------------------------- ---------------------------------------
JEAN LAVIGUEUR JEAN LAVIGUEUR
/s/ Sylvie Lauze /s/ Sylvie Lauze
-------------------------------------- ---------------------------------------
SYLVIE LAUZE SYLVIE LAUZE
<PAGE>
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THE INTERVENING PARTY:
WHITE AMBER, INC.
BY:
/s/ Jean Lavigueur
--------------------------------------
JEAN LAVIGUEUR
/s/ Sylvie Lauze
--------------------------------------
SYLVIE LAUZE
<PAGE>
SECURITY AGREEMENT
AGREEMENT dated as of May 7, 2004, by and between NATIONAL BANK OF CANADA, a
corporation organized under the laws of Canada, having a principal place of
business at 150, boulevard Rene-Levesque East, 19th Floor, Quebec, Province of
Quebec, Canada, G1R 5B1 (hereinafter referred to as the "SECURED PARTY") and
TALEO CORPORATION, a corporation organized under the laws of the State of
Delaware, United States of America, having its head office at 182 Second Street,
5th Floor, San Fransisco, CA 94105 USA (hereinafter sometimes referred to as the
"CORPORATION").
WHEREAS the Secured Party addressed to Corporation Recruitsoft (Canada) Inc. /
Recruitsoft (Canada) Corporation Inc. on April 28th, 2004 an offer to finance
the terms of which have been stated in a confirmatory agreement dated May 7,
2004 (hereinafter collectively called the "CREDIT AGREEMENT");
WHEREAS under the Credit Agreement the Secured Party has agreed to grant notably
an operating credit facility of FIVE HUNDRED THOUSAND CANADIAN DOLLARS (CA$
500,000) and/or the equivalent in US dollars, a demand credit facility which was
originally in the amount of FIVE HUNDRED THOUSAND CANADIAN DOLLARS (CA$
500,000), for which there was an amount of FORTY NINE THOUSAND NINE HUNDRED
NINETY-NINE CANADIAN DOLLARS (CA$ 49,999) still outstanding as of April 28th,
2004, a letter of guarantee of SIXTY THREE THOUSAND THREE HUNDRED THIRTY-THREE
CANADIAN DOLLARS (CA$ 63,333), a term financing of TWO MILLION FIVE HUNDRED
THOUSAND CANADIAN DOLLARS (CA$ 2,500,000) for which there is an amount of TWO
MILLION TWO HUNDRED FIFTY THOUSAND CANADIAN DOLLARS (CA$ 2,250,000) still
outstanding as of April 28th, 2004, a Master Card business purchasing of FOUR
HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 400,000), a term financing of TWO MILLION
FOUR HUNDRED THOUSAND CANADIAN DOLLARS (CA 2,400,000) and/or the equivalent in
US dollars, a demand credit facility of ONE MILLION NINE HUNDRED THOUSAND
CANADIAN DOLLARS (CA$ 1,900,000), a demand credit facility of TWO MILLION SIX
HUNDRED THOUSAND CANADIAN DOLLARS (CA$ 2,600,000) and/or the equivalent in US
dollars, an Exchange Risk Credit of FIVE HUNDRED THOUSAND CANADIAN DOLLARS (CA$
500,000) (the "CREDIT FACILITIES") to Corporation Recruitsoft (Canada) Inc. /
Recruitsoft (Canada) Corporation Inc. (hereinafter called the "BORROWER") for
the purposes described in the Credit Agreement, the Credit Facilities being
guaranteed by the Corporation pursuant to a guarantee for an amount of CA$
10,663,333 (the "GUARANTEE") of even date herewith in favor of the Secured
Party;
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WHEREAS the Secured Party agrees to make available the Credit Facilities but
only upon the condition, among others, that the Corporation executes and
delivers to the Secured Party for its benefit this security agreement;
WHEREAS this agreement evidences and sets forth the obligations of the
Corporation with respect to the Guarantee granted by the Corporation in favor of
the Secured Party (hereinafter referred to as the "CORPORATION'S OBLIGATION" and
"GUARANTEE" respectively) with respect to the Credit Agreement;
NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the parties hereto agree as follows:
1. DEFINITION
1.1 "LIABILITY" OR "LIABILITIES" shall mean all the obligations of the
Corporation to the Secured Party, whether now existing or hereafter
arising, direct or indirect, fixed or contingent, secured or unsecured,
matured or unmatured, joint, several or joint and several, arising out
of or in connection with the Guarantee or any other document executed
in connection with the Guarantee, and any and all interest,
commissions, obligations, liabilities, indebtedness, charges and
expenses direct or indirect, primary, secondary, contingent, joint or
several which are due or to become due or that may hereafter be
contracted or acquired of the Corporation to the Secured Party, arising
out of or in connection with the Guarantee or any other document
executed in connection with the Guarantee, or on account of any of the
foregoing and the performance and fulfillment by the Corporation of all
the terms, conditions, promises, covenants and provisions contained in
existing documents evidencing or securing the Corporation's Obligation,
this Agreement, or in any future agreement or instrument between the
Corporation and the Secured Party relating to the Corporation's
Obligation or the Guarantee, together with reasonable attorney's fees,
costs and expenses incurred by the Secured Party in the enforcement of
its rights under the Corporation's Obligation or this Agreement.
