[SANWA BANK LOGO]
EXHIBIT 10.6
CREDIT AGREEMENT
(LINE OF CREDIT)
This Agreement is made and entered into as of Sept. 21, 1999, by and
between SANWA BANK CALIFORNIA (the "Bank") and TRINET EMPLOYER GROUP, INC. (the
"Borrower"), on the terms and conditions that follow:
SECTION
1
DEFINITIONS
1.1 Certain Defined Terms: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be
generally applicable to the singular and plural forms of the terms
defined):
1.1.1 "ASP" or "Average Subscriber Payroll" shall mean the sum of payroll
disbursements to Subscriber employees divided by the total
Subscribers.
1.1.2 "Advance": shall mean an advance to the Borrower under the credit
facility (ies) described in Section 2.
1.1.3 "Business Day": shall mean a day, other than a Saturday or Sunday,
on which commercial banks are open for business in California.
1.1.4 "Cash Flow": shall mean the sum of net income after tax and
exclusive of extraordinary gains plus interest expense, plus
depreciation and amortization expense minus dividends and
distributions.
1.1.5 "Collateral": shall mean the property described in Section 3,
together with any other personal or real property in which the Bank
may be granted a lien or security interest to secure payment of the
Obligations.
1.1.6 "Current Assets": shall mean current assets as determined in
accordance with generally accepted accounting principles, less all
amounts due from affiliates, officers or employees.
1.1.7 "Current Liabilities": shall mean current liabilities as determined
in accordance with generally accepted accounting principles,
including any negative cash balance on the Borrower's financial
statement and Indebtedness for borrowed money under lines of credit
with the Bank used by the Borrower for working capital purposes.
1.1.8 "Debt": shall mean all interest bearing liabilities of the Borrower
less Subordinated Debt, if any.
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1.1.9 "EBITDA": shall mean earnings exclusive of extraordinary gains and
before deductions for interest expense, taxes, depreciation and
amortization expense.
1.1.10 "Effective Tangible Net Worth": shall mean the Borrower's stated
net worth plus Subordinated Debt but less all intangible assets of
the Borrower (i.e., goodwill, trademarks, patents, copyrights,
organization expense, and similar intangible items including, but
not limited to, investments in and all amounts due from affiliates,
officers or employees).
1.1.11 "Environmental Claims": shall mean all claims, however asserted, by
any governmental authority or other person alleging potential
liability or responsibility for violation of any Environmental Law
or for release or injury to the environment or threat to public
health, personal injury (including sickness, disease or death),
property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief,
resulting from or based upon (a) the presence, placement,
discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden,
accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from
property, whether or not owned by the Borrower, or (b) any other
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
1.1.12 "Environmental Laws": shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements
with, any governmental authorities, in each case relating to
environmental, health, safety and land use matters; including the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-
to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource, Recovery and Recycling
Act, the California Water Code and the California Health and Safety
Code.
1.1.13 "Environmental Permits": shall have the meaning provided in Section
5.11 hereof.
1.1.14 "ERISA": shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context
otherwise requires) any rules or regulations promulgated
thereunder.
1.1.15 "Event of Default": shall have the meaning set forth in Section 7.
1.1.16 "Expiration Date": shall mean March 31, 2000, or the date of
termination of the Bank's commitment to lend under this Agreement
pursuant to Section 8, whichever shall occur first.
1.1.17 "Hazardous Materials": shall mean all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance,
hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
1.1.18 "Indebtedness": shall mean, with respect to the Borrower, (i) all
indebtedness for borrowed money or for the deferred purchase price
of property or services in respect of which the Borrower is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or
in respect of which the Borrower otherwise assures a creditor
against loss and (ii)
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obligations under leases which shall have been or should be, in
accordance with generally accepted accounting principles, reported
as capital leases in respect of which the Borrower is liable,
contingently or otherwise, or in respect of which the Borrower
otherwise assures a creditor against loss.
1.1.19 "LIBOR Rate Advance": shall have the meaning provided in Section
2.1.5.
1.1.20 "LIBOR Interest Period": shall have the meaning provided in Section
2.1.5.
1.1.21 "LIBOR Rate": shall have the respective meaning provided in Section
2.1.5.
1.1.22 "Line Account": shall have the meaning provided in Section 2.2
hereof.
1.1.23 "Line of Credit": shall mean the credit facility described as such
in Section 2.
1.1.24 "Obligations": shall mean all amounts owing by the Borrower to the
Bank pursuant to this Agreement including, but not limited to, the
unpaid principal amount of Advances.
1.1.25 "Ordinary Course of Business": shall mean, with respect to any
transaction involving the Borrower or any of its subsidiaries or
affiliates, the ordinary course of the Borrower's business, as
conducted by the Borrower in accordance with past practice and
undertaken by the borrower in good faith and not for the purpose of
evading any covenant or restriction in this Agreement or in any
other document, instrument or agreement executed in connection
herewith.
1.1.26 "PAP": shall mean Performance Assurance Payments or deposits which
are made by Subscribers pursuant to a Subscriber Service Agreement
between Borrower and its Subscribers and held in a trust account
with Bank.
1.1.27 "Permitted Liens": shall mean: (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank; (ii) liens
for taxes, assessments or similar charges not yet due; (iii) liens
of materialmen, mechanics, warehousemen, or carriers or other like
liens arising in the Ordinary Course of Business and securing
obligations which are not yet delinquent; (iv) purchase money liens
or purchase money security interests upon or in any property
acquired or held by the Borrower in the Ordinary Course of Business
to secure Indebtedness outstanding on the date hereof or permitted
to be incurred under Section 5.7 hereof; (v) liens and security
interests which, as of the date hereof, have been disclosed to and
approved by the Bank in writing; and (vi) those liens and security
interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of the
Borrower's assets.
1.1.28 "Prior Agreement": means and refers to that certain Equipment
Purchase Line of Credit Agreement dated as of September 29, 1998,
between Bank and Borrower.
1.1.29 "Reference Rate": shall mean an index for a variable interest rate
which is quoted, published or announced by Bank as its reference
rate and as to which loans may be made by Bank at, above or below
such rate.
1.1.30 "Subordinated Debt": shall mean such liabilities of the Borrower
which have been subordinated to those owed to the Bank in a manner
acceptable to the Bank.
1.1.31 "Subscriber": shall mean an individual or firm who has entered into
a Subscriber Service Agreement with Borrower, whereby Borrower
provides certain payroll and other services to the subscriber.
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1.1.32 "Term Loan": means and refers to the term loan described in
Section 2.1.3.
1.1.33 "This Agreement": means and refers to this Agreement and all
amendments, supplements, modifications and addenda hereto,
1.1.34 "Variable Rate Advance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.35 "Variable Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.2 Accounting Terms: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein
shall mean such financial statements or such items prepared or determined
in accordance with generally accepted accounting principles consistently
applied and, except where otherwise specified, all financial data submitted
pursuant to this Agreement shall be prepared in accordance with such
principles.
1.3 Other Terms: Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code.
SECTION
2
CREDIT FACILITIES
2.1 THE LINE OF CREDIT
2.1.1 The Line of Credit: On terms and conditions as set forth herein,
the Bank agrees to make Advances to the Borrower from time to time
from the date hereof to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed
$4,000,000.00 (the "Line of Credit"). Any sums repaid under the
Line of Credit may not be re-borrowed. Advances under the Line of
Credit shall be used for the only for the purposes set forth in
Exhibit 2.1.1, and in amounts not to exceed those specified for
each such purpose. The amount of any and all Advance shall be
subject to any further limitations set forth in Exhibit 2.1.1.
