EXHIBIT 10
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AMENDED AND RESTATED CREDIT AGREEMENT
by and among
COMPUTER TASK GROUP, INCORPORATED ("CTG"),
AND
CERTAIN SUBSIDIARIES OF CTG NAMED HEREIN,
AS BORROWERS,
THE LENDING INSTITUTIONS PARTY HERETO,
AS LENDERS,
and
X.X. XXXXXX BUSINESS CREDIT CORP., ACTING THROUGH
JPMORGAN CHASE BANK,
as Administrative, Documentation, Collateral and Syndication Agent
Dated as of May 9, 2002
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AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 9, 2002 among
COMPUTER TASK GROUP, INCORPORATED, a New York corporation ("CTG"), CTG SERVICES,
INC., a New York corporation ("CTG SERVICES"), COMPUTER TASK GROUP
INTERNATIONAL, INC., a Delaware corporation ("CTG INTERNATIONAL"), CTG
HEALTHCARE SOLUTIONS, INC., a Delaware corporation ("CTG HEALTHCARE"), and CTG
HEALTHCARE SOLUTIONS (KANSAS), INC., a Kansas corporation ("CTG HEALTHCARE
KANSAS"), as joint and several borrowers, the financial institutions identified
on SCHEDULE 2.01(A) hereto (the "INITIAL LENDERS"), and such other financial
institutions as may from time to time become parties hereto, as lenders, and
JPMORGAN CHASE BANK, formerly known as THE CHASE MANHATTAN BANK, as
administrative, documentation, collateral and syndication agent for the Lenders
(in such capacities, together with its successors in such capacities, the
"AGENT").
The Borrowers and Computer Task Group (U.K.), Ltd., a corporation
organized under the laws of the United Kingdom ("CTG (UK) LTD."), as guarantor,
entered into that certain Credit Agreement dated as of May 11, 2001 (as
heretofore amended, the "EXISTING CREDIT AGREEMENT") with the financial
institutions party thereto as lenders and the Agent and, in connection
therewith, executed and delivered or caused to be executed and delivered, the
other "Facility Documents" as defined in the Existing Credit Agreement (together
with the Existing Credit Agreement, the "EXISTING FACILITY DOCUMENTS"). The
Borrowers, the Initial Lenders and the Agent wish to amend and restate the
Existing Credit Agreement and, accordingly, the parties hereto agree that the
Existing Credit Agreement shall be amended and restated as of the date hereof in
its entirety as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
Section 1.01. DEFINITIONS. As used in this Agreement the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and VICE VERSA):
"ACCOUNT" means any account receivable or right of the Borrowers or any
of their Subsidiaries to payment for goods sold or leased or for services
rendered, regardless of how such right is evidenced and whether or not it has
been earned by performance, whether secured or unsecured, now existing or
hereafter arising, and the proceeds thereof.
"ACQUISITION" means any transaction pursuant to which the Borrowers or
any of their Subsidiaries: (a) acquires equity securities (or warrants, options
or other rights to acquire such securities) of any corporation (other than the
Borrowers or any corporation which is then a Subsidiary of any Borrower),
pursuant to a solicitation of tenders therefore, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing; (b) makes any corporation a Subsidiary of
any Borrower, or causes any such corporation to be merged into any Borrower or
any Subsidiary, in any case pursuant to a merger, purchase of assets or any
reorganization providing for the delivery or issuance to the holders of such
corporation's then outstanding securities, in exchange for such securities, of
cash or securities of any Borrower or any Subsidiary, or a combination thereof;
or (c) purchases all or substantially all of the business or assets of any
corporation.
"ADJUSTED BASE RATE" means, for any day, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day, and (b) the Federal Funds Rate in
effect on such day PLUS 1/2 of 1%. Any change in the Adjusted Base Rate due to a
change in the Prime RatE or the Federal Funds Rate shall be effective from and
including the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
"ADJUSTED EURODOLLAR RATE" means, with respect to any Borrowing for any
Eurodollar Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the Eurodollar Rate for such
Eurodollar Interest Period multiplied by (b) the Statutory Reserve Rate.
"AFFILIATE" means any Person which directly or indirectly through one
or more intermediaries Controls, or is Controlled by, or is under common Control
with, any Borrower.
"AFFILIATE SUBORDINATION AGREEMENT" means the Amended and Restated
Affiliate Subordination Agreement dated as of the Closing Date among the Foreign
Subsidiaries and the Agent, substantially in the form of EXHIBIT K annexed
hereto, as the same may be amended, supplemented or otherwise modified from time
to time
"AGENT" has the meaning set forth in the preamble to this Agreement.
"AGREEMENT" means this Amended and Restated Credit Agreement, as
amended or supplemented from time to time. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.
"APPLICABLE BILLING PERIOD" means each (a) 5-week period consisting of
the first five weeks of any Fiscal Quarter, (b) 4-week period consisting of the
sixth through ninth weeks of any Fiscal Quarter or (c) 4-week period consisting
of the tenth through thirteenth weeks of any Fiscal Quarter.
"APPLICABLE COMMITMENT FEE RATE" means a rate of interest per year
(expressed in basis points), equal to:
(a) For the period from the date hereof through the first Banking Day
of the month following the date on which the Agent receives the Compliance
Certificate required to be delivered by the Borrowers pursuant to section
6.08(c) of this Agreement and the corresponding financial statements required
to be delivered by the Borrowers pursuant to section 6.08(b) for the Fiscal
Quarter ending March 29, 2002, thirty seven and one-half (37.5) basis points;
and
(b) For each Applicable Commitment Fee Rate Period (as defined below)
thereafter, the Applicable Commitment Fee Rate set forth below which corresponds
to the Total Funded Debt/EBITDA Ratio of the Borrowers as of the commencement of
the Applicable Commitment Fee Rate Period:
--------------------------------------- -------------------------------
TOTAL FUNDED APPLICABLE COMMITMENT FEE RATE
DEBT/EBITDA RATIO IN BASIS POINTS PER YEAR
--------------------------------------- -------------------------------
Greater than or equal to 2.75:1.00 50
--------------------------------------- -------------------------------
Greater than or equal to 1.50:1.00
but less than 2.75:1.00 37.5
--------------------------------------- -------------------------------
Less than 1.50:1.00 25
--------------------------------------- -------------------------------
Anything in the Agreement to the contrary notwithstanding, after the
occurrence and during the continuance of any Event of Default, the Applicable
Commitment Fee Rate shall equal fifty (50) basis points.