1.2 "OBLIGOR" means the Corporation and the Borrower and, if any debt due
to Secured Party hereunder is evidenced by a credit agreement, guaranty
or other instrument, the makers and endorsers thereof.
1.3 "CORPORATION" means Taleo Corporation, with offices at 182 Second
Street, 5th Floor, San Fransisco, CA 94105 USA, 636 Morris Twinpike,
Suite 3B, Short Hills, NJ 07078 USA and One Energy Center, 40 Shuman
Blvd., Suite 301, Naperville, IL 60563 USA.
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1.4 "DEFAULT RATE" means that rate established in the Credit Agreement.
1.5 "ADVANCES" shall mean the expenditure of money or incurring of
obligations by the Borrower in connection with the Credit Agreement.
1.6 "UNIFORM COMMERCIAL CODE" ("UCC") shall mean the Uniform Commercial
Code of the State of Delaware (except to the extent that the Uniform
Commercial Code of the State of Delaware requires the application of
the Uniform Commercial Code of another jurisdiction).
1.7 "CONSENT OF THE SECURED PARTY" means the written consent by an
Authorized Officer of the Secured Party.
1.8 "ACCOUNTS" means any "Account", as such term is defined in the UCC, now
or hereafter owned by the Corporation, including, in any event, without
limitation, any right of the Corporation to payment for goods sold or
leased or for services rendered which the Corporation may now have or
hereafter acquire, whether or not such right has been earned by
performance, including, without limitation, all accounts, accounts
receivable, book debts, instruments and chattel paper, Credit
Agreement, drafts, acceptances, payments under leases of Equipment or
sales of Inventory and other forms of obligations now or hereafter
received by or belonging or owing to the Corporation for goods sold or
leased and/or services rendered by it, and all of the Corporation's
rights in, to and under all purchase orders, instruments, and other
documents now or hereafter received by it evidencing obligations for
and representing payment for goods sold or leased and/or services
rendered, and all monies due or to become due to the Corporation under
all contracts for the sale or lease of goods and/or the performance of
services by it, now in existence or hereafter arising, including
without limitation the right to receive the Proceeds of said purchase
orders and contracts.
1.9 "CONTRACTS" means all contracts, instruments, undertakings, chattel
paper, documents or other agreements in or under which the Corporation
may now or hereafter have any right, title or interest.
1.10 "EQUIPMENT" means any "equipment", as such term is defined in the UCC
now or hereafter owned by the Corporation and, in any event, including,
without limitation, all machinery, equipment, furnishings, fixtures,
and vehicles now or hereafter owned by the Corporation, including,
without limitation, all items of machinery and equipment of any kind,
nature and description whether affixed to real property or not, as well
as trucks and vehicles of every description, trailers, handling and
delivery equipment, fixtures and office furniture and any and all
additions to, substitutions for and replacements of or accessions to
any of the foregoing, wherever located, together with all attachments,
components, parts (including spare parts), equipment and accessories
installed thereon or affixed thereto and all fuel for any thereof.
<PAGE>
/4
1.11 "GENERAL INTANGIBLES" means any "general intangibles", as such term is
defined in the UCC, now or hereafter owned by the Corporation and, in
any event, including, without limitation, all customer lists,
Trademarks, Patents, rights in intellectual property, licenses, permits
and copyrights now or hereafter owned by the Corporation.
1.12 "INVENTORY" means any "inventory", as such term is defined in the UCC,
now or hereafter owned by the Corporation, including, without
limitation, all inventory, wherever located, now owned or hereafter
acquired by the Corporation or in which the Corporation now has or
hereafter may acquire any right, title or interest, including, without
limitation, all goods and other personal property now or hereafter
owned by the Corporation which are held for sale or lease or are
furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed
or to be used or consumed in the Corporation's business, or in the
processing, packaging or shipping of the same, and all finished goods.