Bank shall have no duty to make any requested Advance hereunder if
Borrower has not provided Bank with such invoices and satisfactory
supporting documentation (including, without limitation, an
itemized list of allocated costs prior to such Advance) as Bank may
require to evidence that the requested Advance has been or will be
used by Borrower for the purposes and in the amounts specified in
such exhibit.
2.1.2 Making Line Advances: Each Advance shall be conclusively deemed to
have been made at the request of and for the benefit of the
Borrower (i) when credited to any deposit account of the Borrower
maintained with the Bank or (ii) when paid in accordance with the
Borrower's written instructions. Subject to the requirements of
Section 4 and provided such request is made in a timely manner as
provided in Section 2.1.6 below, Advances shall be made by the Bank
under the Line of Credit.
2.1.3 Repayment of Line of Credit: Unless sooner due in accordance with
the terms of this Agreement or Bank has extended the Term Loan as
contemplated herein, the Borrower hereby promises to pay in full on
the Expiration Date, the aggregate unpaid principal amount of all
Advances and then outstanding, together with all accrued and unpaid
interest thereon. Bank agrees to lend to Borrower on the Expiration
Date an amount equal to the
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outstanding amount of all Advances (the "Term Loan") provided no
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Event of Default has occurred or is continuing on the Expiration
Date, and provided such Term Loan is to be evidenced by and subject
to a promissory note to be in form and content safisfactory to Bank
and executed by Borrower. Interest shall accrue and be payable on
the terms set forth in the promissory note. The proceeds of Term
Loan shall be used solely to repay such Advances.
2.1.4 Repayment of the Term Loan. The Term Loan shall be repaid in 36
monthly installments, such payments to begin on the April 30, 2000,
and continue thereafter on the last day of each succeeding month to
and including February 28, 2003, with a final payment due on March
31, 2003, at which time all outstanding principal plus all accrued
and unpaid interest on such loan shall be immediately due and
payable.
2.1.5 Interest. Interest shall accrue from the date of each Advance at
one of the following rates, as quoted by the Bank and as elected by
the Borrower:
(i) Variable Rate : A variable rate per annum equivalent to an
index for a variable interest rate which is quoted,
published or announced from time to time by the Bank as its
reference rate (the "Reference Rate") and as to which loans
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may be made by the Bank at, below or above such Reference
Rate plus one percent (the "Variable Rate"). Interest shall
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be adjusted concurrently with any change in the Reference
Rate. Each Advance based upon the Variable Rate is
hereinafter referred to as a "Variable Rate Advance."
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(ii) LIBOR Rate. In addition to Variable Rate Advances, the Bank
hereby agrees to make one or more Advances (in the minimum
amount $250,000.00), which shall accrue interest at a fixed
rate quoted by the Bank for a minimum of three months or for
such other period of time that the Bank may elect to quote
and offer (provided that any such period of time does not
extend beyond the maturity date of the relevant Advance)
[the "LIBOR Interest Period"]. Such interest rate (the
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"LIBOR Rate") shall be a percentage approximately equivalent
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to 3.60% in excess of LIBOR as determined by Bank. LIBOR
means, as of the date the same is to be determined, the U.S.
dollar London Interbank Offered Rate as of such date for
a U.S. dollar deposit in an amount approximately equal to
the amount of the relevant advance or term loan and for a
period of time approximately equal to the relevant LIBOR
Interest Period, as appearing on page 3750 (or such other
page as may replace page 3750 of the Telerate screen at or
about 11:00 a.m. (London time) on the second Business Day
prior to the first day of the relevant LIBOR Interest
Period. Each Advance bearing interest at the LIBOR Rate is
hereinafter referred to as a "LIBOR Rate Advance. "
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(iii) Payment of Interest. On the Advances, Borrower hereby
promises and agrees to pay interest monthly on the last day
of each month beginning September 30, 1999, and continuing
on the same date of each succeeding month thereafter. In
addition, with respect to each LIBOR Rate Advance and/or
advance bearing interest at the LIBOR Rate, Borrower
promises to pay interest on the last day of the relevant
LIBOR Interest Period pertaining thereto. Interest not paid
when due shall be added to principal and become part
thereof, and shall thereafter bear like interest. Interest
shall be computed on the basis of 360 days per year, but
charged on the actual number of days elapsed.
2.1.6 Notice of Borrowing: Upon written or telephonic notice which shall
be received by the Bank at or before 2:00 p.m. (California time) on
a Business Day, the Borrower may borrow under the Line of Credit by
requesting:
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(i) A Variable Rate Advance. A Variable Rate Advance may be made on
the day notice is received by the Bank; provided, however, that
if the Bank shall not have received notice at or before 2:00 p.m.
on the day such Advance is requested to be made, such Variable
Rate Advance may, at the Bank's option, be made on the next
Business Day.
(ii) A LIBOR Advance. Notice of any LIBOR Advance shall be received by
the Bank no later than two Business Days prior to the day (which
shall be a Business Day) on which the Borrower requests such
LIBOR Advance to be made.
2.1.7 Notice of Election to Adjust Interest Rate. Upon telephonic notice
which shall be received by the Bank at or before 2:00 p.m.
(California time) on a business day, the Borrower may elect:
(a) That interest on a Variable Rate Advance shall be adjusted
to accrued at the LIBOR Rate; provided, however, that such notice
shall be received by the Bank no later than two business days
prior to the day (which shall be a business day) on which
Borrower requests that interest be adjusted to accrue at the
LIBOR Rate.
(b) That interest on a LIBOR Rate Advance shall continue to
accrue at a newly quoted LIBOR Rate as the case may be or shall
be adjusted to commence to accrue at the Variable Rate; provided,
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however, that such notice shall be received by the Bank no later
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than two business days prior to the last day of the LIBOR
Interest Period pertaining to such LIBOR Rate Advance, as
applicable. If the Bank shall not have received notice as
prescribed herein of Borrower's election that interest on any
LIBOR Rate Advance shall continue to accrue at the LIBOR Rate,
Borrower shall be deemed to have elected that interest thereon
shall be adjusted to accrue at the Variable Rate upon the
expiration of the LIBOR Interest Period pertaining thereto.
2.1.8 Prohibition Against Prepayment of LIBOR Rate Advances.
Notwithstanding anything to the contrary, no prepayment shall be
made on any LIBOR Rate Advance except on a day which is the last
day of the LIBOR Interest Period pertaining thereto. If the whole
or any part of any LIBOR Rate Advance is prepaid by reason of
acceleration or otherwise, the Borrower shall, upon the Bank's
request, promptly pay to the Bank a prepayment premium equal to
(and shall and indemnify the Bank for) (i) all costs and expenses
incurred by the Bank and (ii) any loss deemed sustained by the Bank
as a consequence of such prepayment, including loss of future
interest income resulting from the re-employment of funds).
The Bank shall be entitled to fund all or any portion of its LIBOR
Rate Advances in any manner it may determine in its sole
discretion, but all calculations and transactions hereunder shall
be conducted as though the Bank actually funded all such through
the sale of U.S. Treasury securities in the amount of the relevant
advance or the relevant LIBOR Rate Advance and in maturities
corresponding to the then applicable LIBOR Interest Period.
