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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 7, 1997
ALTERNATIVE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware Commission file number 0-23940 38-2791069
- -------- ------------------------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Tri-State International, Suite 300, Lincolnshire, IL 60069
(Address of principal executive offices) (Zip code)
(847) 317-1000
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On November 7, 1997, Alternative Resources Corporation (ARC) purchased all of
the outstanding stock of CGI Corporation (the "Company") from Compagnie Generale
d'Informatique, a wholly-owned subsidiary of IBM Corporation. The purchase
included the Company's 88.62% interest in CGI Systems, Inc. (the "Subsidiary"),
a subsidiary of the Company, as well as a buyout of the 11.38% minority
interests in the Subsidiary.
CGI Corporation functions as a holding company for CGI Systems, Inc. CGI
Systems, Inc. provides a range of information technology (IT) services including
IT supplemental staffing; network solutions including network implementation and
Lotus Notes practices; applications development practices; and application
consulting practices for SAP, data warehousing and other applications.
Headquartered in suburban Philadelphia, PA, CGI Systems operates from seven
locations within the U.S. The acquisition is a strategic expansion of ARC's
service offerings in the IT staffing and managed services area, which will allow
for a broader base of solutions to an increasingly sophisticated information
technology marketplace.
The initial purchase price was $60 million with a potential additional payout
of up to $20 million over the next three years if certain targets are
achieved. The purchase price was financed with cash from short-term
investments and borrowings under a $75 million revolving credit facility with
American National Bank.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of businesses acquired.
(b) Pro forma financial information
It is impractical to provide the required financial statements and pro
forma financial information as of this date. The required financial
statements and pro forma financial information will be filed as a Form 8-K/A
with the Commission as soon as practicable, but not later than January
21, 1998, as required.
(c) Exhibits
(2) Stock Purchase and Sale Agreement Dated as of October 6, 1997
Among Alternative Resources Corporation, Compagnie Generale
d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan and
International Business Machines Corporation.
(2a) Amendment Number One Dated as of November 7, 1997 to Stock
Purchase and Sale Agreement Dated as of October 6, 1997 Among
Alternative Resources Corporation, Compagnie Generale
d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan and
International Business Machines Corporation.
(2b) I/T Staffing Revenues Escrow Agreement By and Among Compagnie
Generale d'Informatique, Joseph R. Ferrandino, Thomas K.
Sheridan, Alternative Resources Corporation and Harris Trust and
Savings Bank Dated November 7, 1997.
(2c) Credit agreement Dated November 7, 1997
Schedules to the above such agreements have been omitted but will
be furnished to the Commission upon request. Page 2 SIGNATURES
Page 2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ALTERNATIVE RESOURCES CORPORATION
Date: November 22, 1997 /s/ Bradley K. Lamers
--------------------------
Bradley K. Lamers
Vice President, Chief Financial Officer,
Secretary and Treasurer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
- ------- ----------- --------
NUMBER
- ------
Stock Purchase and Sale Agreement Dated as of
October 6, 1997 Among Alternative Resources Corporation,
Compagnie Generale d'Informatique, Joseph R. Ferrandino,
Thomas K. Sheridan and International Business Machines
Corporation.
2a Amendment Number One Dated as of November 7, 1997
to Stock Purchase and Sale Agreement Dated as of
October 6, 1997 Among Alternative Resources Corporation,
Compagnie Generale d'Informatique, Joseph R.
Ferrandino, Thomas K. Sheridan and International
Business Machines Corporation.
2b I/T Staffing Revenues Escrow Agreement By and Among
Compagnie Generale d'Informatique, Joseph R.
Ferrandino, Thomas K. Sheridan, Alternative Resources
Corporation and Harris Trust and Savings Bank Dated
November 7, 1997.
2c Credit Agreement Dated November 7, 1997.
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- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCK PURCHASE AND SALE AGREEMENT
Dated as of October 6, 1997
among
Alternative Resources Corporation,
Compagnie Generale d'Informatique,
Joseph R. Ferrandino,
Thomas K. Sheridan,
and
International Business Machines Corporation
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- -------------------------------------------------------------------------------
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TABLE OF CONTENTS
ARTICLE I ............................................................ PAGE 2
DEFINITIONS .......................................................... PAGE 2
SECTION 1.01. CERTAIN DEFINITIONS.................................... PAGE 2
SECTION 1.02. ADDITIONAL DEFINITIONS................................. PAGE 6
SECTION 1.03. TERMS GENERALLY........................................ PAGE 7
ARTICLE II ........................................................... PAGE 7
PURCHASE AND SALE; CLOSING ........................................... PAGE 7
SECTION 2.01. PURCHASE AND SALE OF THE SHARES........................ PAGE 7
SECTION 2.02. PAYMENT OF THE PURCHASE PRICE.......................... PAGE 8
SECTION 2.03. CLOSING................................................ PAGE 8
SECTION 2.04. CLOSING DELIVERIES..................................... PAGE 8
SECTION 2.05. Purchase Price Adjustment ............................. PAGE 9
ARTICLE III .......................................................... PAGE 10
REPRESENTATIONS, AND WARRANTIES AND COVENANTS ........................ PAGE 10
OFCONCERNING THE SELLING SHAREHOLDERS ................................ PAGE 10
SECTION 3.01. TITLE TO THE SHARES.................................... PAGE 10
SECTION 3.02. AUTHORITY OF SHAREHOLDER............................... PAGE 10
SECTION 3.03. NO BANKRUPTCY, ETC..................................... PAGE 11
SECTION 3.04. SHAREHOLDER AGREEMENTS................................. PAGE 11
SECTION 3.05. Independent Review .................................... PAGE 11
SECTION 3.06. Representations Concerning CGI Corp.................... PAGE 11
ARTICLE IV ........................................................... PAGE 13
REPRESENTATIONS, AND WARRANTIES AND COVENANTS ....................... PAGE 13
OF CONCERNING THE COMPANY ............................................ PAGE 13
SECTION 4.01. ORGANIZATION AND STANDING OF THE COMPANY............... PAGE 13
SECTION 4.02. GOOD STANDING ......................................... PAGE 14
SECTION 4.03. AUTHORITY.............................................. PAGE 14
SECTION 4.04. CAPITAL STOCK OF THE COMPANY .......................... PAGE 14
SECTION 4.05. EQUITY INTERESTS ...................................... PAGE 15
SECTION 4.06. FINANCIAL STATEMENTS ................................. PAGE 15
SECTION 4.07. TAXES.................................................. PAGE 15
SECTION 4.08. ASSETS OTHER THAN REAL PROPERTY........................ PAGE 16
SECTION 4.09. REAL PROPERTY.......................................... PAGE 16
SECTION 4.10. CONTRACTS ............................................. PAGE 16
SECTION 4.11. LITIGATION; DECREES.................................... PAGE 17
SECTION 4.12. OPERATION OF THE BUSINESS; ABSENCE OF CHANGES
OR EVENTS.............................................. PAGE 17
SECTION 4.13. COMPLIANCE WITH APPLICABLE LAWS........................ PAGE 18
SECTION 4.14. CERTAIN EMPLOYEE MATTERS............................... PAGE 18
SECTION 4.15. INSURANCE ............................................. PAGE 19
SECTION 4.16. BENEFIT PLANS.......................................... PAGE 19
SECTION 4.17. NTS LICENSES........................................... PAGE 20
SECTION 4.18. DISCLOSURE............................................. PAGE 20
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SECTION 4.19. BROKERS................................................ PAGE 20
SECTION 4.20. Consulting Practice Methodologies...................... PAGE 20
ARTICLE V ............................................................ PAGE 21
REPRESENTATIONS AND WARRANTIES OF BUYER .............................. PAGE 21
SECTION 5.01. ORGANIZATION........................................... PAGE 21
SECTION 5.02. AUTHORITY.............................................. PAGE 21
SECTION 5.03. GOOD STANDING.......................................... PAGE 21
SECTION 5.04. GOVERNMENTAL CONSENTS - BUYER ......................... PAGE 21
SECTION 5.05. BROKER ................................................ PAGE 21
SECTION 5.06. SUFFICIENT FUNDS....................................... PAGE 21
SECTION 5.07. PURCHASE FOR INVESTMENT................................ PAGE 22
SECTION 5.08. ACCESS TO INFORMATION.................................. PAGE 22
ARTICLE VI ........................................................... PAGE 22
CERTAIN COVENANTS .................................................... PAGE 22
SECTION 6.01. CONDUCT OF BUSINESS OF COMPANY........................ PAGE 22
SECTION 6.02. ACCESS TO INFORMATION................................. PAGE 23
SECTION 6.03. REQUISITE CONSENTS.................................... PAGE 23
SECTION 6.04. REASONABLE EFFORTS.................................... PAGE 24
SECTION 6.05. RESTRICTIVE COVENANTS................................. PAGE 24
SECTION 6.06. Certain Costs ........................................ PAGE 24
SECTION 6.07. Revised NTS Agreement ................................ PAGE 24
ARTICLE VII .......................................................... PAGE 25
CONDITIONS TO BUYER .................................................. PAGE 25
SECTION 7.01. REPRESENTATIONS AND WARRANTIES......................... PAGE 25
SECTION 7.02. CONSENTS, ETC.; BURDENSOME CONDITIONS.................. PAGE 25
SECTION 7.03. GOVERNMENTAL RULES..................................... PAGE 25
SECTION 7.04. INJUNCTIONS, ETC....................................... PAGE 25
SECTION 7.05. RESIGNATION OF DIRECTORS............................... PAGE 26
SECTION 7.06. CLOSING DOCUMENTS...................................... PAGE 26
ARTICLE VIII ......................................................... PAGE 27
CONDITIONS TO THE SELLING ............................................ PAGE 27
SHAREHOLDERS ......................................................... PAGE 27
SECTION 8.01. REPRESENTATIONS AND WARRANTIES......................... PAGE 27
SECTION 8.02. CONSENTS, ETC.; BURDENSOME CONDITIONS.................. PAGE 27
SECTION 8.03. GOVERNMENTAL RULES..................................... PAGE 27
SECTION 8.04. INJUNCTIONS, ETC....................................... PAGE 28
SECTION 8.05. CLOSING DOCUMENTS...................................... PAGE 28
ARTICLE IX ........................................................... PAGE 28
INDEMNIFICATION ...................................................... PAGE 28
SECTION 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES............. PAGE 29
SECTION 9.02. INDEMNIFICATION........................................ PAGE 29
SECTION 9.03. THIRD-PARTY CLAIMS..................................... PAGE 31
SECTION 9.04. LIMITATIONS ON INDEMNITIES FROM SELLING SHAREHOLDERS... PAGE 32
SECTION 9.05. Appointment of IBM as Representative................... PAGE 32
SECTION 9.06. EXCLUSION OF CERTAIN DAMAGES........................... PAGE 33
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ARTICLE X ............................................................ PAGE 33
GUARANTEE ............................................................ PAGE 33
SECTION 10.01. GUARANTEE BY GUARANTOR................................ PAGE 33
ARTICLE XI ........................................................... PAGE 33
MISCELLANEOUS ........................................................ PAGE 33
SECTION 11.01. ENTIRE AGREEMENT...................................... PAGE 33
SECTION 11.02. PRESS RELEASES, PUBLIC ANNOUNCEMENTS AND PUBLICITY.... PAGE 34
SECTION 11.03. HSR FILING ........................................... PAGE 34
SECTION 11.04. CONFIDENTIAL INFORMATION.............................. PAGE 34
SECTION 11.05. TERMINATION OF AGREEMENT ............................. PAGE 34
SECTION 11.06. COUNTERPARTS.......................................... PAGE 35
SECTION 11.07. DESCRIPTIVE HEADINGS ................................. PAGE 35
SECTION 11.08. NOTICES............................................... PAGE 35
SECTION 11.09. CHOICE OF LAW......................................... PAGE 37
SECTION 11.10. ASSIGNMENT............................................ PAGE 37
SECTION 11.11. NO THIRD-PARTY BENEFICIARIES.......................... PAGE 38
SECTION 11.12. WAIVER AND AMENDMENT.................................. PAGE 38
SECTION 11.13. EXPENSES.............................................. PAGE 38
SECTION 11.14. WAIVER OF JURY TRIAL.................................. PAGE 38
SECTION 11.15. SEVERABILITY; COMPLIANCE WITH LAWS.................... PAGE 38
SECTION 11.16. JURISDICTION; CONSENT TO SERVICE OF PROCESS; REMEDIES. PAGE 39
SECTION 11.17. CONSTRUCTION; REPRESENTATION.......................... PAGE 40
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THIS STOCK PURCHASE AND SALE AGREEMENT (THIS
"AGREEMENT") DATED AS OF OCTOBER 6, 1997, IS MADE AND ENTERED
INTO AMONG Compagnie Generale Informatique, a French company
("CGI"), Joseph R. Ferrandino ("Ferrandino") and
Thomas K. Sheridan ("Sheridan") (CGI, Ferrandino and Sheridan
being referred to collectively herein as the "Selling
Shareholders"), International Business Machines Corporation, a
New York corporation ("IBM" or "Guarantor") and Alternative
Resources Corporation, a Delaware corporation ("BUYER").
WHEREAS, the Selling Shareholders desire to sell, and BUYER desires
to purchase, that number of shares of Common Stock presently owned by the
Selling Shareholders reflected on Exhibit A opposite the name of each Selling
Shareholder, representing all issued and outstanding shares of CGI Systems,
Inc. a Delaware corporation ("the Company") (collectively referred to as the
"SHARES") upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, BUYER desires to purchase from Selling Shareholders the
Shares of the Company upon the terms and conditions set forth in this
Agreement;
WHEREAS, Guarantor, as the indirect owner of CGI, desires to induce
BUYER to enter into the Agreement by guaranteeing performance of each and
every obligation of CGI set forth in this Agreement pursuant to the terms of
this Agreement;
WHEREAS, BUYER would not enter into this Agreement and consummate
the transactions contemplated hereby without the guaranty by Guarantor and
Guarantor's agreement to provide the guarantee contemplated hereby;
Accordingly, in consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements set forth
herein, each party agreeing to be legally bound hereby, the Company, the
Selling Shareholders and BUYER agree as follows:
ARTICLE I
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Page 2
DEFINITIONS
SECTION 1.01. Certain Definitions. As used in this Agreement, the
following terms shall have the meanings specified below:
"AFFILIATE" shall mean, as to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified. The term
"AFFILIATE", when used with regard to a Selling Shareholder or any other
natural person, shall also include members of such person's immediate family.
"BENEFIT PLANS" shall mean all "employee pension benefit plans" (as
defined in Section 3(2) of ERISA), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA), bonus, deferred compensation plans or
arrangements, and other employee fringe benefit plans (all the foregoing
being maintained, or contributed to, by the Company or by CGI Corporation, or
by any predecessor corporation of either the Company or CGI Corporation, for
the benefit of any officers or employees of the Company or CGI Corporation,
respectively), vacation policies, severance policies and any other
arrangements for the benefit of employees (or Persons who may be deemed to be
employees pursuant to any Governmental Rule).
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted in accordance with the Articles of Incorporation.
"BURDENSOME CONDITION" shall mean any action taken, or credibly
threatened, by or before any Governmental Authority or other Person to
challenge the legality of the transactions contemplated by this Agreement or
that would otherwise deprive a party of a material benefit of any such
transaction, including (i) the pendency of a governmental investigation
(formal or informal), (ii) the institution of any litigation, or the threat
thereof, (iii) an order by a Governmental Authority of competent jurisdiction
preventing consummation of the transactions contemplated by this Agreement or
placing any material conditions or limitations upon such consummation or (iv)
the issuance of any subpoena, civil investigative demand or other request for
documents or information relating to such transaction that is unreasonably
burdensome in the reasonable judgment of the applicable Person.
"BUSINESS DAY" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks
are open for business in New York, New York.
"CGI CORP." shall mean CGI Corporation, a Delaware corporation.
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Page 3
"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time (and any successor statute), and the rules and regulations
thereunder.
"COMMON STOCK" shall mean the shares of Common Stock, no par value,
of the Company.
"CONFIDENTIALITY AGREEMENT" shall mean the Agreement for the
Exchange of Confidential Information and Supplement, as amended, entered into
between the Company, and BUYER dated as of August 11, 1997.
"DISCONTINUED BUSINESSES" shall mean the businesses of the Company
associated with HR Access, PacBase, the NYPD Contract and Education and
Training, each as more specifically described in, and to be transferred to
IBM prior to Closing pursuant to, agreements substantially in the form of
those attached as Exhibits B, C, D, and E respectively
"CONTRACT" of any Person shall mean any written agreement, lease,
license, commitment or obligation to which such Person is a party or by which
any property of such Person is bound.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974.
"ESCROW AGENT" shall mean the Harris Trust and Savings Bank, 115
West Monroe Street,. Chicago, Illinois 60690.
"ESCROW AGREEMENT" shall mean the Escrow Agreement to be dated as
of the Closing Date among Ferrandino, Sheridan and Buyer and the Escrow
Agent, in the form annexed hereto as Exhibit F.
"GOVERNMENTAL ACTIONS" shall mean any authorizations, consents,
approvals, waivers, exceptions, variances, franchises, permissions, permits,
and licenses of, and filings and declarations with, Governmental Authorities.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court, governmental or administrative agency or commission or other
governmental agency, authority, instrumentality or regulatory body.
"GOVERNMENTAL RULE" shall mean any statute, law, treaty, rule,
code, ordinance, regulation or order of any Governmental Authority or any
judgment, decree, injunction, writ, order or like action of any Federal,
state, local or foreign court, arbitrator or other judicial tribunal of
competent jurisdiction.
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Page 4
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Act of 1976,
as amended.
"INDEBTEDNESS" of any Person shall mean, without
duplication, (a) all obligations of such Person for borrowed money
or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements
relating to property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred
purchase price of property or services, and (f) all obligations of
such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required
to be classified and accounted for as capital leases on a balance
sheet of such Person under generally accepted accounting
principles. The Indebtedness of any Person shall include the
Indebtedness of any entity which is a Subsidiary of such Person.
"LIEN" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge, restriction or security
interest in or on such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement
relating to such asset and (c) in the case of securities, any purchase
option, call or similar right of a third party with respect to such
securities, other than in the case of (a), (b) or (c), Permitted Liens.
Any reference to any event, condition, matter, change or effect
being "MATERIAL" with respect to the Company means an event, condition,
matter, change or effect which impacts or, insofar as reasonably can be
foreseen, in the future is likely to impact the condition (financial or
otherwise), properties, assets, liabilities, capitalization, licenses or
franchises, businesses, or operations of the Company, of a magnitude ( with
respect to any such event, condition, matter, change or effect or any related
set or series of similar such events, conditions, matters, changes or
effects) of at least two hundred fifty thousand dollars ($250,000.00) in
the aggregate.
"LITIGATION" shall mean any suit, action or proceeding.
"NET BOOK VALUE" shall be the value of the total assets of the
Company less the total liabilities of the Company as determined using US GAAP
accounting rules.
"PERMITTED LIENS" shall mean:
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Page 5
(i) mechanics', carriers', workmen's, repairmen's or other like Liens
arising from or incurred in the ordinary course of business and securing
obligations which are not due or which are being contested in good faith
by the Company (provided that the Company has set up adequate reserves
therefor);
(ii) Liens for Taxes which are not due and payable or which may
thereafter be paid without penalty or which are being contested in good faith
by the Company (provided that the Company has set up adequate reserves for
the payment of Taxes;
(iii) imperfections of title or encumbrances, if any, which
imperfections of title or encumbrances do not materially impair the value of
such assets or the use of the assets to which they relate in the business of
the Company as presently conducted;
(iv) easements, covenants, rights-of-way and other encumbrances or
restrictions of record;
(v) zoning, building and other similar restrictions which are not
violated in any material respect by any improvements of the Company or by the
use thereof for the conduct of the Company's business;
(vi) unrecorded easements, covenants, rights-of-way or other
encumbrances or restrictions, and other Liens which are not material in
character or amount, none of which unrecorded items or other Liens materially
impairs the use of the property to which they relate in the business of the
Company as presently conducted; and
(vii) the Lien upon Sheridan's Shares in favor of the Company to
secure a loan made by the Company to Sheridan in the principal amount of
approximately forty thousand dollars ($40,000.00).
"PERSON" shall mean any individual, firm, corporation,
partnership, trust, joint venture, Governmental Authority or other
entity, and shall include any successor (by merger or otherwise) of
such entity.
"POST-CLOSING TAX PERIOD" shall mean any Taxable period (or portion
thereof) that is not a Pre-Closing Tax Period.
"PRE-CLOSING TAX PERIOD" shall mean any Taxable periods ending on
or before the Closing Date and the portion ending on the Closing Date of any
Taxable period that begins before (but does not end on) the Closing Date.
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Page 6
"PRO RATA PORTION" with respect to each Selling Shareholder shall
mean the percent of the total number of Shares represented by the Shares to
be sold by such Selling Shareholder.
"SUBSIDIARY" of any Person shall mean a corporation, company or
other entity (i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (ii) which does not have outstanding shares or
securities (as may be the case in a partnership, joint venture or
unincorporated association), but more than 50% of whose ownership interest
representing the right to make decisions for such other entity is, now or
hereafter owned or controlled, directly or indirectly, by such Person,
provided that such corporation, company or other entity shall be deemed to be
a Subsidiary only so long as such ownership or control exists.
"TAX" or "TAXES" (including, with correlative meaning, "TAXABLE")
shall mean all Federal, state, local and foreign taxes, assessments, levies,
impositions, withholdings and other governmental charges (including taxes
based upon or measured by gross receipts, income, profits, sales, use or
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, social security, employment, excise and property taxes), together
with all interest, penalties and additions imposed with respect to such
amounts and any obligations under any agreements or arrangements with any
other Person with respect to such amounts.
"TAX RETURNS" shall mean all Tax returns, reports and forms
(including withholding tax returns) for a Taxable period required to be filed
by applicable Federal, state, local or foreign Tax laws or Governmental
Authority.
"TO THE KNOWLEDGE OF THE COMPANY" shall mean the actual knowledge
of Mr. Joseph R. Ferrandino, Mr. Thomas K. Sheridan, each manager of the
Company reporting directly to Ferrandino, Mr. Frank Roney, Mr. Patrick J.
O'Neil and Mr. Kevin J. Halloran.
SECTION 1.02. ADDITIONAL DEFINITIONS.
Defined Term Section Defined in
------------ ------------------
"Accountants" 2.05
"Agreement" Recitals
"Antitrust Division" 10.03
"Balance Sheet" 4.05
"Benefit Plans" 4.14
"Closing" 2.03
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Page 7
"Closing Date" 2.03
"Company" Parties
"Employee Welfare Benefit Plan" 4.16
"Financial Statements" 4.05
"FTC" 10.03
"IBM" Parties
"Indemnifying Party" 8.02(a)
"Losses" 8.02(a)
"Purchase Price" 2.01
"Selling Shareholders" Parties
"Shares" Recital
"Straddle Period" 8.02(d)(ii)
"Third Party Claim" 8.03
SECTION 1.03. TERMS GENERALLY. The definitions in Sections 1.01
and 1.02 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections,
paragraphs, Exhibits and Schedules shall be deemed references to Articles,
paragraphs and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with United States generally accepted accounting
principles, as in effect from time to time.
ARTICLE II
PURCHASE AND SALE; CLOSING
SECTION 2.01. PURCHASE AND SALE OF THE SHARES. Subject to the
terms and conditions set forth below, on the Closing Date, (a) Ferrandino
shall sell to BUYER, and BUYER shall purchase from Ferrandino seventy two
thousand six hundred fifty four (72,654) shares of the Company for seven
million four hundred fifty seven thousand six hundred fifty eight dollars and
forty three cents ($7,457,658.43); (b) Sheridan shall sell to the BUYER, and
BUYER shall purchase from Sheridan sixteen thousand twenty (16,020) shares of
the Company for one million six hundred forty four thousand three hundred
ninety two dollars and forty four cents $ (1,644,392.44), less the remaining
principal balance remaining due as of the Closing Date under the loan made by
the Company to Sheridan which is secured by a Lien in favor of the Company
upon Sheridan's Shares; and (c) CGI or an Affiliate of CGI shall sell to
BUYER and BUYER shall purchase from CGI ,or an Affiliate of CGI, all issued
and outstanding shares of CGI Corp, which owns six hundred ninety thousand
seven hundred two (690,702) shares of the Company, for seventy million eight
hundred ninety seven thousand nine hundred forty nine dollars and thirteen
cents ($
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Page 8
70,897,949.13), less any liabilities outstanding on the balance sheet of CGI
Corp. as of the Closing Date; with the sum of the amounts in Sections
2.01(a) , 2.01(b) and 2.01(c) equaling the aggregate purchase price for all
issued and outstanding shares of the Company (the "PURCHASE PRICE").
SECTION 2.02. PAYMENT OF THE PURCHASE PRICE. On the Closing Date,
Buyer shall pay
(a) to CGI the amount set forth in Section 2.01(c) above by wire
transfer of immediately available funds to the account designated by CGI at
least two Business Days prior to the Closing Date;
(b) to each of Ferrandino and Sheridan one-half (1/2) of the
respective amounts set forth in Section 2.01(a) and 2.01(b), respectively,
by wire transfer of immediately available funds to accounts designated by
Ferrandino and Sheridan, respectively, at least two Business Days prior to
the Closing Date; and
(c) one-half (1/2) of the respective amounts set forth in Section
2.01(a) and 2.01(b) to the Escrow Agent to be held by the Escrow Agent
pursuant to the terms and conditions of the Escrow Agreement.
SECTION 2.03. CLOSING. The Closing with respect to the purchase
and sale of the Shares (the "CLOSING") shall be held at the offices of
Guarantor, at Armonk, New York on the accounting month end of the Company
immediately following the expiration or early termination of the waiting
period under HSR. The date on which the Closing shall occur is herein
referred to as the "CLOSING DATE."
SECTION 2.04. CLOSING DELIVERIES. At the Closing Date:
(a) BUYER shall pay the Purchase Price in accordance with
Section 2.02; and
(b) the Selling Shareholders shall deliver to BUYER:
(i) certificates representing the Shares, duly endorsed
for transfer to BUYER or with appropriate stock powers duly executed for
transfer to BUYER attached;
(ii) spousal waivers signed by each of the spouses,
respectively, of Ferrandino and Sheridan.
SECTION 2.05. PURCHASE PRICE ADJUSTMENT.
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Page 9
(a) As soon as practicable following the date hereof, the Company
shall engage Leon Constantin and Company to conduct an audit of the balance
sheet of the Company as of the Closing Date (the "Closing Balance Sheet").
The Closing Balance Sheet shall be prepared in accordance with U.S. generally
accepted accounting principles which shall be applied consistent with those
used in the preparation of the Company's audited balance sheet as of December
31, 1996 to the extent that such principles are in conformity with U.S.
generally accepted accounting principles.
(b) In connection with the preparation by the Company and the audit
by Leon Constantin and Company of the Closing Balance Sheet, BUYER shall
engage KPMG and the Selling Shareholders shall engage Price Waterhouse, at
their own respective expense, to review the work papers of Leon Constantin
and Company and conduct such other activities as they deem appropriate.
(c) Promptly following the delivery of the audited Closing Balance
Sheet, which is anticipated to be available on or about fifteen (15) days
following the Closing Date, KPMG, Price Waterhouse and Leon Constantin and
Company (KPMG, Price Waterhouse and Leon Constantin and Company being
collectively referred to as the "Accountants" for purposes of this Section
2.05) shall meet to determine the Net Book Value of the Company as of the
Closing Date upon which any Purchase Price Adjustment required by this
Section 2.05 shall be based (the "Agreed Net Book Value"). In making such
determination, the Accountants shall take into consideration such matters as
they deem appropriate consistent with U.S. generally accepted accounting
principles.