1.13 "INVESTMENT PROPERTY" means any "investment property", as such term is
defined in the UCC, now or hereafter owned by the Corporation.
1.14 "PROCEEDS" means "Proceeds", as such term is defined in the UCC and, in
any event, including, without limitation, the following at any time
whatsoever arising or receivable (i) whatever is received upon any
collection, exchange, sale or other disposition of any of the
Collateral, and any property into which any of the Collateral is
converted, whether cash or non-cash proceeds, (ii) any and all proceeds
of any insurance, indemnity, warranty or guarantee payable to the
Corporation from time to time with respect to any of the Collateral,
(iii) any and all payments (in any form whatsoever) made or due and
payable to the Corporation from time to time in connection with any
requisition, confiscation, condemnations, seizure or forfeiture of all
or any part of the Collateral by any governmental body, authority,
bureau or agency (or any person, corporation, agency, authority or
other entity acting under color of any governmental authority), (iv)
any claim of the Corporation against third parties for past, present or
future infringement of any Patent or breach of any Patent License or
for past, present or future infringement or dilution of, any Trademark
or for injury to the goodwill associated with any Trademark, or breach
of any Trademark License and (v) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral
and General Intangibles.
1.15 "PATENTS" mean (i) all letters patent of the United States or any other
country, and all applications for letters patent of the United States
or any other country, and (ii) all reissues, continuations,
continuations-in-part or extensions thereof, in each case now or
hereafter owned by the Corporation.
1.16 "PATENT LICENSE" mean any written agreement, now or hereafter entered
into by the Corporation, granting any right to practice any invention
covered by a Patent.
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1.17 "TRADEMARKS" mean (i) all trademarks, trade names, corporate names,
Corporation names, business names, fictitious business names, trade
styles, service marks, logos, other source of business identifiers,
prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or
any political subdivision thereof, and (ii) all reissues, extensions or
renewals thereof, in each case now or hereafter owned by the
Corporation.
1.18 "TRADEMARK LICENSE" mean any written agreement, now or hereafter
entered into by the Corporation, granting any right to use any
Trademark.
1.19 "PERMITTED INDEBTEDNESS" means indebtedness secured by a lien permitted
under clause (d) of the definition of Permitted Liens.
1.20 "PERMITTED LIENS" means (a) liens for taxes not yet delinquent or liens
for taxes being contested in good faith and by appropriate proceedings
for which adequate reserves have been established; (b) liens in respect
of property or assets imposed by law which were incurred in the
ordinary course of business, such as carriers', warehousemen's,
materialmen's and mechanics' liens and other similar liens arising in
the ordinary course of business which are not delinquent or remain
payable without penalty or which are being contested in good faith and
by appropriate proceedings; (c) liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, and other
liens to secure the performance of tenders, statutory obligations,
contract bids, government contracts, performance and return of money
bonds and other similar obligations, incurred in the ordinary course of
business, whether pursuant to statutory requirements, common law or
consensual arrangements; (d) liens upon any equipment acquired or held
by the Corporation or any of its Subsidiaries to secure the purchase
price of such equipment or indebtedness incurred solely for the purpose
of financing the acquisition of such equipment, so long as such lien
extends only to the equipment financed, and any accessions,
replacements, substitutions and proceeds (including insurance proceeds)
thereof or thereto; (e) liens arising from judgments or attachments in
circumstances not constituting an Event of Default under Section 5.6 of
this Agreement; (f) liens in favor of customs and revenue authorities
arising as a matter of law to secure payments of customs duties in
connection with the importation of goods, (g) liens which constitute
rights of setoff of a customary nature or banker's liens, whether
arising by law or by contract; (h) liens on insurance proceeds in favor
of insurance companies granted solely as security for financed
premiums; and (i) leases or subleases and licenses or sublicenses
granted in the ordinary course of the Corporation's business.
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1.21 "RELATED COMPANY" means the parent company (other than in reference to
such parent company) and any of the parent company's wholly-owned
subsidiaries.
2. LOANS
2.1 LOAN. The parties hereto acknowledge that funds have been and may
hereafter be loaned by the Secured Party to the Borrower pursuant to
the Credit Agreement. The parties further acknowledge that the
Corporation's undertaking to enter into the Guarantee was a condition
of the Secured Party's making Advances to the Borrower, is a condition
of continuing said Advances of credit to the Borrower, and is a
condition of future Advances of credit to the Borrower.