2.1.9 Mandatory Conversion from LIBOR Rate to Variable Rate. In the event
that the Bank, shall at any time determine that the accrual of
interest on the basis of the LIBOR Rate (i) is unfeasible because
the Bank is unable to determine such rate due to the unavailability
of U.S. dollar deposits, contracts or certificates of deposit in an
amount approximately equal to the amount of the relevant Advance
and for a period of time approximately equal to the relevant LIBOR
Interest Period pertaining thereto; or (ii) is or has become
unlawful or unfeasible by reason of the Bank's compliance with any
new law, rule, regulation, guideline or order, or any new
interpretation of any present law, rule, regulation, guideline or
order,
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then the Bank shall give telephonic notice thereof (confirmed in
writing) to the Borrower, in which event any such Advance as the
case may be shall be deemed to be a Variable Advance and interest
shall thereupon immediately accrue at the Variable Rate."
2.1.10 Indemnification for LIBOR Rate Costs. During any period of time in
which interest on any Advance is accruing on the basis of the LIBOR
Rate, the Borrower shall, upon the Bank's request, promptly pay to
and reimburse the Bank for all costs incurred and payments made by
the Bank by reason of any future assessment, reserve, deposit or
similar requirements or any surcharge, tax or fee imposed upon the
Bank or as a result of the Bank's compliance with any directive or
requirement of any regulatory authority pertaining or relating to
funds used by the Bank in quoting and determining the LIBOR Rate or
at such fixed rate.
2.2 Line Account:
2.2.1 The Bank shall maintain on its books a record of account in which
the Bank shall make entries for each Advance and such other debits
and credits as shall be appropriate in connection with the credit
facilities granted hereunder (the "Line Account"). The Bank shall
provide the Borrower with a statement of the Borrower's Line
Account, which statement shall be considered to be correct and
conclusively binding on the Borrower unless the Borrower notifies
the Bank to the contrary within 30 days after the Borrower's
receipt of any such statement which it deems to be incorrect.
2.2.2 The Borrower hereby authorizes the Bank to charge, from time to
time, against any or all of the Borrower's deposit accounts with
the Bank any amount so due under this Agreement, including, but not
limited to, account # 0560-53600 maintained with the Bank's Hayward
Office (BBC).
2.2.3 If any payment required to be made by the Borrower hereunder
becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day
and interest thereon shall be payable at the then applicable rate
during such extension. All payments required to be made hereunder
shall be made to the office of the Bank designated for the receipt
of notices herein or such other office as Bank shall from time to
time designate.
2.3 Late Payment: In addition to any other rights the Bank may have
hereunder, if any payment of principal or interest or any portion thereof,
under this Agreement is not paid within 5 days of when due, a late payment
charge equal to five percent (5%) of such past due payment may be assessed
and shall be immediately payable.
2.4 Prior Agreement. In consideration of the credit facility extended by
Bank to Borrower hereunder, no further loans or advances will be made by
Bank under the Prior Agreement, and the line of credit granted thereunder
is hereby cancelled and terminated.
SECTION
3
COLLATERAL
3.1 The Collateral: To secure payment and performance of all the Borrower's
Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties owed by the Borrower to the Bank, whether
or not evidenced by this or by any other agreement, absolute or contingent,
due or to become due, now existing or hereafter and howsoever created, the
Borrower hereby grants the Bank a security interest in and to all of the
following property ("Collateral"):
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(i) Equipment All goods now owned or hereafter acquired by the
Borrower or in which the Borrower now has or may hereafter
acquire any interest, including, but not limited to, all
machinery, equipment, furniture, furnishings, fixtures, tools,
supplies and motor vehicles of every kind and description, and
all additions, accessions, improvements, replacements and
substitutions thereto and thereof (the "Equipment").
(ii) Inventory. All inventory now owned or hereafter acquired by the
Borrower, including, but not limited to, all raw materials,
work in process, finished goods, merchandise, parts and
supplies of every kind and description, including inventory
temporarily out of the Borrower's custody or possession,
together with all returns on accounts (the "Inventory").
(iii) Accounts. All accounts, contract rights and general intangibles
now owned or hereafter created or acquired by the Borrower,
including, but not limited to, all receivables, goodwill,
trademarks, trademark applications, trade styles, trade names,
patents, patent applications, copyrights and copyright
applications, customer lists, business records and computer
programs, tapes, disks and related data processing software
that at any time evidence or contain information relating to
any of the Collateral.
(iv) Documents. All documents, instruments and chattel paper now
owned or hereafter acquired by the Borrower, including, but not
limited to, warehouse and other receipts, bills of sale and
bills of lading.
(v) Monies. All monies, deposit accounts, certificates of deposit
and securities of the Borrower now or hereafter in the Bank's
or its agents' possession.
The Bank's security interest in the Collateral shall be a continuing lien and
shall include the proceeds and products of the Collateral including, but not
limited to, the proceeds of any insurance thereon.
The security interest granted to Bank in the Collateral shall not secure or be
deemed to secure any Indebtedness of the Borrower to the bank which is, at the
time of its creation, subject to the provisions of any state or federal consumer
credit or truth-in-lending disclosure statutes.
SECTION
4
CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Initial Advance: The obligation of the Bank to
make the initial Advance and the first extension of credit to or on account
of the Borrower hereunder is subject to the conditions precedent that the
Bank shall have received before the date of such initial Advance and such
first extension of credit all of the following, in form and substance
satisfactory to the Bank:
(i) Authority to Borrow. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any document,
instrument or agreement required hereunder have been duly
authorized.
(ii) Fees. A loan fee of $10,000.00, such fee to be deemed to be
fully earned upon payment.
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(iii) Financing Statements. Executed UCC-1 financing statement(s)
describing the Collateral, which have been filed with the
Secretary of State or the county recorder as a lien of first
priority.
(iv) Audit. The Bank shall have conducted an audit of the Borrower's
books, records and operations and the Bank shall be satisfied
as to the condition thereof.
(v) Miscellaneous. Such other evidence as the Bank may request to
establish the consummation of the transaction contemplated
hereunder and compliance with the conditions of this Agreement.
(vi) Surepay Addendum. A new Addendum, in form and content
satisfaction to the Bank, to Schedule A for Surepay Services
under the Cash Management Service Master Agreement dated as of
March 27, 1995, together with a documentation fee of $750.00,
which fee shall be deemed fully earned upon payment.
4.2 Conditions Precedent to All Advances: The obligation of the Bank to make
each Advance and each other extension of credit to or on account of the
Borrower (including the initial Advance and the first extension of credit)
shall be subject to the further conditions precedent that, on the date of
each Advance or each extension of credit and after the making of such
Advance or extension of credit.
(i) Subsequent Approvals. The Bank shall have received such
supplemental approvals, opinions or documents as the Bank may
reasonably request.
(ii) Representations and Warranties. The representations contained
in Section 5 and in any other document, instrument or
certificate delivered to the Bank hereunder are true, correct
and complete.
(iii) Event of Default. No event has occurred and is continuing
which constitutes, or with the lapse of time or giving of
notice or both, would constitute an Event of Default.
(iv) Collateral. The security interest in the Collateral has been
duly authorized, created and perfected with first priority and
is in full force and effect.
The Borrower's acceptance of the proceeds of any loan, advance or extension of
credit or the Borrower's execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the Borrower's
representation and warranty that all of the above statements are true and
correct.
SECTION
5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to
the Bank, which representations and warranties are continuing:
5.1 Status: The Borrower is a corporation duly organized and validly existing
under the laws of the state of California and is properly licensed and is
qualified to do business and in good standing in, and, where necessary to
maintain the Borrower's rights and privileges, has complied with the
fictitious name statute of every jurisdiction in which the Borrower is
doing business.