(d) Without limiting the generality of the foregoing, it is
expressly agreed that one-half of the cost of the audit by Leon Constantin
and Company and all the costs of counsel for the Selling Shareholders
contemplated by this Section 2.05 shall be recorded as a pre-Closing
liability of the Company, it being agreed that one-half of the cost of said
audit shall be treated as a liability of the Company arising after the
Closing regardless of how it might otherwise have been treated on the audited
Closing Balance Sheet. The amount certified by at least two of the
Accountants to be the Agreed Net Book Value shall be used as the basis for
the adjustment payment provided for in Sections 2.05 (e) and (f), below.
(e) BUYER shall pay each of the Selling Shareholders its
or his Pro Rata Portion of the amount by which the Agreed Net Book
Value exceeds fourteen million, three hundred thousand dollars
($14,300,000). The Selling Shareholders, severally and not
jointly, shall pay to BUYER its or his Pro Rata Portion of the
amount by which the Agreed Net Book Value is less than fourteen
million, three hundred thousand dollars ($14,300,000).
(f) Any payments required by this Section 2.05 shall be made by
wire transfer of immediately available funds to the account(s) designated by
the
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party entitled to such payments within three (3) business days of the
determination of the Agreed Net Book Value.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE SELLING SHAREHOLDERS
Each Selling Shareholder represents, warrants and covenants to BUYER,
individually as to itself or himself and its or his respective properties, as
of the date hereof and as of the Closing, as follows:
SECTION 3.01. TITLE TO THE SHARES. Each of Ferrandino, Sheridan
and CGI Corporation is the beneficial and record owner of the respective
number of shares set forth in Exhibit A with respect to such Person and has
good title to such shares, free and clear of all Liens. The Shares constitute
all of the issued and outstanding shares of Common Stock and there are no
shares of stock of any other class authorized or issued.
SECTION 3.02. AUTHORITY OF SHAREHOLDER. (a) Such Selling
Shareholder has the power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein to be
consummated by such Selling Shareholder. This Agreement has been duly
executed and delivered by such Selling Shareholder and this Agreement is a
legal, valid and binding obligation of such Selling Shareholder enforceable
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally or general principles of equity.
No approval by or filing with any Governmental Authority, or any other
regulatory or self-regulatory body, is required in connection with the
execution and delivery by such Selling Shareholder of this Agreement or the
consummation by such Selling Shareholder of the transactions contemplated
hereby, except under the HSR Act.
(b) Such Selling Shareholder has all requisite power and authority
to sell, transfer and deliver to BUYER the Shares to be sold by such Selling
Shareholder pursuant to this Agreement.
SECTION 3.03. NO BANKRUPTCY, ETC. There has not been filed any
petition or application, or any proceedings commenced which have not been
discharged, by or against such Selling Shareholder with respect to any assets
under any law, domestic or foreign, relating to bankruptcy, reorganization,
compromise, arrangements, insolvency, readjustment of debt or creditors
rights, and no assignment has been made by such Selling Shareholder for the
benefit of creditors.
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SECTION 3.04. SHAREHOLDER AGREEMENTS. There are no voting trust
agreements or any other Contracts between such Selling Shareholder or CGI Corp.
and any other Person or, to the knowledge of the Company, between or among the
Company and any other Person:
(a) restricting or otherwise relating to voting or dividend rights
with respect to the Shares owned by such Selling Shareholder or CGI Corp.; or
(b) granting any Person any right in respect of such Shares; or
(c) granting any Person any right to acquire any additional shares of
Common Stock or stock of any other class of the Company.
Section 3.05. INDEPENDENT REVIEW. Each of Ferrandino and Sheridan
hereby represent and warrant to each of BUYER, IBM and IBM Affiliates, that he
has reviewed the terms and conditions of this Agreement, and that he has been
advised to engage, and has in fact engaged, independent counsel, and has had
the terms and conditions of this Agreement reviewed by such independent counsel
and received advice regarding this Agreement and the transactions contemplated
hereby from such independent counsel prior to his execution of this Agreement.
Section 3.06. REPRESENTATIONS BY CGI CONCERNING CGI CORP. CGI
hereby represents and warrants to BUYER, as of the date hereof and as of the
Closing Date, as follows:
(a) CGI is the sole beneficial and record owner of all issued and
outstanding shares of CGI Corp., and there are no other capital shares of CGI
Corp. issued, or reserved for issuance, or authorized or outstanding. CGI's
shares of CGI Corp. are duly authorized, validly issued, fully paid and
nonassessable and are not subject to any preemptive or subscription rights;
;
(b) CGI Corp. has no assets other than its ownership of 690,702
shares of the Company;
(c) CGI Corp has no liabilities other than the liabilities on its
balance sheet as of the Closing Date used to calculate the proceeds to CGI
described in Section 2.01(c);
(d) CGI Corp. is the beneficial and record owner of 690,702 shares of
the Company, and has good title to such Shares, free and clear of all Liens;
(e) CGI Corp. is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. CGI Corp. has the
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corporate power and authority to own, lease or otherwise hold its properties
and assets and to carry on its business as presently conducted. CGI Corp. has
delivered to BUYER true and complete copies of the Articles of Incorporation,
as amended to date, and the By-laws, as in effect on the date hereof, of CGI
Corp.;
(f) CGI Corp. is in good standing and is qualified to do business in
every jurisdiction where the nature of its operations or ownership of assets
requires that it be so qualified, except where the failure to be in good
standing or so qualified would not have a material adverse effect on CGI Corp.
CGI Corp. is in good standing in each such jurisdiction;
(g) There are no outstanding warrants, options, rights, securities,
agreements, subscriptions or other commitments pursuant to which CGI Corp. is
or may become obligated to issue, deliver or sell any additional shares of
capital stock of CGI Corp. or to issue, grant, extend or enter into any such
warrant, option, right, security, agreement, subscription or other commitment.
(h) CGI Corp. does not directly or indirectly own any capital stock
of, or other equity interests in, any other corporation, partnership, limited
liability company or other entity, and CGI Corp. is not a member of or
participant in any partnership, limited liability company or joint venture and
is not obligated to become such a member or participant;
(i)
(i) to the knowlege of CGI Corp., CGI Corp. has filed or caused
to be filed in a timely manner (within any applicable extension periods) all
Tax Returns required to be filed by CGI Corp. by the Code or by applicable
state or local Tax laws;
(ii) all Taxes of CGI Corp. shown as due on such Tax Returns
have been duly and timely paid or accrued; and
(iii) no Tax Liens have been filed and no claims are being
asserted in a writing received by CGI Corp. with respect to any Taxes.
(k) to the knowledge of the Company, there are no outstanding
agreements or waivers extending the statutory period of limitation applicable
to any Tax Returns required to be filed by or on behalf of CGI Corp. and CGI
Corp. has not requested any extension of time within which to file any Tax
Return, which Tax Return has not yet been filed;
(l) there is no material Litigation pending or, to the knowledge of
the Company, threatened against CGI Corp. in writing. There is no outstanding
judgment, order or decree of any Governmental Authority or arbitrator appli
cable to CGI Corp.or its properties, assets or businesses having, or which,
insofar as
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Page 13
can be reasonably foreseen, in the future is likely to have, a material
adverse effect on CGI Corp.or its businesses as heretofore conducted by CGI
Corp.;
(m) CGI Corp. and its properties, assets, operations and business,
have been operated and are in compliance in all material respects with all
applicable statutes, laws, ordinances, administrative orders, rules and
regulations of any Governmental Authority, except where the failure to so
comply would not have a material adverse effect on the business, financial
condition or results of CGI Corp.; and
(n) CGI Corp. has never had any employees or conducted any
operations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
The Selling Shareholders, severally and not jointly, represent, and
warrant to BUYER, as of the date hereof and as of the Closing, as follows:
SECTION 4.01. ORGANIZATION AND STANDING OF THE COMPANY. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has the
corporate power and authority to own, lease or otherwise hold its properties
and assets and to carry on its business as presently conducted. The Company
has delivered to BUYER true and complete copies of the Articles of
Incorporation, as amended to date, and the By-laws, as in effect on the date
hereof, of the Company.
SECTION 4.02. GOOD STANDING. The Company is in good standing and
is qualified to do business in every jurisdiction where the nature of its
operations or ownership of assets requires that it be so qualified, except
where the failure to be in good standing or so qualified would not have a
material adverse effect on the Company.
SECTION 4.03. AUTHORITY.(a) The Company has the corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company
and the Selling Shareholders.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms except as such enforcement
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Page 14
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally or general principles
of equity.
(c) No approval by or filing with any Governmental Authority or
any other regulatory or self-regulatory body is required in connection with
the execution and delivery by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby, except
under the HSR Act.
SECTION 4.04. CAPITAL STOCK OF THE COMPANY. (a) The authorized
capital stock of the Company consists of:
(i) 2,000,000 shares of Class A Common Stock, of which 779,376
shares of Class A Common Stock are issued and outstanding; and
(ii) there are no other capital shares of the Company issued, or
reserved for issuance, or authorized or outstanding. The outstanding shares of
Common Stock, are duly authorized, validly issued, fully paid and nonassessable
and are not subject to any preemptive or subscription rights;
(b) Exhibit A contains a true and complete list of the record holders
of shares of Common Stock as of the date hereof; and
(c) There are no outstanding warrants, options, rights, securities,
agreements, subscriptions or other commitments pursuant to which the Company
is or may become obligated to issue, deliver or sell any additional shares of
capital stock of the Company or to issue, grant, extend or enter into any
such warrant, option, right, security, agreement, subscription or other
commitment.
SECTION 4.05. EQUITY INTERESTS. The Company does not directly or
indirectly own any capital stock of, or other equity interests in, any other
corporation, partnership, limited liability company or other entity, and the
Company is not a member of or participant in any partnership, limited liability
company or joint venture and is not obligated to become such a member or
participant.
SECTION 4.06. FINANCIAL STATEMENTS. The Company has delivered to
BUYER:
(a) the unaudited balance sheet of the Company as of June 30,
1997 (the "JUNE BALANCE SHEET"), and the related unaudited statements of
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Page 15
operations of the Company for the six-month period ended at the date of the
Balance Sheet, and
(b) the audited balance sheet of the Company as of December
31, 1996, and the related audited statements of operations, shareholders'
equity and cash flows for the year then ended (the financial statements
described in (a) and (b) are collectively referred to as the "FINANCIAL
STATEMENTS"). Except as specified on Schedule 4.06(b),the Financial
Statements are in accordance with the books and records of the Company, have
been prepared in conformity with French generally accepted-accounting
principles consistently applied (except as described in the notes included
therein) and fairly present the financial condition and results of operation
of the Company in all material respects as of the dates and for the periods
thereof.
SECTION 4.07. TAXES.:
(a) to the knowlege of the Company, the Company has filed or
caused to be filed in a timely manner (within any applicable extension periods)
all Tax Returns required to be filed by the Company by the Code or by
applicable state or local Tax laws,
(b) all Taxes of the Company shown as due on such Tax Returns
have been duly and timely paid or accrued, and
(c) no Tax Liens have been filed and no claims are being
asserted in a writing received by the Company with respect to any Taxes.
(d) to the knowledge of the Company, there are no outstanding
agreements or waivers extending the statutory period of limitation applicable
to any Tax Returns required to be filed by or on behalf of the Company and
the Company has not requested any extension of time within which to file any
Tax Return, which Tax Return has not yet been filed.
SECTION 4.08. ASSETS OTHER THAN REAL PROPERTY. The Company has
good title to all tangible assets reflected on the Balance Sheet or acquired
after the date thereof, except those since sold or otherwise disposed of in
the ordinary course of business and the terms of this Agreement, in each case
free and clear of all Liens. This Section does not relate to real property or
interests in real property; such items are covered under Section 4.09.
SECTION 4.09. REAL PROPERTY. The Company does not own any real
property. Schedule 4.09 sets forth a complete list of all real property and
interests in real property leased by the Company.
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SECTION 4.10. CONTRACTS. Except as set forth on Schedule 4.10, the
Company is not a party to or bound by any:
(a) Contract not entered into in the ordinary course of business
which involves payments by the Company of two hundred fifty thousand dollars
($250,000.00) or more in any calendar year;
(b) employee collective bargaining agreement or other contract with
any labor union;
(c) covenant not to compete;
(d) Contract with:
(i) any shareholder of the Company,
(ii) any Affiliate of the Company or of any shareholder of the
Company, or
(iii) any officer, director or employee of the Company or of any
Affiliate of the Company;
(e) material Contract relating to patents, trademarks, trade names,
service marks, or copyrights;
(f) joint venture, partnership or other equity-based strategic
alliance agreement; or
(g)(i) any Contract providing for performance by the Company on a
fixed fee basis (a "Fixed Price Contract") which is either not terminable at
will or involves services expected to have a cost of performance following
Closing in excess of one hundred thousand dollars ($100,000.00).
(h) any Contract other than a Fixed Price Contract to which the
Company is a party or by or to which it or any of its properties or assets is
bound or subject which is not terminable by the Company or its Subsidiary for a
cost of less than Twenty Five thousand dollars ($25,000.00); or
Each Contract of the Company set forth in Schedule 4.10 hereto is in
full force and effect and is a legal, valid and binding agreement of the
Company and, to the knowledge of the Company, of each other party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally or general principles of
equity. The Company is not in default in any material respect under any
material Contract;
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and, to the knowledge of the Company, no other party to any of the material
Contracts is in default in any material respect thereunder.
SECTION 4.11. LITIGATION; DECREES. Except as disclosed in
Schedule 4.11, there is no material Litigation pending or, to the knowledge
of the Company, threatened against the Company in writing. There is no
outstanding judgment, order or decree of any Governmental Authority or
arbitrator appli cable to the Company or its properties, assets or businesses
having, or which, insofar as can be reasonably foreseen, in the future is
likely to have, a material adverse effect on the Company or its businesses as
heretofore conducted by the Company.
SECTION 4.12. OPERATION OF THE BUSINESS; ABSENCE OF CHANGES OR
EVENTS. (a) Except as indicated on Schedule 4.12(a), since the date of the
Balance Sheet, the business of the Company has been conducted in the ordinary
course and there has not been any material adverse change with respect to the
Company.
(b) Except as indicated on Schedule 4.12(b), since the date of the
Balance Sheet, the Company has not:
(i) declared or paid or made, or agreed to declare or pay or
make, any dividends or other distributions in cash or property to the
shareholders of the Company;
(ii) purchased or redeemed any securities issued by the Company
or issued any equity securities, warrants, options or convertible, exchangeable
or redeemable securities;
(iii) made any material expenditures or investments other than
in the ordinary course of business, or acquired any entity or entered into
any joint venture, or entered into any contract to do any of the foregoing;
(iv) except for the disposition of the Discontinued
Businesses, sold, licensed, assigned or otherwise transferred any material
assets, or entered into any contract to do any of the foregoing other than in
the ordinary course of business, or to be acquired by another entity;
(v) other than in the ordinary course of business, increased
the compensation of any officer, director or employee, entered into any
employment agreement with any Person or modified any employment agreement
with any Person;
(vi) adopted any amendment to its Articles of Incorporation or
By-laws;
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(vii) adopted any collective bargaining agreement or employee
benefit plan;
(viii) permitted any of its assets to become subject to any
Lien;
(ix) canceled any material Indebtedness owed to the Company or
waived any material claims of any kind; or
(x) failed to pay all payroll or other Taxes when due or
failed to pay all other material obligations of the Company, nor shall the
Company do any of the foregoing prior to Closing, except as approved in
writing by BUYER.
SECTION 4.13. COMPLIANCE WITH APPLICABLE LAWS. The Company and its
properties, assets, operations and business, have been operated and are in
compliance in all material respects with all applicable statutes, laws,
ordinances, administrative orders, rules and regulations of any Governmental
Authority, except where the failure to so comply would not have a material
adverse effect on the business, financial condition or results of the Company.
SECTION 4.14. CERTAIN EMPLOYEE MATTERS. The Company is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, occupational safety and health
standards, terms and conditions of employment and wages and hours, and are
not engaged in any unfair labor practice. All Persons who are deemed to be
"employees" pursuant to any Governmental Rule, have been treated as employees
by the Company. The Company has not engaged in any pattern or practice with
respect to any group of employees or subcontractors which would violate in
any material respect any applicable laws respecting employment and employment
practices.
SECTION 4.15. INSURANCE. Schedule 4.15 sets forth a complete and
accurate list and summary description, including annual premiums and
deductibles, of all material policies of fire, liability, product liability,
workmen's compensation, health and other forms of insurance presently in
effect with respect to the Company's business, true and correct copies of
which have been delivered to, or made available for review by, BUYER. All
such policies are valid, outstanding and enforceable policies and provide
insurance coverage for the properties, assets and operations of the Company,
of the kinds, in the amounts and against the risks required to comply with
applicable law.
SECTION 4.16 BENEFIT PLANS. (a) The Company has made available to
BUYER true, complete and correct copies of :
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(i) each Benefit Plan (or, in the case of any unwritten Benefit
Plan, a brief description thereof); and
(ii) each trust agreement and group annuity contract relating to
any Benefit Plan.
(b) The Company is in compliance in all material respects with the
provisions of ERISA, the Code and all regulations under the Code, ERISA and
any other Governmental Rules. The Company does not maintain any Benefit Plan
which is subject to the provisions of Title IV of ERISA. No "reportable
event" (as defined in Section 4043 of ERISA and the regulations thereunder)
has occurred with respect to any Benefit Plan that is subject to the
provisions of Title IV of ERISA and which is maintained for employees of the
Company. There are no unfunded vested liabilities under any such Benefit
Plan.
(c) No employee of the Company will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of any
benefits under any Benefit Plan as a result of the transactions contemplated
by this Agreement.
(d) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions) have
been filed or distributed as required by applicable Governmental Rule with
respect to each such Benefit Plan. The requirements of Part 6 of Subtitle B
of Title I of ERISA and of Code Sec.4980B have been substantially satisfied
with respect to each such Benefit Plan which is an employee welfare benefit
plan as defined in Section 3(1) of ERISA (an "Employee Welfare Benefit Plan").
(e) All contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee
Welfare Benefit Plan or accrued in accordance with the past custom and
practice of the Company. All premiums or other payments which are due for all
periods ending on or before the Closing Date have been paid with respect to
each such Benefit Plan which is an Employee Welfare Benefit Plan.
(f) The Company has made available to BUYER correct copies of the
plan documents and Summary Plan Descriptions, the most recent determination
letter received from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Benefit Plan.
(g) The Company does not maintain or contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Sec.
4980B).
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SECTION 4.17 NTS LICENSES. The Company has not received any
notice or other communication, whether written or, to the knowledge of the
Company, oral, to the effect that the number of NTS licenses will be
increased or that the nature and scope or the value of the NTS license to
the Company will be materially impaired.
SECTION 4.18 DISCLOSURE. No representation or warranty made by
the Selling Shareholders in this Agreement, or Schedules, exhibits or
attachments hereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make the statement or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
SECTION 4.19. BROKERS. The Company, the Selling Shareholders and
CGI Corp. have not engaged any broker or finder in connection with the
transactions contemplated by this Agreement.
SECTION 4.20. CONSULTING PRACTICE METHODOLOGIES. To the knowledge
of the Company:
(a) the Company is the owner of the consulting practice
methodologies created by employees of the Company and listed on Schedule 4.20
(the "Consulting Practice Methodologies") as they exist as of the date hereof
and as of the Closing Date; and
(b) there is no material Litigation pending or, to the knowledge of
the Company, threatened against the Company in writing alleging that the
Company's use of the Consulting Practice Methodologies infringe upon the
intellectual property rights of any other Person.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
BUYER represents and warrants to the Company and the Selling
Shareholders, as of the date hereof and as of the Closing, as follows:
SECTION 5.01. ORGANIZATION. BUYER is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the power and authority to own, lease or otherwise hold its properties
and assets and to carry on its business as presently conducted.
SECTION 5.02. AUTHORITY. BUYER has the corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
BUYER and constitutes a valid and binding obligation of BUYER enforceable
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against it in accordance with its terms. No other corporate proceedings on
the part of BUYER are necessary to authorize BUYER'S execution and
performance of this Agreement and the transactions contemplated hereby.
SECTION 5.03. GOOD STANDING. BUYER is in good standing and is
qualified to do business in every jurisdiction where the nature of its
operations or ownership of assets requires that it be so qualified, except
where the failure to be so qualified would not have a material adverse effect
on BUYER.
SECTION 5.04. GOVERNMENTAL CONSENTS - BUYER. No approval by or
filing with any Governmental Authority or any other regulatory or
self-regulatory body is required in connection with the execution and
delivery by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby, except under the HSR Act.
SECTION 5.05. BROKER'S FEES. BUYER shall be responsible for all
liabilities and claims (including costs and expenses defending against same)
arising in connection with any claim by a finder or broker that it acted on
behalf of BUYER in connection with the transactions contemplated hereby.
SECTION 5.06. SUFFICIENT FUNDS. BUYER represents and warrants that
BUYER has sufficient funds, currently available to BUYER without contingency
or condition, to enable BUYER to pay the Purchase Price to the Selling
Shareholders on the Closing Date pursuant to Section 2.02, above.
SECTION 5.07. PURCHASE FOR INVESTMENT. BUYER is acquiring the
Shares for its own account for investment purposes, and not with a view
toward any resale or distribution thereof.
SECTION 5.08. ACCESS TO INFORMATION. BUYER acknowledges and agrees
that it has been furnished with the information about the Company in the
data room, and allowed access to the Company and its records, sufficient to
enable BUYER to perform its due diligence investigation of the transactions
contemplated by this Agreement to its satisfaction, and that BUYER has
completed such due diligence to its satisfaction.
ARTICLE VI
CERTAIN COVENANTS
SECTION 6.01. CONDUCT OF BUSINESS OF COMPANY. (a) Except as
contemplated by this Agreement, or as set forth in Schedule 6.01 or with the
prior consent of BUYER, during the period from the date of this Agreement to
the Closing Date, the Selling Shareholders will use reasonable efforts to
cause the Company:
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(i) to conduct the business of the Company in the ordinary
course, except in connection with the transactions contemplated hereby;
(ii) to preserve intact the present organization of the Company
and preserve its relationships with its material customers, suppliers and
others having significant business dealings with it, in each case in the
ordinary course of business.
(b) Without limiting the generality of the foregoing, and except as
otherwise provided in this Agreement, the Selling Shareholders will not permit
the Company, prior to the Closing Date, without the prior consent of BUYER, to:
(i) incur any Indebtedness or issue any long-term debt
securities or assume, guarantee or endorse the obligations of any other Person,
to the extent that such would be an Indebtedness, except for Indebtedness
incurred in the ordinary course of business;
(ii) except in the ordinary course of business
(1) acquire or dispose of, any material property or assets,
or
(2) mortgage or encumber any material property or assets;
(iii) enter into any commitments that would be material, other
than those made in the ordinary course of business;
(iv) other than with respect to the Discontinued Businesses,
engage in any transactions with, or enter into any Contracts with, any
Selling Shareholders or any of their respective Affiliates;
(v) enter into, adopt, amend or terminate any material
agreement relating to the compensation or severance of any employee of the
Company other than in the ordinary course of business, except to the extent
required by law or an existing agreement; or
(vi) agree to take any of the foregoing actions.
SECTION 6.02. ACCESS TO INFORMATION. From the date of this
Agreement to the Closing, the Company will, for the sole purpose of enabling
BUYER to develop a transition plan in connection with BUYER's succession to
the business of the Company:
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(a) give BUYER and its authorized representatives reasonable access
to the documents in the data room and to the books, records, offices and other
facilities and properties of the Company;
(b) permit BUYER to make reasonable inspections of the books, records
and facilities of the Company;
(c) cause its officers to furnish BUYER with such financial and
operating data and other information with respect to the Company as BUYER may
from time to time reasonably request; and
(d) permit BUYER to confer with employees of the Company with
knowledge of such financial and operating data;
provided, however, that any such access shall be conducted at a reasonable time
and in such manner as not to interfere with the operation of the Company. All
such information and access shall be subject to the terms and conditions of the
Confidentiality Agreement between BUYER and the Company.
SECTION 6.03. REQUISITE CONSENTS. Prior to the Closing Date and
thereafter, BUYER and the Selling Shareholders shall fully cooperate with
each other to cause the Company to obtain all Requisite Consents (i.e., all
consents required from third parties under any commitments which are required
for the transfer, directly or indirectly, thereof); provided, however, that
the Selling Shareholders shall not be obligated to pay or otherwise make
available any form of consideration to obtain any such Required Consents.
SECTION 6.04. REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable efforts to take, or cause to be taken, all reasonable actions, and
to do, or cause to be done, all reasonable things necessary, proper or
advisable under applicable Governmental Rules to consummate and make effective
the transactions contemplated hereby, including, without limitation, making all
required filings and applications and complying with or responding to any
requests by Governmental Authorities; provided, that no party shall be required
to comply with any Burdensome Condition.
SECTION 6.05. RESTRICTIVE COVENANTS. Neither Ferrandino nor
Sheridan shall work for another one of the eight (8) primary vendors under
IBM's NTS program as of the date hereof for a period of 18 months following the
Closing Date.
SECTION 6.06. CERTAIN COSTS. Effective as of the Closing Date,
(a) CGI hereby agrees:
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(i) with respect to the HR Access business, to immediately pay all
past expenses of the Company previously charged by the Company to CGI and to
reimburse the Company for all such future costs and expenses actually
incurred by the Company using the same markup for such costs used by the
Company prior to the date hereof, until such time as CGI terminates the HR
Access services being provided by the Companyand the Company has ceased to
incur such costs to provide HR Access services to CGI;
(ii) to continue to provide the Company access to the financial
systems and information to the same extent that the Company had such access
prior to the date hereof for a period of at least six (6) months; and
(iii) to discontinue all intercompany charges to the Company, other
than arm's-length accounts receivable owed by the Company to CGI, if any, and
reasonable computer charges for CGI processing the Company's financial
systems and information; and
(b) the IBM Intercompany Agreement under which the Company is
required to pay IBM a two (2) percent royalty on non IBM services will be
terminated.
SECTION 6.07 REVISED NTS AGREEMENT. IBM and the Company shall
execute a revised NTS Agreement which shall substantially reflect the terms and
conditions specified in Exhibit G, attached hereto.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of BUYER to consummate the transactions contemplated
herein is subject to the satisfaction (or waiver by BUYER) of the conditions
set forth below in this Article.
SECTION 7.01. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Selling Shareholders made in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and as of the Closing Date with the same effect as if made at and as of the
Closing Date, except to the extent such representations and warranties
relate to an earlier specified date. The Selling Shareholders shall have
performed in all material respects their respective covenants and agreements
contained in this Agreement required to be performed by them at or prior to
the Closing.
SECTION 7.02. CONSENTS, ETC.; BURDENSOME CONDITIONS. (a) The
waiting period under the HSR Act shall have expired or been terminated.
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(b) No Burdensome Condition shall exist with respect to BUYER or the
Company in connection with the transactions contemplated hereby.
(c) No Litigation challenging the transactions contemplated by this
Agreement shall be pending or threatened against any party.
SECTION 7.03. GOVERNMENTAL RULES. (a) No Governmental Rule shall
have been instituted, issued or proposed to restrain, enjoin or prevent the
transactions contemplated hereby or to invalidate, suspend or require
modification of any material provision of this Agreement.
(b) No change shall have occurred since the date of this Agreement
in any Governmental Rule that, in BUYER'S good faith opinion, would make it
illegal for BUYER to consummate the transactions contemplated hereby or
subject BUYER to any fine, penalty or other liability under or pursuant to
any Governmental Rule in connection with any such transaction.
SECTION 7.04. INJUNCTIONS, ETC. No injunction, order or decree of
any Governmental Authority shall be in effect as of the Closing, and no
lawsuit, claim, proceeding or investigation shall be pending or threatened by
or before any Governmental Authority as of the Closing, which would restrain,
prohibit or make unlawful the sale of the Shares to BUYER.
SECTION 7.05. RESIGNATION OF DIRECTORS. All directors of the
Company shall have tendered their resignations, which resignations shall be
effective as of the Closing Date.