2.2 EXCESS LOANS. In the event the Secured Party shall make Advances to the
Borrower for an amount in excess of the face amount indicated in the
Credit Agreement, or if the Corporation should directly or indirectly
become indebted to the Secured Party in an amount which is in excess of
the said amount, the indebtedness shall nevertheless be secured by the
terms of this Security Agreement up to the amount guaranteed under the
Guarantee.
2.3 LATE CHARGE AND MATURITY RATE. This Security Agreement shall also be
deemed to secure Corporation's Obligation to make payments of any and
all late charges set forth in the Guarantee.
3. COLLATERAL
3.1 COLLATERAL. As collateral security for the prompt and complete payment
and performance when due of all the Liabilities and in order to induce
the Secured Party to enter into the Credit Agreement and make available
the Credit Facilities to the Borrower in accordance with the terms
thereof, the Corporation hereby pledges, hypothecates and grants to the
Secured Party a security interest in all the Corporation's right, title
and interest in, to and under the following (all of which being
hereinafter collectively called the "COLLATERAL"):
(i) all Contracts;
(ii) all Accounts in which the Corporation has any right, title or
interest, including, without limitation, (A) all moneys due and to
become due under any Contract, (B) any damages arising out of or for
breach or default in respect of any such Contract or Account, (C) all
other amounts from time to time paid or payable under or in connection
with any such Contract or Account, (D) the right of the Corporation to
terminate any such Contract or to perform and to exercise all remedies
thereunder;
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/7
(iii) all General Intangibles to the exclusion of the intellectual
property including Trademarks, Patents, Patent Licenses and Trademark
Licenses without limitation;
(iv) all Equipment;
(v) all Inventory;
(vi) all Investment Property;
(vii) all other personal property of the Corporation whether
tangible or intangible, or whether now or hereafter owned by the
Corporation and wherever located, including, but not limited to, the
balance of every deposit account, now or hereafter existing, of the
Corporation with any lenders and all moneys of the Corporation and all
rights to payment of money of the Corporation; and
(viii) to the extent not otherwise included, all Proceeds and
products of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral shall not be
deemed to include (i) any copyrights, copyright applications, copyright
registrations and like protection in each work of authorship and
derivative work thereof, whether published or unpublished, now owned or
hereafter acquired; any patents, patent applications and like
protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part
of the same, trademarks, servicemarks and applications therefor,
whether registered or not, and the goodwill of the business of
Corporation connected with and symbolized by such trademarks, any trade
secret rights, including any rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; or any claims for damage
by way of any past, present and future infringement of any of the
foregoing; or (ii) any equipment or other property financed by a third
party, provided that such third party's liens are liens of the type
described in subsection (d) of the definition of Permitted Liens
provided further that such equipment or other property shall be deemed
"Collateral" hereunder if such third party's lien is released or
otherwise terminated
3.2 CONTINUING PERFECTION. The Corporation will perform any and all steps
requested by the Secured Party to create and maintain in the Secured
Party's favor a first and valid lien on the Collateral or security
interest in the Collateral or pledges of Collateral. Such steps
include, without limitation, the execution, delivery, filing and
recording of financing statements, notes and any other documents
necessary, in the opinion of the Secured Party, necessary or advisable
to secure payment of all Liabilities to the Secured Party.
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4. REPRESENTATIONS, COVENANTS AND WARRANTIES
To induce the Secured Party to enter into this Agreement (and to accept this
Agreement in partial satisfaction of conditions to making Advances pursuant to
the Credit Agreement), the Corporation, covenants and warrants to the Secured
Party (and understands that the Secured Party shall rely thereon) as follows:
4.1 GOOD STANDING. The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is authorized to do business in all states or jurisdictions in
which it does business. The Corporation is specifically duly authorized
to do business in and is in good standing under the laws of the State
of Delaware.
4.2 CORPORATE AUTHORITY. The Corporation has the corporate power to
execute, deliver and carry out this Agreement and all documents
referred to herein and contemplated hereby, its board of directors
(and, to the extent required by law, its stockholders) has duly
authorized and approved the terms of the transactions described herein
and the taking of any and all action contemplated herein by the
Corporation and the consummation of the within transaction does not
violate any provision of its articles of incorporation, its by-laws, or
any agreement or undertaking to which the Corporation is a party or by
which it is bound.