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5.2 Authoriy: The execution, delivery and performance by the Borrower of this
Agreement and any instrument, document or agreement required hereunder have
been duly authorized and do not and will not: (i) violate any provision of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having application to the
Borrower; (ii) result in a breach of or constitute a default under any
material indenture or loan or credit agreement or other material agreement,
lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected; or (iii) require any consent or
approval of its stockholders or violate any provision of its articles of
incorporation or by-laws.
5.3 Legal Effect: This Agreement constitutes, and any instrument, document or
agreement required hereunder when delivered hereunder will constitute,
legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their respective terms.
5.4 Fictitious Trade Styles: There are no fictitious trade styles used by the
Borrower in connection with its business operations. The Borrower shall
notify the Bank not less than 30 days prior to effecting any change in the
matters described herein or prior to using any other fictitious trade style
at any future date, indicating the trade style and state(s) of its use.
5.5 Financial Statements: All financial statements, information and other data
which may have been or which may hereafter be submitted by the Borrower to
the Bank are true, accurate and correct and have been or will be prepared
in accordance with generally accepted accounting principles consistently
applied and accurately represent the financial condition or, as applicable,
the other information disclosed therein. Since the most recent submission
of such financial information or data to the Bank, the Borrower represents
and warrants that no material adverse change in the Borrower's financial
condition or operations has occurred which has not been fully disclosed to
the Bank in writing.
5.6 Litigation: Except as have been disclosed to the Bank in writing, there are
no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or the Borrower's
properties before any court or administrative agency which, if determined
adversely to the Borrower, would have a material adverse effect on the
Borrower's financial condition or operations or on the Collateral.
5.7 Title to Assets: The Borrower has good and marketable title to all of its
assets (including, but not limited to, the Collateral) and the same are not
subject to any security interest, encumbrance, lien or claim of any third
person except for Permitted Liens.
5.8 ERISA: If the Borrower has a pension, profit sharing or retirement plan
subject to ERISA, such plan has been and will continue to be funded in
accordance with its terms and otherwise complies with and continues to
comply with the requirements of ERISA.
5.9 Taxes: The Borrower has filed all tax returns required to be filed and paid
all taxes shown thereon to be due, including interest and penalties, other
than such taxes which are currently payable without penalty or interest or
those which are being duly contested in good faith.
5.10 Margin Stock. The proceeds of any loan or advance hereunder will not be
used to purchase or carry margin stock as such term is defined under
Regulation U of the Board of Governors of the Federal Reserve System.
5.11 Environmental Compliance. The operations of the Borrower comply, and
during the term of this Agreement will at all times comply, in all respects
with all Environmental Laws; the Borrower has obtained all licenses,
permits, authorizations and registrations required under any Environmental
Law ("Environmental Permits") and necessary for its ordinary course
---------------------
operations, all such Environmental Permits are in good standing, and the
Borrower is in compliance with all material terms and conditions of such
Environmental Permits; neither the Borrower nor any of its present
-10-
property or operations is subject to any outstanding written order from or
agreement with any governmental authority nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material; there are no Hazardous
Materials or other conditions or circumstances existing, or arising from
operations prior to the date of this Agreement, with respect to any
property of the Borrower that would reasonably be expected to give rise to
Environmental Claims; provided, however, that with respect to property
---------
leased from an unrelated third party, the foregoing representation is made
to the best knowledge of the Borrower. In addition, (i) the Borrower does
not have any underground storage tanks that are not properly registered or
permitted under applicable Environmental Laws, or that are leaking or
disposing of Hazardous Materials off-site, and (ii) the Borrower has
notified all of their employees of the existence, if any, of any health
hazard arising from the conditions of their employment and have met all
notification requirements under Title III of CERCLA and all other
Environmental Laws.
5.12 Inventory:
(i) The Borrower keeps correct and accurate records. (itemizing and
describing the kind, type, quality and quantity of inventory,
the Borrower's cost therefor and selling price thereof, and the
daily withdrawals therefrom and additions thereto).
(ii) All inventory is of good and merchantable quality, free from
defects.
(iii) The inventory is not stored with a bailee, warehouseman or
similar party.
(iv) The Borrower is not a "retail merchant" as defined in the
California Uniform Commercial Code.
SECTION
6
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as the Borrower is indebted to the Bank under this Agreement,
the Borrower will, unless the Bank shall otherwise consent in writing:
6.1 Reporting and Certification Requirements: Deliver or cause to be delivered
to the Bank in form and detail satisfactory to the Bank:
(i) Not later than 120 days after the end of each of the Borrower's
fiscal years, a copy of the annual audited consolidated
financial report of the Borrower for such year, prepared by a
firm of certified public accountants acceptable to Bank and
accompanied by an unqualified opinion of such firm.
(ii) Not later than 45 days after the end of each quarter, the
Borrower's financial statement as of the end of such period.
(iii) Concurrently with the delivery of the financial reports
required hereunder, a compliance certificate stating that the
Borrower is in compliance with all covenants contained herein
and that no Event of Default or potential Event of Default has
occurred or is continuing, and certified to by the chief
financial officer of the Borrower.
(iv) Not later than 30 days after the end of each quarter, a report
indicating the Average Subscriber Payroll listing Subscriber's
names and average payroll per
-11-
Subscriber.
(v) Not later than 30 days after the end of each fiscal quarter of
the Borrower, a PAP report executed by the Borrower and
detailing funds on deposit from its Subscribers.
(vi) Promptly upon the Bank's request, such other information
pertaining to the Borrower, the Collateral or any guarantor
hereunder as the Bank may reasonably request, including
evidence of Borrower's payment of payroll taxes.
6.2 Financial Condition: The Borrower promises and agrees, during the term of
this Agreement and until payment in full of all of the Borrower's
Obligations, the Borrower will maintain at all times:
(i) A minimum Effective Tangible Net Worth of at least $5,000,000.
(ii) A ratio of Current Assets to Current Liabilities of not less
than .90 to 1 through December 31, 2000 and 1.0 to 1
thereafter.
(iii) A ratio of Cash Flow to the current portion of long term Debt
plus interest expense of not less than 1.50 to 1, measured at
each fiscal year-end.
(iv) A ratio of Debt to EBITDA of not more than 1.5 to 1 at the end
of each fiscal quarter, with EBITDA based upon the immediately
preceding three fiscal quarters and the current quarter just
ended.
6.3 Preservation of Existence; Compliance with Applicable Laws: Maintain and
preserve its existence and all rights and privileges now enjoyed; and
conduct its business and operations in accordance with all applicable laws,
rules and regulations.
6.4 Maintenance of Insurance: Keep and maintain the Collateral insured for not
less than its full replacement value against all risks of loss and damage
and maintain insurance in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower operates
and maintain such other insurance and coverages as may be required by the
Bank. All such insurance shall be in form and amount and with companies
satisfactory to the Bank.
With respect to insurance covering properties in which the Bank maintains a
security interest or lien, such insurance shall name the Bank as loss payee
pursuant to a loss payable endorsement satisfactory to the Bank and shall
not be altered or canceled except upon 10 days' prior written notice to the
Bank. Upon the Bank's request, the Borrower shall furnish the Bank with the
original policy or binder of all such insurance.