SECTION 7.06. CLOSING DOCUMENTS. The Selling Shareholders shall
have delivered to BUYER the following documents:
(a) a certificate of each of the Selling Shareholders, dated as of
the Closing Date, to the effect that the representations and warranties in
Article III are true and correct in all material respects with respect to such
Selling Shareholder, and, to the knowledge of such Person, that the
representations and warranties in Article IV are true and correct in all
material respects, and that all actions required to be taken by such Person to
authorize the sale of the Shares owned by such Selling Shareholder to BUYER
have been duly taken.
(b) a certificate of the chief operating officer, secretary or
assistant secretary of the Company, dated as of the Closing Date, as to the
continued existence of the Company certifying the attached copy of the By-laws
of the Company, ;
(c) a certificate of the Secretary of State of the State of
Delaware, dated a recent date, to the effect that the Company is in good
standing in the State of Delaware;
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(e) a copy of the Articles of Incorporation of the Company as filed
with the Secretary of State of the State of Delaware certified as of a recent
date; and
(f) such books as are in the Company's possession and control
containing all of the original stock records and corporate records of the
Company, including records of proceedings of the Board of Directors and
stockholders of the Company, and all predecessor companies, and canceled stock
certificates;
(g) a certificate of the chief operating officer, secretary or
assistant secretary of CGI Corp., dated as of the Closing Date, as to the
continued existence of CGI Corp., certifying the attached copy of the By-laws
of CGI Corp.;
(h) a certificate of the Secretary of State of the State of Delaware,
dated a recent date, to the effect that CGI Corp. is in good standing in the
State of Delaware;
(i) a copy of the Articles of Incorporation of CGI Corp. as filed
with the Secretary of State of the State of Delaware certified as of a recent
date; and
(j) such books as are in CGI Corp.'s possession and control
containing all of the original stock records and corporate records of CGI
Corp., including records of proceedings of the Board of Directors and
stockholders of CGI Corp., and all predecessor companies, and canceled stock
certificates.
ARTICLE VIII
Conditions to the Selling
Shareholders' Obligations
The obligations of the Selling Shareholders to consummate the
transactions contemplated herein shall be subject to the satisfaction (or
waiver by the Selling Shareholders) of the conditions set forth below in this
Article.
SECTION 8.01. REPRESENTATIONS AND WARRANTIES. The representations,
warranties and covenants of BUYER made in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date with the same effect as if made at and as of the Closing Date.
SECTION 8.02. CONSENTS, ETC.; BURDENSOME CONDITIONS. (a) The
waiting period under the HSR Act shall have expired or been terminated.
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(b) No Burdensome Condition shall exist with respect to any Selling
Shareholder , the BUYER or the Company in connection with the transactions
contemplated hereby.
(c) No Litigation challenging the transactions contemplated by this
Agreement shall be pending or threatened against any party.
SECTION 8.03. GOVERNMENTAL RULES. (a) No Governmental Rule shall
have been instituted, issued or proposed to restrain, enjoin or prevent the
transactions contemplated hereby or to invalidate, suspend or require
modification of any material provision of this Agreement.
(b) No change shall have occurred since the date of this Agreement
in any Governmental Rule that, in any Selling Shareholder's good faith opinion,
would make it illegal for any such Selling Shareholder to consummate the
transactions contemplated hereby or subject such Selling Shareholder to any
fine, penalty or other liability under or pursuant to any Governmental Rule in
connection with any such transaction.
SECTION 8.04. INJUNCTIONS, ETC. No injunction, order or decree of
any Governmental Authority shall be in effect as of the Closing, and no
lawsuit, claim, proceeding or investigation shall be pending or threatened by
or before any Governmental Authority as of the Closing, which would restrain,
prohibit or make unlawful the sale of the Shares by any Selling Shareholder.
SECTION 8.05. CLOSING DOCUMENTS. BUYER shall have delivered to each
of the Selling Shareholders the following documents:
(a) a certificate of an authorized signatory of BUYER, dated the
Closing Date, to the effect that the conditions specified in Sections 7.01 and
7.02 have been satisfied as to BUYER ;
(b) an incumbency certificate dated the Closing Date for the
authorized signatories of BUYER executing this Agreement and any documents
delivered in connection with this Agreement at the Closing;
(c) a certificate of the secretary of BUYER, dated as of the Closing
Date, to the effect that the representations and warranties in Article V are
true and correct in all material respects, and that all actions required to be
taken by BUYER to authorize the purchase of the Shares by BUYER from each of
the Selling Shareholders have been duly taken;
(d) a certificate of the secretary or assistant secretary of BUYER,
dated as of the Closing Date, as to the continued existence of BUYER certifying
the attached copy of the By-laws of BUYER, the authorization of the execution,
delivery and performance of this Agreement and the resolutions adopted by the
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Board of Directors of BUYER authorizing the actions to be taken by the Company
under this Agreement;
(e) a certificate of the Secretary of State of the State of Delaware,
dated a recent date, to the effect that BUYER is in good standing in the State
of Delaware; and
(f) a copy of the Articles of Incorporation of BUYER as filed with
the Secretary of State of the State of Delaware certified as of a recent date.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
covenants, agreements, representations and warranties of the parties (a)
contained in Article III shall survive indefinitely; (b) pursuant to Section
9.02(d), below, shall survive for six months after the expiration of the
applicable statue of limitations ; and (c) contained elsewhere herein shall
survive the Closing and shall remain in full force and effect for a period of
eighteen (18) months after the Closing Date, but in each case, all such
covenants, agreements, representations and warranties shall be subject to all
limitations and other provisions contained in this Agreement. After the
Closing, the Indemnities set forth in this Article IX shall be the sole and
exclusive remedy of each party for damages for breach of any covenant,
agreement, representation or warranty contained in this Agreement.
SECTION 9.02. INDEMNIFICATION. (a) "LOSSES" of any Person shall
mean any and all demands, claims, suits, actions, causes of action,
proceedings, assessments, losses, damages, liabilities, costs and expenses
incurred by such Person, including interest, penalties and reasonable
attorneys' fees and any increased insurance premiums resulting from claims
relating to indemnified matters. As used in this Section 9.02, an Affiliate of
BUYER shall mean any direct or indirect Subsidiary of BUYER and any officer,
director or employee of BUYER or any such Subsidiary. As used in this
Agreement, an "INDEMNIFYING PARTY" shall mean, with respect to any Loss, the
Person or Persons that have agreed to indemnify and hold harmless the other
party or parties and its or their Affiliates with respect to such Loss
pursuant to Section 9.02(b), (c), (d) or (e), as provided below. The liability
of the Indemnifying Parties shall be several and not joint, as hereinafter
provided. As used in this Agreement, an "INDEMNITEE" shall mean the Person or
Persons that the Indemnifying Party has agreed to indemnify and hold harmless
with respect to any Loss pursuant to Section 9.02(b), (c) or (d), as provided
below.
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(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless BUYER and its Affiliates from and against any and
all Losses (as heretofore defined) asserted against, imposed upon, or incurred
by such Indemnitee and which arise out of or in connection with:
(i) any inaccuracy in, or any breach of, any representation or
warranty of such Selling Shareholder contained in Article III of this
Agreement; PROVIDED, HOWEVER, that each Selling Shareholder shall be liable
only to the extent of his Pro Rata Portion to indemnify and hold harmless BUYER
and its Affiliates from and against any and all Losses asserted against,
imposed upon, or incurred by BUYER and its Affiliates in connection with a
breach of the representation made in the second sentence of Section 3.01,
above;
(ii) the failure by such Selling Shareholder to perform any
covenant or agreement in this Agreement; or
(iii) any asset, liability, obligation, operation or
circumstance arising out of or relating to or comprising the Discontinued
Businesses.
(c) Each Selling Shareholder agrees, severally and not jointly and
to the extent of his Pro Rata Portion, to indemnify and hold harmless BUYER and
its Affiliates from and against any and all Losses asserted against, imposed
upon, or incurred by such Indemnitee and which arise out of or in connection
with:
(i) any inaccuracy in, or any breach of, any representation or
warranty concerning the Company contained in Article IV of this Agreement; or
(ii) the failure by the Company to perform any covenant or
agreement in this Agreement;
(d) Each Selling Shareholder, severally and not jointly, and to the
extent of his Pro Rata Portion, agrees to indemnify and hold harmless BUYER and
its Affiliates from and against any and all Losses asserted against, imposed
upon or incurred by BUYER or its Affiliates resulting from or arising out of
liability for Taxes of the Company attributable to any Pre-Closing Tax Period,
computed and discharged as follows:
(i) In the case of any Taxable period that includes (but does
not end on) the Closing Date (a "STRADDLE PERIOD"), the Taxes of the Company
for the Pre-Closing Tax Period shall be computed as if the Pre-Closing Tax
Period ended as of the close of business on the Closing Date, and the amount of
Taxes of the Company for the Post-Closing Tax Period shall be the excess, if
any, of (x) the Taxes of the Company for the Straddle Period over (y) the Taxes
of the Company for the Pre-Closing Tax Period.
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(ii) The indemnity obligation of the Selling Shareholders
described above with respect to Taxes attributable to any Pre-Closing Tax
Period shall be discharged by payment to BUYER of the excess of such Taxes for
such Pre-Closing Tax Period over the amount of such Taxes of the Company paid
on or prior to the Closing Date by or on behalf of the Company. Such payment
shall be made before the later of (A) five Business Days prior to the date the
relevant Tax is due (including by way of payment of estimated Taxes) and
(B) five Business Days after BUYER notifies the Selling Shareholders that such
Tax is due.
(e) Buyer agrees to indemnify and hold harmless the Company, the
Selling Shareholders and the Affiliates of each of them from and against any
and all Losses (as heretofore defined) asserted against, imposed upon, or
incurred by such Indemnitee and which arise out of or in connection with:
(i) any inaccuracy in, or any breach of, any representation or
warranty of Buyer contained in Article V of this Agreement; or
(ii) the failure by Buyer to perform any covenant or agreement
in this Agreement;
(f) For the purposes of the indemnity provided in this
Section 9.02, any Losses hereunder shall be determined on the basis of the net
effect after giving effect to any cash payments, setoffs or recoupment or any
payments in each case actually received, realized or retained by the Indemnitee
as a result of any event giving rise to a claim for such indemnification,
including but not limited to any amounts that the Indemnitee recovers under
insurance policies or agreements with respect to any such Loss. Each Indemnitee
will take all reasonable actions to secure payment from such insurance policies
before putting forward a claim for any Loss to the Indemnifying Party.
SECTION 9.03. THIRD-PARTY CLAIMS. (a) If a claim by a third party
(a "THIRD PARTY CLAIM") is made against BUYER arising out of a matter for which
BUYER is entitled to be indemnified pursuant to Section 9.02, BUYER shall
promptly notify each Selling Shareholder in writing of such claim and the
Selling Shareholders will undertake the cost of defending against such claim.
(b) In addition to the rights provided in Section 9.03(a) the
Selling Shareholders shall be entitled to participate in the defense of a Third
Party Claim, or undertake the defense of a Third Party Claim, individually or
jointly, at their own expense. Such Shareholders shall have 30 days after
receipt of the above-mentioned notice to undertake to conduct and control,
through counsel of their own choosing, and at their sole risk and expense, the
good faith settlement or defense of such claim, and BUYER shall cooperate fully
with such Selling
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Shareholders in connection therewith; provided that (i) BUYER shall be
entitled to participate in such settlement or defense through counsel chosen
by it, provided that, the fees and expenses of such counsel shall be borne by
BUYER, and (ii) the Selling Shareholders shall have within the aforementioned
30-day period notified BUYER in writing of their election to undertake such
defense or settlement. The Selling Shareholders shall obtain the written
consent of BUYER prior to ceasing to defend, settling or otherwise disposing
of such Third Party Claim if, as a result thereof, BUYER would become subject
to injunctive, declaratory or other equitable relief or the business of BUYER
would be materially adversely affected.
(c) So long as the Selling Shareholders are reasonably contesting
any such Third Party Claim in good faith, BUYER shall cooperate with the
Selling Shareholders in the defense of such Third Party Claim by providing
records and information which are relevant to such Third Party Claim. BUYER
shall not settle or compromise any Third Party Claim without the prior written
consent of the Selling Shareholders unless BUYER agrees in writing to forego
all claims for indemnification from the Selling Shareholders with respect to
such Third Party Claim. However, if the Selling Shareholders, within 30 days
after notice of any such claim, fail to defend such Third Party Claim, BUYER
will have the right to undertake the defense, compromise or settlement of such
claim on behalf of and for the account and risk of the Selling Shareholders.
(d) Notwithstanding the foregoing, if a Third Party Claim shall
relate to Taxes for a Straddle Period, the Selling Shareholders shall control
all proceedings taken in connection with such Third Party Claim.
SECTION 9.04. LIMITATIONS ON INDEMNITIES FROM SELLING SHAREHOLDERS.
Notwithstanding any other provision of this Article IX, the indemnity
obligations of the Selling Shareholders shall be subject to the following
limitations:
(a) the Selling Shareholders shall not be liable for any individual
breach of any of the representations, warranties, covenants or agreements by
the Selling Shareholders or the Company contained in this Agreement where the
Losses resulting therefrom are less than twenty thousand dollars
($20,000.00), and no such individual breach shall be aggregated for purposes of
Section 8.04(b), below;
(b) the Selling Shareholders shall not be liable for any breach of
any representation, warranty, covenant or agreement by the Selling Shareholders
or the Company contained in this Agreement unless the aggregate amount of
Losses with respect to all such breaches by the Selling Shareholders or the
Company exceeds one million dollars ($1,000,000.00) and then only to the extent
of such excess up to a maximum aggregate liability of twenty million
($20,000,000.00); PROVIDED, HOWEVER, that each Selling Shareholder shall be
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liable to Buyer up to a maximum aggregate liability of the total respective
amounts actually received by each such Selling Shareholder from Buyer pursuant
to Section 2.02, above, for such Selling Shareholder's breach of his or its
representations set forth in Section 3.01 ("Title to Shares"), and for such
Selling Shareholder's indemnification obligations pursuant to Section 9.02(d),
above.
(c) no Selling Shareholder shall be liable to contribute to
indemnification for Losses an aggregate amount in excess of the Pro Rata
Portion allocable to such Selling Shareholder; and
(d) No Indemnifying Party shall be liable to indemnify any
Indemnified Party for any Loss arising out of any breach of warranty or
misrepresentation by such Indemnifying Party if such Indemnified Party had
actual knowledge that such warranty or representation was not true and correct
as of the date hereof or as of the Closing Date.
SECTION 9.05. APPOINTMENT OF IBM AS REPRESENTATIVE. Each Selling
Shareholder hereby unconditionally and irrevocably (a) authorizes and appoints
IBM as its attorney in fact and representative to represent such Selling
Shareholders and act on its behalf with respect to all claims by BUYER for
indemnification (i) for breach of the representations and warranties in Article
IV; and (ii) pursuant to Section 9.02(d) above; (b) waives and releases any
claims it or he may have against IBM for any actions or decisions taken by IBM
in its capacity as representative of the Selling Shareholders; and (c) agrees
to be bound by any such action or decision taken by IBM in its capacity as
representative of the Selling Shareholders and agrees to indemnify BUYER in
accordance with the provisions of this Article IX in a manner consistent with
any such decisions or actions by IBM.
SECTION 9.06. EXCLUSION OF CERTAIN DAMAGES. NEITHER BUYER NOR ANY
OF THE COMPANY, THE SELLING SHAREHOLDERS OR THE GUARANTOR SHALL BE RESPONSIBLE
FOR ANY INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES WHATSOEVER,
INCLUDING LOSS OF PROFITS OR GOODWILL, IN CONNECTION WITH ANY ASPECT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE X
GUARANTEE
SECTION 10.01. GUARANTEE BY GUARANTOR. Guarantor hereby guarantees
to BUYER the payment of any and all monetary obligations of CGI under this
Agreement, including the indemnification obligations set forth in Article IX,
and agrees to cause CGI to perform each of its other obligations to BUYER
pursuant to this Agreement. Guarantor hereby agrees to indemnify
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BUYER against any Losses incurred by reason of any failure of CGI Corporation
to pay or perform such obligations. The obligations of Guarantor shall be
subject to valid defenses that CGI may have against BUYER and all other
rights of CGI Corporation under this Agreement or at law or equity. Guarantor
hereby waives presentment for payment, notice of nonpayment, demand, protest,
notice of protest and notice of dishonor or default to any party including
the Guarantor.
No failure or delay on the part of BUYER to exercise any right, power or
privilege with respect to this guarantee shall operate as a waiver thereof; and
no single or partial exercise of any right, power, or privilege with respect to
this guarantee shall preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. ENTIRE AGREEMENT. This Agreement (including the
Exhibits and Schedules hereto), and the Confidentiality Agreement contain the
entire agreement of the parties hereto with respect to the subject matter
hereof, and supersede any prior written or oral agreements (including any
outline of terms, which shall terminate upon the execution hereof) between them
concerning the subject matter hereof. There are no representations, agree
ments, arrangements or understandings, oral or written, between the parties
hereto relating to the subject matter hereof which are not fully expressed
herein or therein. Each Schedule and Exhibit attached to this Agreement or
delivered pursuant to this Agreement is incorporated herein by reference and
constitutes a part of this Agreement.
SECTION 11.02. PRESS RELEASES, PUBLIC ANNOUNCEMENTS AND PUBLICITY.
Except as may otherwise be agreed to by the parties, all press releases,
announcements and other forms of publicity regarding the purchase of the Shares
by BUYER and the other transactions contemplated by this Agreement shall be
coordinated and approved by BUYER, the Selling Shareholders and the Company.
SECTION 11.03. HSR FILING. (a) Within ten Business Days after the
execution hereof, the Company, each of the Selling Shareholders and BUYER shall
each file, with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "ANTITRUST DIVISION")
a premerger notification in accordance with the HSR Act with respect to the
sale of the Shares by the Selling Shareholders to BUYER pursuant to this
Agreement. BUYER, each of the Selling Shareholders and the Company agree to
request early termination of the waiting period under the HSR Act. BUYER, each
of the Selling Shareholders and the Company agree to furnish, and to
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Page 34
cause its Affiliates to furnish, promptly to the FTC and the Antitrust
Division any additional information reasonably requested by either of them
pursuant to the HSR Act in connection with such filings and shall diligently
take, or cooperate in the taking of, all steps that are necessary or
reasonably desirable and proper to expedite the termination of the waiting
period under the HSR Act; PROVIDED, HOWEVER, that neither BUYER nor the
Company shall be required to comply with any Burdensome Condition.
SECTION 11.04. CONFIDENTIAL INFORMATION. Each of BUYER, the Selling
Shareholders and the Company agrees that the terms of this Agreement, and the
exchange of any confidential information between the parties to this Agreement
shall be subject to the terms of the Confidentiality Agreement.
SECTION 11.05. TERMINATION OF AGREEMENT. (a) This Agreement and
the obligations to consummate the transactions contemplated hereby may be
terminated upon written notice to the other parties hereto at any time before
the Closing Date as follows:
(i) by BUYER, on the one hand, and by the Selling Shareholders,
on the other hand, if the Closing shall not have occurred on or prior to
December 31, 1997;
(ii) by BUYER, at any time prior to the Closing, if there has
been a material breach of any of the representations or warranties of the
Company or any Selling Shareholder;
(iii) by the Selling Shareholders, at any time prior to Closing,
if there has been a material breach of any of the representations, warranties
or covenants of BUYER; or
(iv) by either the BUYER or the Selling Shareholders if, in its
or their reasonable opinion, a Burdensome Condition exists with reference to
BUYER or the Selling Shareholders, respectively; PROVIDED, HOWEVER, that prior
to such termination such party shall have exercised reasonable efforts to
negotiate with the relevant Governmental Authority for removal of the
Burdensome Condition;
in which case this Agreement and all obligations of the parties
hereunder, except obligations under Section 11.02, 11.04, and 11.13, shall
terminate, unless the parties otherwise mutually agree.
(b) Notwithstanding the provisions of this Section, termination of
this Agreement shall not relieve any party of its liability for breach of any
of the provisions of this Agreement or its obligations under Section 11.13.
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SECTION 11.06. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which shall taken together constitute but one and the same instrument, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 11.07. DESCRIPTIVE HEADINGS. The Article and Section
headings and the Table of Contents used herein are for convenience of reference
only and shall not affect the meanings, interpretation or construction of any
provision of this Agreement.
SECTION 11.08. NOTICES. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service or sent by mail, as follows:
(a) if to BUYER,
Alternative Resources Corporation
100 Tri-State International, Suite 300
Lincolnshire, IL 60069
Telephone: (847) 317-1000
Attention: Richard B. Williams
with a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, IL 60606-5096
Telephone: 312-984-7579
Attention of: Neal J. White, Esq.
(b) if to the Company:
CGI Systems, Inc.
301 Lindenwood Drive, Suite
Malvern, PA 19355
Telephone: (610) 993-8082
Attention: Mr. Joseph Ferrandino
with a copy to:
International Business Machines Corporation
New Orchard Road,
Armonk, NY 10504
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Telephone: (914) 499-7800
Attention: Mr. Lee A. Dayton
(c) if to CGI:
International Business Machines Corporation
New Orchard Road,
Armonk, NY 10504
Telephone: (914) 499-7800
Attention: Mr. Lee A. Dayton
with a copy to:
International Business Machines Corporation
New Orchard Road,
Armonk, NY 10504
Telephone: (914) 499-4788
Attention: Mr. Donald D. Westfall
(d) if to Ferrandino:
Mr. Joseph R. Ferrandino
2573 Crum Creek Drive
Berwyn, PA 19312
with a copy to:
James D. Rosener, Esq.
Pepper, Hamilton & Scheetz
1235 Westlakes Drive
Berwyn, PA 19312
(e) if to Sheridan:
Mr. Thomas K.Sheridan
191-05 35th Avenue
Auburdale, NY 11358
with a copy to:
James D. Rosener, Esq.
Pepper, Hamilton & Scheetz
1235 Westlakes Drive
Berwyn, PA 19312
Notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier
service, or
<PAGE>
Page 37
on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered or mailed (properly addressed) to such
party as provided in this Section or in accordance with the latest written
direction from such party given in accordance with this Section. Any address
or addressee specified above may be changed by written notice to the other
parties in accordance with this Section.
SECTION 11.09. CHOICE OF LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed entirely within such State, without
regard to the conflicts of law principles of such State.
SECTION 11.10. ASSIGNMENT. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by any party to this Agreement without the prior written consent of
the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
SECTION 11.11. NO THIRD-PARTY BENEFICIARIES. Except as provided in
Article VIII, this Agreement is for the sole benefit of the parties hereto and
nothing herein expressed or implied shall give or be construed to give to any
Person, other than the parties and the Indemnities, any legal or equitable
rights hereunder.
SECTION 11.12. WAIVER AND AMENDMENT. (a) No waiver of any provision
of this Agreement or consent to any departure therefrom shall in any event be
effective unless the same shall be expressly permitted hereby, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice or demand on any party in any case shall
entitle any party to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing,
expressly identified as a waiver, amendment or modification hereof, entered
into by BUYER and the Selling Shareholders. To be effective, any consent,
approval, notice, waiver or demand required or permitted under this Agreement
must refer specifically to this Agreement and the provisions to which it
relates, describe with particularity any right or obligation consented to,
approved, waived or purported to be violated, and be signed by an authorized
signatory of the party making or giving such consent, approval, notice, waiver
or demand.
SECTION 11.13. EXPENSES. Each party to this Agreement shall pay any
and all fees and expenses incurred by it in connection with the
<PAGE>
Page 38
negotiation, preparation, execution and the performance prior to the Closing
of this Agreement, except that the Company will pay the reasonable legal fees
submitted by Pepper, Hamilton & Scheetz for their work on behalf of the
Selling Shareholders.
SECTION 11.14. WAIVER OF JURY TRIAL. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of the other party has
represented, expressly or otherwise, that the other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section.
SECTION 11.15. SEVERABILITY; COMPLIANCE WITH LAWS. In the event any
one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 11.16. JURISDICTION; CONSENT TO SERVICE OF PROCESS;
REMEDIES. (a) Each party hereby irrevocably and unconditionally submits, for
itself and its properties, to the exclusive jurisdiction of any New York State
court sitting in the County of New York or Westchester, any Federal court of
the United States of America sitting in the Southern District of New York, and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, by removal or otherwise, in such Federal court. Each
party agrees that a final judgment in any such suit, action or proceeding shall
be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby in any New York State court sitting in the County of New
York or Westchester, or any Federal court sitting in the Southern District of
New York. Each party hereby irrevocably waives, to the fullest extent
permitted by law, the
<PAGE>
Page 39
defense of an inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
(c) No party to this Agreement may move to (i) transfer any such
suit, action or proceeding from such New York State court or Federal court to
another jurisdiction, (ii) consolidate any such suit, action or proceeding
brought in such New York State court or Federal court with a suit, action or
proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York State court or Federal court for the
purpose of bringing the same in another jurisdiction.
(d) Each party to this Agreement irrevocably consents to service of
process by personal delivery or by registered or certified mail, return receipt
requested, in the manner otherwise provided for notices in Section 10.08.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
SECTION 11.17. CONSTRUCTION; REPRESENTATION. This Agreement has
been negotiated by the parties and their respective counsel and will be fairly
interpreted in accordance with its terms and without any strict construction in
favor of or against any party. Each Selling Shareholder acknowledges that he
has reviewed the terms and conditions of this Agreement with counsel, is
capable of evaluating the merits and risks of entering into this Agreement and
the transactions contemplated hereby and has the capacity to protect his own
interests.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
Page 40
IN WITNESS WHEREOF, this Agreement has been executed as of the day
and year first above written.
Alternative Resources Corporation
By:
---------------------------------------------
Name:
Title:
INTERNATIONAL BUSINESS MACHINES CORPORATION
By:
---------------------------------------------
Name:
Title:
Compagnie Generale d'Informatique
By:
---------------------------------------------
Name:
Title:
Joseph R. Ferrandino
By:
---------------------------------------------
Name:
Title:
Thomas K. Sheridan
By:
---------------------------------------------
Name:
Title:
<PAGE>
Amendment Number One Dated as
of November 7, 1997 to Stock
Purchase and Sale Agreement Dated
as of October 6, 1997 among
Alternative Resources Corporation,
Compagnie Generale d'Informatique,
Joseph R. Ferrandino, Thomas K.
Sheridan and International Business
Machines Corporation
WHEREAS, Alternative Resources Corporation, Compagnie Generale
d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan and International
Business Machines Corporation (the "Parties") have entered into a Stock
Purchase and Sale Agreement Dated as of October 6, 1997 (the "Stock Purchase
Agreement"); and
WHEREAS, the Parties wish to amend the Stock Purchase Agreement to
provide for an additional escrow agreement among certain of the Parties, to
amend the payment provisions thereof and to amend Exhibit G thereto;
NOW THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which each of the
Parties hereby acknowledges, the Parties hereby agree to amend the Stock
Purchase Agreement as follows:
"SECTION 1.01. CERTAIN DEFINITIONS." is amended to add the
following, new definition:
"I/T STAFFING REVENUES ESCROW AGREEMENT" shall mean the I/T
Staffing Revenues Escrow Agreement to be dated as of the Closing Date among
CGI, Ferrandino, Sheridan and Buyer and the Escrow Agent, in the form annexed
hereto as Exhibit H.