4.3 COMPLIANCE WITH LAW. The execution of this Agreement or any instruments
or documents supplemental or incidental hereto and performance by the
Corporation of its obligations hereunder, does not, at the date of
execution hereof, violate any existing law or regulation or any writ or
decree of any court or governmental agency or the charter or by-laws of
the Corporation or any agreement or undertaking to which it is a party
or by which it is bound Hereafter the Corporation will conduct its
business in the United States in material compliance with all
applicable U. S. federal, state and municipal statutes or ordinances
and regulations.
4.4 NO LITIGATION. There are no judgments against the Corporation as of the
date of this Agreement and no material litigation or administrative
proceeding before any governmental body is presently pending now, or to
the knowledge of Corporation, threatened, against the Corporation or
any of its property or which could affect the Collateral or the lien
created hereunder.
4.5 NO FINANCIAL CHANGE. The Corporation has furnished the Secured Party
with current financial statements. Such financial statements are
complete and correct and have been prepared in accordance with
generally accepted accounting principles consistently followed
throughout the periods specified
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4.5.1 The Corporation warrants that there has been no material
adverse change in the financial condition of the Corporation,
since the date on which the most recent financial statements
of the Corporation were delivered to Secured Party.
4.5.2 The Corporation has made no investment in, Advances to, or
guarantees of the obligations of any Corporation, individual
or other entity except (i) those disclosed in the financial
statements referred to above, and (ii) the guarantees
subsequently simultaneously or hereafter given to the Secured
Party.
4.6 TAX COMPLIANCE. The Corporation has filed, or caused to be filed, all
tax returns required to be filed and has paid all taxes shown to be due
and payable on said return or on any assessment made against it.
4.7 GOOD TITLE. On the date of the Agreement, the Corporation has good and
marketable title to the Collateral, none of the Collateral is subject
to any pledge, lien, security interest, encumbrance, charge or title
retention or other security agreement or arrangement of any character
whatsoever, other than Permitted Liens, and the security interest
granted by the Corporation to the Secured Party herein shall constitute
valid and enforceable first liens on the Collateral, subject only to
Permitted Liens.
4.8 PLACE OF RECORDS. The Corporation represents that the offices where it
keeps its records concerning the Collateral are at its place of
business located at 182 Second Street, 5th Floor, San Fransisco, CA
94105 USA. The Corporation will notify the Secured Party promptly in
writing of any proposed change in location of the place referred to in
this Paragraph.
4.9 FINANCIAL STATEMENTS AND CERTIFICATE OF NO DEFAULT. The financial
statements of the Corporation, in form reasonably satisfactory to
Secured Party, are to be provided to Secured Party as set forth in the
Credit Agreement.
4.10 INSURANCE. The Corporation agrees to maintain, with financially sound
and reputable insurers, insurance with respect to its properties and
business against such casualties and contingencies, of such types
(including public liability, larceny, embezzlement or other criminal
misappropriation insurance) and in such amount both reasonably
acceptable to the Secured Party and as is customary in the case of
corporations of established reputations engaged in the same or a
similar business and similarly situated (but not less than, in the case
of casualty insurance, the fair market value of the insured property).
If the Corporation fails to take the action called for herein, the
Secured Party may, after giving the Corporation written notice of such
failure and a reasonable time to correct same, in its discretion obtain
insurance covering the Secured Party's interest in the Collateral and
the amount of the premium for said insurance shall be added to the
Liabilities of the Corporation to the Secured Party.
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4.10.1 The Corporation will deliver the originals of all such
policies (or certificates evidencing insurance if the
policies are master policies) to the Secured Party, and not
less than fifteen (15) days prior to the expiration date of
each such policy, will deliver to the Secured Party a
renewal policy or policies (or certificates evidencing
insurance if the policies are master policies) marked
"premium paid" or accompanied by other evidence of payment
satisfactory to the Secured Party, all naming the Secured
Party as loss payee.
4.10.2 All policies shall require that no less than thirty (30)
days' written notice of cancellation or material change will
be given to the Secured Party. All cost of insurance shall
be borne by the Corporation. Renewal policies, together with
evidence of payment of premiums, shall be deposited with the
Secured Party at least thirty (30) days before the
expiration of the prior existing policies. All insurance is
required commencing from the date hereof and is to be
continued throughout the term of this Agreement. The
Corporation shall not violate or permit to be violated any
of the conditions of the policies or insurance required to
be maintained hereunder.
4.10.3 Damage to, destruction, or loss of all or any portion of the
Corporation's business which adversely affects the
Collateral shall not terminate this Agreement or cause any
abatement of or reduction in the payments to be made by the
Corporation hereunder, or otherwise alter the obligations of
the Corporation as set forth herein.