"APPLICABLE COMMITMENT FEE RATE PERIOD" means each period beginning on
the first Banking Day of the month following the date on which the Agent
receives the Compliance Certificate required to be delivered by the Borrowers
pursuant to section 6.08(c) and the corresponding financial statements required
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to be delivered by the Borrowers pursuant to section 6.08(b) for the most
recently ended Fiscal Quarter, and ending on the day immediately preceding the
commencement of the next Applicable Commitment Fee Rate Period.
"APPLICABLE MARGIN" means the Base Rate Margin in respect of each Base
Rate Loan and the Eurodollar Margin in respect of each Eurodollar Loan.
"APPLICABLE REAL ESTATE PERCENTAGE" means, as of any date of
determination thereof, the percentage determined by dividing (a) the product of
(i) 75% and (ii) the difference between (x) 60 and (y) the integral number of
calendar months that have elapsed since the Closing Date by (b) 60.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee and accepted by the Agent in
accordance with section 12.05 and in substantially the form of EXHIBIT I hereto.
"AUTHORIZATION LETTER" means the letter agreement executed by the
Borrowers in the form of EXHIBIT B hereto.
"AVAILABILITY" means, as of any date of determination thereof, the
amount by which (a) the lesser of (i) the Borrowing Base at such time and (ii)
the aggregate amount of the Revolving Credit Commitments at such time, exceeds
(b) the Total Exposure at such time.
"AVAILABILITY BLOCK AMOUNT" means $4,000,000.
"AVAILABLE FUNDS" means all deposits in any Lockbox Account maintained
by the Borrowers at JPMorgan which shall have been made by 2:00 p.m. on a
Banking Day, or such later time in any Banking Day as to which the Agent shall
have expressly consented.
"BANKING DAY" means any day on which commercial banks are not
authorized or are not required to be closed in New York, New York and whenever
such day relates to a Eurodollar Loan or notice with respect to any Eurodollar
Loan, a day on which dealings in Dollar deposits are also carried out in the
London interbank market.
"BASE RATE LOAN" means any Loan hereunder bearing interest at a rate
based upon the Adjusted Base Rate.
"BASE RATE MARGIN" means a rate of interest per year (expressed in
basis points) equal to:
(a) For the period from the date hereof through the first Banking Day
of the month following the date on which the Agent receives the Compliance
Certificate required to be delivered by the Borrowers pursuant to section
6.08(c) of this Agreement and the corresponding financial statements required
to be delivered by the Borrowers pursuant to section 6.08(b) for the Fiscal
Quarter ending March 29, 2002, seventy five (75) basis points; and
(b) For each Base Rate Margin Period (as defined below) thereafter, the
Base Rate Margin set forth below which corresponds to the Total Funded
Debt/EBITDA Ratio of the Borrowers as of the commencement of such Base Rate
Margin Period:
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--------------------------------------------------- ----------------------------
TOTAL FUNDED BASE RATE MARGIN IN BASIS
DEBT/EBITDA RATIO POINTS PER YEAR
--------------------------------------------------- ----------------------------
Greater than or equal to 3.00:1.00 200
--------------------------------------------------- ----------------------------
Greater than or equal to 2.75:1.00 but less than 150
3.00:1.00
--------------------------------------------------- ----------------------------
Greater than or equal to 2.50:1.00 but less than 125
2.75:1.00
--------------------------------------------------- ----------------------------
Greater than or equal to 2.00:1.00 but less than 100
2.50:1.00
--------------------------------------------------- ----------------------------
Greater than or equal to 1.50:100 but less than 75
2.00: 1.00
--------------------------------------------------- ----------------------------
Greater than or equal to 1.00:1.00 but less than 50
1.50: 1.00
--------------------------------------------------- ----------------------------
Less than 1.00:1.00 25
--------------------------------------------------- ----------------------------
Anything in the Agreement to the contrary notwithstanding, after the
occurrence and during the continuance of any Event of Default and following a
written demand of the Agent to the Borrowers at the request of the Required
Lenders, interest shall accrue on all Loans at the Default Rate.
"BASE RATE MARGIN PERIOD" means each period beginning on the first
Banking Day of the month following the date on which the Agent receives the
Compliance Certificate required to be delivered by the Borrowers pursuant to
section 6.08(c) and the corresponding financial statements required to be
delivered by the Borrowers pursuant to section 6.08(b) for the most recently
ended Fiscal Quarter, and ending on the day immediately preceding the
commencement of the next Base Rate Margin Period.
"BELGIAN PLEDGE AGREEMENT" means the pledge agreement executed and
delivered by CTG Europe in connection with the Existing Credit Agreement,
pursuant to which CTG Europe granted to the Agent for the benefit of the Lenders
a First Priority Lien on 65% of the issued and outstanding stock of Computer
Task Group Belgium N.V. as security for the obligations of the Borrowers under
the Existing Credit Agreement, as such agreement may be amended, supplemented or
otherwise modified from time to time.
"BLOCKED ACCOUNT AGREEMENT" means with respect to any deposit or other
bank account (other than a Lockbox Account) maintained by the Borrowers with any
financial institution other than JPMorgan, an agreement among the Borrowers, the
depository institution at which such account is maintained and the Agent in form
and substance satisfactory to the Agent that provides for the Agent to have
dominion and control over the funds from time to time on deposit in such
account.
"BORROWERS" means CTG, CTG Services, CTG International, CTG Healthcare
and CTG Healthcare Kansas, jointly and severally, together with (i) any
Subsidiary of CTG which, upon the request of CTG and upon the approval of the
Agent and the Required Lenders, becomes a co-borrower hereunder pursuant to such
documentation as the Agent shall reasonably request, and (ii) all of their
respective successors and assigns; and "BORROWER" means any one of the
Borrowers.
"BORROWING BASE" means the sum in United States Dollars of the
following determined as of the latest Borrowing Base Certificate delivered to
the Agent:
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(a) up to 85% of the aggregate amount of Qualified Domestic
Accounts; plus
(b) the lesser of (i) up to 75% of the aggregate amount of
Qualified Domestic Unbilled Accounts and (ii) the Qualified Domestic
Unbilled Cap Amount; plus
(c) up to the Applicable Real Estate Percentage of the Fair
Market Value of Qualified Real Estate; minus
(d) the Availability Block Amount; minus
(e) the aggregate amount of reserves established from time to
time by the Agent for Interest Rate Protection Obligations and Foreign
Exchange Obligations that are secured by the Collateral pursuant to
this Agreement or the other Facility Documents;
in each case as calculated by the Agent from time to time; PROVIDED, however,
that the Agent, in its commercially reasonable discretion, may from time to time
on not less than three days' prior notice to the Borrowers, adjust the Borrowing
Base by reducing the percentages of Qualified Domestic Accounts, Qualified
Domestic Unbilled Accounts or Qualified Real Estate, by reducing the Qualified
Domestic Unbilled Cap Amount, or by setting up such reserves or other reductions
in the amount of the Borrowing Base as the Agent deems appropriate in its
reasonable credit judgment from time to time.