"SECTION 2.01. PURCHASE AND SALE OF SHARES." shall be amended by
amending subsection (b) thereof as follows:
"(b) Sheridan shall sell to the BUYER and BUYER shall purchase
from Sheridan sixteen thousand twenty (16,020) shares of the Company for one
million six hundred forty four thousand three hundred ninety two dollars and
forty four cents $(1,644,392.44), less (i) forty thousand dollars
($40,000.00), which constitutes the remaining principal balance remaining due
as of the Closing Date from Sheridan to the Company, and (ii) seventy three
thousand five hundred dollars ($73,500.00) which constitutes the remaining
principal balance remaining due as of the Closing Date from Sheridan to CGI
Corp.;"
"SECTION 2.02. PAYMENT OF THE PURCHASE PRICE." is amended as
follows:
<PAGE>
Subsection (a) is amended to read as follows: "(a)(i) to CGI
the amount of fifty three million one hundred seventy three thousand four
hundred sixty one dollars ($53,173,461.00) by wire transfer of immediately
available funds to the account designated by CGI at least two Business Days
prior to the Closing Date, and (ii) seventeen million seven hundred twenty
four thousand four hundred eighty eight dollars ($17,724,488.00) to the
Escrow Agent to be held by the Escrow Agent for the account of CGI pursuant
to the terms and conditions of the I/T Staffing Revenues Escrow Agreement;"
Subsection (c) is amended to read as follows: "(c) one-quarter
(1/4) of the respective amounts set forth in Section 2.01(a) and 2.01(b) to
the Escrow Agent to be held by the Escrow Agent pursuant to the terms and
conditions of the Escrow Agreement; and"
A new Subsection (d) is added as follows; "(d) one-quarter
(1/4) of the respective amounts set forth in Section 2.01(a) and 2.01(b) to
the Escrow Agent to be held by the Escrow Agent for the account of Ferrandino
and Sheridan, respectively, pursuant to the terms and conditions of the I/T
Staffing Revenues Escrow Agreement."
"SECTION 4.17 NTS LICENSES." shall be amended as follows:
"Except as specified in Exhibit G hereto, the Company has not
received any notice or other communication, whether written or, to the
knowledge of the Company, oral, to the effect that the number of NTS licenses
will be increased or that the nature and scope or the value of the NTS
license to the Company will be materially impaired."
EXHIBIT G shall be amended by adding to it a copy of the October
30, 1997 letter from Mr. Patrick J. O'Neil to Mr. Richard B. Williams (copy
attached).
EXHIBIT H (a new exhibit) comprised of the "I/T Staffing Revenues
Escrow Agreement" (copy attached) shall be added to the Stock Purchase
Agreement.
Except as otherwise expressly modified hereby, the Parties hereby agree
that all terms and conditions of the Stock Purchase Agreement remain
unmodified and in full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.
Alternative Resources Corporation
By:
------------------------------
Name:
Title:
<PAGE>
[Signature Page to Amendment No. 1 dated as of November 7, 1997
to Stock Purchase and Sale Agreement Dated as of October 6, 1997 among
Alternative Resources Corporation, Compagnie Generale d'Informatique,
Joseph R. Ferrandino, Thomas K. Sheridan and
International Business Machines Corporation]
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By:
-----------------------------
Name:
Title:
Compagnie Generale d'Informatique
By:
-----------------------------
Name:
Title:
Joseph R. Ferrandino
By:
-----------------------------
Name:
Title:
Thomas K. Sheridan
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT H
I/T STAFFING REVENUES ESCROW AGREEMENT
by and among
COMPAGNIE GENERALE d'INFORMATIQUE,
JOSEPH R. FERRANDINO,
THOMAS K. SHERIDAN,
ALTERNATIVE RESOURCES CORPORATION
AND
HARRIS TRUST AND SAVINGS BANK
DATED
November 7, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
ESCROW
1.1. Creation of Escrow. . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Buyer's Deposits. . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Acceptance of Escrow Deposit. . . . . . . . . . . . . . . . . . 2
1.4. Interest on Escrow Deposits . . . . . . . . . . . . . . . . . . 2
ARTICLE II
DISBURSEMENTS
2.1. Disbursement Certificates and Withdrawal Notices. . . . . . . . 3
2.2. Time of Disbursements . . . . . . . . . . . . . . . . . . . . . 5
2.3. Procedure for Disbursements to Buyer. . . . . . . . . . . . . . 5
2.4. Final Disbursement to Buyer . . . . . . . . . . . . . . . . . . 5
ARTICLE III
TERMINATION OF ESCROW
ARTICLE IV
SETTLEMENT
ARTICLE V
ESCROW AGENT'S DUTIES
5.1. Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. Limitation of Liability . . . . . . . . . . . . . . . . . . . . 6
5.3. Counsel to Escrow Agent . . . . . . . . . . . . . . . . . . . . 7
5.4. Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5. Receipt of Notices. . . . . . . . . . . . . . . . . . . . . . . 7
-i-
<PAGE>
-ii-
<PAGE>
ARTICLE VI
SUCCESSOR ESCROW AGENT
ARTICLE VII
EXPENSES
7.1. Ordinary Expenses and Charges . . . . . . . . . . . . . . . . . . 8
7.2. Escrow Agent's Attorneys Fees . . . . . . . . . . . . . . . . . . 8
7.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.4. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII
INVESTMENT OF DEPOSITS
8.1. Segregation of Deposits . . . . . . . . . . . . . . . . . . . . . 9
8.2. Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . 9
8.3. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IX
NOTICES
9.1. Method of Notice. . . . . . . . . . . . . . . . . . . . . . . . . 9
9.2. Place for Delivery of Notices . . . . . . . . . . . . . . . . . . 10
9.3. Change of Address . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE X
MISCELLANEOUS
10.1. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 12
10.2. Parties in Interest. . . . . . . . . . . . . . . . . . . . . 12
10.3. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 12
10.4. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 12
10.5. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . 13
10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . 13
10.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.8. Currency . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-iii-
<PAGE>
-iv-
<PAGE>
EXHIBITS
Exhibit 1 Form of Joint Disbursement Certificate
ANNEX
Annex I Schedule of Fees
Annex II Permitted Investments
-v-
<PAGE>
I/T STAFFING REVENUE ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made this 7th day of November 1997, by and among
ALTERNATIVE RESOURCES CORPORATION, a Delaware corporation ("Buyer"), COMPAGNIE
GENERALE d'INFORMATIQUE ("CGI"), JOSEPH R. FERRANDINO ("Ferrandino"), THOMAS K.
SHERIDAN ("Sheridan") (CGI, Ferrandino and Sheridan hereinafter collectively
referred to as the "Sellers"), and HARRIS TRUST AND SAVINGS BANK (the "Escrow
Agent"). Capitalized terms used in this Escrow Agreement shall unless otherwise
defined herein have the meanings ascribed to them in the Purchase and Sale
Agreement referenced below.
WHEREAS, pursuant to a Stock Purchase and Sale Agreement dated as of October 6,
1997 (the "Purchase and Sale Agreement") among CGI, International Business
Machines Corporation ("IBM"), Ferrandino, Sheridan and Buyer, Buyer has agreed
to purchase from CGI all outstanding shares of CGI Corporation, a Delaware
corporation, and from Ferrandino and Sheridan the Shares of CGI Systems, Inc.
owned by them (the "Shares"), and the Sellers have agreed to sell their Shares
to Buyer, subject to the terms and conditions of the Purchase and Sale
Agreement;
WHEREAS, the Purchase and Sale Agreement contemplates that at the Closing on
November 7, 1997, Buyer shall deposit a portion of the Purchase Price otherwise
payable to Sellers into an escrow account from which Buyer may draw in the event
that Buyer, or its Affiliates, including CGI Systems, Inc., does not achieve
certain annual revenues under certain contracts described in Section
2.1.1(a)(iv);
WHEREAS, the parties hereto desire to establish the Escrow contemplated by
Section 2.02(d) of the Purchase and Sale Agreement consisting of three accounts,
as follows:
For the account of CGI: the CGI Deposit consisting of $17,724,488.00
For the account of Ferrandino: the Ferrandino Deposit consisting of
$1,864,414.00
For the account of Sheridan: the Sheridan Deposit consisting of
$411,098.00
NOW, THEREFORE, in consideration of the premises and promises contained herein,
the parties intending to be legally bound mutually agree as follows:
<PAGE>
ARTICLE I
ESCROW
1.1 Creation of Escrow.
Buyer and Sellers hereby establish the Escrow and mutually acknowledge that this
is the Escrow Agreement contemplated by Section 2.02(d) of the Purchase and Sale
Agreement. The Escrow Agent agrees to act as escrow agent for the benefit of
Buyer and Sellers in accordance with the terms of this Escrow Agreement.
1.2 Buyer's Deposits.
Buyer hereby delivers to the Escrow Agent into escrow hereunder, and the Escrow
Agent acknowledges and accepts receipt of, funds:
(a) for the account of CGI for the amount of the CGI Deposit;
(b) for the account of Ferrandino in the amount of the Ferrandino Deposit,
and
(c) for the account of Sheridan in the amount of the Sheridan Deposit.
The CGI Deposit, Ferrandino Deposit and the Sheridan Deposit are collectively
referred to as the "Escrow Deposits."
1.3 ACCEPTANCE OF ESCROW DEPOSITS.
The Escrow Agent agrees to hold and disburse the Escrow Deposits, including all
accrued and accumulated interest and earnings thereon, in accordance with the
terms hereof.
1.4 INTEREST ON ESCROW DEPOSITS.
The Buyer and Sellers hereby agree that the Escrow Deposits shall earn interest
at a rate of 6.5% per annum for the benefit of the respective Sellers from the
Closing Date through and including the termination of the Escrow and this Escrow
Agreement pursuant to Article III below. To the extent that the actual
investment yield is insufficient to pay interest at this rate or the Escrow
Deposits decline in value due to investment results or otherwise, Buyer agrees
to deposit such additional funds into the Escrow as necessary to make the
disbursements to Sellers required under Article II of this Agreement. Any
excess funds in the Escrow following disbursement to Sellers of all amounts
required under Article II shall be the property of, and shall be paid out to,
Buyer.
-2-
<PAGE>
ARTICLE II
DISBURSEMENTS
2.1 DISBURSEMENT CERTIFICATES AND WITHDRAWAL NOTICES.
2.1.1. Upon receipt of a Disbursement Certificate pursuant to Section
2.1.2, below, the Escrow Agent shall disburse from or otherwise deliver the
Annual Buyer Distribution to Buyer and the Seller's Annual Earn-out Amount to
each of the Sellers from the Escrow Deposits, each such disbursement to be
calculated pursuant to this Section 2.1.1.
(a) For purposes of this Section 2.1.1:
(i) "ANNUAL AGGREGATE EARN-OUT AMOUNT" shall be calculated by
multiplying the Earn-out Ratio (as defined below) for a given
calendar year by the "Earn-out Target Payout" for such calendar
year from the table in Section 2.1.1(vi), below, plus interest
on such amount calculated at the rate of 6.5% per annum to the
date of disbursement.
(ii) "ANNUAL BUYER DISTRIBUTION" shall be calculated by subtracting
the Annual Aggregate Earn-out Amount (as defined above) for a
given calendar year from the "Earn-out Target Payout" for such
calendar year from the table in Section 2.1.1(vi), below, plus
interest, to the extent the investment yield on the Escrow
Deposit has been sufficient to permit such payment of interest
without reducing the remaining potential Earn-out Target Payout
amount, on such amount calculated at the rate of 6.5% per annum
to the date of disbursement.
(iii) "EARN-OUT RATIO" shall be calculated by dividing the
[...*...], below; provided, however, that the parties
hereby agree that if the Earn-out Ratio for any calendar year
is greater than or equal to 1.00, then the Earn-out Ratio shall
equal 1.00; and provided further, however, that if the Earn-out
Ratio for any calendar year is less than the "Earn-out Floor
Percentage" for such calendar year from the table in Section
2.1.1(vi), below, then the Earn-out Ratio shall equal zero.
(iv) [...*...]
- ----------------------
* CONFIDENTIAL TREATMENT REQUESTED
-3-
<PAGE>
[...*...]
(v) "SELLER'S ANNUAL EARN-OUT AMOUNT" shall be calculated by
multiplying the Annual Aggregate Earn-out Amount for a given
calendar year by each Seller's Pro Rata Portion.
(vi) TABLE 2.1.1.
Year 1998 1999 2000
---- ---- ---- ----
[...*...]
[...*...]
[...*...]
(b) On or before January 15 of each of calendar years 1999, 2000 and 2001,
Buyer shall deliver to IBM Buyer's calculation of the [...*...] for
the previous calendar year. On or before January 31 of each of calendar
years 1999, 2000 and 2001, IBM shall notify Buyer whether or not it agrees
with Buyer's calculation of the [...*...] for the previous calendar
year. If IBM agrees with Buyer's calculation of the [...*...] for
the previous calendar year, then the Buyer and the Sellers shall
immediately prepare and execute a Disbursement Certificate in accordance
with Section 2.1.2, below. If IBM disagrees with Buyer's calculation of
the [...*...] for the previous calendar year, and IBM and Buyer
cannot agree on such [...*...] within fifteen (15) days of notice of
IBM's disagreement, then the Buyer and IBM shall mutually agree upon and
appoint a nationally recognized accounting firm to determine the [...*...]
for the previous calendar year, which determination the parties hereby
agree shall be final and binding upon all parties.
2.1.2. From time to time, as specified herein, the Escrow Agent shall
disburse from or otherwise deliver out of the Escrow to Buyer and Sellers, as
the case may be, such funds from the Escrow Deposits as shall be specified in a
Disbursement Certificate, each of which shall be substantially in the form of
Exhibit 1 (a "Disbursement Certificate").
2.1.3. Each executed Disbursement Certificate shall be completed by the
party or parties executing such certificate with the following information:
- -------------------
* CONFIDENTIAL TREATMENT REQUESTED
-4-
<PAGE>
(a) the amount of the Annual Buyer Distribution (calculated pursuant to
Section 2.1.1 above); and
(b) the amount of the Seller's Annual Earn-out Amount for each of CGI,
Ferrandino and Sheridan to be disbursed.
2.2 TIME OF DISBURSEMENTS.
If the Escrow Agent receives a Disbursement Certificate, then the Escrow Agent
shall make the disbursements required by such Disbursement Certificate on the
second Business Day (or such other date as may be specified in the Disbursement
Certificate) following receipt by the Escrow Agent of such Disbursement
Certificate.
2.3 PROCEDURE FOR DISBURSEMENTS TO BUYER AND SELLERS.
All disbursements of funds to Buyer and Sellers from the Escrow Deposits by the
Escrow Agent shall be made by wire transfer, in the case of CGI or Buyer, to the
account specified in the Disbursement Certificate and in the case of Ferrandino
or Sheridan, to:
The Bryn Mawr Trust Company, as escrow agent under Escrow Agreement
dated as of November 7, 1997 to which Ferrandino, Sheridan
and Buyer are parties.
801 Lancaster Avenue
Bryn Mawr, PA 19010
ABA Number: 031908485
Account Number: 069-6964 for further credit to account number 07164-00
Resources/Ferrandino/Sheridan Escrow Account
for the respective account of Ferrandino or Sheridan as the case may be. In
each case, evidence of the wire transfer shall be delivered to the respective
Seller on whose deposit the disbursement is to be drawn and to Buyer.
2.4 FINAL DISBURSEMENT TO BUYER.
Disbursement of any amounts remaining in the Escrow Deposits on termination of
the Escrow shall be made to the Buyer after notice by Sellers to Escrow Agent,
or upon entry of a decision by court of competent jurisdiction to the effect,
that all required disbursements to the Sellers have been made.
-5-
<PAGE>
ARTICLE III
TERMINATION OF ESCROW
The Escrow and this Escrow Agreement shall terminate upon the earlier to occur
of the following:
(a) disbursement of all Escrow Deposits hereunder;
(b) joint written direction from all of the Sellers and Buyer; or
(c) February 28, 2001;
provided, however, that notwithstanding the foregoing, the Escrow and this
Escrow Agreement shall remain in effect until all required disbursements to the
Sellers have been made and all disputed disbursements between Buyer and Sellers
have been resolved and the Escrow Agent has disbursed all amounts held in the
Escrow Accounts.
ARTICLE IV
SETTLEMENT
Anything to the contrary herein notwithstanding, the Escrow Agent may at any
time disburse any portion of the CGI Deposit, the Ferrandino Deposit or of the
Sheridan Deposits held by it hereunder as directed by a joint written direction
from Buyer and CGI, Ferrandino or Sheridan, respectively, as the case may be.
ARTICLE V
ESCROW AGENT'S DUTIES
5.1 STANDARD OF CARE.
The Escrow Agent undertakes to perform such duties and only such duties as are
specifically set forth herein and to use the same degree of care and skill in
its exercise as an ordinary prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
5.2 LIMITATION OF LIABILITY.
The Escrow Agent shall not be liable except for the performance of such duties
as are specifically set forth herein and no implied covenants or obligations
shall be read into this
-6-
<PAGE>
Escrow Agreement against the Escrow Agent. The Escrow Agent shall not be
liable for any error of judgment made in good faith by any of its officers,
unless it shall be proved that the Escrow Agent was negligent in ascertaining
the pertinent facts.
5.3 COUNSEL TO ESCROW AGENT.
The Escrow Agent may consult with counsel selected by the Escrow Agent and the
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered under this Escrow
Agreement in good faith and in accordance with such advice or opinion of
counsel.
5.4 RELIANCE.
In the absence of willful misconduct or negligence on its part, the Escrow Agent
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any instrument or signature reasonably
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons.
5.5 RECEIPT OF NOTICES.
The Escrow Agent is hereby expressly authorized and directed to disregard any
and all notices or warnings given by any of the parties hereto, or by any person
or corporation, excepting the notices provided for in this Escrow Agreement.
ARTICLE VI
SUCCESSOR ESCROW AGENT
In the event that the Escrow Agent shall resign or in the event that the Escrow
Agent shall be removed by the mutual consent of Buyer and Sellers, a successor
Escrow Agent shall be appointed by mutual agreement of Buyer and Sellers;
provided, however, that failure to agree upon any successor Escrow Agent in the
event of any vacancy shall not terminate this Escrow Agreement, and in such
event Buyer shall have the right to appoint as successor Escrow Agent a national
bank or trust company in good standing doing business within the City of Chicago
which shall, upon acceptance thereof, be entitled to all the rights, powers and
indemnities hereunder as if originally named herein. The Escrow Agent may
resign at any time by giving written notice thereof to the other parties hereto,
but such resignation shall not become effective until a successor Escrow Agent
shall have been appointed and shall have accepted such appointment in writing.
If an instrument of acceptance by a successor Escrow Agent shall not have been
delivered to the Escrow Agent within thirty (30) days after the giving of such
notice of resignation, the resigning Escrow Agent may, at the expense of Buyer,
petition any court of competent jurisdiction for the appointment of a successor
Escrow Agent.
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<PAGE>
ARTICLE VII
EXPENSES
7.1 ORDINARY EXPENSES AND CHARGES.
Buyer agrees to pay the Escrow Agent a fee according to the fee schedule
attached hereto as Annex I. Fees are payable in advance as compensation for the
ordinary administrative services to be rendered hereunder and Buyer agrees to
pay all the expenses of the Escrow Agent, including the indemnity provided in
Section 7.3 hereof. To the extent such fees are not paid by Buyer, the
foregoing shall be paid from the Escrow Account after written notice from the
Escrow Agent to the Buyer.
7.2 ESCROW AGENT'S ATTORNEYS FEES.
Any attorneys fees incurred by Escrow Agent in connection with the performance
of its duties and obligations under this Escrow Agreement shall be borne by
Buyer.
7.3 INDEMNIFICATION.
Buyer agrees to indemnify the Escrow Agent and hold it harmless against all
proper charges and expenses of the Escrow Agent, including reasonable charges
and expenses of its counsel, in defending any action brought against it by
reason of its acting as the Escrow Agent hereunder, unless it is determined in
such action that the Escrow Agent acted in violation of its duties and
obligations hereunder. The Escrow Agent costs and expenses of enforcing this
right of indemnification also shall be paid by Buyer. This right of
indemnification shall survive the termination of this Escrow Agreement, and the
removal or resignation of the Escrow Agent.
7.4 CONTRIBUTION
Buyer and Sellers agree among themselves that, in the case when the Escrow Agent
incurs attorney fees and costs because a Seller commences an action or threatens
such action against the Escrow Agent and such Seller then agrees or is
determined to have acted improperly or against whose interest the matter is
decided, then such Seller or Sellers shall promptly reimburse the Buyer for any
amounts paid by Buyer to the Escrow Agent pursuant to this Article VII together
with interest on such amounts at the prime rate as from time to time published
in The Wall Street Journal.
-8-
<PAGE>
ARTICLE VIII
INVESTMENT OF DEPOSITS
8.1 SEGREGATION OF DEPOSITS.
The Escrow Agent will invest the Escrow Deposit as one account.
8.2 INVESTMENT OF FUNDS.
8.2.1. The Escrow Agent will invest the amounts deposited hereunder in
such securities or types of investments as Buyer shall direct in writing
consistent with the investment guidelines attached hereto as Annex II. The
parties acknowledge that the Escrow Agent shall not be responsible for any
diminution in escrow funds due to the losses resulting from investments made
pursuant to this Article VIII.
8.2.2. All costs incurred by Escrow Agent and fees charged by Escrow
Agent in connection with the establishment of any brokerage accounts or
administering any transactions through such accounts, other than those
directly administered by Escrow Agent through Escrow Agent's own bond
department shall be charged to the Escrow Deposit.
8.3 TAX MATTERS.
For Federal income tax purposes, to the extent permitted by law, income
earned on or from the CGI Deposit, the Ferrandino Deposit or the Sheridan
Deposit, respectively, shall be treated by the parties to this Escrow
Agreement as income of CGI, Ferrandino or Sheridan, respectively, under
Section 468B(g) of the Internal Revenue Code of 1986, as amended, to the
extent of 6.5% per annum and thereafter to Buyer. CGI, Ferrandino, Sheridan
and Buyer will provide to the Escrow Agent such forms as are required to
establish an exemption from backup withholding tax on the income of their
respective Escrow Deposits.
ARTICLE IX
NOTICES
9.1 METHOD OF NOTICE.
Notices shall not be deemed to be given until actually received. All
notices, requests, demands and other communications hereunder shall be in
writing and shall be personally delivered or sent by facsimile transmission
with confirming copy sent by overnight courier (such as Express Mail, Federal
Express, etc.) and a delivery receipt obtained and addressed to the intended
recipient as follows:
-9-
<PAGE>
9.2 PLACE FOR DELIVERY OF NOTICES.
(a) If to Buyer:
Alternative Resources Corporation
100 Tri-State International
Suite 300
Lincolnshire, IL 60069
Attn: Richard Williams
Telephone: 847-317-1000
Facsimile: 847-317-1067
IN EACH CASE WITH A COPY TO:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606-5096
Attn: Neal J. White, P.C.
Telephone: 312-984-7579
Facsimile: 312-984-3669
(b) If to CGI:
Compagnie Generale d'Informatique
c/o International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
Attn: Lee A. Dayton
Telephone: 914-499-7800
Facsimile: 914-499-7803
IN EACH CASE WITH A COPY TO:
International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
Attn: Donald D. Westfall
Telephone: 914-499-4478
Facsimile: 914-499-6006
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<PAGE>
(c) If to Ferrandino:
Joseph R. Ferrandino
2573 Crum Creek Drive
Berwyn, PA 19312
Attention: Joseph R. Ferrandino
Telephone:
Facsimile:
WITH A COPY TO:
James D. Rosener
Pepper, Hamilton & Scheetz
1235 Westlakes Drive
Berwyn, PA 19312
Attention: James D. Rosener
Telephone: 610-640-7817
Facsimile: 610-889-1839
(d) If to Sheridan:
Thomas K. Sheridan
191-05 35th Avenue
Auburdale, NY 11358
Attention:
Telephone:
Facsimile:
WITH A COPY TO:
James D. Rosener
Pepper, Hamilton & Scheetz
1235 Westlakes Drive
Berwyn, PA 19312
Attention: James D. Rosener
Telephone: 610-640-7817
Facsimile: 610-889-1839
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<PAGE>
(e) If to the Escrow Agent, to:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attn: Escrow Division, Marianne Tinerella
Telephone: 312-461-2420
Facsimile: 312-461-3525
9.3 CHANGE OF ADDRESS.
Any party may change its address for receiving notice by giving written notice
to the others named above. All such notices shall be given as provided in
Section 9.1 and shall be effective immediately upon confirmation of facsimile
or completion of personal delivery.
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT.
This Escrow Agreement, including Annexes I and II and the Exhibits delivered
pursuant hereto constitute the entire agreement among the parties with respect
to the transactions contemplated hereby and supersede all other agreements and
understandings among the parties.
10.2 PARTIES IN INTEREST.
This Escrow Agreement shall bind and inure to the benefit of the parties named
herein, in each case with respect to the obligations and rights applicable to
them, and their respective, successors.
10.3 COUNTERPARTS.
This Escrow Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
10.4 APPLICABLE LAW.
This Escrow Agreement shall be governed by and construed in accordance with the
internal substantive laws of the State of Illinois. Should any provision of
this Escrow Agreement be
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<PAGE>
determined to be invalid, void or unenforceable by a court of competent
jurisdiction for any reason, the remaining provisions shall remain in full
force and effect.
10.5 AMENDMENT AND WAIVER.
No amendment or waiver of any provision of this Escrow Agreement shall in any
event be effective, unless the same shall be in writing and signed by the
parties hereto, and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
10.6 SEVERABILITY.
Any term or provision of this Escrow Agreement which is held invalid or
unenforceable by a court of competent jurisdiction, shall be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the party intended to be benefitted by
such provision and provisions of this Escrow Agreement.
10.7 HEADINGS.
The section and other headings contained in this Escrow Agreement are for
convenience of reference purposes only and shall not affect in any way the
meaning or interpretation of this Escrow Agreement.
10.8 CURRENCY.
All references herein to dollars are to United States dollars.
[SIGNATURE PAGE FOLLOWS]
-13-
<PAGE>
[SIGNATURE PAGE TO ESCROW AGREEMENT
DATED AS OF NOVEMBER 7, 1997]
IN WITNESS WHEREOF, the undersigned, have caused this Escrow Agreement to be
executed as of the day and year first above written.
COMPAGNIE GENERALE ALTERNATIVE RESOURCES
d'INFORMATIQUE CORPORATION
By:______________________________ By: ______________________________
Name:____________________________ Name:______________________________
Title:___________________________ Title:_____________________________
_________________________________ HARRIS TRUST AND SAVINGS BANK
Joseph R. Ferrandino Escrow Agent
_________________________________ By: ______________________________
Thomas K. Sheridan
Name: ______________________________
Title: ______________________________
-14-
<PAGE>
EXHIBIT 1
DISBURSEMENT CERTIFICATE
The undersigned hereby certifies and directs the Escrow Agent, pursuant to
Section 2.1 of the Escrow Agreement dated as of November 7, 1997 by and among
Compagnie Generale d'Informatique ("CGI"), Joseph R. Ferrandino ("Ferrandino"),
Thomas K. Sheridan ("Sheridan"), Alternative Resources Corporation ("Buyer") and
Harris Trust and Savings (the "Escrow Agent"), to disburse and deliver:
(a) From the CGI Deposit:
(i) to CGI, an aggregate amount of $__________, and
(ii) to Buyer, an aggregate amount of $_________;
(b) From the Ferrandino Deposit:
(i) to Ferrandino, an aggregate amount of $_____________, and
(ii) to Buyer, an aggregate amount of $__________;
(c) From the Sheridan Deposit:
(i) to Sheridan, an aggregate amount of $_____________, and
(ii) to Buyer, an aggregate amount of $_________.
The disbursement(s) shall be paid by Escrow Agent by wire transfer in
immediately available funds as follows:
To CGI:
_______________
_______________
_______________
_______________
To Buyer:
_______________
_______________
_______________
_______________
<PAGE>
To each of Ferrandino or Sheridan, to The Bryn Mawr Trust Company, as
escrow agent, as set forth in Section 2.3.1 of the Escrow Agreement.
Capitalized terms used in this Certificate shall, unless otherwise defined
herein, have the meanings ascribed to them in the Escrow Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day
of __________, ____.