4.10.4 In the event of any loss or change in circumstances which
would materially adversely affect Corporation's Collateral,
the Corporation shall give immediate written notice to the
Secured Party and shall perform all of its duties and
obligations set forth in each such policy. The Proceeds of
any insurance policies covering such damage or destruction
and shall be paid to the Borrower unless an Event of Default
exists, then to Secured Party, unless otherwise agreed to by
the Secured Party. The Secured Party shall have the right to
adjust losses with insurance companies and to settle or
adjudicate claims.
4.11 PAYMENT OF EXPENSES. The Corporation shall pay any and all expenses,
including reasonable counsel fees and disbursements, filing and
recording fees, and all other charges and expenses of the Secured Party
which may be required in connection with the negotiation and processing
of the within Agreement and the perfection of the security interest
created hereunder, the enforcement of the Credit Agreement and payment
of all Liabilities arising with respect hereto.
4.12 INSPECTION. The Corporation will permit any person designated by the
Secured Party to inspect any properties, corporate books and financial
records of the Corporation and to discuss the business affairs and
finances of the Corporation with its principal officers and/or
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/11
its independent accountants, and/or to contact accounts receivable
Corporations, all at such reasonable times as the Secured Party may
request.
4.13 MAINTAIN CORPORATE EXISTENCE. The Corporation shall maintain in Good
Standing, its corporate existence and will not, without the prior
written Consent of the Secured Party, which consent will not be
unreasonably withheld, dissolve or liquidate, nor merge or consolidate
with or acquire or affiliate with any other business entity nor form
any subsidiary.
4.14 DISCHARGE OF TAXES AND LIENS. The Secured Party may, after giving to
the Corporation written notice, at its option, discharge any taxes,
liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance of the
Collateral and the Corporation will reimburse the Secured Party on
demand for any payment made or any expense incurred by the Secured
Party pursuant to the foregoing authority, with interest at the rate
set forth in the Credit Agreement.
4.15 NOTICE OF ADVERSE CHANGE. The Corporation agrees to inform the Secured
Party of any material adverse change in its business, including but not
limited to: strikes; the bankruptcy of an important client or
supplier; and filing of any lawsuit naming the Corporation in amounts
exceeding $25,000.00.
4.16 NEGATIVE COVENANTS. So long as the Corporation is indebted to the
Secured Party hereunder, the Corporation shall not, without the Consent
of the Secured Party:
4.16.1 Become liable upon the obligations of any corporation,
person or other entity except (i) to the Secured Party, or
(ii) as now existing and disclosed in the financial
statements previously delivered to the Secured Party.
4.16.2 Merge with and/or consolidate any of its business operations
with another without notifying the Secured Party in writing
and obtaining written Consent of the Secured Party to make a
decision.
4.16.3 Sell or dispose of any asset or property other than in the
ordinary course of business or to a wholly-owned subsidiary.
4.16.4 Other than Permitted Liens, pledge or grant any further
security interest in the Collateral to any party other than
the Secured Party, without the Secured Party's prior written
Consent.
4.16.5 Other than Permitted Indebtedness, incur any indebtedness
for borrowed money with any other bank or lending
institution or private lender.
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4.16.6 Make loans, Advances or extension of credit to any
corporation, person or other entity except extensions of
credit, on normal terms, in connection with the sale of
products and services; Advances to employees for business
purposes if accounted for and repaid in a timely manner, and
loans, Advances or extensions of credit between the parent
company and any wholly-owned subsidiary or between such
subsidiaries.
4.16.7 Change the principal nature of its business.
4.16.8 Change its principal places of business or the place of
business at which the Collateral is located without prior
written notice to Secured Party.
5. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an "Event of Default":
5.1 NON-PERFORMANCE. Failure on the part of the Corporation to perform any
term, covenant or condition contained in this Agreement, the Guarantee
or in any agreements between the Corporation and the Secured Party made
with respect to the Credit Facilities within 10 days after written
notice of such failure from Secured Party.
5.2 MISREPRESENTATION. Any representation or warranty made by the
Corporation in this Agreement, in any written report, certificate or
other instrument in writing furnished in connection with the Guarantee
or in connection with any instrument of security furnished to the
Secured Party proves to be inaccurate in any substantial and material
respect as of the date or dates with respect to which it is deemed to
have been made.
5.3 OTHER SECURITY INTEREST. Failure on the part of the Corporation, after
written notice from the Secured Party to the Corporation, to take any
action requested by the Secured Party to perfect or protect the
security interests provided for herein.