"BORROWING BASE CERTIFICATE" means the Borrowing Base Certificate
delivered by the Borrowers to the Agent in substantially the form of EXHIBIT C,
as such form may be modified from time to time in such a manner as the Agent may
reasonably require.
"CAPITALIZED LEASE" means any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated or combined
balance sheet of the lessee and its subsidiaries or related entities in
accordance with GAAP.
"CAPITALIZED RENTALS" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate present value of future
Rentals due and to become due under all Capitalized Leases under which such
Person is a lessee would be reflected as a liability on a consolidated or
combined balance sheet of such Person in accordance with GAAP.
"CASH EQUIVALENTS" means any of the following, to the extent owned by
the Borrowers or any of their Subsidiaries free and clear of all Liens other
than Liens created under the Security Documents: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States having a maturity of not
greater than 360 days from the date of issuance thereof: (b) insured
certificates of deposit of, or time deposits having a maturity of not greater
than 360 days from the date of issuance thereof with, any commercial bank that
is a Lender or a member of the Federal Reserve System, issues (or the parent of
which issues) commercial paper rated as described in clause (c), is organized
under the laws of the United States or any State thereof and has combined
capital and surplus of at least $1 billion; or (c) commercial paper having a
maturity of not greater than 180 days from the date of issuance thereof in an
aggregate amount of no more than $4,000,000 per issuer outstanding at any time,
issued by any corporation organized under the laws of any State of the United
States and rated at least "Prime-1" (or the then equivalent grade) by Xxxxx'x
Investors Service, Inc. or "A-1" (or the then equivalent grade) by Standard &
Poor's Ratings Group.
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"CASUALTY EVENT" means with respect to any property or asset of any
person, any loss of or damage to, or any condemnation or other taking of, such
property or asset for which such person receives insurance proceeds, or proceeds
of a condemnation award or other compensation.
"CHANGE OF CONTROL" means the occurrence of any of the following: (a)
any person or group of persons (within the meaning of Section 13 or 14 of the
Securities Exchange Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under said Act) of 30% or more of the outstanding shares of
common stock of CTG or (b) during any period of twelve consecutive calendar
months, individuals who were directors of CTG on the first day of such period
(together with any new directors whose election by such board of directors or
whose nomination for reelection by the shareholders of CTG was approved by a
vote of a majority of the directors of CTG then still in office who where either
directors on the first day of such period or whose election or nomination for
election was previously so approved) shall cease to constitute a majority of the
board of directors of CTG.
"CLOSING DATE" means the date this Agreement has been executed by the
Borrowers, the Initial Lenders and the Agent.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means, collectively, all of the Property (including
capital stock and other beneficial interests) in which Liens are purported to be
granted pursuant to the Security Documents as security for all Obligations.
"COLLECTION ACCOUNT" means, collectively, any account of the Borrowers
maintained at JPMorgan as an account to which all proceeds of Collateral
deposited in all Lockbox Accounts shall be remitted pursuant to and under the
Security Agreement and the Lockbox Account Agreements.
"CONTROL" and "CONTROLS" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of Voting Stock, by contract or holding
or owning the power to vote, or possessing the power to direct any right to
vote, or as an officer, director, employee or management consultant or other
arrangement where there is the power to direct or cause the direction of the
management and policies of a Person, and "CONTROLLED" means to be under the
Control of another Person.
"COPYRIGHTS" means all copyrights, whether statutory or common law,
owned by or assigned to the Borrowers, and all exclusive and nonexclusive
licenses to the Borrowers from third parties or rights to use copyrights owned
by such third parties, including, without limitation, the registrations,
applications and licenses listed on SCHEDULE 5.11 hereto, along with any and all
(a) renewals and extensions thereof, (b) income, royalties, damages, claims and
payments now and hereafter due and/or payable with respect thereto, including,
without limitation, damages and payments for past, present or future
infringements thereof, (c) rights to xxx for past, present and future
infringements thereof, and (d) foreign copyrights and any other rights
corresponding thereto throughout the world.
"CTG EUROPE" means Computer Task Group Europe B.V., an entity organized
under the laws of the Netherlands.
"CTG STOCK REPURCHASE PLAN" means the plans adopted on or about October
26, 1994 and July 21, 1995 by CTG's board of directors to purchase in the
aggregate, after giving effect to a stock split in 1997, up to 3,400,000 shares
of CTG capital stock.
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"DEFAULT" means any event, condition or act which, with the giving of
notice or lapse of time, or both, would become an Event of Default.
"DEFAULT RATE" means for any Loan a rate per annum equal to the rate
which is then in effect for such Loan plus 2%.
"DOLLARS" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means for any fiscal period and in respect of any Person, the
sum of (a) the net income of such Person for such period computed in accordance
with GAAP, PLUS (b) the interest expense, of such Person for such period as
reported on such Person's financial statements for such period, PLUS (c) the
income tax expense of such Person for such period as reported on such Person's
financial statements for such period, PLUS (d) the amount reported on the
financial statements of such Person as the depreciation of the assets of such
Person for such period computed in accordance with GAAP, PLUS (e) the amount
reported on the financial statements of such Person as the amortization of
intangibles assets of such Person for such period computed in accordance with
GAAP, and PLUS (f) all extraordinary non-cash charges, expenses and losses and
all other non-cash charges, expenses and losses of such Person for such period
computed in accordance with GAAP, MINUS (g) all cash and non-cash extraordinary
or non-operating income and gains of such Person for such period, in each case
as such item is used in the computation of such Person's net income for such
period. To the extent deducted in calculating EBITDA of the Borrowers and their
Subsidiaries for any period, the amount of fees and expenses paid by the
Borrowers for the financial consultant previously retained by the Lenders in
connection with the Existing Credit Agreement shall be added back to EBITDA for
such period.
"EFFECTIVE DATE" means the date on which all conditions under Article 4
shall be fully satisfied.