COMPAGNIE GENERALE ALTERNATIVE RESOURCES
d'INFORMATIQUE CORPORATION
By:______________________________ By: ______________________________
Name:____________________________ Name:______________________________
Title:___________________________ Title:_____________________________
_________________________________ ____________________________________
Joseph Ferrandino Thomas Sheridan
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<PAGE>
Annex I
-------
HARRIS TRUST AND SAVINGS BANK
ESCROW AGENT SERVICES
SCHEDULE OF FEES
ACCEPTANCE FEE . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500
. in-house legal review of escrow document
. administrative review of documents
. establishment of appropriate accounts
. participate in pre-closing and closing
ANNUAL ADMINISTRATION FEE (per account). . . . . . . . . . . . . . $ 2,500
. routine administrative functions under the agreement
. custody of investments
ACTIVITY FEES (per account)
. deposit, delivery of securities (per event) . . . . . . . $ 35
. deposit of funds. . . . . . . . . . . . . . . . . . . . . $ 20
. disbursements (checks, wires, etc.) . . . . . . . . . . . $ 20
. disbursements (international wires) . . . . . . . . . . . $ 40
. purchases, sales of individual securities (per event) . . $ 100
. investment in selected money market funds . . . . . . . . $No charge
. asset/transaction report (per statement). . . . . . . . . $ 10
OUT-OF-POCKET
Additionally, the cost of items that can be directly allocated such as
postage, telephone, overnight delivery, etc. incurred during the
routine administration of the agreement will be billed separately.
All reasonable outside legal fees will be billed as incurred.
Acceptance of the appointment as escrow agent is contingent upon our mutual
agreement to and execution of an escrow document.
The foregoing schedule was designed to apply to Escrow Agent appointments which
require the usual amount of responsibility, time and attention. Fees are
subject to our review and acceptance of the governing documentation, and to
reasonable adjustment as changes in laws, procedures, or costs of doing business
demand. If in any specific situation, the agent's duties and responsibilities
are greater than customary or additional work becomes necessary because of the
imposition of governmental legislation or regulation, we reserve the right to
adjust our fees. Fees for services not specifically covered in this schedule
will be assessed in an amount commensurate with the services rendered. The
acceptance fee and first year's administration fee are billed at closing.
<PAGE>
ANNEX II
to
ESCROW AGREEMENT
relating to
PERMITTED INVESTMENTS
I. Debt instruments of any federal or state government or agency or political
subdivision thereof;
II. Debt instruments of any corporation rated by Standard & Poors as BB or
better or by Moody's Investors Service as B or better;
III. Equity securities in the S&P 500 or which otherwise have a market
capitalization in excess of $1,000,000,000;
IV. Money market instruments;
V. Mutual funds investing in any of the foregoing.
<PAGE>
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . Page 1
ARTICLE II
THE CREDITS
2.1. Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13
2.2. Required Payments; Termination. . . . . . . . . . . . . . . . . . Page 13
2.3. Ratable Loans . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13
2.4. Types of Advances . . . . . . . . . . . . . . . . . . . . . . . . Page 13
2.5. Commitment Fee; Reductions in Aggregate Commitment. . . . . . . . Page 13
2.6. Minimum Amount of Each Advance. . . . . . . . . . . . . . . . . . Page 14
2.7. Optional Principal Payments . . . . . . . . . . . . . . . . . . . Page 14
2.8. Method of Selecting Types and Interest Periods for New Advances . Page 14
2.9. Conversion and Continuation of Outstanding Advances . . . . . . . Page 15
2.10. Changes in Interest Rate, etc.. . . . . . . . . . . . . . . . . . Page 15
2.11. Rates Applicable After Default. . . . . . . . . . . . . . . . . . Page 15
2.12. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . Page 16
2.13. Noteless Agreement; Evidence of Indebtedness. . . . . . . . . . . Page 16
2.14. Telephonic Notices. . . . . . . . . . . . . . . . . . . . . . . . Page 17
2.15. Interest Payment Dates; Interest and Fee Basis. . . . . . . . . . Page 17
2.16. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions. . . . . . . . . . . . . . Page 17
2.17. Lending Installations . . . . . . . . . . . . . . . . . . . . . . Page 17
2.18. Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . Page 18
ARTICLE III
YIELD PROTECTION; TAXES
3.1. Yield Protection. . . . . . . . . . . . . . . . . . . . . . . . . Page 18
3.2. Changes in Capital Adequacy Regulations . . . . . . . . . . . . . Page 19
3.3. Availability of Types of Advances . . . . . . . . . . . . . . . . Page 20
3.4. Funding Indemnification . . . . . . . . . . . . . . . . . . . . . Page 20
3.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 20
3.6. Lender Statements; Survival of Indemnity. . . . . . . . . . . . . Page 22
Page i
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Advance . . . . . . . . . . . . . . . . . . . . . Page 22
4.2. Each Advance. . . . . . . . . . . . . . . . . . . . . . . Page 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Existence and Standing. . . . . . . . . . . . . . . . . . Page 24
5.2. Authorization and Validity. . . . . . . . . . . . . . . . Page 24
5.3. No Conflict; Government Consent . . . . . . . . . . . . . Page 25
5.4. Financial Statements. . . . . . . . . . . . . . . . . . . Page 25
5.5. Material Adverse Change . . . . . . . . . . . . . . . . . Page 25
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . Page 25
5.7. Litigation and Contingent Obligations . . . . . . . . . . Page 26
5.8. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . Page 26
5.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . Page 26
5.10. Accuracy of Information . . . . . . . . . . . . . . . . . Page 26
5.11. Regulation U. . . . . . . . . . . . . . . . . . . . . . . Page 26
5.12. Material Agreements . . . . . . . . . . . . . . . . . . . Page 27
5.13. Compliance With Laws. . . . . . . . . . . . . . . . . . . Page 27
5.14. Ownership of Properties . . . . . . . . . . . . . . . . . Page 27
5.15. Plan Assets; Prohibited Transactions. . . . . . . . . . . Page 27
5.16. Environmental Matters.. . . . . . . . . . . . . . . . . . Page 27
5.17. Investment Company Act. . . . . . . . . . . . . . . . . . Page 27
5.18. Public Utility Holding Company Act. . . . . . . . . . . . Page 28
5.19. Post-Retirement Benefits. . . . . . . . . . . . . . . . . Page 28
5.20. Insurance . . . . . . . . . . . . . . . . . . . . . . . . Page 28
5.21. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . Page 28
5.22 Full Disclosure.. . . . . . . . . . . . . . . . . . . . . Page 28
ARTICLE VI
COVENANTS
6.1. Financial Reporting . . . . . . . . . . . . . . . . . . . Page 29
6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . Page 31
6.3. Notice of Default . . . . . . . . . . . . . . . . . . . . Page 31
6.4. Conduct of Business . . . . . . . . . . . . . . . . . . . Page 31
Page ii
<PAGE>
6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . Page 31
6.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . Page 31
6.7. Compliance with Laws. . . . . . . . . . . . . . . . . . . Page 31
6.8. Maintenance of Properties . . . . . . . . . . . . . . . . Page 31
6.9. Inspection. . . . . . . . . . . . . . . . . . . . . . . . Page 32
6.10. Dividends . . . . . . . . . . . . . . . . . . . . . . . . Page 32
6.11. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . Page 32
6.12. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . Page 32
6.13. Sale of Assets. . . . . . . . . . . . . . . . . . . . . . Page 32
6.14. Investments and Acquisitions. . . . . . . . . . . . . . . Page 33
6.15. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . Page 33
6.16. Capital Expenditures. . . . . . . . . . . . . . . . . . . Page 34
6.17. Rentals . . . . . . . . . . . . . . . . . . . . . . . . . Page 34
6.18. Affiliates. . . . . . . . . . . . . . . . . . . . . . . . Page 34
6.19. Amendments to Agreements. . . . . . . . . . . . . . . . . Page 34
6.20. Sale of Accounts. . . . . . . . . . . . . . . . . . . . . Page 35
6.21. Sale and Leaseback Transactions and other
Off-Balance Sheet Liabilities. . . . . . . . . . . . . . Page 35
6.22. Contingent Obligations. . . . . . . . . . . . . . . . . . Page 35
6.24. Financial Covenants . . . . . . . . . . . . . . . . . . . Page 35
6.24.1. Fixed Charge Coverage Ratio. . . . . . . . . . . Page 35
6.24.2. Leverage Ratio . . . . . . . . . . . . . . . . . Page 35
6.24.3. Minimum Net Worth. . . . . . . . . . . . . . . . Page 35
6.25 Initial Syndication Period. . . . . . . . . . . . . . . . Page 35
6.26 Additional Subsidiaries . . . . . . . . . . . . . . . . . Page 35
6.27 Certain Post Closing Matters. . . . . . . . . . . . . . . Page 36
6.28 Negative Pledges. . . . . . . . . . . . . . . . . . . . . Page 36
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. . . . . . . . . . . . . . . . . . . . . . . Page 39
8.2. Amendments. . . . . . . . . . . . . . . . . . . . . . . . Page 39
8.3. Preservation of Rights. . . . . . . . . . . . . . . . . . Page 40
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations . . . . . . . . . . . . . . . Page 40
9.2. Governmental Regulation . . . . . . . . . . . . . . . . . Page 41
Page iii
<PAGE>
9.3. Headings. . . . . . . . . . . . . . . . . . . . . . . . . Page 41
9.4. Entire Agreement. . . . . . . . . . . . . . . . . . . . . Page 41
9.5. Several Obligations; Benefits of this Agreement . . . . . Page 41
9.6. Expenses; Indemnification . . . . . . . . . . . . . . . . Page 41
9.7. Numbers of Documents. . . . . . . . . . . . . . . . . . . Page 41
9.8. Accounting. . . . . . . . . . . . . . . . . . . . . . . . Page 42
9.9. Severability of Provisions. . . . . . . . . . . . . . . . Page 42
9.10. Nonliability of Lenders . . . . . . . . . . . . . . . . . Page 42
9.11. Confidentiality . . . . . . . . . . . . . . . . . . . . . Page 42
9.12. Nonreliance . . . . . . . . . . . . . . . . . . . . . . . Page 42
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship . . . . . . . . . . . Page 43
10.2. Powers. . . . . . . . . . . . . . . . . . . . . . . . . . Page 43
10.3. General Immunity. . . . . . . . . . . . . . . . . . . . . Page 43
10.4. No Responsibility for Loans, Recitals, etc. . . . . . . . Page 43
10.5. Action on Instructions of Lenders . . . . . . . . . . . . Page 44
10.6. Employment of Agents and Counsel. . . . . . . . . . . . . Page 44
10.7. Reliance on Documents; Counsel. . . . . . . . . . . . . . Page 44
10.8. Agent's Reimbursement and Indemnification . . . . . . . . Page 44
10.9. Notice of Default . . . . . . . . . . . . . . . . . . . . Page 45
10.10. Rights as a Lender. . . . . . . . . . . . . . . . . . . . Page 45
10.11. Lender Credit Decision. . . . . . . . . . . . . . . . . . Page 45
10.12. Successor Agent . . . . . . . . . . . . . . . . . . . . . Page 45
10.13. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . Page 46
10.14. Delegation to Affiliates. . . . . . . . . . . . . . . . . Page 46
10.15. Execution of Collateral Documents . . . . . . . . . . . . Page 46
10.16. Collateral Releases . . . . . . . . . . . . . . . . . . . Page 47
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . Page 47
11.2. Ratable Payments. . . . . . . . . . . . . . . . . . . . . Page 47
Page iv
<PAGE>
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. . . . . . . . . . . . . . . . . . Page 48
12.2. Participations. . . . . . . . . . . . . . . . . . . . . . Page 48
12.2.1 Permitted Participants; Effect. . . . . . . . . . Page 48
12.2.2. Voting Rights . . . . . . . . . . . . . . . . . . Page 48
12.2.3. Benefit of Setoff . . . . . . . . . . . . . . . . Page 49
12.3. Assignments . . . . . . . . . . . . . . . . . . . . . . . Page 49
12.3.1. Permitted Assignments. . . . . . . . . . . . . . Page 49
12.3.2. Effect; Effective Date . . . . . . . . . . . . . Page 49
12.4. Dissemination of Information. . . . . . . . . . . . . . . Page 50
12.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . Page 50
ARTICLE XIII
NOTICES
13.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . Page 50
13.2. Change of Address . . . . . . . . . . . . . . . . . . . . Page 51
ARTICLE XIV
COUNTERPARTS
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . Page 51
15.2. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . Page 51
15.3. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . Page 52
EXHIBIT A
FORM OF OPINION. . . . . . . . . . . . . . . . . . . . . . . . . Page 56
EXHIBIT B
COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . Page 58
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EXHIBIT C
ASSIGNMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . Page 65
EXHIBIT D
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION . . . . . . . . . Page 77
EXHIBIT E
NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 78
SCHEDULE 1
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . Page 80
SCHEDULE 2
INDEBTEDNESS AND LIENS . . . . . . . . . . . . . . . . . . . . . Page 81
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CREDIT AGREEMENT
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This Agreement, dated as of November 7, 1997, is among Alternative
Resources Corporation, a Delaware corporation, the Lenders and American
National Bank and Trust Company of Chicago, as Agent. The parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or voting
power) of the outstanding ownership interests of a partnership or limited
liability company.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans made on the
same Borrowing Date (or date of conversion or continuation) by the Lenders to
the Borrower of the same Type and, in the case of Eurodollar Advances, for the
same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
<PAGE>
"Agent" means American National Bank and Trust Company of Chicago in its
capacity as contractual representative of the Lenders pursuant to Article X,
and not in its individual capacity as a Lender, and any successor Agent
appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time in the United States, applied in a
manner consistent with that used in preparing the financial statements
referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the
sum of the Federal Funds Effective Rate for such day plus 1% per annum.
"ANB" means American National Bank and Trust Company of Chicago in its
individual capacity.
"Applicable Fee Rate" means, at any time, the percentage rate per annum
at which Commitment Fees are accruing on the unused portion of the Aggregate
Commitment at such time as set forth in the Pricing Schedule.
"Applicable Margin" means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in the Pricing Schedule.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means (i) with respect to the Borrower any of its
Chief Executive Officer, President, Executive Vice President or any Vice
President, and (ii) with respect to the Guarantors, any of their respective
President or Vice President, in each case acting singly.
"Borrower" means Alternative Resources Corporation, a Delaware
corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
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"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which
dealings in United States dollars are carried on in the London interbank
market and (ii) for all other purposes, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and
its Subsidiaries prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the United States of America, (ii) commercial paper
rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit
accounts maintained in the ordinary course of business, (iv) certificates of
deposit issued by and time deposits with commercial banks (whether domestic
or foreign) having capital and surplus in excess of $100,000,000 and (v)
fixed income investments rated AAA or better by S&P or Aaa or better by
Moody's, maturing within twelve months of date of issuance thereof; PROVIDED
in each case that the same provides for payment of both principal and
interest (and not principal alone or interest alone) and is not subject to
any contingency regarding the payment of principal or interest.
"CGI Acquisition" means the acquisition by the Borrower of the stock of
CGI Corporation, a Delaware corporation, and CGI Systems, Inc., a Delaware
corporation, pursuant to the CGI Acquisition Agreement.
"CGI Acquisition Agreement" means that certain Stock Purchase and Sale
Agreement dated as of October 6, 1997 among the Borrower, Compagnie General
d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan and International
Business Machines Corporation, as amended by that certain Amendment Number
One dated November 7, 1997.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 25% or more of the outstanding shares of voting
stock of the Borrower.
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"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral Documents" means, collectively, the Pledge Agreement and
that certain Collateral Assignment of Stock Purchase Agreement bearing even
date herewith from the Borrower in favor of the Agent for the benefit of the
Lenders, as the same may from time to time be amended or modified from time
to time together with all other security agreements, assignments, financing
statements and other documents as shall from time to time secure the
Obligations.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below or
as set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to Section 12.3.2, as such amount may be modified
from time to time pursuant to the terms hereof.
"Consolidated Capital Expenditures" means, with reference to any period,
the Capital Expenditures of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated EBIT" means Consolidated Net Income PLUS, to the extent
deducted from revenues in determining Consolidated Net Income, (i)
Consolidated Interest Expense, (ii) expense for income taxes paid or accrued,
and (iii) extraordinary losses incurred other than in the ordinary course of
business, MINUS, to the extent included in Consolidated Net Income,
extraordinary gains realized other than in the ordinary course of business,
all calculated for the Borrower and its Subsidiaries on a consolidated basis.
"Consolidated EBITDA" means Consolidated Net Income PLUS, to the extent
deducted from revenues in determining Consolidated Net Income, (i)
Consolidated Interest Expense, (ii) expense for income taxes paid or accrued,
(iii) depreciation, (iv) amortization and (v) extraordinary losses incurred
other than in the ordinary course of business, MINUS, to the extent included
in Consolidated Net Income, extraordinary gains realized other than in the
ordinary course of business, all calculated for the Borrower and its
Subsidiaries on a consolidated basis.
"Consolidated Funded Indebtedness" means at any time the aggregate
dollar amount of Consolidated Indebtedness which has actually been funded and
is outstanding at such time, whether or not such amount is due or payable at
such time.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time.
"Consolidated Interest Expense" means, with reference to any period, the
gross interest expense of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
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"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Net Worth" means at any time the consolidated
stockholders' equity of the Borrower and its Subsidiaries calculated on a
consolidated basis as of such time.
"Consolidated Rentals" means, with reference to any period, the Rentals
of the Borrower and its Subsidiaries calculated on a consolidated basis for
such period.
"Consolidated Total Capitalization" means at any time the sum of
Consolidated Indebtedness and Consolidated Net Worth, each calculated at such
time.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes
or is contingently liable upon, the obligation or liability of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether
or not incorporated) under common control which, together with the Borrower
or any of its Subsidiaries, are treated as a single employer under Section
414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by ANB from time to time, changing when and as
said corporate base rate changes.
"Default" means an event described in Article VII.
"Domestic Subsidiary" means any Subsidiary organized and existing under
the laws of one of the states of the United States of America.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to (i) the protection of the environment, (ii) the effect of the environment
on human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water
or land, or (iv) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other remediation thereof.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at the
applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Interest Period, the rate determined by the Agent to be the rate
at which ANB offers to place deposits in U.S. dollars with first-class banks
in the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in the
approximate amount of ANB's relevant Eurodollar Loan and having a maturity
approximately equal to such Interest Period.
"Eurodollar Loan" means a Loan which bears interest at the applicable
Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar
Base Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest
Period, plus the Applicable Margin. The Eurodollar Rate shall be rounded to
the next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of
which such Lender or the Agent is incorporated or organized or (ii) the
jurisdiction in which the Agent's or such Lender's principal executive office
or such Lender's applicable Lending Installation is located.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Facility Termination Date" means December 31, 2000 or any earlier date
on which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not
a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (Chicago time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent
in its sole discretion.
"Fee Letter" is defined in Section 10.13 hereof.
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<PAGE>
"Financial Contract" of a Person means (i) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics or (ii) any agreements, devices or
arrangements providing for payments related to fluctuations of interest
rates, exchange rates or forward rates, including, but not limited to,
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency or
interest rate options.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day, in each case changing when and as the
Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Guarantors" means all Domestic Subsidiaries of the Borrower, and their
respective successors and assigns.
"Guarantees" means each Guaranty bearing even date herewith made by each
Domestic Subsidiary of the Borrower existing on the date hereof in favor of
the Agent and the Lenders and each Guaranty in form satisfactory to the
Agent, executed and delivered to the Agent pursuant to Section 6.26 hereof by
each Domestic Subsidiary of the Borrower created after the date hereof, in
each case as modified and supplemented from time to time, executed jointly
and severally by the Guarantors in favor of the Agent, for the ratable
benefit of the Lenders, as it may be amended or modified and in effect from
time to time.
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade),
(iii) obligations, whether or not assumed, secured by Liens or payable out of
the proceeds or production from property now or hereafter owned or acquired
by such Person, (iv) obligations which are evidenced by notes, acceptances,
or other instruments, (v) obligations of such Person to purchase securities
or other property arising out of or in connection with the sale of the same
or substantially similar securities or property, (vi) Capitalized Lease
Obligations, (vii) obligations in respect of Letters of Credit, (viii)
Off-Balance Sheet Liabilities of such Person and (ix) any other obligation
for borrowed money or other financial accommodation which in accordance with
Agreement Accounting Principles would be shown as a liability on the
consolidated balance sheet of such Person.
"Initial Syndication Period" means the period commencing on the date
hereof and ending January 31, 1998.
"Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two, three or six months, and during the Initial Syndication Period
only, seven days or with the consent of the Agent one month, commencing on a
Business Day selected by the Borrower
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pursuant to this Agreement. Such Interest Period shall end on the day which
corresponds numerically to such date one, two, three or six months, and
during the Initial Syndication Period only, seven days or, if applicable, one
month, thereafter, PROVIDED, HOWEVER, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second,
third or sixth succeeding month. If an Interest Period would otherwise end
on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, PROVIDED, HOWEVER, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable
arising in the ordinary course of business on terms customary in the trade)
or contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificate of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, the
office, branch, subsidiary or affiliate of such Lender or the Agent listed on
the signature pages hereof or on a Schedule or otherwise selected by such
Lender or the Agent pursuant to Section 2.17.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, as of any date of calculation, the ratio of (i)
Consolidated Funded Indebtedness outstanding on such date to (ii)
Consolidated EBITDA for the Borrower's then most-recently ended four fiscal
quarters.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, the interest of a vendor
or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant
to Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement and any Notes issued pursuant to
Section 2.13, the Collateral Documents and the Guarantees.
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"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of
operations, or prospects of the Borrower and its Subsidiaries taken as a
whole, (ii) the ability of the Borrower to perform its obligations under the
Loan Documents to which it is a party, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Mark-to-Market Exposure" of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all
unrealized profits of such Person arising from Rate Hedging Agreements.
"Unrealized losses" means the fair market value of the cost to such Person of
replacing such Rate Hedging Agreement as of the date of determination
(assuming the Rate Hedging Agreement were to be terminated as of that date),
and "unrealized profits" means the fair market value of the gain to such
Person of replacing such Rate Hedging Agreement as of the date of
determination (assuming such Rate Hedging Agreement were to be terminated as
of that date).
"Non-U.S. Lender" is defined in Section 3.5(iv).
"Note" means any promissory note issued at the request of a Lender
pursuant to Section 2.13 in the form of Exhibit E.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party arising under
the Loan Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any Sale and
Leaseback Transaction which does not create a liability on the balance sheet
of such Person, (iii) any liability under any financing lease or so-called
"synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the balance sheets of such Person, but excluding
Operating Leases.
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"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of
the lessor) of one year or more.
"Other Taxes" is defined in Section 3.5(ii).
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each December, March, June and
September.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or
other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Pledge Agreement" means that certain Pledge Agreement bearing even date
herewith from the Borrower in favor of the Agent for the benefit of the
Lenders as the same may be amended or modified from time to time.
"Pledged Securities" means the securities of the Borrower's Domestic
Subsidiaries pledged from time to time pursuant to the Pledge Agreement.
"Pricing Schedule" means the Schedule attached hereto identified as such.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor),
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under (i) any and all Rate Hedging Agreements, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any Rate
Hedging Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve
System.
"Rentals" of a Person means the aggregate annual fixed amounts payable
by such Person under any Operating Lease.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC has by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event, PROVIDED, HOWEVER, that a failure to
meet the minimum funding standard of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any
such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.
"Reports" is defined in Section 9.6.
"Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 51% of the aggregate unpaid
principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
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"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Obligations" means, collectively, (i) the Obligations and (ii)
all Rate Hedging Obligations owing to one or more Lenders.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization more than 50% of
the ownership interests having ordinary voting power of which shall at the
time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries as would be
shown in the consolidated financial statements of the Borrower and its
Subsidiaries as at the beginning of the twelve-month period ending with the
month in which such determination is made, or (ii) is responsible for more
than 10% of the consolidated net sales or of the consolidated net income of
the Borrower and its Subsidiaries as reflected in the financial statements
referred to in clause (i) above.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities
with respect to the foregoing, but EXCLUDING Excluded Taxes.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or a Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
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"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary voting power of
which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. COMMITMENT. From and including the date of this Agreement and
prior to the Facility Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make Loans to the
Borrower from time to time in amounts not to exceed in the aggregate at any
one time outstanding the amount of its Commitment. Subject to the terms of
this Agreement, the Borrower may borrow, repay and reborrow at any time prior
to the Facility Termination Date. The Commitments to lend hereunder shall
expire on the Facility Termination Date.
2.2. REQUIRED PAYMENTS; TERMINATION. Any outstanding Advances and
all other unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.
2.3. RATABLE LOANS. Each Advance hereunder shall consist of Loans
made from the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment.
2.4. TYPES OF ADVANCES. The Advances may be Floating Rate Advances
or Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9. Notwithstanding anything to the
contrary contained in this Agreement, prior to expiration of the Initial
Syndication Period, the Borrower may only elect Floating Rate Advances, or
Eurodollar Advances having an Interest Period of seven days or, with the
Agent's consent, one month.
2.5. COMMITMENT FEE; REDUCTIONS IN AGGREGATE COMMITMENT. The
Borrower agrees to pay to the Agent for the account of each Lender a
commitment fee at a per annum rate equal to the Applicable Fee Rate on the
daily unused portion of such Lender's Commitment from the date hereof to and
including the Facility Termination Date, payable on each Payment Date
hereafter and on the Facility Termination Date. The Borrower may permanently
reduce the
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Aggregate Commitment in whole, or in part ratably among the Lenders in
integral multiples of $5,000,000, upon at least one Business Day's written
notice to the Agent, which notice shall specify the amount of any such
reduction, PROVIDED, HOWEVER, that the amount of the Aggregate Commitment may
not be reduced below the aggregate principal amount of the outstanding
Advances. All accrued commitment fees shall be payable on the effective date
of any termination of the obligations of the Lenders to make Loans hereunder.
2.6. MINIMUM AMOUNT OF EACH ADVANCE. Each Eurodollar Advance shall
be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in
excess thereof), and each Floating Rate Advance shall be in the minimum
amount of $1,000,000 (and in multiples of $100,000 if in excess thereof),
PROVIDED, HOWEVER, that any Floating Rate Advance may be in the amount of the
unused Aggregate Commitment.
2.7. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to
time pay, without penalty or premium, all outstanding Floating Rate Advances,
or, in a minimum aggregate amount of $1,000,000 or any integral multiple of
$100,000 in excess thereof, any portion of the outstanding Floating Rate
Advances upon one Business Day's prior notice to the Agent. The Borrower may
from time to time pay, subject to the payment of any funding indemnification
amounts required by Section 3.4 but without penalty or premium, all
outstanding Eurodollar Advances, or, in a minimum aggregate amount of
$5,000,000 or any integral multiple of $1,000,000 in excess thereof, any
portion of the outstanding Eurodollar Advances upon three Business Days'
prior notice to the Agent.
2.8. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW
ADVANCES. The Borrower shall select the Type of Advance and, in the case of
each Eurodollar Advance, the Interest Period applicable thereto from time to
time. The Borrower shall give the Agent irrevocable notice (a "Borrowing
Notice") not later than 10:00 a.m. (Chicago time) at least one Business Day
before the Borrowing Date of each Floating Rate Advance and three Business
Days before the Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period applicable
thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Loan or Loans in funds immediately available in Chicago to
the Agent at its address specified pursuant to Article XIII. The Agent will
make the funds so received from the Lenders available to the Borrower at the
Agent's aforesaid address.