6.5 Maintenance of Collateral and Other Properties: Except for Permitted Liens,
keep and maintain the Collateral free and clear of all levies, liens,
encumbrances and security interests (including, but not limited to, any
lien of attachment, judgment or execution) and defend the Collateral
against any such levy, lien, encumbrance or security interest; comply with
all laws, statutes and regulations pertaining to the Collateral and its use
and operation; execute, file and record such statements, notices and
agreements, take such actions and obtain such certificates and other
documents as necessary to perfect, evidence and continue the Bank's
security interest in the Collateral and the priority thereof; maintain
accurate and complete records of the Collateral which show all sales,
claims and allowances; and property care for, house, store and maintain the
Collateral in good condition, free of misuse, abuse and deterioration,
other than normal wear and tear. The Borrower shall also maintain and
preserve all its properties in good working order and condition in
accordance with the general practice of other businesses of similar
character and size, ordinary wear and tear excepted.
-12-
6.6 Payment of Obligations and Taxes: Make timely payment of all assessments
and taxes and all of its liabilities and obligations including, but not
limited to, trade payables, unless the same are being contested in good
faith by appropriate proceedings with the appropriate court or regulatory
agency. For purposes hereof, the Borrower's issuance of a check, draft or
similar instrument without delivery to the intended payee shall not
constitute payment. Borrower agrees to pay all payroll taxes as they become
due and upon the request of Bank, to provide Bank with evidence of such
payments.
6.7 Inspection Rights and Accounting Records: The Borrower will maintain
adequate books and records in accordance with generally accepted accounting
principles consistently applied and in a manner otherwise acceptable to
Bank, and, at any reasonable time and from time to time, permit the Bank or
any representative thereof to examine and make copies of the records and
visit the properties of the Borrower and discuss the business and
operations of the Borrower with any employee or representative thereof. If
the Borrower shall maintain any records (including, but not limited to,
computer generated records or computer programs for the generation of such
records) in the possession of a third party, the Borrower hereby agrees to
notify such third party to permit the Bank free access to such records at
all reasonable times and to provide the Bank with copies of any records
which it may request, all at the Borrower's expense, the amount of which
shall be payable immediately upon demand.
6.8 Redemption or Repurchase of Stock: Not redeem or repurchase any class of
the Borrower's stock now or hereafter outstanding.
6.9 Additional Indebtedness: Not, after the date hereof, create, incur or
assume, directly or indirectly, any additional Indebtedness other than (i)
Indebtedness owed or to be owed to the Bank or (ii) Indebtedness to trade
creditors incurred in the Ordinary Course of Business.
6.10 Liens and Encumbrances: Not create, assume or permit to exist any security
interest, encumbrance, mortgage, dead of trust, or other lien (including,
but not limited to, a lien of attachment, judgment or execution) affecting
any of the Borrower's properties, or execute or allow to be filed any
financing statement or continuation thereof affecting any of such
properties except for Permitted Liens or as otherwise provided in this
Agreement.
6.11 Transfer Assets: Not, after the date hereof, sell, contract for sale,
convey, transfer, assign, lease or sublet, any of its assets (including,
but not limited to, the Collateral) except in the Ordinary Course of
Business and, then, only for full, fair and reasonable consideration.
6.12 Change in Nature of Business: Not make any material change in its
financial structure or the nature of its business as existing or conducted
as of the date hereof.
6.13 Compensation of Employees: Compensate its employees for services rendered
at an hourly rate at least equal to the minimum hourly rate prescribed by
any applicable federal or state law or regulation.
6.14 Notice: Give the Bank prompt written notice of any and all (i) Events of
Default; (ii) litigation, arbitration or administrative proceedings to
which the Borrower is a party and in which the claim or liability exceeds
$50,000.00 or which affects the Collateral; (iii) other matters which have
resulted in, or might result in a material adverse change in the Collateral
or the financial condition or business operations of the Borrower, and (iv)
any enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against the Borrower or any of
its properties.
6.15 Environmental Compliance: The Borrower shall conduct its operations and
keep and maintain all of its property in compliance with all Environmental
Laws and, upon the written request of the Bank,the Borrower shall submit to
the Bank, at the Borrower's sole cost and expense, at reasonable
-13-
intervals, a report providing the status of any environmental, health or
safety compliance, hazard or liability.
6.16 Inventory:
(i) Except as provided herein below, the Borrower's inventory
shall, at all times, be in the Borrower's physical possession,
shall not be held by others on consignment, sale on approval,
or sale or return and shall be kept only at: 000 Xxxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxxxxx, XX 00000 and
______________________________________________________________.
(ii) The Borrower shall keep correct and accurate records.
(iii) All inventory shall be of good and merchantable quality, free
from defects.
(iv) The inventory shall not at any time or times hereafter be
stored with a bailee, warehouseman or similar party without the
Bank's prior written consent and, in such event, the Borrower
will concurrently therewith cause any such bailee, warehouseman
or similar party to issue and deliver to the Bank, in form
acceptable to the Bank, warehouse receipts in the Bank's name
evidencing the storage of inventory.
(v) At any reasonable time and from time to time, allow Bank to
have the right, upon demand, to inspect and examine inventory
and to check and test the same as to quality, quantity, value
and condition and the Borrower agrees to reimburse the Bank for
the Bank's reasonable costs and expenses in so doing.
6.17 Location and Maintenance of Equipment.:
(i) The Equipment shall at all times be in the Borrower's physical
possession, shall not be held for sale or lease, and shall be
kept only at the following location(s): 000 Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxxxxx, XX 00000 and
______________________________________________________________.
(ii) The Borrower shall not secrete, abandon or remove, or permit
the removal of, the Equipment, or any part thereof, from the
location(s) shown above or remove or permit to be removed any
accessories now or hereafter placed upon, the Equipment.
(iii) Upon the Bank's demand, the Borrower shall immediately provide
the Bank with a complete and accurate description of the
Equipment including, as applicable, the make, model,
identification number and serial number of each item of
Equipment. In addition, the Borrower shall immediately notify
the Bank of the acquisition of any new or additional Equipment
or the replacement of any existing Equipment and shall supply
the Bank with a complete description of any such additional or
replacement Equipment.
(iv) The Borrower shall, at the Borrower's sole cost and expense,
keep and maintain the Equipment in a good state of repair and
shall not destroy, misuse, abuse, illegally use or be negligent
in the care of the Equipment or any part thereof. The Borrower
shall not remove, destroy, obliterate, change, cover, paint,
deface or alter the name plates, serial numbers, labels or
other distinguishing numbers or identification marks placed
upon the Equipment or any part thereof by or on behalf of the
manufacturer, any dealer or rebuilder thereof, or the Bank. The
Borrower shall not be released from any liability to the Bank
hereunder because of any injury
-14-
to or loss or destruction of the Equipment. The Borrower shall
allow the Bank and its representatives free access to and the
right to inspect the Equipment at all times and shall comply
with the terms and conditions of any leases covering the real
property on which the Equipment is located and any orders,
ordinances, laws, regulations or rules of any federal, state or
municipal agency or authority having jurisdiction of such real
property or the conduct of the business of the persons having
control or possession of the Equipment.
(v) The Equipment is not now and shall not at any time hereafter be
so affixed to the real property on which it is located as to
become a fixture or a part thereof. The Equipment is now and
shall at all times hereafter be and remain personal property of
the Borrower.
6.18 Y2K Compliance. The Borrower shall perform all acts reasonably necessary
to ensure that the Borrower becomes Year 2000 Compliant in a timely manner.
