-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EKoE6EK/sJtOCdaDfptZpTBEggf9LuYd9Gao5+cPF2hQ49FqEvTnRTIjD3C8fwbI +ctk1tRYsNFk77497qX9Bg== 0001047469-97-005922.txt : 19971125 0001047469-97-005922.hdr.sgml : 19971125 ACCESSION NUMBER: 0001047469-97-005922 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971107 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971124 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALTERNATIVE RESOURCES CORP CENTRAL INDEX KEY: 0000920521 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 382791069 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-23940 FILM NUMBER: 97727150 BUSINESS ADDRESS: STREET 1: 75 TRI STATE INTERNATIONAL STREET 2: STE 100 CITY: LINCOLNSHIRE STATE: IL ZIP: 60069 BUSINESS PHONE: 7083171000 MAIL ADDRESS: STREET 1: 75 TRI STATE INTERNATIONAL STREET 2: STE 100 CITY: LINCOLNSHIRE STATE: IL ZIP: 60069 8-K 1 FORM 8-K 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 -------------- (Registrant's telephone number, including area code) 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 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 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. EX-2 2 EXHIBIT 2 STOCK PURCHASE AND SALE AGREEMENT - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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 i 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 ii 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 iii 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 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. 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. 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: 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. 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 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 ($ 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. 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 Page 10 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. Page 11 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 Page 12 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 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 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 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. Page 16 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; Page 17 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; Page 18 (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 : Page 19 (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). Page 20 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 Page 21 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: Page 22 (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: Page 23 (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: Page 24 (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. Page 25 (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; Page 26 (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. Page 27 (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 Page 28 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. Page 29 (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. Page 30 (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 Page 31 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 Page 32 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 Page 33 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 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. Page 35 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 Page 36 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 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 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 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 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: EX-2.A 3 EXHIBIT 2A AMENDMENT NUMBER ONE DATED NOV 7, 1997 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: 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: [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: EX-2.B 4 EXHIBIT 2B I/T STAFFING REVENUES ESCROW AGREEMENT 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 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- -ii- 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- -iv- EXHIBITS Exhibit 1 Form of Joint Disbursement Certificate ANNEX Annex I Schedule of Fees Annex II Permitted Investments -v- 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: 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- 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- [...*...] (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- (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- 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- 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. -7- 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- 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- 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 -10- (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 -11- (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 -12- 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- [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- 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: _______________ _______________ _______________ _______________ 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 -2- 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. 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. EX-2.C 5 EXHIBIT 2C CREDIT AGREEMENT DATED NOV. 7, 1997 - ------------------------------------------------------------------------------- CREDIT AGREEMENT - ------------------------------------------------------------------------------- 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 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 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 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 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 Page v 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 Page vi CREDIT AGREEMENT - ------------------------------------------------------------------------------- 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. "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. Page 2 "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. Page 3 "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. Page 4 "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. Page 5 "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. Page 6 "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 Page 7 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. Page 8 "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. Page 9 "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), Page 10 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. Page 11 "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. Page 12 "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 Page 13 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. Page 14 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 Page 15 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. Page 16 (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 Page 17 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 Page 18 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. Page 19 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. Page 20 (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. Page 21 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 Page 22 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, Page 23 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 Page 24 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 Page 25 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. Page 26 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. Page 27 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, Page 28 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 Page 29 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. Page 30 (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 Page 31 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 Page 32 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 Page 33 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. Page 34 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 Page 35 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. Page 36 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 Page 37 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 Page 38 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 Page 39 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. Page 40 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. Page 41 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. Page 42 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 Page 43 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 Page 44 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 Page 45 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. Page 46 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 Page 47 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 Page 48 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 Page 49 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. Page 50 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, Page 51 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. Page 52 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 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, 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%. 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, 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, 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: -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- 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 ____________, ____. ---------------------------- 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 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 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 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 __________ SCHEDULE III TO COMPLIANCE CERTIFICATE Reports and Deliveries Currently Due 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 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 ___% 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. 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. 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: ___________________________________ ___________________________________ ___________________________________ 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 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: Name & ABA # of Destination Bank:_______________________________________________ _______________________________________________ Account Name & Number for Wire Transfer:________________________________________ _________________________________________ Other Instructions:_____________________________________________________________ ________________________________________________________________________________ ADDRESS FOR NOTICES FOR ASSIGNEE: ______________________________________________ ________________________________________________ ________________________________________________ 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) _________ 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 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:___________________ 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] 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) 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:______________________________ 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 ------- ----------- ---------- ----------- --------- 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% 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 - ------------ ------------ ------------------- ---------------- -----END PRIVACY-ENHANCED MESSAGE-----