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2.9. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. Floating
Rate Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Eurodollar Advances pursuant to
this Section 2.9 or are repaid in accordance with Section 2.7. Each
Eurodollar Advance shall continue as a Eurodollar Advance until the end of
the then applicable Interest Period therefor, at which time such Eurodollar
Advance shall be automatically converted into a Floating Rate Advance unless
(x) such Eurodollar Advance is or was repaid in accordance with Section 2.7
or (y) the Borrower shall have given the Agent a Conversion/Continuation
Notice (as defined below) requesting that, at the end of such Interest
Period, such Eurodollar Advance continue as a Eurodollar Advance for the same
or another Interest Period. Subject to the terms of Section 2.6, the
Borrower may elect from time to time to convert all or any part of a Floating
Rate Advance into a Eurodollar Advance. The Borrower shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of
a Floating Rate Advance into a Eurodollar Advance or continuation of a
Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least three
Business Days prior to the date of the requested conversion or continuation,
specifying:
(i) the requested date, which shall be a Business Day, of such conversion
or continuation,
(ii) the aggregate amount and Type of the Advance which is to be converted
or continued, and
(iii) the amount of such Advance which is to be converted into or
continued as a Eurodollar Advance and the duration of the Interest
Period applicable thereto.
2.10. CHANGES IN INTEREST RATE, ETC. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each day
from and including the date such Advance is made or is automatically
converted from a Eurodollar Advance into a Floating Rate Advance pursuant to
Section 2.9, to but excluding the date it is paid or is converted into a
Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum equal
to the Floating Rate for such day. Changes in the rate of interest on that
portion of any Advance maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each Eurodollar
Advance shall bear interest on the outstanding principal amount thereof from
and including the first day of the Interest Period applicable thereto to (but
not including) the last day of such Interest Period at the interest rate
determined by the Agent as applicable to such Eurodollar Advance based upon
the Borrower's selections under Section 2.8 and 2.9 and otherwise in
accordance with the terms hereof. No Interest Period may end after the
Facility Termination Date.
2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to
the contrary contained in Section 2.8 or 2.9, during the continuance of a
Default or Unmatured Default the Required Lenders may, at their option, by
written notice to the Borrower (which notice may be revoked at the option of
the Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that
no
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Advance may be made as, converted into or continued as a Eurodollar Advance.
During the continuance of a Default the Required Lenders may, at their
option, by written notice to the Borrower (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that (i) each Eurodollar Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable
to such Interest Period plus 2% per annum and (ii) each Floating Rate Advance
shall bear interest at a rate per annum equal to the Floating Rate in effect
from time to time plus 2% per annum, PROVIDED that, during the continuance of
a Default under Section 7.6 or 7.7, the interest rates set forth in clauses
(i) and (ii) above shall be applicable to all Advances without any election
or action on the part of the Agent or any Lender.
2.12. METHOD OF PAYMENT. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIII, or at any other Lending Installation of the Agent specified in
writing by the Agent to the Borrower, by noon (local time) on the date when
due and shall be applied ratably by the Agent among the Lenders. Each
payment delivered to the Agent for the account of any Lender shall be
delivered promptly by the Agent to such Lender in the same type of funds that
the Agent received at its address specified pursuant to Article XIII or at
any Lending Installation specified in a notice received by the Agent from
such Lender. The Agent is hereby authorized to charge account number
500-500-4322 (or such other account as may be designated in writing by the
Borrower to the Agent) of the Borrower maintained with ANB for each payment
of principal, interest and fees as it becomes due hereunder and the Agent
agrees to promptly give the Borrower notice of any such debit.
2.13. NOTELESS AGREEMENT; EVIDENCE OF INDEBTEDNESS. (i) Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(ii) The Agent shall also maintain accounts in which it will record (a)
the amount of each Loan made hereunder, the Type thereof and the Interest
Period with respect thereto, (b) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to each Lender
hereunder and (c) the amount of any sum received by the Agent hereunder from
the Borrower and each Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be PRIMA FACIE evidence of the existence
and amounts of the Obligations therein recorded; PROVIDED, HOWEVER, that the
failure of the Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to
repay the Obligations in accordance with their terms but in no event shall
the Borrower at any time be required to pay any amounts in excess of
Obligations due at such time.
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(iv) Any Lender may request that its Loans be evidenced by a Note. In
such event, the Borrower shall prepare, execute and deliver to such Lender a
Note payable to the order of such Lender. Thereafter, the Loans evidenced by
such Note and interest thereon shall at all times (including after any
assignment pursuant to Section 12.3) be represented by one or more Notes
payable to the order of the payee named therein or any assignee pursuant to
Section 12.3, except to the extent that any such Lender or assignee
subsequently returns any such Note for cancellation and requests that such
Loans once again be evidenced as described in paragraphs (i) and (ii) above.
2.14. TELEPHONIC NOTICES. The Borrower hereby authorizes the
Lenders and the Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Agent or any Lender in good faith
reasonably believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each telephonic
notice signed by an Authorized Officer. If the written confirmation differs
in any material respect from the action taken by the Agent and the Lenders,
the records of the Agent and the Lenders shall govern absent manifest error.
2.15. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof and at
maturity. Interest accrued on each Eurodollar Advance shall be payable on the
last day of its applicable Interest Period, on any date on which the
Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Advance having an Interest
Period longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest and commitment
fees shall be calculated for actual days elapsed on the basis of a 360-day
year. Interest shall be payable for the day an Advance is made but not for
the day of any payment on the amount paid if payment is received prior to
1:00 p.m. (local time) at the place of payment. If any payment of principal
of or interest on an Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
2.16. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and repayment notice
received by it hereunder. The Agent will notify each Lender of the interest
rate applicable to each Eurodollar Advance promptly upon determination of
such interest rate and will give each Lender prompt notice of each change in
the Alternate Base Rate.
2.17. LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Loans and any Notes issued hereunder
shall be deemed held by each Lender for the benefit of such Lending
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Installation. Each Lender may, by written notice to the Agent and the
Borrower in accordance with Article XIII, designate replacement or additional
Lending Installations through which Loans will be made by it and for whose
account Loan payments are to be made.
2.18. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which it
is scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that
it does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance
upon such assumption. If such Lender or the Borrower, as the case may be, has
not in fact made such payment to the Agent, the recipient of such payment
shall, on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to
(x) in the case of payment by a Lender, the Federal Funds Effective Rate for
such day or (y) in the case of payment by the Borrower, the interest rate
applicable to the relevant Loan. Nothing contained in this Section shall be
construed to relieve ANB of its obligations to fund the entire amount of the
initial Loan requested by the Borrower hereunder, subject to the provisions
of Article IV hereof if ANB shall be the sole Lender hereunder at such time.
ARTICLE III
YIELD PROTECTION; TAXES
3.1. YIELD PROTECTION. If, on or after the date of this Agreement,
the adoption of any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force
of law), or any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by any Lender or applicable Lending Installation with any request
or directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) subjects any Lender or any applicable Lending Installation to any
Taxes, or changes the basis of taxation of payments (other than with
respect to Excluded Taxes) to any Lender in respect of its Eurodollar
Loans, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending
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Installation (other than reserves and assessments taken into account
in determining the interest rate applicable to Eurodollar Advances),
or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining its Eurodollar Loans or reduces any
amount receivable by any Lender or any applicable Lending Installation
in connection with its Eurodollar Loans, or requires any Lender or any
applicable Lending Installation to make any payment calculated by
reference to the amount of Eurodollar Loans held or interest received
by it, by an amount deemed reasonably material by such Lender,
and the result of any of the foregoing is to increase the cost to such Lender
or applicable Lending Installation of making or maintaining its Eurodollar
Loans or Commitment or to reduce the return received by such Lender or
applicable Lending Installation in connection with such Eurodollar Loans or
Commitment, then, within 15 days of demand by such Lender, the Borrower shall
pay such Lender such additional amount or amounts as will compensate such
Lender for such increased cost or reduction in amount received. Any demand
by a Lender pursuant hereto shall be accompanied by a statement setting forth
in reasonable detail the amount or amounts due and the basis for the
determination thereof, which statements shall be conclusive and binding
absent manifest error.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender
determines the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a Change, then, within 15
days of demand by such Lender, the Borrower shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender reasonably determines is
attributable to this Agreement, its Loans or its Commitment to make Loans
hereunder (after taking into account such Lender's policies as to capital
adequacy) but in no event shall any such calculation increase the yield to
such Lender hereunder. "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or
change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the amount of
capital required or expected to be maintained by any Lender or any Lending
Installation or any corporation controlling any Lender. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of
the Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted
prior to the date of this Agreement. If any Lender shall make a claim for
compensation under this Section 3.2, the Borrower shall have the right to
require that such Lender assign its Commitment and Loans to a Purchaser
pursuant to the terms and conditions, and subject to the approvals required,
in Section 12.3 hereof.
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3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or
not having the force of law, or if the Required Lenders determine that (i)
deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (ii) the interest rate applicable to a Type of Advance
does not accurately reflect the cost of making or maintaining such Advance,
then the Agent shall suspend the availability of the affected Type of Advance
and require any affected Eurodollar Advances to be repaid or converted to
Floating Rate Advances, subject to the payment of any funding indemnification
amounts required by Section 3.4.
3.4. FUNDING INDEMNIFICATION. If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain such Eurodollar Advance.
3.5. TAXES. (i) All payments by the Borrower to or for
the account of any Lender or the Agent hereunder or under any Note
shall be made free and clear of and without deduction for any and
all Taxes. If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Lender
or the Agent, (a) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.5) such
Lender or the Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made,
(b) the Borrower shall make such deductions, (c) the Borrower shall
pay the full amount deducted to the relevant authority in
accordance with applicable law and (d) the Borrower shall furnish
to the Agent the original copy of a receipt evidencing payment
thereof within 30 days after such payment is made.
(ii) In addition, the Borrower hereby agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or
under any Note or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note other than Excluded Taxes ("Other
Taxes").
(iii) The Borrower hereby agrees to indemnify the Agent and each Lender
for the full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed on amounts payable under this Section 3.5)
paid by the Agent or such Lender and any liability (including penalties,
interest and expenses provided that the Agent or such Lender has used its
reasonable efforts to avoid the same) arising therefrom or with respect
thereto. Payments due under this indemnification shall be made within 30
days of the date the Agent or such Lender makes demand therefor pursuant to
Section 3.6.
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(iv) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Lender") agrees that
it will, not less than ten Business Days after the date of this Agreement,
(i) deliver to each of the Borrower and the Agent two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, certifying in
either case that such Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal
income taxes, and (ii) deliver to each of the Borrower and the Agent a United
States Internal Revenue Form W-8 or W-9, as the case may be, and certify that
it is entitled to an exemption from United States backup withholding tax.
Each Non-U.S. Lender further undertakes to deliver to each of the Borrower
and the Agent (x) renewals or additional copies of such form (or any
successor form) on or before the date that such form expires or becomes
obsolete, and (y) after the occurrence of any event requiring a change in the
most recent forms so delivered by it, such additional forms or amendments
thereto as may be reasonably requested by the Borrower or the Agent. All
forms or amendments described in the preceding sentence shall certify that
such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, UNLESS an
event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent
such Lender from duly completing and delivering any such form or amendment
with respect to it and such Lender advises the Borrower and the Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax, provided that in such event the Borrower
shall have the right to require that such Lender assign its Commitment and
Loans to a Purchaser pursuant to the terms and conditions and subject to the
approvals required in Section 12.3 hereof.
(v) For any period during which a Non-U.S. Lender has failed to provide
the Borrower with an appropriate form pursuant to clause (iv), above (unless
such failure is due to a change in treaty, law or regulation, or any change
in the interpretation or administration thereof by any governmental
authority, occurring subsequent to the date on which a form originally was
required to be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this Section 3.5 with respect to Taxes imposed by the
United States; PROVIDED that, should a Non-U.S. Lender which is otherwise
exempt from or subject to a reduced rate of withholding tax become subject to
Taxes because of its failure to deliver a form required under clause (iv),
above, the Borrower shall take such steps as such Non-U.S. Lender shall
reasonably request to assist such Non-U.S. Lender to recover such Taxes at no
cost to the Borrower.
(vi) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall deliver
to the Borrower (with a copy to the Agent), at the time or times prescribed
by applicable law, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate.
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3.6. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of
the Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the
unavailability of Eurodollar Advances under Section 3.3, so long as such
designation is not, in the reasonable judgment of such Lender,
disadvantageous to such Lender. Each Lender shall deliver a written
statement of such Lender to the Borrower (with a copy to the Agent) as to the
amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written
statement shall set forth in reasonable detail the calculations upon which
such Lender determined such amount and shall be final, conclusive and binding
on the Borrower in the absence of manifest error. Determination of amounts
payable under such Sections in connection with a Eurodollar Loan shall be
calculated as though each Lender funded its Eurodollar Loan through the
purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Eurodollar Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of such written statement.
The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall
survive payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. INITIAL ADVANCE. The Lenders shall not be required to make
the initial Advance hereunder unless the Borrower has furnished to the Agent
with sufficient copies for the Lenders:
(i) Copies of the articles or certificate of incorporation of the Borrower
and each Guarantor, together with all amendments, and a certificate
of good standing, each certified by the appropriate governmental
officer in its jurisdiction of incorporation.
(ii) Copies certified by the Secretary or Assistant Secretary of the
Borrower and each Guarantor, of its by-laws and of its Board of
Directors' resolutions and of resolutions or actions of any other
body authorizing the execution of the Loan Documents to which the
Borrower and such Guarantor is a party.
(iii) An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Borrower and each Guarantor, which shall identify by
name and title and bear the signatures of the Authorized Officers and
any other officers of the Borrower or such Guarantor authorized to
sign the Loan Documents to which the Borrower and such Guarantor is a
party, upon which certificate the Agent and the Lenders
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shall be entitled to rely until informed of any change in writing by
the Borrower or the relevant Guarantor.
(iv) A certificate, signed by the chief financial officer of the Borrower,
stating that on the initial Borrowing Date no Default or Unmatured
Default has occurred and is continuing.
(v) A written opinion of counsel to the Borrower and the Guarantors,
addressed to the Lenders in substantially the form of Exhibit A.
(vi) Any Notes requested by a Lender pursuant to Section 2.13 payable to
the order of each such requesting Lender.
(vii) Written money transfer instructions, in substantially the form of
Exhibit D, addressed to the Agent and signed by an Authorized Officer
of the Borrower, together with such other related money transfer
authorizations as the Agent may have reasonably requested.
(viii) The Guarantees and Collateral Documents, together with original
stock certificates evidencing the Pledged Securities and stock powers
executed in blank therefore and such UCC financing statements as any
Lender shall request in connection therewith.
(ix) A copy, certified as true and correct by the Secretary or Assistant
Secretary of the Borrower, of the CGI Acquisition Agreement, together
with evidence satisfactory to the Agent that the transactions
contemplated thereby shall have been consummated on terms acceptable
to the Agent.
(x) The insurance certificate described in Section 5.20.
(xi) The proforma opening balance sheet and financial projections, in each
case, prepared after giving effect to the CGI Acquisition which shall
not be materially less favorable, in the Agent's judgment, than the
projections previously provided to the Agent and which must
demonstrate, in the Agent's reasonable judgment, together with all
other information then available to the Agent that the Borrower and
its Subsidiaries can repay their debts and satisfy their respective
other obligations as and when due, and can comply with the covenants
contained herein.
(xii) Such other documents as the Agent or its counsel may have reasonably
requested.
4.2. EACH ADVANCE. The Lenders shall not be required to make any
Advance (other than an Advance that, after giving effect thereto and to the
application of the proceeds thereof,
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does not increase the aggregate amount of outstanding Advances), unless on
the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are true and
correct as of such Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall have been
true and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance shall be
reasonably satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute
a representation and warranty by the Borrower that the conditions contained
in Sections 4.2(i) and (ii) have been satisfied. Any Lender may require a
duly completed compliance certificate in substantially the form of Exhibit B
as a condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. EXISTENCE AND STANDING. Each of the Borrower and its
Subsidiaries is a corporation, partnership (in the case of Subsidiaries only)
or limited liability company duly and properly incorporated or organized, as
the case may be, validly existing and (to the extent such concept applies to
such entity) in good standing under the laws of its jurisdiction of
incorporation or organization and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
5.2. AUTHORIZATION AND VALIDITY. The Borrower and each Guarantor
has the power and authority and legal right to execute and deliver the Loan
Documents to which it is a party and to perform its respective obligations
thereunder. The execution and delivery by the Borrower and each Guarantor of
the Loan Documents to which it is a party and the performance of its
obligations thereunder have been duly authorized by proper corporate
proceedings, and the Loan Documents constitute legal, valid and binding
obligations of the Borrower and each Guarantor enforceable against the
Borrower and in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally. The Borrower has the power and authority and
legal right to execute and deliver the CGI Acquisition Agreement and to
consummate the CGI Acquisition pursuant
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thereto. The execution and delivery by the Borrower of the CGI Acquisition
Agreement has been duly authorized by proper corporate proceedings.
5.3. NO CONFLICT; GOVERNMENT CONSENT. Neither (a) the execution
and delivery by the Borrower or the Guarantors of the Loan Documents to which
they are a party, (b) the execution and delivery by the Borrower, of the CGI
Acquisition Agreement nor (c) the consummation of the transactions
contemplated in the Loan Documents or the CGI Acquisition Agreement, nor
compliance with the provisions thereof will violate (i) any material law,
rule, regulation, order, writ, judgment, injunction, decree or award binding
on the Borrower or any of its Subsidiaries or (ii) the Borrower's or any
Subsidiary's articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws,
or operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on
the Property of the Borrower or a Subsidiary pursuant to the terms of any
such indenture, instrument or agreement. No order, consent, adjudication,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, or other action in respect of any
governmental or public body or authority, or any subdivision thereof, which
has not been obtained by the Borrower or any Guarantor, is required to be
obtained by the Borrower or any Guarantor in connection with the execution
and delivery of the Loan Documents, the borrowings under this Agreement, the
payment and performance by the Borrower or any Guarantor of the Obligations,
the consummation of the CGI Acquisition or the legality, validity, binding
effect or enforceability of any of the Loan Documents.
5.4. FINANCIAL STATEMENTS. The December 31, 1996, audited
consolidated financial statements of the Borrower and its Subsidiaries
heretofore delivered to the Lenders were prepared in accordance with
generally accepted accounting principles in effect on the date such
statements were prepared and fairly present in all material respects the
consolidated financial condition and operations of the Borrower and its
Subsidiaries at such date and the consolidated results of their operations
for the period then ended. All financial projections furnished by the
Borrower to the Lenders in connection with the CGI Acquisition have been
prepared in accordance with the standard set forth in the second sentence of
Section 5.22 hereof.
5.5. MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has
been no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect.
5.6. TAXES. The Borrower and its Subsidiaries have filed all
United States federal tax returns and all other tax returns which are
required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any of its
Subsidiaries, except such taxes, if any, as are being contested in good faith
and as to which adequate reserves have been provided in accordance with
Agreement Accounting Principles and
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as to which no Lien exists. The United States income tax returns of the
Borrower and its Subsidiaries have been audited by the Internal Revenue
Service through the fiscal year ended December 31, 1993. No tax liens have
been filed and, to the best of the Borrower's knowledge, no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves
on the books of the Borrower and its Subsidiaries in respect of any taxes or
other governmental charges are adequate in Borrower's reasonable judgment.
5.7. LITIGATION AND CONTINGENT OBLIGATIONS. There is no
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their officers, threatened against or
affecting the Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect or which seeks to prevent, enjoin
or delay the making of any Loans or the consummation of the CGI Acquisition.
Other than any liability incident to any litigation, arbitration or
proceeding which could not reasonably be expected to have a Material Adverse
Effect, the Borrower has no material contingent obligations not provided for
or disclosed in the financial statements referred to in Section 5.4.
5.8. SUBSIDIARIES. Schedule 1 (as updated from time to time
pursuant to Section 6.26) contains an accurate list of all Subsidiaries of
the Borrower as of the date of this Agreement, setting forth their respective
jurisdictions of organization and the percentage of their respective capital
stock or other ownership interests owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock or
other ownership interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests) duly
authorized and issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans
do not in the aggregate exceed $0. Neither the Borrower nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to Multiemployer Plans in excess of $0 in the aggregate.
Each Plan complies in all material respects with all applicable requirements
of law and regulations, no Reportable Event has occurred with respect to any
Plan, neither the Borrower nor any other member of the Controlled Group has
withdrawn from any Plan or initiated steps to do so, and no steps have been
taken to reorganize or terminate any Plan.
5.10. ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein
not misleading.
5.11. REGULATION U. Margin stock (as defined in Regulation U)
constitutes less than 25% of the value of those assets of the Borrower and
its Subsidiaries which are subject to any limitation on sale, pledge, or
other restriction hereunder.
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5.12. MATERIAL AGREEMENTS. Neither the Borrower nor any Subsidiary
is a party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in (i) any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Material
Indebtedness.
5.13. COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property except for any
failure to comply with any of the foregoing which could not reasonably be
expected to have a Material Adverse Effect.
5.14. OWNERSHIP OF PROPERTIES. Except as set forth on Schedule 2,
on the date of this Agreement, the Borrower and its Subsidiaries will have
good title, free of all Liens other than those permitted by Section 6.15, to
all of the Property and assets reflected in the Borrower's most recent
consolidated financial statements provided to the Agent as owned by the
Borrower and its Subsidiaries.
5.15. PLAN ASSETS; PROHIBITED TRANSACTIONS. The Borrower
is not an entity deemed to hold "plan assets" within the meaning of
29 C.F.R. Section 2510.3-101 of an employee benefit plan (as
defined in Section 3(3) of ERISA) which is subject to Title I of
ERISA or any plan (within the meaning of Section 4975 of the Code),
and neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
5.16. ENVIRONMENTAL MATTERS. In the ordinary course of its
business, the officers of the Borrower consider the effect of Environmental
Laws on the business of the Borrower and its Subsidiaries, in the course of
which they identify and evaluate potential risks and liabilities accruing to
the Borrower due to Environmental Laws. On the basis of this consideration,
the Borrower has no knowledge that its compliance with, or violation of,
Environmental Laws could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary has received any notice to
the effect that its operations are not in material compliance with any of the
requirements of applicable Environmental Laws or are the subject of any
federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action could
reasonably be expected to have a Material Adverse Effect.
5.17. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.
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5.18. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor
any Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.19. POST-RETIREMENT BENEFITS. The present value of the
expected cost of post-retirement medical and insurance benefits
payable by the Borrower and its Subsidiaries to its employees and
former employees, as estimated by the Borrower in accordance with
Agreement Accounting Principles, does not exceed $0.
5.20. INSURANCE. The certificate signed by the President
or Chief Financial Officer of the Borrower, that attests to the
existence and adequacy of, and summarizes, insurance program
carried by the Borrower with respect to itself and its Subsidiaries
and that has been furnished by the Borrower to the Agent and the
Lenders, is complete and accurate. This summary includes the
insurer's or insurers' name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, exclusion(s),
and deductibles. This summary also includes similar information,
and describes any reserves, relating to any self-insurance program
that is in effect.
5.21. SOLVENCY. (i) Immediately after the consummation of
the CGI Acquisition and immediately following the making of each
Loan, if any, made on the date hereof and after giving effect to
the application of the proceeds of such Loans, (a) the fair value
of the assets of the Borrower and its Subsidiaries on a
consolidated basis, at a fair valuation, will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Borrower
and its Subsidiaries on a consolidated basis; (b) the present fair
saleable value of the Property of the Borrower and its Subsidiaries
on a consolidated basis will be greater than the amount that will
be required to pay the probable liability of the Borrower and its
Subsidiaries on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts
and other liabilities become absolute and matured; (c) the Borrower
and its Subsidiaries on a consolidated basis will be able to pay
their debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (d)
the Borrower and its Subsidiaries on a consolidated basis will not
have unreasonably small capital with which to conduct the
businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted after the date hereof.
(ii) The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries
will, incur debts beyond its ability to pay such debts as they mature, taking
into account the timing of and amounts of cash to be received by it or any
such Subsidiary and the timing of the amounts of cash to be payable on or in
respect of its Indebtedness or the Indebtedness of any such Subsidiary.
5.22 FULL DISCLOSURE. No representation or warranty made
by the Borrower or its Subsidiaries under this Agreement or any
other Loan Document is false or misleading in any material respect
and no Loan Document or schedule or exhibit thereto and no
certificate, report,
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statement or other document or information furnished by the Borrower to the
Agent or the Lenders in connection herewith or therewith or with the CGI
Acquisition, contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements contained herein
or therein not misleading. To the extent the Borrower furnishes any
projections of the financial position and result of operations of the
Borrower and its Subsidiaries for, or as at the end of, certain future
period, such projects were believed at the time furnished to be reasonable,
have been or will have been prepared on a reasonable basis and in good faith
by the Borrower, and have been or will be based on assumptions believed by
the Borrower to be reasonable at the time made and upon the best information
then reasonably available to the Borrower. To the best of the Borrower's
knowledge, there is no fact materially adversely affecting the condition or
operations, financial or otherwise, or the business or prospects of the
Borrower or any of its Subsidiaries (whether before or after giving effect to
the CGI Acquisition) which has not been set forth in a footnote included in
the financial statements heretofore furnished to the Lenders.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 120 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants acceptable to the Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated basis for itself and
its Subsidiaries, including balance sheets as of the end of such
period, related profit and loss and reconciliation of surplus
statements, and a statement of cash flows, accompanied by any
management letter prepared by said accountants. The Borrower also
agrees to promptly furnish the annual consolidating financial
statements for itself and its Subsidiaries prepared by the Borrower
in connection with its annual income tax returns.
(ii) Within 45 days after the close of the first three quarterly periods of
each of its fiscal years, for itself and its Subsidiaries,
consolidated unaudited balance sheets as at the close of each such
period and consolidated and consolidating profit and loss and
reconciliation of surplus statements and a statement of cash flows
for the
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period from the beginning of such fiscal year to the end of such
quarter, all certified by its chief financial officer.
(iii) Together with the financial statements required under Sections
6.1(i) and (ii), a compliance certificate in substantially the form
of Exhibit B signed by its chief financial officer showing the
calculations necessary to determine compliance with this Agreement
and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status
thereof.
(iv) Within 270 days after the close of each fiscal year, a statement of
the Unfunded Liabilities of each Single Employer Plan, certified as
correct by an actuary enrolled under ERISA.
(v) As soon as possible and in any event within 10 days after the Borrower
knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by the chief financial officer of the Borrower,
describing said Reportable Event and the action which the Borrower
proposes to take with respect thereto.
(vi) As soon as possible and in any event within 10 days after receipt by
the Borrower, a copy of (a) any notice or claim to the effect that
the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries,
which, in either case, could reasonably be expected to have a Material
Adverse Effect.
(vii) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(viii) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports
which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission.
(ix) As soon as available, but in any event within 90 days after the
beginning of each fiscal year of the Borrower, a copy of the plan and
forecast (including a projected consolidated balance sheet, income
statement and funds flow statement) of the Borrower for such fiscal
year.
(x) As soon as available, but in any event by no later than January 15,
1998, a copy of the audited Closing Balance Sheet, as defined in and
to be furnished pursuant to the CGI Acquisition Agreement.
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(xi) Such other information (including non-financial information) as the
Agent may from time to time reasonably request.
6.2. USE OF PROCEEDS. The Borrower will, and will cause each
Subsidiary to, use the proceeds of the Advances to consummate the CGI
Acquisition, for general working capital purposes, and to repay outstanding
Advances. The Borrower will not, nor will it permit any Subsidiary to, use
any of the proceeds of the Advances to purchase or carry any "margin stock"
(as defined in Regulation U).
6.3. NOTICE OF DEFAULT. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence
of any Default or Unmatured Default and of any other development, financial
or otherwise, which could reasonably be expected to have a Material Adverse
Effect.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same or related fields of enterprise as it is
presently conducted and do all things necessary to remain duly incorporated
or organized, validly existing and (to the extent such concept applies to
such entity) in good standing as a domestic corporation, partnership or
limited liability company in its jurisdiction of incorporation or
organization, as the case may be, and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
6.5. TAXES. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law and pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside in accordance with Agreement Accounting Principles.
6.6. INSURANCE. The Borrower will, and will cause each Subsidiary
to, maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such risks as is
consistent with sound business practice customary in the Borrower's industry,
and the Borrower will furnish to any Lender upon request full information as
to the insurance carried.