Such acts shall include performing a review and assessment of all of
Borrower's systems and adopting a plan with a budget for the remediation
and testing of such systems. For the purposes hereof, "Year 2000 Compliant"
shall mean that all software, hardware, firmware, equipment, goods or
systems, utilized by and material to the business operations or financial
condition of the Borrower, will properly perform date sensitive functions
before, during and after the Year 2000. Borrower shall use its best efforts
to remain informed as to whether its major customers, suppliers and vendors
are Year 2000 Compliant. Borrower shall, upon the Bank's request, provide
Bank with such certifications or other evidence of Borrower's compliance
with the terms hereof as Bank may from time to time require.
SECTION
7
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an event
of default (an "Event of Default") under this Agreement:
7.1 Non-Payment: Any Borrower shall fail to pay the principal amount of any
Obligations when due or interest on the Obligations within 5 days of when
due.
7.2 Performance Under This Agreement: The Borrower shall fail in any material
respect to perform or observe any term, covenant or agreement contained in
this Agreement or in any document, instrument or agreement relating to this
Agreement or any other document or agreement executed by Borrower with or
in favor of Bank and any such failure shall continue unremedied for more
than 30 days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.
7.3 Representations and Warranties; Financial Statements: Any representation or
warranty made by the Borrower under or in connection with this Agreement or
any financial statement given by the Borrower or any guarantor shall prove
to have been incorrect in any material respect when made or given or when
deemed to have been made or given.
7.4 Other Agreements: If there is a default under any other agreement with Bank
or under an agreement to which Borrower is a party with Bank or with a
third party or parties resulting in a right by the Bank or by such third
party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness.
-15-
7.5 Insolvency: The Borrower or any guarantor shall: (i) become insolvent or be
unable to pay its debts as they mature; (ii) make an assignment for the
benefit of creditors or to an agent authorized to liquidate any substantial
amount of its properties and assets; (iii) file a voluntary petition in
bankruptcy or seeking reorganization or to effect a plan or other
arrangement with creditors; (iv) file an answer admitting the material
allegations of an involuntary petition relating to bankruptcy or
reorganization or join in any such petition; (v) become or be adjudicated a
bankrupt; (vi) apply for or consent to the appointment of, or consent that
an order be made, appointing any receiver, custodian or trustee, for itself
or any of its properties, assets or businesses; or (vii) in an involuntary
proceeding, any receiver, custodian or trustee shall have been appointed
for all or substantial part of the Borrower's or guarantor's properties,
assets or businesses and shall not be discharged within 30 days after the
date of such appointment.
7.6 Execution: Any writ of execution or attachment or any judgment lien shall
be issued against any property of the Borrower and shall not be discharged
or bonded against or released within 30 days after the issuance or
attachment of such writ or lien.
7.7 Suspension: The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any
permit, license or approval of any governmental body necessary to conduct
the Borrower's business as now conducted.
7.8 Material Adverse Change: If there occurs a material adverse change in the
Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations
or there is a material impairment of the value or priority of the Bank's
security interest in the Collateral.
7.9 Change in Ownership: There shall occur a sale, transfer, disposition or
encumbrance (whether voluntary or involuntary), or an agreement shall be
entered into to do so, with respect to more than 10% of the issued and
outstanding capital stock of the Borrower.
7.10 Impairment of Collateral. There shall occur any injury or damage to all or
any part of the Collateral or all or any part of the Collateral shall be
lost, stolen or destroyed.
SECTION
8
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:
8.1 Acceleration: Declare any or all of the Borrower's indebtedness owing to
the Bank, whether under this Agreement or any other document, instrument or
agreement, immediately due and payable, whether or not otherwise due and
payable.
8.2 Cease Extending Credit: Cease making Advances or otherwise extending credit
to or for the account of the Borrower under this Agreement or under any
other agreement now existing or hereafter entered into between the Borrower
and the Bank.
8.3 Termination: Terminate this Agreement as to any future obligation of the
Bank without affecting the Borrower's obligations to the Bank or the Bank's
rights and remedies under this Agreement or under any other document,
instrument or agreement.
8.4 Protection of Security Interest: Make such payments and do such acts as the
Bank, in its sole judgment, considers necessary and reasonable to protect
its security interest or lien in the
-16-
Collateral. The Borrower hereby irrevocably authorizes the Bank to pay,
purchase, contest or compromise any encumbrance, lien or claim which the
Bank, in its sole judgment, deems to be prior or superior to its security
interest. Further, the Borrower hereby agrees to pay to the Bank, upon
demand therefor, all expenses and expenditures (including attorneys' fees)
incurred in connection with the foregoing.
8.5 Foreclosure: Enforce any security interest or lien given or provided for
under this Agreement or under any security agreement, mortgage, deed of
trust or other document, in such manner and such order, as to all or any
part of the properties subject to such security interest or lien, as the
Bank, in its sole judgment, deems to be necessary or appropriate and the
Borrower hereby waives any and all rights, obligations or defenses now or
hereafter established by law relating to the foregoing. In the enforcement
of its security interest or lien, the Bank is authorized to enter upon the
premises where any Collateral is located and take possession of the
Collateral or any part thereof, together with the Borrower's records
pertaining thereto, or the Bank may require the Borrower to assemble the
Collateral and records pertaining thereto and make such Collateral and
records available to the Bank at a place designated by the Bank. The Bank
may sell the Collateral or any portions thereof, together with all
additions, accessions and accessories thereto, giving only such notices and
following only such procedures as are required by law, at either a public
or private sale, or both, with or without having the Collateral present at
the time of the sale, which sale shall be on such terms and conditions and
conducted in such manner as the Bank determines in its sole judgment to be
commercially reasonable. Any deficiency which exists after the disposition
or liquidation of the Collateral shall be a continuing liability of the
Borrower to the Bank and shall be immediately paid by the Borrower to the
Bank.
8.6 Non-Exclusivity of Remedies: Exercise one or more of the Bank's rights set
forth herein or seek such other rights or pursue such other remedies as may
be provided by law, in equity or in any other agreement now existing or
hereafter entered into between the Borrower and the Bank, or otherwise.
8.7 Application of Proceeds: All amounts received by the Bank as proceeds from
the disposition or liquidation of the Collateral shall be applied to the
Borrower's indebtedness to the Bank as follows: first, to the costs and
expenses of collection, enforcement, protection and preservation of the
Bank's lien in the Collateral, including court costs and reasonable
attorneys' fees, whether or not suit is commenced by the Bank; next, to
those costs and expenses incurred by the Bank in protecting, preserving,
enforcing, collecting, liquidating, selling or disposing of the Collateral;
next, to the payment of accrued and unpaid interest on all of the
Obligations; next, to the payment of the outstanding principal balance of
the Obligations; and last, to the payment of any other indebtedness owed by
the Borrower to the Bank.
SECTION
9
MISCELLANEOUS
9.1 Amounts Payable on Demand: If the Borrower shall fail to pay on demand any
amount so payable under this Agreement, the Bank may, at its option and
without any obligation to do so and without waiving any default occasioned
by the Borrower having so failed to pay such amount, create an Advance
under this Agreement in an amount equal to the amount so payable, which
Advance shall thereafter bear interest as provided hereunder.
9.2 Default Interest Rate: If an Event of Default, or an event which, with
notice or passage of time could become an Event of Default, has occurred or
is continuing, the Borrower shall pay to the Bank interest on any
Indebtedness or amount payable under this Agreement at a rate which is 3%
in excess of the rate or rates then in effect under this Agreement.
-17-
9.3 Reliance and Further Assurances: Each warranty, representation, covenant,
obligation and agreement contained in this Agreement shall be conclusively
presumed to have been relied upon by the Bank regardless of any
investigation made or information possessed by the Bank and shall be
cumulative and in addition to any other warranties, representations,
covenants and agreements which the Borrower now or hereafter shall give, or
cause to be given, to the Bank. Borrower agrees to execute all documents
and instruments and to perform such acts as the Bank may reasonably deem
necessary to confirm and secure to the Bank all rights and remedies
conferred upon the Bank by this agreement and all other documents related
thereto.