"ELIGIBLE ASSIGNEE" means: (a) a Lender; (b) an Affiliate of a Lender;
(c) a commercial bank organized under the laws of the United States, or any
State thereof, and having total assets in excess of $1,000,000,000; (d) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$1,000,000,000; (e) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow or of the Cayman Islands, or a political subdivision of
any such country, and having total assets in excess of $1,000,000,000, so long
as such bank is acting through a branch or agency located in the United States;
(f) the central bank of any country that is a member of the OECD; (g) a finance
company, insurance company or other financial institution or fund (whether a
corporation, partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business and having total assets in excess of $1,000,000,000; and (h) any
other Person approved by the Agent and the Borrowers, such approval not to be
unreasonably withheld or delayed; provided that no such approval of the
Borrowers shall be required after the occurrence and during the continuance of a
Default); and PROVIDED FURTHER, that none of the Borrowers or any of their
Affiliates shall qualify as an Eligible Assignee under this definition.
"ENVIRONMENTAL LAW" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No.
99-499, 100 Stat. 1613 (October 17, 1986), the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6991-6991i, as amended by the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613
(October 17, 1986), as the same may be amended from time to time, and any other
presently existing or hereafter enacted or decided federal, state or local
statutory or common laws relating to pollution or protection of the environment,
including without limitation, any common law of nuisance or trespass, and any
law or
7
regulation relating to emissions, discharges, releases or threatened release of
pollutants, contaminants or chemicals or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or chemicals, or
industrial, toxic or hazardous substances or wastes.
"EQUITY RIGHTS" means, with respect to any Person, any subscriptions,
options, warrants, commitments, preemptive rights or agreements of any kind
(including any stockholders' or voting trust agreements) for the issuance or
sale of, or securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA AFFILIATE" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as any Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with any Borrower.
"EURODOLLAR LOAN" means any Loan Tranche when and to the extent the
interest rate therefore is determined on the basis of the "Eurodollar Rate."
"EURODOLLAR INTEREST PAYMENT DATE" means with respect to any Eurodollar
Loan the last day of the Eurodollar Interest Period applicable to such
Eurodollar Loan.
"EURODOLLAR INTEREST PERIOD" means the period of time commencing on the
day a Eurodollar Rate is made applicable to a Loan Tranche and ending on the
numerically corresponding day in the first or second calendar month thereafter,
as the Borrowers may select pursuant to sections 2.07 and 2.08, provided that
each such Eurodollar Interest Period which commences on the last Banking Day of
a calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Banking
Day of the appropriate calendar month.
"EURODOLLAR MARGIN" means a rate of interest per year (expressed in
basis points) equal to:
(a) For the period from the date hereof through the first Banking Day
of the month following the date on which the Agent receives the Compliance
Certificate required to be delivered by the Borrowers pursuant to section
6.08(c) of this Agreement and the corresponding financial statements required to
be delivered by the Borrowers pursuant to section 6.08(b) for the Fiscal Quarter
ending March 29, 2002, one hundred seventy five (175) basis points; and
(b) For each Eurodollar Margin Period (as defined below) thereafter,
the Eurodollar Margin set forth below which corresponds to the Total Funded
Debt/EBITDA Ratio of the Borrowers as of the commencement of such Eurodollar
Margin Period:
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------------------------------------------------- -----------------------------
EURODOLLAR MARGIN
TOTAL FUNDED IN BASIS POINTS
DEBT/EBITDA RATIO PER YEAR
------------------------------------------------- -----------------------------
Greater than or equal to 3.00:1.00 300
------------------------------------------------- -----------------------------
Greater than or equal to 2.75:1.00 but less 250
than 3.00:1.00
------------------------------------------------- -----------------------------
Greater than or equal to 2.50:1.00 but less 225
than 2.75:1.00
------------------------------------------------- -----------------------------
Greater than or equal to 2.00:1.00 but less 200
than 2.50:1.00
------------------------------------------------- -----------------------------
Greater than or equal to 1.50: 1.00 but less 175
than 2.00:1.00
------------------------------------------------- -----------------------------
Greater than or equal to 1.00:1.00 but less 150
than 1.50:1.00
------------------------------------------------- -----------------------------
Less than 1.00:1.00 125
------------------------------------------------- -----------------------------
To the extent that a Eurodollar Margin Period commences during the
pendency of a Eurodollar Interest Period for an existing Eurodollar Loan, the
Eurodollar Margin shall remain the same for the remainder of the Eurodollar
Interest Period for such existing Eurodollar Loan. Anything in the Agreement to
the contrary notwithstanding, after the occurrence and during the continuance of
any Event of Default and following a written demand of the Agent to the
Borrowers at the request of the Required Lenders, interest shall accrue on all
Loans at the Default Rate.
"EURODOLLAR MARGIN PERIOD" means each period beginning on the first
Banking Day of the month following the date on which the Agent receives the
Compliance Certificate required to be delivered by the Borrowers pursuant to
section 6.08(c) and the corresponding financial statements required to be
delivered by the BorrowerS pursuant to section 6.08(b) for the most recently
ended Fiscal Quarter, and ending on the day immediately preceding thE
commencement of the next Eurodollar Margin Period.
"EURODOLLAR RATE" means, with respect to any Eurodollar Loan for any
Eurodollar Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Agent from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, two Banking Days prior to the
commencement of such Eurodollar Interest Period, as the rate for dollar deposits
with a maturity comparable to such Eurodollar Interest Period. In the event that
such rate is not available at such time for any reason, then the "EURODOLLAR
RATE" with respect to such Eurodollar Loan for such Eurodollar Interest Period
shall be the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Eurodollar Interest Period are offered by the Agent's
principal London office in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Banking Days prior to the
commencement of such Eurodollar Interest Period.
"EVENT OF DEFAULT" has the meaning given such term in section 9.01.
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"EXISTING LETTERS OF CREDIT" mean the Letters of Credit issued by
JPMorgan under the Existing Senior Credit Facility and outstanding on the
Effective Date, all of which Existing Letters of Credit are identified on
SCHEDULE 2.01(C) hereto.
"EXISTING SENIOR CREDIT FACILITY" means the credit facility under the
Existing Credit Agreement.
"FACILITY DOCUMENTS" means this Credit Agreement, the Notes, the
Authorization Letter, all Letter of Credit documents, all Security Documents,
any Loan Guaranties, all foreign exchange contracts and Interest Rate Protection
Agreements between any of the Borrowers or Guarantors and the Agent or Lenders
and any other agreement between any of the Borrowers or Guarantors and the Agent
or the Lenders which by its terms provides that it is to be deemed a Facility
Document hereunder.