5.4 INSOLVENCY. The Corporation shall have applied for or consented to the
appointment of a receiver, trustee or liquidator of all or a
substantial part of its assets; admitted in writing its inability to
pay its debts as they mature; made a general assignment for the benefit
of creditors; been adjudicated a bankrupt or insolvent; or filed a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or to take advantage of
any insolvency law, or an answer admitting the material allegations of
a petition in any bankruptcy, reorganization or insolvency proceeding,
or taken corporate action for the purposes of effecting any of the
foregoing; or an order, judgment or decree shall have been entered,
without the application, approval or consent of the Corporation by any
court of competent jurisdiction approving a petition seeking
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/13
reorganization of the Corporation, or appointing a receiver, trustee or
liquidator of any Obligor, or of a substantial part of its assets and
such order, judgment or decree shall have continued unstayed and in
effect for any period of sixty (60) consecutive days; or a petition in
bankruptcy shall have been filed against the Corporation and shall not
have been dismissed for a period of sixty (60) consecutive days.
5.5 JUDGMENT OR LIEN. Entry of a judgment(s), issuance or any
garnishment(s), attachment(s) or distraint(s) in excess of the
aggregate sum of One Hundred Thousand Dollars ($100,000.00), the filing
of any lien or of any governmental attachment against any property of
the Corporation which entry, issuance, attachment or filing shall have
continued unstayed and in effect for a period of thirty (30) days.
5.6 DEFAULT UNDER OTHER SECURITY INTERESTS - BORROWINGS OR OBLIGATIONS. The
Corporation is in default under any security agreement permitted by or
given to the Secured Party covering any of the Collateral provided for
herein or any other Collateral owned by the Secured Party, which
default is not cured within any permitted cure period.
6. CONSEQUENCE OF EVENT OF DEFAULT
In case any Event of Default shall have occurred and be continuing, then and in
every such event of default, the Secured Party may take any or all of the
following actions, either simultaneously or separately:
6.1 ACCELERATION. Declare all Liabilities owing to the Secured Party from
the Corporation under this Agreement and under the Guarantee to be
forthwith due and payable, whereupon all such sums shall forthwith
become due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the
Corporation.
6.1.1 The Secured Party shall have, in addition to all other rights
and remedies, the rights and remedies of a secured party under
the Uniform Commercial Code, including without limitation, the
right to take possession of the Collateral, and for that
purpose the Secured Party may, as far as the Corporation can
give authority therefor, enter upon any premises on which
Collateral may be situated and remove the same therefrom.
6.2 POSSESSION. Proceed with or without judicial process to take possession
of all or any part of the Collateral provided for herein not already in
the possession of the Secured Party, and the Corporation agrees that
upon receipt of notice of the Secured Party's intention to take
possession of all or any part of said Collateral, the Corporation will
do everything reasonably necessary to make same available to the
Secured Party. The Secured Party may require the Corporation upon ten
(10) days notice to the Corporation to assemble the Collateral and
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Proceeds and make them available to the Secured Party at a place to be
designated by the Secured Party.
6.3 METHODS OF SALE. So long as the Secured Party acts in a commercially
reasonable manner, the Secured Party may assign, transfer and deliver
at any time or from time to time the whole or any portion of the
Collateral or any rights or interest therein in accordance with the
Uniform Commercial Code, and without limiting the scope of the Secured
Party's rights thereunder, the Secured Party may sell the Collateral at
public or private sale, or in any other manner, at such price or prices
as the Secured Party may deem best, and either for cash or credit, or
for future delivery, at the option of the Secured Party, in bulk or in
parcels and with or without having the Collateral at the sale or other
disposition. In the event of a sale of the Collateral, Secured Party
shall give the Corporation at least ten (10) days prior written notice
of such sale, which notice the Corporation acknowledges is reasonable.
In the event of a sale of the Collateral, or any other disposition
thereof, the Secured Party shall apply all Proceeds first to all
Advances and all costs and expenses of disposition, including
attorney's fees and then to the Liabilities of the Corporation to the
Secured Party.
6.4 RETENTION OF COLLATERAL. Elect to retain the Collateral or any part
thereof in satisfaction of all Liabilities due from the Corporation to
Secured Party upon notice of such proposed election to the Corporation
and any other party as may be required by the Uniform Commercial Code.
The Secured Party may at any time in its discretion transfer any
securities or other property constituting Collateral into its own name
or that of its nominee and receive the income thereon and hold the same
as security for Liabilities or apply it to principal or interest due on
Liabilities.