9.4 Attorneys' Fees: Borrower shall pay to the Bank all costs and expenses,
including but not limited to reasonable attorneys fees, incurred by Bank in
connection with the administration, enforcement, including any bankruptcy,
appeal or the enforcement of any judgment or any refinancing or
restructuring of this Agreement or any document, instrument or agreement
executed with respect to, evidencing or securing the indebtedness
hereunder.
9.5 Notices: All notices, payments, requests, information and demands which
either party hereto may desire, or may be required to give or make to the
other party hereto, shall be given or made to such party by hand delivery
or through deposit in the United States mail, postage prepaid, or by
facsimile delivery, or to such other address as may be specified from time
to time in writing by either party to the other.
To the Borrower: To the Bank:
TRINET EMPLOYER GROUP, INC. SANWA BANK CALIFORNIA
000 Xxxxxx Xxxxxx, 0xx Xxxxx Xxxxxxx Office (BBC)
Xxx Xxxxxxx, XX 00000 00000 Xxxxxxxxx Xxxxx
Attn: Xxxx Xxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxx
FAX: (000) 000-0000 Assistant Vice President
FAX: (000) 000-0000
9.6 Waiver: Neither the failure nor delay by the Bank in exercising any right
hereunder or under any document, instrument or agreement mentioned herein
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right hereunder or under any other document, instrument or agreement
mentioned herein preclude other or further exercise thereof or the exercise
of any other right; nor shall any waiver of any right or default hereunder,
or under any other document, instrument or agreement mentioned herein,
constitute a waiver of any other right or default or constitute a waiver of
any other default of the same or any other term or provision.
9.7 Conflicting Provisions: To the extent the provisions contained in this
Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and provisions
contained herein shall control. Otherwise, such provisions shall be
considered cumulative.
9.8 Binding Effect; Assignment: This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written
consent of the Bank. The Bank may sell, assign or grant participation in
all or any portion of its rights and benefits hereunder. The Borrower
agrees that, in connection with any such sale, grant or assignment, the
Bank may deliver to the prospective buyer, participant or assignee
financial statements and other relevant information relating to the
Borrower and any guarantor.
9.9 Jurisdiction: This Agreement, any notes issued hereunder, the rights of the
parties hereunder to and concerning the Collateral, and any documents,
instruments or agreements mentioned or referred to herein shall be governed
by and construed according to the laws of the State of
-18-
California without regard to conflict of law principles, to the
jurisdiction of whose courts the parties hereby submit.
9.10 Waiver of Jury Trial: THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT. THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
9.11 Counterparts: This Agreement may be executed in any number of counterparts
and all such counterparts taken together shall be deemed to constitute one
and the same instrument.
9.12 Headings: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
9.13 Entire Agreement and Amendments: This Agreement and all documents,
instruments and agreements mentioned herein constitute the entire and
complete understanding of the parties with respect to the transactions
contemplated hereunder. All previous conversations, memoranda and writings
between the parties pertaining to the transactions contemplated hereunder
not incorporated or referenced in this Agreement or in such documents,
instruments and agreements are superseded hereby. This Agreement may be
amended only by an instrument in writing signed by the Borrower and the
Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA TRINET EMPLOYER GROUP, INC.
BY: /s/ XXXXXXXXX XXXXX BY: /s/ XXXXXX XXXXXXX
----------------------------- --------------------------
Name: Xxxxxxxxx Xxxxx, Assistant Name: Xxxxxx Xxxxxxx, President
Vice President
BY: /s/ XXXXXXX XXXXXX
---------------------------
Name: Xxxxxxx Xxxxxx, Chief
Financial Officer
-19-
Exhibit 2.1.1
Schedule of Purposes and Maximum Loan Amounts and Costs
-----------------------------------------------------------------------------
PROJECT NAME BUDGETED PROJECT COSTS
-----------------------------------------------------------------------------
Pay to Xxxx $ 216,000
-----------------------------------------------------------------------------
Canadian PTB $ 247,200
-----------------------------------------------------------------------------
Reno Facility $ 600,000
-----------------------------------------------------------------------------
Web Deployment $1,453,800
-----------------------------------------------------------------------------
Back Office Systems $ 981,000
-----------------------------------------------------------------------------
Additional Web Self-Service $ 531,400
-----------------------------------------------------------------------------
Additional Infrastructure $ 511,000
-----------------------------------------------------------------------------
Supporting Capital Expenditures $1,338,646
-----------------------------------------------------------------------------
Total $5,879,046
-----------------------------------------------------------------------------
Notwithstanding anything contrary contained in the credit agreement dated
September 21, 1999 Sanwa Bank is obligated to advance funds in an amount not to
exceed 80% of individual budgeted project costs, as designated in the table
above. The Bank, in its sole discretion, may advance funds in an amount not to
exceed 100% of individual budgeted project costs. Under no circumstances shall
the Bank's aggregate funding exceed $4,000,000.00.
-20-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, TRINET EMPLOYER GROUP, INC. (the "Corporation") has made
application to SANWA BANK CALIFORNIA (the "Bank") for credit accommodations
which may consist of but shall in no way be limited to the following: the
renewal, continuation or extension of an existing obligation; the extension of a
new loan, line of credit or commitment; the issuance of letters of credit or
banker's acceptances; or the purchase or sale through Bank of foreign
currencies.
RESOLVED, that: any two, acting together, of the following officers: XXXXXX
XXXXXXX, as the PRESIDENT of the Corporation, or XXXXXXX XXXXXX, as the CHIEF
FINANCIAL OFFICER of the Corporation, are authorized, in the name of and on
behalf of the Corporation to:
(a) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and
the Bank; and execute and deliver or endorse such evidences of
indebtedness or renewals thereof or agreements therefor as may be
required by the Bank, all in such form and content as the officers of
the Corporation executing such documents shall approve (which approval
shall be evidenced by the execution and delivery of such documents);
provided, however, that the maximum amount of such indebtedness shall
not exceed the principal sum of $30,000,000.00 exclusive of any
interest, fees, attorneys' fees and other costs and expenses related
to the indebtedness.
(b) Execute such evidences of indebtedness, agreements, security
instruments and other documents and to take such other actions as are
herein authorized.
(c) Sell to or discount or re-discount with the Bank any and all
negotiable instruments, contracts or instruments or evidences of
indebtedness at any time held by the Corporation; and endorse,
transfer and deliver the same, together with guaranties of payment or
repurchase thereof, to the Bank (for which the Bank is hereby
authorized and directed to pay the proceeds of such sale, discount or
re-discount as directed by such endorsement without inquiring into the
circumstances of its issue or endorsement or the disposition of such
proceeds).
(d) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(e) Grant security interests and liens in any real, personal or other
property belonging to or under the control of the Corporation as
security for any indebtedness of the Corporation to the Bank; and
execute and deliver to the Bank any and all security agreements,
pledges, mortgages, deeds of trust and other security instruments and
any other documents to effectuate the grant of such security interests
and liens, which security instruments and other documents shall be in
such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which
approval shall be evidenced by the execution and delivery of such
security instruments and other documents.
(f) Apply for letters of credit or seek the issuance of banker's
acceptances under which the Corporation shall be liable to the Bank
for repayment.