"FAIR MARKET VALUE" means with respect to any particular parcel of
Qualified Real Estate, the average fair market value of such parcel of Qualified
Real Estate as set forth in a recent appraisal report prepared by an independent
appraiser reasonably satisfactory to the Agent.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (expressed
on a 360 day basis of calculation) equal to the weighted average of the rates on
overnight federal funds transactions as published by the Federal Reserve Bank of
New York for such day (or for any day that is not a Banking Day, for the
immediately preceding Banking Day).
"FIRST PRIORITY" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Security Document, that such Lien is
the most senior Lien (other than Permitted Liens to the extent not perfected by
filing of any UCC financing statements) to which such Collateral is subject.
"FISCAL MONTH" means each fiscal month of the Borrowers.
"FISCAL QUARTER" means each of the fiscal three month periods
commencing on the first day of the Fiscal Year and on the first day of each
subsequent fiscal three month period.
"FISCAL YEAR" means the fiscal year period of the Borrowers, each of
which shall end on the 31st day of December of each year. "FY" followed by a
year means the Fiscal Year ending in that year.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property the improvements on
which are located in an area designated by the Federal Emergency Management
Agency as having special flood or mud slide hazards.
"FLORIDA PROPERTY" means the real property owned by CTG and located at
0000 Xxxx Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx.
"FOREIGN EXCHANGE OBLIGATIONS" means all obligations of the Borrowers
or their Subsidiaries pursuant to and under any and all foreign exchange
contracts and agreements to which any Borrower or any Subsidiary is a party as
of any date of computation as if such foreign exchange agreement were to be
terminated or declared to be in default on such date (after giving effect to any
netting provisions).
"FOREIGN SUBSIDIARIES" means collectively (i) CTG (UK) Ltd., a
corporation organized under the laws of the United Kingdom, (ii) CTG Europe,
(iii) Computer Task Group Nederland B.V., an entity organized under the laws of
the Netherlands, (iv) Computer Task Group Belgium N.V., an entity organized
under the laws of Belgium, (v) Computer Task Group of Luxembourg S.A., an entity
organized under the laws of Luxembourg, and (vi) Computer Task Group of Canada,
Inc., a corporation organized under the laws of Canada, and such other
corporations, partnerships or limited liability companies
10
organized under the laws of any jurisdiction other than the United States, as
may become Subsidiaries of the Borrowers from time to time with the approval of
the Required Lenders, other than Inactive Subsidiaries.
"FUNDED INDEBTEDNESS" means, for the Borrowers and their Subsidiaries,
without duplication (a) all Indebtedness of the Borrowers and their Subsidiaries
under this Agreement and the Notes (other than undrawn Letters of Credit), (b)
all other Indebtedness of the Borrowers and their Subsidiaries for borrowed
money to the extent such Indebtedness has a final maturity of one or more than
one year from the date of origin thereof (or which is renewable or extendible at
the option of the obligor for a period or periods more than one year from the
date of origin), (c) all Indebtedness of the Borrowers and their Subsidiaries
which has been incurred in connection with the acquisition of assets (excluding
leases defined as "operating leases" under GAAP), in each case having a final
maturity of one or more than one year from the date of origin thereof (or which
is renewable or extendible at the option of the obligor for a period or periods
more than one year from the date of origin), (d) all payments in respect of
items (b) and (c) above that were required to be made within one year prior to
the date of any determination of Funded Indebtedness, if the obligation to make
such payments shall constitute a current liability of the obligor under GAAP and
(e) all Capitalized Rentals of the Borrowers and their Subsidiaries.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
section 5.05 (except for changes concurred in by the Borrowers' independent
public accountants).
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government and the National Association of Insurance Commissioners.
"GUARANTIES" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefore, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or obligation, or
(ii) to maintain working capital or other balance sheet condition or otherwise
to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (c) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (d) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"GUARANTORS" means any direct or indirect Subsidiary of CTG who from
time to time agrees to guaranty the obligations of the Borrowers hereunder by
executing and delivering to the Agent a Loan Guaranty, together with all of
their successors and assigns.
11
"HAZARDOUS MATERIALS" means any contaminants, hazardous substances,
regulated substances, or hazardous wastes which may be the subject of liability
pursuant to any Environmental Law.
"HAZARDOUS MATERIALS INDEMNITY AGREEMENT" means the Amended and
Restated Hazardous Materials Indemnity Agreement substantially in the form of
EXHIBIT G annexed hereto, executed and delivered by each of the Borrowers at the
Effective Date, as such agreement may be amended, supplemented or otherwise
modified from time to time.
"INACTIVE SUBSIDIARIES" means Computer Task Group of Delaware, Inc., a
Delaware corporation, Computer Task Group of Kansas, Inc., a Missouri
corporation, Computer Task Group (Holdings) Ltd., a United Kingdom corporation,
Rendeck Macro-4 Software B.V., an entity organized under the laws of the
Netherlands, CTG of England, Ltd., an entity organized under the laws of the
United Kingdom, and Computer Task Group France, S.A.S., a corporation organized
under the laws of France.
"INDEBTEDNESS" of any Person means and includes all obligations of such
Person which in accordance with GAAP shall be classified upon a balance sheet of
such Person as liabilities of such Person, and in any event shall include all
(a) obligations of such Person for borrowed money or which have been incurred in
connection with the acquisition of property or assets, (b) obligations secured
by any Lien upon property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations, (c)
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property, (d) Capitalized Rentals, (e) Guaranties of obligations of
others of the character referred to in this definition, (f) Foreign Exchange
Obligations and (g) Interest Rate Protection Obligations.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate cap, swap,
collar or other, similar protection agreement, foreign currency exchange
agreement, commodity price protection agreement or other interest or currency
exchange rate or commodity price hedging arrangement to which any Borrower or
any Subsidiary is a party or for which any Borrower or any Subsidiary is liable.
"INTEREST RATE PROTECTION OBLIGATIONS" means obligations of the
Borrowers and their Subsidiaries pursuant to and under any and all Interest Rate
Protection Agreements to which any Borrower or any Subsidiary is a party as of
any date of computation as if such Interest Rate Protection Agreement were to be
terminated or declared to be in default on such date (after giving effect to any
netting provisions).
"IP COLLATERAL" means, collectively, the Collateral relating to
intellectual property rights of the Borrowers under the Collateral Documents.
"JPMORGAN" means JPMorgan Chase Bank, formerly known as The Chase
Manhattan Bank.
"JPMORGAN OFFICE" means the office of JPMorgan at Xxx Xxxxx Xxxxxx
XX-0, Xxxxxxxxx, Xxx Xxxx, 00000.