6.7. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws noncompliance with
which could reasonably be expected to have a Material Adverse Effect.
6.8. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its Property in good repair, working order and condition, and make
all necessary and proper repairs, renewals and
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replacements so that its business carried on in connection therewith may be
properly conducted at all times.
6.9. INSPECTION. The Borrower will, and will cause each Subsidiary
to, permit the Agent, by its representatives and agents, to inspect any of
the Property, books and financial records of the Borrower and each
Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and each Subsidiary, and to discuss the
affairs, finances and accounts of the Borrower and each Subsidiary with, and
to be advised as to the same by, their respective officers upon reasonable
notice and at such reasonable times and intervals as the Agent may designate.
6.10. DIVIDENDS. The Borrower will not, nor will it permit any
Subsidiary to, declare or pay any dividends or make any distributions on its
capital stock (other than dividends payable in its own capital stock) or
redeem, repurchase or otherwise acquire or retire any of its capital stock at
any time outstanding, except that any Subsidiary may declare and pay
dividends or make distributions to the Borrower or to a Wholly-Owned
Subsidiary.
6.11. INDEBTEDNESS. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans.
(ii) Indebtedness existing on the date hereof and described in Schedule 2.
(iii) Indebtedness in addition to that otherwise permitted hereunder in
an amount not exceeding $5,000,000 at any one time outstanding.
6.12. MERGER. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except
that a Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary.
6.13. SALE OF ASSETS. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property to any other
Person, except:
(i) Sales of inventory in the ordinary course of business.
(ii) Trades by the Borrower of Investments in its investment portfolio.
(iii) Sales of accounts receivable permitted under Section 6.20 hereof.
(iv) Leases, sales or other dispositions of its Property that, together
with all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than as otherwise
permitted under this Section 6.13) as permitted by this Section during
the twelve-month period ending with the month in which any such
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lease, sale or other disposition occurs, do not constitute a
Substantial Portion of the Property of the Borrower and its
Subsidiaries.
6.14. INVESTMENTS AND ACQUISITIONS. The Borrower will not, nor will
it permit any Subsidiary to, make or suffer to exist any Investments
(including without limitation, loans and advances to, and other Investments
in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to
become or remain a partner in any partnership or joint venture, or to make
any Acquisition of any Person, except:
(i) Cash Equivalent Investments.
(ii) Existing Investments in Subsidiaries.
(iii) Other fixed income investments rated A or better by S&P or A2 or
better by Moody's, respectively, maturing not more than 18 months
from the date of acquisition thereof and not exceeding $15,000,000
at any one time outstanding (to the extent not included in Cash
Equivalent Investments above).
(iv) Other investment grade marketable debt and equity securities publicly
traded on U.S. exchanges not exceeding $7,500,000 at any one time
outstanding.
(v) Investments in Domestic Subsidiaries with respect to which the
agreements and other items required pursuant to Section 6.26 have
been or will be delivered to the Agent within the time specified
therein.
(vi) Investments in joint ventures in a similar or related line of business
to the Borrower not exceeding $10,000,000 at any one time outstanding.
(vii) Acquisitions not involving consideration payable by the Borrower
exceeding $35,000,000 individually or $75,000,000 in aggregate amount
for all Acquisitions consummated after the date of this Agreement,
without the prior written approval of the Required Lenders, so long as
such Acquisition involves a Person in a similar or related line of
business to the Borrower and prior to consummating such Acquisition
the Borrower shall have furnished the Lenders with proforma financial
statements and such other information as may be reasonably requested
by, and satisfactory to, the Lenders demonstrating compliance with the
terms of this Agreement after giving effect to any such proposed
Acquisition.
6.15. LIENS. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on its
Property if the same shall not at the time be delinquent or
thereafter can be paid without
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penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with
Agreement Accounting Principles shall have been set aside on its
books.
(ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations not
more than 60 days past due or which are being contested in good
faith by appropriate proceedings and for which adequate reserves
shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the
business of the Borrower or its Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule 2.
(vi) Liens in favor of the Agent, for the benefit of the Lenders, granted
pursuant to any Collateral Document.
6.16. CAPITAL EXPENDITURES. The Borrower will not, nor will it
permit any Subsidiary to, expend, or be committed to expend, in excess of
$7,500,000 for Capital Expenditures during any one fiscal year on a
non-cumulative basis in the aggregate for the Borrower and its Subsidiaries.
6.17. RENTALS. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist obligations for Rentals in
excess of $8,500,000 during any one fiscal year on a non-cumulative basis in
the aggregate for the Borrower and its Subsidiaries.
6.18. AFFILIATES. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction.
6.19. AMENDMENTS TO AGREEMENTS. The Borrower will not, and will
not permit any Subsidiary to, amend or terminate the CGI Acquisition
Agreement.
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6.20. SALE OF ACCOUNTS. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse other than sales of accounts receivable
not exceeding $200,000 during any one fiscal year.
6.21. SALE AND LEASEBACK TRANSACTIONS AND OTHER OFF-BALANCE SHEET
LIABILITIES. The Borrower will not, nor will it permit any Subsidiary to,
enter into or suffer to exist any (i) Sale and Leaseback Transaction or (ii)
any other transaction pursuant to which it incurs or has incurred Off-Balance
Sheet Liabilities.
6.22. CONTINGENT OBLIGATIONS. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Contingent Obligation
(including, without limitation, any Contingent Obligation with respect to the
obligations of a Subsidiary), except (i) by endorsement of instruments for
deposit or collection in the ordinary course of business and (ii) for the
Guarantees.
6.23. FINANCIAL CONTRACTS. The Borrower will not, nor will it permit
any Subsidiary to, enter into or remain liable upon any Financial Contract,
except for (a) Rate Hedging Obligations having a Net Mark-to-Market Exposure
not exceeding $5,000,000.
6.24. FINANCIAL COVENANTS.
6.24.1. FIXED CHARGE COVERAGE RATIO. The Borrower will not permit
the ratio, determined as of the end of each of its fiscal quarters for the
then most-recently ended four fiscal quarters, of (i) Consolidated EBIT
PLUS Consolidated Rentals to (ii) Consolidated Interest Expense, PLUS
Consolidated Rentals, all calculated for the Borrower and its Subsidiaries
on a consolidated basis, to be less than 3.25 to 1.00 as of December 31,
1997, 3.10 to 1.00 as of March 31, 1998 and 3.0 to 1.0 as of any fiscal
quarter end thereafter.
6.24.2. LEVERAGE RATIO. The Borrower will not permit the Leverage
Ratio, determined as of the end of each of its fiscal quarters, to be
greater than 3.0 to 1.0.
6.24.3. MINIMUM NET WORTH. The Borrower will at all times maintain
Consolidated Net Worth of not less than the sum of (i) $55,000,000 plus
(ii) 50% of Consolidated Net Income earned in each fiscal quarter beginning
with the quarter ending December 31, 1997 (without deduction for losses).
6.25 INITIAL SYNDICATION PERIOD. The Borrower will, upon request of the
Agent at any time during the Initial Syndication Period, obtain a rating from
Moody's and/or S&P for the Borrower's debt securities the costs of obtaining
such rating to be covered in accordance with the terms of the Fee Letter.
6.26 ADDITIONAL SUBSIDIARIES. If a Person shall become a Domestic
Subsidiary of the Borrower, the Borrower shall (i) notify the Agent promptly
after such Person becomes a
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Domestic Subsidiary of the Borrower (ii) deliver to the Agent an updated
Schedule 1 to reflect such Domestic Subsidiary, and (iii) promptly, and in
any event within ten (10) Business Days of such Person becoming a Domestic
Subsidiary, (a) cause such Domestic Subsidiary to execute and deliver a
Guaranty in respect of the Secured Obligations and (b) deliver the
certificates for all capital stock of such Domestic Subsidiary (together with
stock powers therefor satisfactory to the Agent) and, in each case, to
deliver proof of corporate action, incumbency of officers, opinions of
counsel and other documents as the Agent may request in connection therewith,
provided however, that with respect to the CGI Acquisition, as to the items
specified in foregoing clause (iii), the Borrower agrees to deliver the stock
certificates and stock power for the acquired stock of CGI Corporation
promptly after the consummation of the CGI Acquisition and deliver the
remaining items by no later than five (5) Business Days following the
consummation of the CGI Acquisition.
6.27 CERTAIN POST CLOSING MATTERS. The Borrower will furnish the Agent
with good standing certificates for each jurisdiction in which the Borrower
and each Domestic Subsidiary is qualified to do business as a foreign
corporation (other than such thereof as have been furnished pursuant to
Section 4.1 hereof) by no later than November 30, 1997.
6.28 NEGATIVE PLEDGES. The Borrower will not, nor will it permit any
Subsidiary to, enter into any agreement which prohibits the granting of a
Lien on its assets in favor of Agent as security for the Secured Obligations.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent
under or in connection with this Agreement, any Loan, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.
7.2. Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any commitment fee or other obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions
of Article VI.
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7.4. The breach by the Borrower (other than a breach which
constitutes a Default under another Section of this Article VII) of any of
the terms or provisions of this Agreement which is not remedied within ten
(10) days after written notice from the Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries or any
Guarantor to pay when due any Indebtedness aggregating in excess of
$1,000,000 ("Material Indebtedness"); or the default by the Borrower or any
of its Subsidiaries or any Guarantor in the performance of any term,
provision or condition contained in any agreement under which any such
Material Indebtedness was created or is governed, or any other event shall
occur or condition exist, the effect of which default or event is to cause,
or to permit the holder or holders of such Material Indebtedness to cause,
such Material Indebtedness to become due prior to its stated maturity; or any
Material Indebtedness of the Borrower or any of its Subsidiaries or any
Guarantor shall be declared to be due and payable or required to be prepaid
or repurchased (other than by a regularly scheduled payment) prior to the
stated maturity thereof; or the Borrower or any of its Subsidiaries or any
Guarantor shall not pay, or admit in writing its inability to pay, its debts
generally as they become due.
7.6. The Borrower or any of its Subsidiaries or any Guarantor shall
(i) have an order for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (ii) make an assignment for
the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any Substantial Portion of its Property, (iv)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief
of debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
or partnership action to authorize or effect any of the foregoing actions set
forth in this Section 7.6 or (vi) fail to contest in good faith any
appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower
or any of its Subsidiaries, or any Guarantor, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for the Borrower or any of
its Subsidiaries or any Guarantor or any Substantial Portion of its Property,
or a proceeding described in Section 7.6(iv) shall be instituted against the
Borrower or any of its Subsidiaries or any Guarantor and such appointment
continues undischarged or such proceeding continues undismissed or unstayed
for a period of 45 consecutive days.
7.8. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of, all or any
portion of the Property of the Borrower and its Subsidiaries or any Guarantor
which, when taken together with all other Property of the Borrower and its
Subsidiaries or any Guarantor so condemned, seized, appropriated, or taken
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custody or control of, during the twelve-month period ending with the month
in which any such action occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30
days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $500,000, which is not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $100,000 or any Reportable Event shall occur in
connection with any Plan.
7.11. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification),
exceeds $100,000 or requires payments exceeding $100,000 per annum.
7.12. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding
the plan year in which the reorganization or termination occurs by an amount
exceeding $100,000.
7.13. The Borrower or any of its Subsidiaries shall (i) be the subject
of any proceeding or investigation pertaining to the release by the Borrower,
any of its Subsidiaries or any other Person of any toxic or hazardous waste
or substance into the environment, or (ii) violate any Environmental Law,
which, in the case of an event described in clause (i) or clause (ii), could
reasonably be expected to have a Material Adverse Effect.
7.14. Any Change in Control shall occur.
7.15. The occurrence of any "default", as defined in any Loan Document
(other than this Agreement) or the breach of any of the terms or provisions
of any Loan Document (other than this Agreement), which default or breach
continues beyond any period of grace therein provided.
7.16. Any Guaranty shall fail to remain in full force or effect or any
action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty, or any Guarantor shall fail to comply with
any of the terms or provisions of any Guaranty to which it
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is a party, or any Guarantor shall deny that it has any further liability
under any Guaranty to which it is a party, or shall give notice to such
effect.
7.17. Any Collateral Document shall for any reason fail to create a
valid and perfected first priority security interest in any collateral
purported to be covered thereby, except as permitted by the terms of any
Collateral Document, or any Collateral Document shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Collateral Document, or the Borrower
shall fail to comply in any material respect with any of the terms or
provisions of any Collateral Document.
7.18. The representations and warranties set forth in Section 5.15
(Plan Assets; Prohibited Transactions") shall at any time not be true and
correct.
7.19. The Borrower or any Subsidiary shall fail to pay when due (after
giving effect to applicable grace periods, if any) any Rate Hedging
Obligation, obligation under a Sale and Leaseback Transaction or Contingent
Obligation.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part
of the Agent or any Lender. If any other Default occurs, the Required
Lenders (or the Agent with the consent of the Required Lenders) may, by
notice to the Borrower terminate or suspend the obligations of the Lenders to
make Loans hereunder, or declare the Obligations to be due and payable, or
both, whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or further notice of any kind, all of
which the Borrower hereby expressly waives.
If, within 30 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans hereunder as a
result of any Default (other than any Default as described in Section 7.6 or
7.7 with respect to the Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the Agent shall,
by notice to the Borrower, rescind and annul such acceleration and/or
termination.
8.2. AMENDMENTS. Subject to the provisions of this Article VIII,
the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to
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the Loan Documents or changing in any manner the rights of the Lenders or the
Borrower hereunder or waiving any Default hereunder; PROVIDED, HOWEVER, that
no such supplemental agreement shall, without the consent of all of the
Lenders:
(i) Extend the final maturity of any Loan or forgive all or
any portion of the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.
(iii) Extend the Facility Termination Date, or reduce the
amount or extend the payment date for, the mandatory payments
required under Section 2.2, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower to
assign its rights under this Agreement.
(iv) Amend this Section 8.2.
(v) Release any Guarantor from its Guaranty or, except as
provided in the Collateral Documents, release all or substantially
all of the Collateral.
No amendment of any provision of this Agreement relating to the Agent shall
be effective without the written consent of the Agent. The Agent may waive
payment of the fee required under Section 12.3.2 without obtaining the
consent of any other party to this Agreement.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders
or the Agent to exercise any right under the Loan Documents shall impair such
right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default
or the inability of the Borrower to satisfy the conditions precedent to such
Loan shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise
thereof or the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required
pursuant to Section 8.2, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by
law afforded shall be cumulative and all shall be available to the Agent and
the Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower contained in this Agreement shall survive the
making of the Loans herein contemplated.
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9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement
to the contrary notwithstanding, no Lender shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition provided
by any applicable statute or regulation.
9.3. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.4. ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the
Agent and the Lenders relating to the subject matter thereof other than the
fee letter described in Section 10.13.
9.5. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The
respective obligations of the Lenders hereunder are several and not joint and
no Lender shall be the partner or agent of any other (except to the extent to
which the Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties
to this Agreement and their respective successors and assigns.
9.6. EXPENSES; INDEMNIFICATION. (i) The Borrower shall reimburse
the Agent for such costs, internal charges and out-of-pocket expenses paid or
incurred by the Agent in connection with the preparation, negotiation,
execution, delivery and administration of the Loan Documents as are provided
for in the Fee Letter. The Borrower also agrees to reimburse the Agent and
the Lenders for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent and
the Lenders, which attorneys may be employees of the Agent or the Lenders)
paid or incurred by the Agent or any Lender in connection with the collection
and enforcement of the Loan Documents.
(ii) The Borrower hereby further agrees to indemnify the Agent and each
Lender, its directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent or any Lender is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other Loan Documents,
the transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loan hereunder except to the
extent that they are determined in a final non-appealable judgment by a court
of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The obligations of
the Borrower under this Section 9.6 shall survive the termination of this
Agreement.
9.7. NUMBERS OF DOCUMENTS. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
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9.8. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement
Accounting Principles.
9.9. SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.10. NONLIABILITY OF LENDERS. The relationship between the
Borrower on the one hand and the Lenders and the Agent on the other hand
shall be solely that of borrower and lender. Neither the Agent nor any
Lender shall have any fiduciary responsibilities to the Borrower. Neither
the Agent nor any Lender undertakes any responsibility to the Borrower to
review or inform the Borrower of any matter in connection with any phase of
the Borrower's business or operations. The Borrower agrees that neither the
Agent nor any Lender shall have liability to the Borrower (whether sounding
in tort, contract or otherwise) for losses suffered by the Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any
act, omission or event occurring in connection therewith, unless it is
determined in a final non-appealable judgment by a court of competent
jurisdiction that such losses resulted from the gross negligence or willful
misconduct of the party from which recovery is sought. Neither the Agent nor
any Lender shall have any liability with respect to, and the Borrower hereby
waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Borrower in connection with, arising
out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.11. CONFIDENTIALITY. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement
in confidence, except for disclosure (i) to its Affiliates and to other
Lenders and their respective Affiliates, (ii) to legal counsel, accountants,
and other professional advisors to that Lender or to a Transferee, (iii) to
regulatory officials, (iv) to any Person as required by law, regulation, or
legal process, (v) to any Person in connection with any legal proceeding to
which that Lender is a party, and (vi) permitted by Section 12.4.
9.12. NONRELIANCE. Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the repayment of the
Loans provided for herein.
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ARTICLE X
THE AGENT
10.1. APPOINTMENT; NATURE OF RELATIONSHIP. American National Bank
and Trust Company of Chicago is hereby appointed by each of the Lenders as
its contractual representative (herein referred to as the "Agent") hereunder
and under each other Loan Document, and each of the Lenders irrevocably
authorizes the Agent to act as the contractual representative of such Lender
with the rights and duties expressly set forth herein and in the other Loan
Documents. The Agent agrees to act as such contractual representative upon
the express conditions contained in this Article X. Notwithstanding the use
of the defined term "Agent," it is expressly understood and agreed that the
Agent shall not have any fiduciary responsibilities to any Lender by reason
of this Agreement or any other Loan Document and that the Agent is merely
acting as the contractual representative of the Lenders with only those
duties as are expressly set forth in this Agreement and the other Loan
Documents. In its capacity as the Lenders' contractual representative, the
Agent (i) does not hereby assume any fiduciary duties to any of the Lenders,
(ii) is a "representative" of the Lenders within the meaning of Section 9-105
of the Uniform Commercial Code and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the Lenders
hereby agrees to assert no claim against the Agent on any agency theory or
any other theory of liability for breach of fiduciary duty, all of which
claims each Lender hereby waives.
10.2. POWERS. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
10.3. GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a
final non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into, or verify (a) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information
directly to each Lender; (c) the satisfaction of any condition specified in
Article IV, except receipt of items required to be delivered solely
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to the Agent; (d) the existence or possible existence of any Default or
Unmatured Default; (e) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith; (f) the value, sufficiency,
creation, perfection or priority of any Lien in any collateral security; or
(g) the financial condition of the Borrower or any Guarantor of any of the
Obligations or of any of the Borrower's or any such Guarantor's respective
Subsidiaries. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent
at such time, but is voluntarily furnished by the Borrower to the Agent
(either in its capacity as Agent or in its individual capacity).
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions
signed by the Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders. The
Lenders hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions
of this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders. The Agent shall be fully justified
in failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the
Lenders pro rata against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any
of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable
to the Lenders, except as to money or securities received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning the contractual arrangement between
the Agent and the Lenders and all matters pertaining to the Agent's duties
hereunder and under any other Loan Document.
10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and,
in respect to legal matters, upon the opinion of counsel selected by the
Agent, which counsel may be employees of the Agent.
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their
respective Commitments (or, if the Commitments have been terminated, in
proportion to their Commitments immediately prior to such termination) (i)
for any amounts not reimbursed by the Borrower for which the Agent is
entitled to reimbursement by the Borrower under the Loan Documents, (ii) for
any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation, for any
expenses incurred by the Agent in connection with any dispute between the
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Agent and any Lender or between two or more of the Lenders) and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred by or asserted
against the Agent in connection with any dispute between the Agent and any
Lender or between two or more of the Lenders), or the enforcement of any of
the terms of the Loan Documents or of any such other documents, PROVIDED that
no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Agent. The obligations of the Lenders under this Section 10.8 shall
survive payment of the Obligations and termination of this Agreement.
10.9. NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders.
10.10. RIGHTS AS A LENDER. In the event the Agent is a Lender, the
Agent shall have the same rights and powers hereunder and under any other
Loan Document with respect to its Commitment and its Loans as any Lender and
may exercise the same as though it were not the Agent, and the term "Lender"
or "Lenders" shall, at any time when the Agent is a Lender, unless the
context otherwise indicates, include the Agent in its individual capacity.
The Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person.
10.11. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
10.12. SUCCESSOR AGENT. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to
be effective upon the appointment of a successor Agent or, if no successor
Agent has been appointed, forty-five days after the retiring Agent gives
notice of its intention to resign. The Agent may be removed at any time with
or without cause by written notice received by the Agent from the Required
Lenders, such
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<PAGE>
removal to be effective on the date specified by the Required Lenders. Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Borrower and
the Lenders, a successor Agent. Notwithstanding the previous sentence, the
Agent may at any time without the consent of the Borrower or any Lender,
appoint any of its Affiliates which is a commercial bank as a successor Agent
hereunder. If the Agent has resigned or been removed and no successor Agent
has been appointed, the Lenders may perform all the duties of the Agent
hereunder and the Borrower shall make all payments in respect of the
Obligations to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and
retained earnings of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the resigning or removed Agent. Upon the
effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation or
removal of an Agent, the provisions of this Article X shall continue in
effect for the benefit of such Agent in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and
under the other Loan Documents. In the event that there is a successor to
the Agent by merger, or the Agent assigns its duties and obligations to an
Affiliate pursuant to this Section 10.12, then the term "Corporate Base Rate"
as used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Agent.
10.13. AGENT'S FEE. The Borrower agrees to pay to the Agent, for its
own account, the fees agreed to by the Borrower and the Agent pursuant to
that certain letter agreement dated October 17, 1997 as amended by addendum
dated as of October 31, 1997 ("Fee Letter"), or as otherwise agreed from time
to time.
10.14. DELEGATION TO AFFILIATES. The Borrower and the Lenders agree
that the Agent may delegate any of its duties under this Agreement to any of
its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification,
waiver and other protective provisions to which the Agent is entitled under
Articles IX and X.
10.15. EXECUTION OF COLLATERAL DOCUMENTS. The Lenders hereby empower
and authorize the Agent to execute and deliver to the Borrower on their
behalf the Collateral Documents and all related financing statements and any
financing statements, agreements, documents or instruments as shall be
necessary or appropriate to effect the purposes of the Collateral Documents.
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<PAGE>
10.16. COLLATERAL RELEASES. The Lenders hereby empower and authorize
the Agent to execute and deliver to the Borrower on their behalf any
agreements, documents or instruments as shall be necessary or appropriate to
effect any releases of Collateral which shall be permitted by the terms
hereof or of any other Loan Document or which shall otherwise have been
approved by the Required Lenders (or, if required by the terms of Section
8.2, all of the Lenders) in writing.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any rights
of the Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default occurs, any and all deposits (including all
account balances, whether provisional or final and whether or not collected
or available) and any other Indebtedness at any time held or owing by any
Lender or any Affiliate of any Lender to or for the credit or account of the
Borrower may be offset and applied toward the payment of the Obligations
owing to such Lender, whether or not the Obligations, or any part hereof,
shall then be due.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments
received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion
than that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase a portion of the Loans held by the other Lenders so that
after such purchase each Lender will hold its ratable proportion of Loans.
If any Lender, whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other protection for
its Obligations or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all
Lenders share in the benefits of such collateral ratably in proportion to
their Loans. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made. If an amount to be
setoff is to be applied to Indebtedness of the Borrower to a Lender other
than Indebtedness comprised of Loans made by such Lender, such amount shall
be applied ratably to such other Indebtedness and to the Indebtedness
comprised of such Loans.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
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<PAGE>
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under
the Loan Documents and (ii) any assignment by any Lender must be made in
compliance with Section 12.3. Notwithstanding clause (ii) of this Section,
any Lender may at any time, without the consent of the Borrower or the Agent,
assign all or any portion of its rights under this Agreement and any Note to
a Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Agent may treat the Person which made any Loan or which holds
any Note as the owner thereof for all purposes hereof unless and until such
Person complies with Section 12.3 in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed
with the Agent. Any assignee or transferee of the rights to any Loan or any
Note agrees by acceptance of such transfer or assignment to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder, transferee or assignee of the rights to such Loan.
12.2. PARTICIPATIONS.
12.2.1 PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held by
such Lender, any Commitment of such Lender or any other interest of such
Lender under the Loan Documents. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the owner of its Loans and the holder
of any Note issued to it in evidence thereof for all purposes under the
Loan Documents, all amounts payable by the Borrower under this Agreement
shall be determined as if such Lender had not sold such participating
interests, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment, extends the Facility
Termination Date, postpones any date fixed for any regularly-scheduled
payment of principal of, or interest or fees on, any
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<PAGE>
such Loan or Commitment, releases any Guarantor of any such Loan or
releases all or substantially all of the collateral, if any, securing
any such Loan.
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in
respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under the Loan Documents, PROVIDED
that each Lender shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance
with Section 11.2 as if each Participant were a Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
assign to one or more banks or other entities ("Purchasers") all or any
part of its rights and obligations under the Loan Documents. Such
assignment shall be substantially in the form of Exhibit C or in such other
form as may be agreed to by the parties thereto. The consent of the
Borrower and the Agent shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; PROVIDED, HOWEVER, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required. Such
consent shall not be unreasonably withheld or delayed. Each such
assignment shall (unless each of the Borrower and the Agent otherwise
consents) be in an amount not less than the lesser of (i) $5,000,000 or
(ii) the remaining amount of the assigning Lender's Commitment (calculated
as at the date of such assignment).
12.3.2. EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit I to
Exhibit C (a "Notice of Assignment"), together with any consents required
by Section 12.3.1, and (ii) payment of a $3,000 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect
that none of the consideration used to make the purchase of the Commitment
and Loans under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the Purchaser in
and under the Loan Documents will not be "plan assets" under ERISA. On and
after the effective date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan Document
executed by or on behalf of the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by the
Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage
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of the Aggregate Commitment and Loans assigned to such Purchaser. Upon
the consummation of any assignment to a Purchaser pursuant to this
Section 12.3.2, the transferor Lender, the Agent and the Borrower shall,
if the transferor Lender or the Purchaser desires that its Loans be
evidenced by a Note, make appropriate arrangements so that a new Note
or, as appropriate, a replacement Note is issued to such transferor
Lender and a new Note or, as appropriate, a replacement Note, is issued
to such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries, including without limitation any information contained in any
Reports; PROVIDED that each Transferee and prospective Transferee agrees to
be bound by Section 9.11 of this Agreement.
12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
3.5(iv).
ARTICLE XIII
NOTICES
13.1. NOTICES. Except as otherwise permitted by Section 2.13 with
respect to borrowing notices, all notices, requests and other communications
to any party hereunder shall be in writing (including electronic
transmission, facsimile transmission or similar writing) and shall be given
to such party: (x) in the case of the Borrower or the Agent, at its address
or facsimile number set forth on the signature pages hereof, (y) in the case
of any Lender, at its address or facsimile number set forth below its
signature hereto in its administrative questionnaire or (z) in the case of
any party, at such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and the Borrower in
accordance with the provisions of this Section 13.1. Each such notice,
request or other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this
Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered (or, in the case of electronic transmission, received)
at the address specified in this Section; PROVIDED that notices to the Agent
under Article II shall not be effective until received.
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<PAGE>
13.2. CHANGE OF ADDRESS. The Borrower, the Agent and any Lender may
each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by facsimile
transmission or telephone that it has taken such action.
ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR
ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
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<PAGE>
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN CHICAGO, ILLINOIS.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR
THE RELATIONSHIP ESTABLISHED THEREUNDER.