(g) Purchase and sell foreign currencies, on behalf of the Corporation,
whether for immediate or future delivery, in such amounts and upon
such terms and conditions as the officer(s) authorized herein may deem
appropriate, and give any instructions for transfers or deposits of
monies by check, drafts, cable, letter or otherwise for any purpose
incidental to the foregoing, and authorize or direct charges to the
depository account or accounts of the
-1-
Corporation for the cost of any foreign currencies so purchased
through the Bank.
(h) To designate in writing to the Bank in accordance with the terms of
any agreement or other document executed by the above-named
individuals one or more individuals who shall have the authority to as
provided herein, to:
(1) request advances under lines of credit extended by the Bank to
the Corporation;
(2) apply for letters of credit or seek the issuance of bankers
acceptances under which the Corporation shall be liable to the
Bank for repayment,
(3) make deposits and receive and execute receipts for deposits on
accounts of the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals
on account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(i) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ____________________, the Secretary of TRINET
EMPLOYER GROUP, INC., a California corporation, and I do hereby further certify
that the foregoing is a true copy of the resolutions of the Board of Directors
of the Corporation adopted and approved by unanimous written consent.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
NAME OF OFFICER: XXXXXX XXXXXXX /s/ XXXXXX XXXXXXX
------------------------------------
(SIGNATURE)
TITLE: PRESIDENT
NAME OF OFFICER: XXXXXXX XXXXXX /s/ XXXXXXX XXXXXX
------------------------------------
(SIGNATURE)
TITLE: CHIEF FINANCIAL OFFICER
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IN WITNESS WHEREOF, this document is executed as of the 21 day of September,
NAME OF CORPORATION: TRINET EMPLOYER GROUP, INC.
BY: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx, Secretary
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[SANWA BANK LOGO]
TRINET: Construction-Draw Sheet
Owner/Project: Employer Group Inc. Draw #: Date:
------------------------------------------------------------------------------------------------------------------------------------
C D E F G H I
------------------------------------------------------------------------------------------------------------------------------------
Description Original Previous Previously This Borrower's Net Request Total Line
Budget Request Disbursed Request Equity This Draw Draw to Date
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Project Name: D10*.80 F10*.20 F10-G10 E10+H10
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Pay to Xxxx $216,000 $100,000 $ 80,000 $100,000 $20,000 $ 80,000 $ 160,000
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Canadian PTB $200,000 $190,000 $152,000 $ 30,000 $ 6,000 $ 24,000 $ 176,000
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Reno Facility $100,000 $ 80,000 $ 64,000 $ 50,000 $10,000 $ 40,000 $ 104,000
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Web Deployment $150,000 $ 0 $ 0 $187,500 $37,500 $150,000 $ 150,000
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Back Office Systems $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Additional Web Self-Service $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Additional Infrastructure $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
Supporting Capex $ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
$ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL COSTS $666,000 $370,000 $370,000 $367,500 $73,500 $294,000 $ 664,000
------------------------------------------------------------------------------------------------------------------------------------
TRINET: Construction-Draw Sheet
Owner/Project: Employer Group Inc. Draw #: Date:
------------------------------------------------------------------------------------------------------------------------------------
J K L
------------------------------------------------------------------------------------------------------------------------------------
Description Budget % Maximum
To Date Drawn Funding
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Project Name: D10+F10 110/J10 IF/(I10=C10*.8,"Y","N")
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Pay to Xxxx $200,000 80.00% N
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Canadian PTB $220,000 80.00% Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Reno Facility $130,000 80.00% Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Web Deployment $187,500 80.00% Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Back Office Systems $0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Additional Web Self-Service $0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Additional Infrastructure $0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
Supporting Capex $0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
$0 #DIV/0! Y
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL COSTS $737,500 Y
------------------------------------------------------------------------------------------------------------------------------------
TOTAL LINE AVAILABILITY $3,336,000
------------------------------------------------------------------------------------------------------------------------------------
***SBCL funds advanced in an amount equal to 80% of individual actual project
costs (assumes no project variance).
***Aggregate funding not to exceed $4,000,000.
***Prior to draw request-borrower to provide bank with:
1. Individual project receipts/invoices.
2. General breakdown of draw requests for hard costs and soft/labor costs.
3. Signed copy of construction-draw sheet.
---------------------------
Trinet Employer Group, Inc.
[LOGO OF SANWA BANK CALIFORNIA]
AUTHORIZATION TO CHARGE ACCOUNT
Hayward BBC #2278 Office September______, 1999
------------------
You are hereby authorized and instructed to charge $INVOICE AMOUNT to
my/our (Checking/XXXXXX No. 0560-53600) account, (MONTHLY/XXXXXXXXXXXXX),
beginning October 31, 1999, and credit a like amount to the following indicated
account in the name of TriNet Employer Group, Inc. Checking Account____________
Savings Account No._____________ [_] [_] Loan No. 05224199670 ______________ [_]
-----------
at SLOC Office [X] In the event there are not sufficient funds in my/our account
----
on the day of the charge, you may at any time thereafter deduct in addition to
the amount indicated above, a late charge in accordance with the terms of the
above referenced loan.
This authority is to remain in full force and effect until revoked by me in
writing, or, in case of credit on loan account, until the loan is paid in full.
Present contract calls for final payment on September_______ , 1999
CHARGE MUST ORIGINATE TRINET EMPLOYER GROUP, INC.
AT DEPOSITORY OFFICE _________________________________________
MIS-40 (03/90) Xxxxxx Xxxxxxx, President
/s/ XXXXXXX XXXXXX
-----------------------------------------
Xxxxxxx Xxxxxx, Chief Financial Officer
TO: Xxxxxxxx Xxxxxx, Group Credit DATE: September 10, 1999
FROM: Xxxxxxxxx Xxxxx, Xxxxxxx BBC
RE: The Commercial Credit Agreement dated September 1999, executed by Trinet
Employer Group, Inc. ("Borrower") and Sanwa Bank California ("Bank").
Section 6 Covenants- 6.8 Redemption or Repurchase of Stock: prohibits the
----------------------------------
redemption or repurchase of any class of the Borrower's stock now or hereafter
outstanding.
Xxxxxx Xxxxxxx and Xxxx Xxxxxx are requesting permission to repurchase
"diminimus stock" from external company shareholders. Pursuant to Section 6.8
of the Commercial Credit Agreement, the BBC is recommending that the Borrower be
permitted to repurchase company stock in an amount not to exceed $50,000 per
annum.
Recommended Approved
/s/XXXXXXXXX XXXXX /s/XXXXXXXX XXXXXX 9/10/99
------------------ ---------------------------------
Xxxxxxxxx Xxxxx, AVP Xxxxxxxx Xxxxxx, XX
Xxxxxxx BBC Group Credit, Northern Region
[LOGO OF SANWA BANK CALIFORNIA]
LOAN DISBURSEMENT INSTRUCTIONS
Line of Credit
Date:_____________________________,________________
The undersigned hereby instructs Sanwa Bank California to disburse the proceeds
of this loan as shown below:
DISBURSEMENT AMOUNT
Credited to the following account: Any and all Advances will $_______
be deposited into checking account #0560-53600 upon the
request of the Borrower.
========
TOTAL: $_______
-1-
BORROWER:
TRINET EMPLOYER GROUP, INC.
BY: /s/ XXXXXX XXXXXXX
--------------------------------
NAME: Xxxxxx Xxxxxxx, President
BY: /s/ XXXXXXX XXXXXX, CFO
--------------------------------
NAME: Xxxxxxx Xxxxxx, Chief
Financial Officer
-2-