"LANDLORD'S WAIVER AND CONSENT" means, with respect to any Leasehold
Property, a letter, certificate or other instrument in writing from the lessor
under the related lease, in form approved by the Agent in its reasonable
discretion.
"LEASEHOLD PROPERTY" means any leasehold interest of any Borrower as
lessee under any lease of real property.
12
"LENDERS" means the Initial Lenders and each Person, if any, that shall
become a Lender hereunder pursuant to section 12.05 other than any Person that
ceases to be a party hereto pursuant to an Assignment anD Acceptance.
"LENDING OFFICE" means, for each Lender and for each type of Loan, the
lending office of such Lender (or of an Affiliate of such Lender) designated by
such Lender on the signature pages hereto, as the lending office of such Lender
for such type of Loan, or such other office of such Lender (or of an Affiliate
of such Lender) as such Lender may from time to time specify to the Agent and
the Borrowers as the office by which such Lender's Loans of such type are to be
made and maintained.
"LETTERS OF CREDIT" means any letters of credit issued from time to
time by JPMorgan for any Borrower as the account party.
"LETTER OF CREDIT EXPOSURE" means the maximum amount available to be
drawn under all outstanding Letters of Credit (converted to U.S. Dollars based
on the exchange rate in effect at the time the Letter of Credit Exposure is
determined).
"LETTER OF CREDIT SUBLIMIT" means $10,000,000.
"LIEN" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including but not
limited to the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Borrowers and their Subsidiaries shall be deemed to be the owner
of any property which they have acquired or hold subject to a conditional sale
agreement, Capitalized Lease or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes and such retention or vesting shall constitute a Lien.
"LOAN GUARANTIES" means any future Guaranties executed and delivered to
the Agent by any Person, pursuant to which such Person guaranties all of the
debts, liabilities and obligations of the Borrowers under the Facility
Documents, and all modifications and amendments thereto, all in form and
substance satisfactory to the Agent.
"LOAN TRANCHE" means any portion of the Loans outstanding under the
Notes as Base Rate Loans or any portion of the Loans outstanding under the Notes
as a Eurodollar Loan having a particular Eurodollar Interest Period. Each
Eurodollar Loan outstanding under the Notes having a different Eurodollar
Interest Period shall constitute a separate Loan Tranche, all Base Rate
Revolving Credit Loans shall constitute a single Loan Tranche, and all Base Rate
Term Loans shall constitute a separate single Loan Tranche. Although there will
be separate Notes issued to each Lender, all Notes taken together shall
constitute a single Loan Tranche in respect of each corresponding Loan
outstanding under all Notes.
"LOANS" means and includes the Revolving Credit Loans, the Term Loans
and the Reimbursement Obligations under section 2.01(c); and "LOAN" means any of
the Loans.
"LOCKBOX" means a post office box into which customers of the Borrowers
and certain of their Subsidiaries remit payments of Accounts and over which the
Agent shall have exclusive dominion,
13
control and access pursuant to a Lockbox Account Agreement or other agreement in
form and substance satisfactory to the Agent.
"LOCKBOX ACCOUNTS" means the accounts of the Borrowers maintained at
the Lockbox Banks into which all collections and proceeds of Collateral received
in the lock boxes maintained by each Lockbox Bank on behalf of the Borrowers
shall be deposited pursuant to the Lockbox Account Agreements.
"LOCKBOX ACCOUNT AGREEMENTS" means an agreement among a Lockbox Bank,
the Borrowers and the Agent pursuant to which the Lockbox Bank maintains a
Lockbox and a Lockbox Account over which the Agent shall exclusive dominion,
control and access and agrees to remit to the Agent on a daily basis all
collections and proceeds of Collateral deposited in the Lockbox Account.
"LOCKBOX BANKS" means, collectively, First Union National Bank and Key
Bank National Association, together with any other depository institution which,
upon the prior approval of the Agent, maintains a Lockbox and Lockbox Account
pursuant to a Lockbox Account Agreement.
"MATERIAL ADVERSE EFFECT" means: (a) a material adverse effect on the
business, operations or condition (financial or otherwise) of the Borrowers and
their Subsidiaries taken as a whole; (b) a material adverse effect on the
ability of the Borrowers or any Guarantor to perform or comply with any of the
terms and conditions contained herein or in any other Facility Document; or (c)
a material adverse effect on the legality, validity, binding effect,
enforceability or admissibility into evidence of any Facility Document, or the
ability of the Agent or the Lenders to enforce any rights or remedies under or
in connection with any Facility Document.
"MATERIAL INDEBTEDNESS" means (i) Indebtedness (other than the Loans or
Letters of Credit), or (ii) obligations in respect of one or more Interest Rate
Protection Agreements, in the case of (i) and (ii) of any one or more of the
Borrowers or their Subsidiaries in an aggregate principal amount exceeding
$1,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of any Person in respect of any Interest Rate
Protection Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that such Person would be required to pay if
such Interest Rate Protection Agreement were terminated at such time.
"MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property reasonably
determined by the Agent to be of material value as Collateral or of material
importance to the operations of the Borrowers or their Subsidiaries.
"MAXIMUM FACILITY AMOUNT" means $50,000,000.
"MORTGAGE" means a security instrument (whether designated as a deed of
trust or a mortgage, leasehold mortgage, assignment of leases and rents or by
any similar title) executed and delivered by any Borrower in such form as may be
approved by the Agent in its sole and reasonable discretion, in each case with
such changes thereto as may be recommended by the Agent's local counsel based on
local laws or customary local practices, as such security instrument or
amendment may be amended, supplemented or otherwise modified from time to time.
"MORTGAGED PROPERTY" has the meaning set forth in section 4.01(d).