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<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
ALTERNATIVE RESOURCES CORPORATION
By: /s/ Bradley Loopis
---------------------------------
Title: Vice President
------------------------------
100 Tri-State International
Tri-State Office Complex
Suite 300
Lincolnshire, Illinois 60069
Attention: Mr. Brad Lamers
Telephone: (847) 317-1000
Telecopier: (847) 317-1067
COMMITMENTS
$75,000,000 AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, Individually and as Agent
By: /s/ Edward L. Hochir
---------------------------------
Title: Vice President
------------------------------
5813 North Milwaukee avenue
Chicago, Illinois 60646
Attention: Mr. Fred Thompson
Telephone: (847) 317-1000
Telecopier: (847) 317-1067
<PAGE>
PRICING SCHEDULE
- --------------------------------------------------------------------------------
APPLICABLE MARGIN LEVEL I STATUS LEVEL II STATUS LEVEL III STATUS
- --------------------------------------------------------------------------------
EURODOLLAR RATE .625% .750% 1.000%
- --------------------------------------------------------------------------------
FLOATING RATE 0% 0% 0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPLICABLE FEE RATE LEVEL I STATUS LEVEL II STATUS LEVEL III STATUS
- --------------------------------------------------------------------------------
Commitment Fee .20% .25% .30%
- --------------------------------------------------------------------------------
For the purposes of this Schedule, the following terms have the
following meanings, subject to the final paragraph of this Schedule:
"Financials" means the annual or quarterly financial statements of the
Borrower delivered pursuant to Section 6.1(i) or (ii).
"Level I Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, the
Pricing Ratio is less than 1.5 to 1.00.
"Level II Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower has not qualified for Level I Status and (ii) the Pricing Ratio
is less than or equal to 2.25 to 1.00.
"Level III Status" exists at any date if the Borrower has not qualified
for Level I Status or Level II Status.
"Pricing Ratio: means, as of the last day of each fiscal quarter the
ratio of (i) Consolidated Funded Indebtedness outstanding on such date to
(ii) Consolidated EBITDA for the four fiscal quarters ending such date,
PROVIDED, HOWEVER, that (a) for the fiscal quarter of the Borrower ending
June 30, 1998, Consolidated EBITDA shall mean the Consolidated EBITDA for the
two fiscal quarters then ending divided by .50 and (b) for the fiscal quarter
of the Borrower ending September 30, 1998, Consolidated EBITDA shall mean the
Consolidated EBITDA for the three fiscal quarters then ending divided by .75.
"Status" means either Level I Status, Level II Status or Level III
Status.
The Applicable Margin and Applicable Fee Rate shall be determined in
accordance with the foregoing table based on the Borrower's Status as reflected
in the then most recent Financials. Adjustments, if any, to the Applicable
Margin or Applicable Fee Rate shall be effective five Business Days after the
Agent has received the applicable Financials. If the Borrower fails to deliver
the Financials to the Agent at the time required pursuant to Section 6.1,
<PAGE>
then the Applicable Margin and Applicable Fee Rate shall be the highest
Applicable Margin and Applicable Fee Rate set forth in the foregoing table
until five days after such Financials are so delivered. The foregoing to the
contrary notwithstanding, the Applicable Margin for the period from the date
hereof through redetermination thereof based upon the Borrower's Financials
as of June 30, 1998 shall be .875% and the Applicable Fee Rate for such
period shall be .25%.
<PAGE>
EXHIBIT A
FORM OF OPINION
November __, 1997
The Agent and the Lenders who are or may become
parties to the Credit Agreement described below.
Gentlemen/Ladies:
We are counsel for Alternative Resources Corporation, a Delaware
corporation (the "Borrower"), and have represented the Borrower in connection
with its execution and delivery of a Credit Agreement dated as of October 31,
1997 (the "Agreement") among the Borrower, the Lenders named therein, and
American National Bank and Trust Company of Chicago, as Agent, and providing
for Advances in an aggregate principal amount not exceeding $75,000,000 at
any one time outstanding. All capitalized terms used in this opinion and not
otherwise defined herein shall have the meanings attributed to them in the
Agreement. We are also counsel to each of the Guarantors and have
represented the Guarantors in connection with their execution and delivery of
the Guarantees.
We have examined the Borrower's and Guarantors' (DESCRIBE CONSTITUTIVE
DOCUMENTS OF BORROWER AND GUARANTORS' AND APPROPRIATE EVIDENCE OF AUTHORITY
TO ENTER INTO THE TRANSACTION), the Loan Documents and such other matters of
fact and law which we deem necessary in order to render this opinion. Based
upon the foregoing, it is our opinion that:
l. Each of the Borrower, the Guarantors and Borrower's other
Subsidiaries is a corporation, partnership or limited liability company duly
and properly incorporated or organized, as the case may be, validly existing
and (to the extent such concept applies to such entity) in good standing
under the laws of its jurisdiction of incorporation or organization and has
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.
2. The execution and delivery by the Borrower of the CGI Acquisition
Agreement and by the Borrower and the Guarantors of the Loan Documents to
which each of them is a party and the performance by the Borrower and the
Guarantors of their respective obligations thereunder have been duly
authorized by proper corporate proceedings on the part of the Borrower and
each Guarantor and will not:
(a) require any consent of the shareholders or members of the
Borrower or any Guarantor (other than any such consent as has already been
given and remains in full force and effect);
(b) violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower, any Guarantor or any
of Borrower's other Subsidiaries or (ii) the Borrower's or any Subsidiary's
articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization,
by-laws, or operating or other management agreement, as the case may be,
<PAGE>
or (iii) the provisions of any indenture, instrument or agreement to which
the Borrower, any Guarantor or any of Borrower's other Subsidiaries is a
party or is subject, or by which it, or its Property, is bound, or
conflict with or constitute a default thereunder; or
(c) result in, or require, the creation or imposition of any Lien in,
of or on the Property of the Borrower, any Guarantor or any other
Subsidiary of the Borrower pursuant to the terms of any indenture,
instrument or agreement binding upon the Borrower, any Guarantor or any of
Borrower's other Subsidiaries.
3. The CGI Acquisition Agreement and the Loan Documents to which the
Borrower and the Guarantors are a party have been duly executed and delivered
by the Borrower and the Guarantors and constitute legal, valid and binding
obligations of the Borrower and the Guarantors enforceable against the
Borrower and the Guarantors in accordance with their respective terms except
to the extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
4. There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the best of our knowledge after due
inquiry, threatened against the Borrower, any Guarantor or any of Borrower's
other Subsidiaries which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
5. No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by,
or other action in respect of any governmental or public body or authority,
or any subdivision thereof, which has not been obtained by the Borrower, the
Guarantors or any of Borrower's other Subsidiaries, is required to be
obtained by the Borrower, any Guarantor or any of Borrower's other
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement, the payment and performance by
the Borrower and the Guarantors of the Obligations, the legality, validity,
binding effect or enforceability of any of the Loan Documents or the
consummation of the CGI Acquisition.
6. CGI Acquisition has been consummated in accordance with the terms of
the CGI Acquisition Agreement.
This opinion may be relied upon by the Agent, the Lenders and their
participants, assignees and other transferees.
Very truly yours,
<PAGE>
EXHIBIT B
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of November __, 1997 (as amended, modified, renewed or
extended from time to time, the "Agreement") among the Alternative Resources
Corporation, a Delaware corporation (the "Borrower"), the lenders party
thereto and American National Bank and Trust Company of Chicago, as Agent for
the Lenders. Unless otherwise defined herein, capitalized terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _______________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting
period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of
the Agreement, all of which data and computations are true, complete and
correct.
5. Schedule II hereto sets forth the determination of the interest rates
to be paid for Advances and the commitment fee rates commencing on the fifth
day following the delivery hereof.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it
has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth
in Schedule I and Schedule II hereto and the financial statements delivered
with this Certificate in support hereof, are made and delivered this _____ day
of ____________, ____.
----------------------------
<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of _________, ____ with
Provisions of Sections 6.11, 6.14, 6.16, 6.17,
6.20, 6.23 and 6.24 of the Agreement
A. INDEBTEDNESS (SECTION 6.11)
1. Amount of Indebtedness outstanding
described in 6.11(iii) $__________
2. Line 1 amount must not exceed) $ 5,000,000
3. Borrower in compliance (circle) yes/no
B. INVESTMENTS AND ACQUISITIONS (SECTION 6.14)
1. Other fixed income investments described
in Section 6.14(iii) $__________
2. Line 1 amount must not exceed $15,000,000
3. Investments in debt and equity securities
described in Section 6.14(iv) $__________
4. Line 3 amount must not exceed $ 7,500,000
5. Investments in joint ventures $__________
6. Line 5 amount must not exceed $10,000,000
7. Total Acquisitions after 10/31/97 $__________
8. Line 7 amount must not exceed $75,000,000
9. Amount(s) of Individual Acquisition
(a) $_____________
(b) $_____________
10. No line 9 amount shall exceed $35,000,000
11. Borrower in compliance (circle) yes/no
C. CAPITAL EXPENDITURES (SECTION 6.16)
1. Capital Expenditures year to date $__________
2. Line 1 amount must not exceed $ 7,500,000
3. Borrower in compliance (circle) yes/no
D. RENTALS (SECTION 6.17)
1. Operating lease obligations (Rentals) $__________
2. Line 1 amount must not exceed $ 8,500,000
3. Borrower in compliance (circle) yes/no
<PAGE>
E. SALE OF ACCOUNTS (SECTION 6.20)
1. Sales of accounts year to date $__________
2. Line 1 amount must not exceed $ 200,000
3. Borrower in compliance (circle) yes/no
F. FINANCIAL CONTRACTS (SECTION 6.23)
1. Net Mark to Market Exposures for
Rate Hedging Obligations $__________
2. Line 1 amount must not exceed $ 5,000,000
3. Any other Financial Contracts? yes/no
3. Borrower in compliance (circle) yes/no
G. FIXED CHARGE COVERAGE RATIO (SECTION 6.24.1)
1. Consolidated Net Income $__________
2. Consolidated Interest Expense $__________
3. Federal, state and local taxes $__________
4. Extraordinary losses $__________
5. Sums of Lines 1 through 4 $__________
6. Extraordinary gains $__________
7. Line 5 minus Line 6 (Consolidated
EBIT) $__________
8. Consolidated Rentals $__________
9. Line 7 plus Line 8 $__________
10. Consolidated Interest Expense
(Line 2 above) $__________
11. Consolidated Rentals (Line 8 above) $__________
12. Line 10 plus Line 11 $__________
13. Ratio of Line 9 to Line 12 __ to 1.00
14. Line 13 Ratio must not be less than 3.00 to 1.00
15. Borrower in compliance (circle) yes/no
H. LEVERAGE RATIO (SECTION 6.24.2)
1. Consolidated Funded Indebtedness $__________
2. Consolidated EBIT (Line G7 above) $__________
3. Depreciation $__________
4. Amortization $__________
5. Sum of Lines 2, 3 and 4 (Consolidated
EBITDA) $__________
6. Ratio of Line 1 to Line 5 __ to 1.00
<PAGE>
7. Line 6 Ratio must not exceed:
On 12/31/97 3.25 to 1.00
On 3/31/98 3.10 to 1.00
Each quarter thereafter 3.00 to 1.00
8. Borrower in compliance (circle) yes/no
I. NET WORTH (SECTION 6.24.3)
1. Consolidated Net Worth $__________
2. Line 1 amount must be equal to or
greater than ($55,000,000 increasing
by 50% of positive Consolidated Net
Income after 10/1/97 $__________
3. Borrower in compliance (circle) yes/no
<PAGE>
SCHEDULE II TO COMPLIANCE CERTIFICATE
Borrower's Applicable Margin Calculation
A. PRICING RATIO (FOR QUARTERS ENDED 6/30/98, 9/30/98)
ALL FIGURES FROM LINES 2-7 ARE YEAR-TO-DATE.
1. Consolidated Funded Indebtedness
(line H1, Schedule 1) $__________
2. Consolidated Net Income $__________
3. Consolidated Federal, State and
Local Taxes $__________
4. Extraordinary Losses $__________
5. Sum of 1 through 4 $__________
6. Extraordinary Gains $__________
7. Line 5 minus line 6 $__________
8. Consolidated EBITDA $__________
9. For period ending 6/30/98, Divide
Line 7 by 0.50 $__________
10. For period ending 9/30/98, Divide
Line 9 by 0.75 $__________
11. Divide Line 1 by Line 10
12. Pricing Schedule Status Level __________
13. Applicable Margin __________
14. Applicable Fee Rate __________
B. PRICING RATIO (QUARTER ENDING AFTER 9/30/98)
1. Leverage Ratio (Line F6, Schedule 1) $__________
2. Pricing Schedule Status Level __________
3. Applicable Margin __________
4. Applicable Fee Rate __________
<PAGE>
SCHEDULE III TO COMPLIANCE CERTIFICATE
Reports and Deliveries Currently Due
<PAGE>
EXHIBIT C
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
___________________(the "Assignor") and _____________(the "Assignee") is
dated as of___________________ , 19__. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from
time to time is herein called the "Credit Agreement") described in Item 1 of
Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings attributed to them in
the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under
the Credit Agreement such that after giving effect to such assignment the
Assignee shall have purchased pursuant to this Assignment Agreement the
percentage interest specified in Item 3 of Schedule 1 of all outstanding
rights and obligations under the Credit Agreement relating to the facilities
listed in Item 3 of Schedule 1 and the other Loan Documents. The aggregate
Commitment (or Loans, if the applicable Commitment has been terminated)
purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Agent) after a Notice of Assignment substantially in the form of Exhibit "I"
attached hereto has been delivered to the Agent. Such Notice of Assignment
must include any consents required to be delivered to the Agent by Section
12.3.1 of the Credit Agreement. In no event will the Effective Date occur if
the payments required to be made by the Assignee to the Assignor on the
Effective Date under Sections 4 and 5 hereof are not made on the proposed
Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (i) the Assignee shall have the rights and
obligations of a Lender under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder and (ii) the Assignor
shall relinquish its rights and be released from its corresponding
obligations under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder.
4. PAYMENT OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Agent all payments of principal, interest
and fees with respect to the interest assigned hereby. The Assignee shall
advance funds directly to the Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby. **[In consideration for the sale and assignment of Loans
hereunder, (i) the Assignee shall pay the Assignor, on the Effective Date, an
amount equal to the principal amount of the portion of all Floating Rate Loans
assigned to the Assignee hereunder and (ii) with respect to each Fixed Rate Loan
made by the Assignor and assigned to
<PAGE>
the Assignee hereunder which is outstanding on the Effective Date, (a) on the
last day of the Interest Period therefor or (b) on such earlier date agreed
to by the Assignor and the Assignee or (c) on the date on which any such
Fixed Rate Loan becomes due (by acceleration or otherwise)(the date as
described in the foregoing clauses (a), (b) or (c) being hereinafter referred
to as the "Payment Date"), the Assignee shall pay the Assignor an amount
equal to the principal amount of the portion of such Fixed Rate Loan assigned
to the Assignee which is outstanding on the Payment Date. If the Assignor
and the Assignee agree that the Payment Date for such Fixed Rate Loan shall
be the Effective Date, they shall agree to the interest rate applicable to
the portion of such Loan assigned hereunder for the period from the Effective
Date to the end of the existing Interest Period applicable to such Fixed Rate
Loan (the "Agreed Interest Rate") and any interest received by the Assignee
in excess of the Agreed Interest Rate shall be remitted to the Assignor. In
the event interest for the period from the Effective Date to but not
including the Payment Date is not paid by the Borrower with respect to any
Fixed Rate Loan sold by the Assignor to the Assignee hereunder, the Assignee
shall pay to the Assignor interest for such period on the portion of such
Fixed Rate Loan sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Credit Agreement. In the event a prepayment
of any Fixed Rate Loan which is existing on the Payment Date and assigned by
the Assignor to the Assignee hereunder occurs after the Payment Date but
before the end of the Interest Period applicable to such Fixed Rate Loan, the
Assignee shall remit to the Assignor the excess of the prepayment penalty
paid with respect to the portion of such Fixed Rate Loan assigned to the
Assignee hereunder over the amount which would have been paid if such
prepayment penalty was calculated based on the Agreed Interest Rate. The
Assignee will also promptly remit to the Assignor (i) any principal payments
received from the Agent with respect to Fixed Rate Loans prior to the Payment
Date and (ii) any amounts of interest on Loans and fees received from the
Agent which relate to the portion of the Loans assigned to the Assignee
hereunder for periods prior to the Effective Date, in the case of Floating
Rate Loans or fees, or the Payment Date, in the case of Fixed Rate Loans, and
not previously paid by the Assignee to the Assignor.]** In the event that
either party hereto receives any payment to which the other party hereto is
entitled under this Assignment Agreement, then the party receiving such
amount shall promptly remit it to the other party hereto.
**Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or commitment fees
is made under the Credit Agreement with respect to the amounts assigned to
the Assignee hereunder (other than a payment of interest or commitment fees
for the period prior to the Effective Date or, in the case of Fixed Rate
Loans, the Payment Date, which the Assignee is obligated to deliver to the
Assignor pursuant to Section 4 hereof). The amount of such fee shall be the
difference between (i) the interest or fee, as applicable, paid with respect
to the amounts assigned to the Assignee hereunder and (ii) the interest or
fee, as applicable, which would have been paid with respect to the amounts
assigned to the Assignee hereunder if each interest rate was ____of 1% less
than the interest rate paid by the Borrower or if the commitment fee was ___
of 1% less than the commitment fee paid by the Borrower, as applicable. In
addition, the Assignee agrees to pay
<PAGE>
___% of the recordation fee required to be paid to the Agent in connection
with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are
made without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of
the Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of
the Property, books or records of the Borrower, (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Loans or (vii) any mistake,
error of judgment, or action taken or omitted to be taken in connection with
the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information at it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Loan Documents, (iii) appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto, (iv)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender, (v) agrees that its payment instructions and
notice instructions are as set forth in the attachment to Schedule 1, (vi)
confirms that none of the funds, monies, assets or other consideration being
used to make the purchase and assumption hereunder are "plan assets" as
defined under ERISA and that its rights, benefits and interests in and under
the Loan Documents will not be "plan assets" under ERISA, (vii) confirms that
it is an Eligible Assignee,] and (viii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying that the Assignee is
entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes].**
**to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
<PAGE>
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section 12.3.1 of the Credit Agreement to assign the
rights which are assigned to the Assignee hereunder to any entity or person,
PROVIDED that (i) any such subsequent assignment does not violate any of the
terms and conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that any consent required under the
terms of the Loan Documents has been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the Aggregate
Commitment occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the parties
hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth in the attachment to Schedule 1.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
**[NAME OF ASSIGNOR]**
By: ___________________________________
Title: ___________________________________
___________________________________
___________________________________
**[NAME OF ASSIGNEE]**
By: ___________________________________
Title: ___________________________________
___________________________________
___________________________________
<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: _____________, 19___
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility
1* 2* 3* 4*
------- ------ ------- ---------
a. Total of Commitments
(Loans)** under
Credit Agreement $ $ $ $
------- ------ ------- ---------
b. Assignee's Percentage
of each Facility
purchased under the
Assignment Agreement*** % % % %
------- ------ ------- ---------
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ $ $ $
------- ------ ------- ---------
4. Assignee's Aggregate (Loan
Amount)** Commitment Amount
Purchased Hereunder: $
-------
5. Proposed Effective Date:
--------
Accepted and Agreed:
**[NAME OF ASSIGNOR]** **[NAME OF ASSIGNEE]**
By: _____________________ By: _____________________
Title:_____________________ Title:_____________________
* Insert specific facility names per Credit Agreement
** If a Commitment has been terminated, insert outstanding Loans in place of
Commitment
*** Percentage taken to 10 decimal places
<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
ADMINISTRATIVE INFORMATION SHEET
Attach Assignor's Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)
ASSIGNOR INFORMATION
CONTACT:
Name: ______________________ Telephone No.:_________________________
Fax No.:____________________ Telex No.:_____________________________
Answerback:____________________________
PAYMENT INFORMATION:
Name & ABA # of Destination Bank:_____________________________________________
_____________________________________________
Account Name & Number for Wire Transfer:_______________________________________
_______________________________________
Other Instructions:____________________________________________________________
_______________________________________________________________________________
ADDRESS FOR NOTICES FOR ASSIGNOR: ___________________________________________
______________________________________________
______________________________________________
ASSIGNEE INFORMATION
CREDIT CONTACT:
Name: ______________________ Telephone No.:_________________________
Fax No.:____________________ Telex No.:_____________________________
Answerback:____________________________
KEY OPERATIONS CONTACTS:
Booking Installation:_________________ Booking Installation:_________________
Name:_________________________________ Name:_________________________________
Telephone No.:________________________ Telephone No.:________________________
Fax No.:______________________________ Fax No.:______________________________
Telex No.:____________________________ Telex No.:____________________________
Answerback:___________________________ Answerback:___________________________
PAYMENT INFORMATION:
<PAGE>
Name & ABA # of Destination Bank:_______________________________________________
_______________________________________________
Account Name & Number for Wire Transfer:________________________________________
_________________________________________
Other Instructions:_____________________________________________________________
________________________________________________________________________________
ADDRESS FOR NOTICES FOR ASSIGNEE: ______________________________________________
________________________________________________
________________________________________________
<PAGE>
ANB INFORMATION
Assignee will be called promptly upon receipt of the signed agreement.
INITIAL FUNDING CONTACT: SUBSEQUENT OPERATIONS CONTACT:
Name:__________________________ Name:____________________________
Telephone No.:_________________ Telephone No.:___(312)____________
Fax No.:_______________________ Fax No.:___(312)__________________
FNBC Telex No.:___________________
INITIAL FUNDING STANDARDS:
Libor - Fund 2 days after rates are set.
ANB WIRE INSTRUCTIONS: American National Bank and Trust Company of
Chicago, ABA # _________
BNF = ______________, Ref:
ADDRESS FOR NOTICES FOR ANB:___________________________________________________
Attn: ________________________________________________
Fax No. (312) ________ or (312) _________
<PAGE>
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
________________, 19____
To: Alternative Resources Corporation
100 Tri-State International
Tri-State Office Complex
Suite 300
Lincolnshire, Illinois 60069
Attention: Mr. Brad Lamers
American National Bank and
Trust Company of Chicago
5813 North Milwaukee Avenue
Chicago, Illinois 60646
Attention: Fred Thompson
From: **[NAME OF ASSIGNOR]** (the "Assignor")
**[NAME OF ASSIGNEE]** (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to the Borrower and the Agent pursuant to Section 12.3.2 of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an
Assignment Agreement, dated as of_______________, 19__ (the "Assignment"),
pursuant to which, among other things, the Assignor has sold, assigned,
delegated and transferred to the Assignee, and the Assignee has purchased,
accepted and assumed from the Assignor the percentage interest specified in
Item 3 of Schedule 1 of all outstandings, rights and obligations under the
Credit Agreement relating to the facilities listed in Item 3 of Schedule 1.
The Effective Date of the Assignment shall be the later of the date specified
in Item 5 of Schedule 1 or two Business Days (or such shorter period as
agreed to by the Agent) after this Notice of Assignment and any consents and
fees required by Sections 12.3.1 and 12.3.2 of the Credit Agreement have been
delivered to the Agent, PROVIDED that the
<PAGE>
Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower
and the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 5 of
Schedule 1 to determine if the Assignment Agreement will become effective on
such date pursuant to Section 3 hereof, and will confer with the Agent to
determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter. The Assignor shall notify the Agent if the Assignment Agreement
does not become effective on any proposed Effective Date as a result of the
failure to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Agent, the Assignor will give the Agent
written confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or
before the Effective Date the processing fee of $3,000 required by Section
12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacement notes,
to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee
each agree to deliver to the Agent the original Note received by it from the
Borrower upon its receipt of a new Note in the appropriate amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that its
rights, benefits, and interests in and under the Loan Documents will not be
"plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under
the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect to
the Borrower or the Loan Documents to the Assignee until the Assignee becomes a
party to the Credit Agreement.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By:______________________ By:______________________
Title:___________________ Title:___________________
<PAGE>
ACKNOWLEDGED AND CONSENTED ACKNOWLEDGED AND CONSENTED TO
TO BY AMERICAN NATIONAL BANK BY ALTERNATIVE RESOURCES
TRUST COMPANY OF CHICAGO CORPORATION
By:______________________ By:_________________________
Title:___________________ Title:______________________
[Attach photocopy of Schedule 1 to Assignment]
<PAGE>
EXHIBIT D
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To American National Bank and Trust Company of Chicago, as Agent (the
"Agent") under the Credit Agreement Described Below.
Re: Credit Agreement, dated November __, 1997 (as the same may be amended or
modified, the "Credit Agreement"), among Alternative Resource Corporation,
a Delaware corporation (the "Borrower"), the Lenders named therein and the
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the
following standing money transfer instructions with respect to the proceeds
of Advances or other extensions of credit from time to time until receipt by
the Agent of a specific written revocation of such instructions by the
Borrower, PROVIDED, HOWEVER, that the Agent may otherwise transfer funds as
hereafter directed in writing by the Borrower in accordance with Section 13.1
of the Credit Agreement or based on any telephonic notice made in accordance
with Section 2.14 of the Credit Agreement.
Facility Identification Number(s)___________________________________
Customer/Account Name_______________________________________________
Transfer Funds To___________________________________________________
___________________________________
For Account No.______________________________________________
Reference/Attention To________________________________________
Authorized Officer (Customer Representative) Date________________
___________________________________ _______________________
(Please Print) Signature
Bank Officer Name Date____________
___________________________________ _______________________
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
<PAGE>
EXHIBIT E
NOTE
$______________ ________, ______
ALTERNATIVE RESOURCES CORPORATION, a Delaware corporation (the
"Borrower"), promises to pay to the order of _________________________________
(the "Lender") the lesser of the principal sum of _____________________________
Dollars or the aggregate unpaid principal amount of all Loans made by the
Lender to the Borrower pursuant to Article II of the Agreement (as
hereinafter defined), in immediately available funds at the main office of
American National Bank and Trust Company of Chicago in Chicago, Illinois, as
Agent, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrower shall pay
the principal of and accrued and unpaid interest on the Loans in full on the
Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of each Loan and the date and amount of each
principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Credit Agreement dated as of November __, 1997 (which,
as it may be amended or modified and in effect from time to time, is herein
called the "Agreement"), among the Borrower, the lenders party thereto,
including the Lender, and American National Bank and Trust Company of Chicago,
as Agent, to which Agreement reference is hereby made for a statement of the
terms and conditions governing this Note, including the terms and conditions
under which this Note may be prepaid or its maturity date accelerated. This
Note is secured pursuant to the Collateral Documents and guaranteed pursuant to
the Guarantees, all as more specifically described in the Agreement, and
reference is made thereto for a statement of the terms and provisions thereof.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Agreement.
ALTERNATIVE RESOURCES CORPORATION
By:_________________________________
Print Name:_________________________
Title:______________________________
<PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF ALTERNATIVE RESOURCES CORPORATION
DATED____________,____
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
------- ----------- ---------- ----------- ---------
<PAGE>
SCHEDULE 1
SUBSIDIARIES
(See Sections 5.8 and 6.14)
Investment Jurisdiction of Owned Amount of Percent
In Organization By Investment Ownership
- ----------------- -------------- -------- ----------- ----------
ARC Service, Inc. Delaware Borrower 100%
ARC Advantage, inc. Delaware Borrower 100%
CGI Corporation Delaware Borrower 100%
CGI Systems, Inc. Delaware CGI Corporation 100%
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SCHEDULE 2
INDEBTEDNESS AND LIENS
(See Sections 5.14, 6.11 and 6.15)
Maturity
Indebtedness Indebtedness Property and Amount
Incurred By Owed To Encumbered (If Any) of Indebtedness
- ------------ ------------ ------------------- ----------------