6.5 SET-OFF. Secured Party shall have the right immediately, and without
notice or other action to set-off against any of the Corporation's
Liabilities to the Secured Party any sum owed by the Secured Party in
any capacity to the Corporation whether due or not, and Secured Party
shall be deemed to have exercised such right of set-off and to have
made a charge against any such sum immediately upon the occurrence of
such event of default, even though the actual book entries may be made
at some time subsequent thereto.
6.6 EXPENSES AND ATTORNEY'S FEES. The Corporation shall pay to the Secured
Party on demand any and all reasonable expenses, including reasonable
counsel fees, incurred or paid by the Secured Party in protecting or
enforcing its rights with respect to the Collateral. After deducting
all of such expenses the residue of any Proceeds of collection or sale
of Collateral shall be applied to the payment of principal or interest
on Liabilities in such order or preference as the Secured Party may
determine, proper allowance for interest on Liabilities not then due
being made, and any excess shall be returned to the Corporation and the
Corporation shall remain liable for a deficiency.
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6.7 INTEREST. The Corporation shall pay to the Secured Party from and after
an Event of Default, interest on any Liabilities owed by the
Corporation at the Default Rate until all such Liabilities are paid to
the Secured Party.
7. MISCELLANEOUS
7.1 NO WAIVER. Corporation agrees that no delay on the part of the Secured
Party in exercising any power or right hereunder shall operate as a
waiver of any such power or right, preclude other or further exercise
thereof, or the exercise of any other power or right. No waiver
whatsoever shall be valid unless in writing signed by the Secured Party
and then only to the extent set forth therein.
7.2 WAIVER OF NOTICE. Corporation waives presentment, dishonor and notice
of dishonor, protest and notice of protest of all commercial papers at
any time held by the Secured Party on which the Corporation is in any
way liable.
7.3 ONE INSTRUMENT. The provisions of this Agreement will be in addition to
those of the Credit Agreement or other evidence of Liability held by
the Secured Party relating to this particular transaction, all of which
shall be construed as one instrument.
7.4 CHOICE OF LAW. This Agreement and the rights of the parties hereto
shall be governed by the laws of the State of Delaware except to the
extent that enforcement of lien claims are governed by the laws of the
state where the Collateral is located.
7.5 SUCCESSORS OR ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their respective successors
and assigns.
7.6 RIGHTS CUMULATIVE. The rights and remedies herein expressed to be
vested in or conferred upon the Secured Party shall be cumulative and
shall be in addition to and not in substitution for or in derogation of
the rights and remedies conferred upon secured creditors by the Uniform
Commercial Code or any other applicable law.
7.7 NO ELECTION OF REMEDIES. Nothing herein shall require the Secured Party
to proceed first under this Agreement to satisfy any Liabilities of the
Guarantee to the Secured Party and the Secured Party may proceed
directly against the Corporation under the Guarantee or under this
Agreement, seriatim or simultaneously, as the Secured Party deems in
its absolute discretion, and the taking of any one such action shall
not constitute an election of remedies on its part.
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7.8 NOTIFICATION OF DISPOSITION OF COLLATERAL. Any notification of a sale
or other disposition of the Collateral or of any other action by the
Secured Party to the Corporation will be sufficient if given personally
or mailed to the Corporation, by certified mail, at its address set
forth herein not less than ten (10) days prior to the day on which such
sales or other disposition will be made, and such notification shall be
deemed reasonable notice.
7.9 TITLES. The titles and headings indicated herein are inserted for
convenience only and shall not be considered a part of this Agreement
or in any way limit the construction or interpretation of this
Agreement.
7.10 ENGLISH. The parties hereto have expressly agreed that this agreement
and all deeds, documents or notices relating thereto be executed in
English. Les parties aux presentes ont expressement convenu que cet
acte ou tout autre acte, document ou avis y afferent soient rediges en
anglais.
7.11 PRIOR AGREEMENTS. This Agreement superseded any existing security
agreement executed by the Corporation in favor of the Secured Party and
such agreements shall be of no further force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their proper and duly authorized officers as of the day and
year first above written and the parties agree that they intend this Agreement
to be executed and delivered as an instrument under seal.
Attest: NATIONAL BANK OF CANADA
By: /s/ Alain Gallichan
-------------------------------
Alain GALLICHAN
By: /s/ Sylvie Pelletier
-------------------------------
Sylvie PELLETIER
Attest: TALEO CORPORATION
By: /s/ Jean Lavigueur
-------------------------------
Jean LAVIGUEUR
By: /s/ Sylvie Lauze
-------------------------------
Sylvie LAUZE