"MULTIEMPLOYER PLAN" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by any Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
14
"NET CASH PAYMENTS" means:
(a) with respect to any Casualty Event, the aggregate amount
of proceeds of insurance, condemnation awards and other compensation received by
the Borrowers or any of their Subsidiaries in respect of such Casualty Event net
of (A) reasonable expenses incurred by the Borrowers or any of their
Subsidiaries in connection therewith and (B) contractually required repayments
of Indebtedness to the extent secured by a Lien on such property and any income
and transfer taxes payable by the Borrowers or any of their Subsidiaries in
respect of such Casualty Event;
(b) with respect to any sale or other disposition of assets,
the aggregate amount of all cash payments received by the Borrowers or any of
their Subsidiaries directly or indirectly in connection with such sale or other
disposition, whether at the time of such sale or disposition or thereafter under
deferred payment arrangements, including all cash payments received in respect
of investments entered into or received in connection with any such sale or
other disposition of assets; provided that
(i) Net Cash Payments shall be net of (A) the amount
of any legal, title, transfer and recording tax expenses,
commissions and other fees and expenses payable by the
Borrowers or any of their Subsidiaries in connection with such
sale or other disposition and (B) any federal, state and local
income or other taxes estimated to be payable by the Borrowers
or any of their Subsidiaries as a result of such sale or other
disposition, but only to the extent that such estimated taxes
are in fact paid to the relevant federal, state or local
governmental authority within twelve months of the date of
such sale or other disposition; and
(ii) Net Cash Payments shall be net of any repayments
by the Borrowers or any of their Subsidiaries of Indebtedness
to the extent that (I) such Indebtedness is secured by a Lien
on the property that is the subject of such sale or other
disposition and (II) the transferee of (or holder of a Lien
on) such property requires that such Indebtedness be repaid
as a condition to the purchase of such property; and
(c) with respect to any sale of debt or equity securities or
any incurrence of Indebtedness, the aggregate amount of all cash proceeds
received by the Borrowers or any of their Subsidiaries therefrom less all legal,
underwriting, and similar fees and expenses incurred in connection therewith.
"NETHERLANDS PLEDGE AGREEMENTS" means, collectively, (a) the pledge
agreement executed and delivered by CTG International in connection with the
Existing Credit Agreement, pursuant to which CTG International granted to the
Agent for the benefit of the Lenders a First Priority Lien on 65% of the issued
and outstanding stock of CTG Europe as security for the obligations of the
Borrowers under the Existing Credit Agreement and (b) the pledge agreement
executed and delivered by CTG Europe in connection with the Existing Credit
Agreement, pursuant to which CTG Europe granted to the Agent for the benefit of
the Lenders a First Priority Lien on 65% of the issued and outstanding stock of
Computer Task Group Nederland B.V. as security for the obligations of the
Borrowers under the Existing Credit Agreement, in each case, as such agreements
may be amended, supplemented or otherwise modified from time to time; and
"NETHERLANDS PLEDGE AGREEMENT" means any one of the Netherlands Pledge
Agreements.
"NEW YORK PROPERTIES" means, collectively, (i) the real property owned
by CTG and located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx and (ii) the real
property owned by CTG and located at 685 and 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxx
Xxxx.
15
"NOTES" means the notes evidencing the Loans hereunder; and "NOTE"
means any one of the Notes.
"OBLIGATIONS" means all obligations of the Borrowers and any Guarantors
to the Lenders and the Agent under this Agreement or any of the other Facility
Documents, including, without limitation, all indebtedness evidenced by the
Notes, all obligations under or in respect of the Letters of Credit and all
Reimbursement Obligations, all Interest Rate Protection Obligations and Foreign
Exchange Obligations of the Borrowers to the Lenders or the Agent, together with
all accrued and unpaid interest, fees, expenses and charges payable by Borrowers
or the Guarantors hereunder or under any of the other Facility Documents.
"OECD" means the Organization for Economic Cooperation and Development.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PATENTS" means all patents issued or assigned to and all patent
applications made by the Borrowers and, to the extent that the grant of a
security interest does not cause a breach or termination thereof, all exclusive
and nonexclusive licenses to the Borrowers from third parties or rights to use
patents owned by such third parties, including, without limitation, the patents,
patent applications and licenses listed on SCHEDULE 5.11 hereto, along with any
and all (a) inventions and improvements described and claimed therein, (b)
reissues, divisions, continuations, extensions and continuations-in-part
thereof, (c) income, royalties, damages, claims and payments now and hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past or future infringements thereof, (d)
rights to xxx for past, present and future infringements thereof, and (e) any
other rights corresponding thereto throughout the world.
"PERMITTED ACQUISITION" means any Acquisition of all or substantially
all of the assets or capital stock of or other equity interests in (including
acquisitions by merger) any corporation, partnership, limited liability company,
or other entity organized under the laws of a jurisdiction within the United
States or a foreign jurisdiction reasonably acceptable to the Agent and which
satisfies each of the following criteria:
(i) if such Acquisition is structured as a stock purchase, the business
so acquired is to become a direct or indirect Wholly-Owned Subsidiary of a
Borrower;
(ii) after giving effect to such Acquisition, the Borrowers shall be in
compliance with all financial covenants set forth in Article 8 on a pro forma
basis for the most recently completed four fiscal quarters;
(iii) the assets so acquired shall be transferred free and clear of any
Liens (other than Liens permitted by section 7.05) and no debt or liabilities
shall be incurred, guaranteed, assumed or combined except to thE extent
otherwise permitted by section 7.11;
(iv) the Agent shall have received Lien searches reasonably
satisfactory to the Agent with respect to any asset being acquired;
(v) if the business or assets to be acquired are located in the United
States (or, in the case of a stock purchase, if the issuer of such stock is
organized under the laws of a jurisdiction within the United States), the Agent
shall have received perfected First Priority Liens (subject only to Liens
permitted by section 7.05) on substantially all of the assets or stock being
acquired in such Acquisition (including the assets
16
of any entity acquired) and the Borrowers shall have complied or caused any
applicable Subsidiary to comply with the requirements of section 7.09(b) to the
extent applicable to such Acquisition;
(vi) to the extent requested by the Agent, the Agent shall have
received an opinion of counsel in each applicable jurisdiction reasonably
satisfactory to the Agent to the effect that the Liens granted pursuant to the
Security Documents are perfected security interests in such assets and as to
such other matters as the Agent may reasonably require; and
(vii) in connection with such Acquisition, the Borrowers shall have
delivered to the Agent (A) a copy of the purchase agreement pursuant to which
such Acquisition will be consummated; (B) a copy of each existing material
services agreement, consulting agreement, lease, credit or financing agreement
or other material agreement relating to the entity or assets to be acquired in
such Acquisition and which is to be in effect after the consummation of such
Acquisition, (C) a Compliance Certificate calculating compliance (as of the last
day of the then most recently ended fiscal quarter) with the covenants set forth
in Article 8 on a pro forma basis, assuming such Acquisition had occurred prior
to the first day of the earliest fiscal quarter included in the applicable test
period for calculating such compliance, (D) historical financial statements (for
the prior two fiscal years provided that if such statements are not available
for the prior two fiscal years, historical financial statements for not less
than the prior four fiscal quarters) of the entity whose stock or assets are
being acquired, which financial statements shall have been audited or reviewed
by the acquired entity's independent public accountants (or if not audited or
reviewed, otherwise reasonably acceptable to the Agent); and (E) such other
information or reports as the Agent may reasonably request with respect to such
Acquisition.
"PERMITTED LIENS" has the meaning set forth in section 7.05.
"PERSON" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"PLAN" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by any Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA or to which Section
412 of the Code applies.
"PLEDGE AGREEMENT" means the Amended and Restated Stock Pledge
Agreement substantially in the form of EXHIBIT E annexed hereto, executed and
delivered by each of the Borrowers at the Effective Time, as such agreements may
be amended, supplemented or otherwise modified from time to time.
"PRIME RATE" means that variable per annum rate of interest from time
to time announced by the Agent at its principal office as its prime commercial
lending rate. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate being charged to any customer of the Agent.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"PROPERTY" means any interest of any kind in property or assets,
whether real, personal or mixed, and whether tangible or intangible.
"QUALIFIED DOMESTIC ACCOUNTS" means Accounts owing to any Borrower, now
existing or hereafter arising, each of which Accounts met the following
specifications at the time it came into existence and continues to meet the same
until it is collected in full:
17
(a) An invoice (in form and substance satisfactory to the
Agent) with respect to such Account has been sent to the applicable account
debtor and bears an invoice date contemporaneous with or later than the date of
the sale of goods or rendering of services giving rise to such invoice;
(b) The Account is due and payable in full within 90 days, is
not subject to xxxx and hold, and not more than 90 days have elapsed since the
invoice/mail date with respect thereto;
(c) The Account arose from the performance of services by any
Borrower; such services have been performed; the Account is evidenced by such
invoices, shipping documents or other instruments ordinarily used in the trade
as shall be reasonably satisfactory to the Agent; and no rejection or dispute
has occurred;
(d) The Account debtor is a resident of the United States;
(e) The Account is not subject to any assignment, claim, lien,
or security interest, except in favor of the Agent and the Lenders;
(f) The Account is a valid and legally enforceable obligation
of the Account debtor and is not subject to a claim for credit, allowance,
defense, offset, chargeback, counterclaim or adjustment by the Account debtor,
other than any discount allowed for prompt payment;
(g) The Account arose in the ordinary course of business of
the Borrowers and no notice of the bankruptcy, insolvency, failure, or
suspension or termination of business of the Account debtor has been received by
the Borrowers;
(h) The Account debtor is not an Affiliate of the Borrowers or
any of their Subsidiaries or a supplier (or an Affiliate of a Supplier) of goods
or services to the Borrowers or any of their Subsidiaries;
(i) The Account otherwise conforms to all representations,
warranties and other provisions of this Agreement;
(j) The Account is not due from an individual;
(k) The Account is not due from the federal government of the
United States unless all requirements of the Federal Assignment of Claims Act
shall have been fully complied with to the satisfaction of the Agent;
(l) The Account is subject to an enforceable, perfected, first
priority Lien in favor of the Agent;
(m) The total unpaid Accounts owing from such Account debtor
do not exceed 25% of all Accounts of the Borrowers and their Subsidiaries
(excluding Accounts as to which International Business Machines Corporation is
the Account debtor); and
(n) The Agent in its discretion, reasonably exercised, has not
deemed the credit worthiness of the Account or Account debtor unsatisfactory;
provided, however, that (i) all Accounts due from an Account debtor which would
otherwise constitute Qualified Domestic Accounts will be excluded from Qualified
Domestic Accounts if either of the following applies: (x) the sum in United
States Dollars of all Accounts due from such Account debtor
18
exceeds $1,000,000 and 50% or more of such Accounts have remained outstanding
for more than 90 days past the invoice/mail date with respect thereto or fail to
meet any other criteria for Qualified Domestic Accounts or (y) the sum in United
States Dollars of all Accounts due from such Account debtor is $1,000,000 or
less and 50% or more or such Accounts have remained outstanding for more than
180 days past the invoice/mail date with respect thereto or fail to meet any
other criteria for Qualified Domestic Accounts.
"QUALIFIED DOMESTIC UNBILLED ACCOUNTS" means amounts owing to any
Borrower for services rendered which have not been billed but which will be
billed within 30 days and, when billed, will constitute Qualified Domestic
Accounts.
"QUALIFIED DOMESTIC UNBILLED CAP AMOUNT" means $5,000,000.
"QUALIFIED REAL ESTATE" means real property owned by one of the
Borrowers that satisfies each of the following requirements:
(a) one of the Borrowers is the record owner of the fee title
to such real property;
(b) the Agent has a First Priority Lien on such real property
securing the obligations of the Borrowers under this Agreement;
(c) such real property is not subject to any Lien of any kind,
except for Permitted Liens (other than Permitted Liens specified in
clause (i) of section 7.05) and the Lien of the Agent securinG
obligations under this Agreement;
(d) such real property is not subject to any agreement (other
than the Mortgages) which would by its terms restrict the Agent's
ability to sell or otherwise dispose of such real property;
(e) the Agent has received environmental reports reasonably
satisfactory to the Agent with respect to such real property, which
reports shall be prepared by environmental engineering firms reasonably
acceptable to the Agent;
(f) the Agent has received an appraisal report with respect to
such real property from an independent appraiser reasonably
satisfactory to the Agent setting forth the Fair Market Value of such
real property;
(g) the Agent has received ALTA mortgagee's title insurance
policies with all endorsements reasonably requested by the Agent (or
commitments for the issuance of same) with respect to such real
property from insurers reasonably acceptable to the Agent;
(h) the Agent has received evidence satisfactory to the Agent
that the improvements on such real property are not located in a flood
plain (or if any such improvements are located in a flood plain, an
acceptable flood hazard insurance policy);
(i) the Agent has received evidence satisfactory to the Agent
that there are no outstanding taxes, water and sewer charges, levies,
assessments or impositions of any kind which have been due and payable
for more than thirty (30) days, subject to contest rights;
(j) the Agent has received opinions of local counsel to the
Borrowers in each jurisdiction in which such real property is located
with respect to the validity and enforceability
19
of the Agent's Lien on such real property securing the obligations of
the Borrowers and the Guarantors under this Agreement, all in form and
substance satisfactory to the Agent; and
(k) the Agent has received evidence satisfactory to the Agent
in the form of coverage in the applicable title insurance policies or
local counsel opinions, at the Borrowers' option, that such real
property complies with the use limitations of all applicable zoning
ordinances and by-laws.
provided, however, that the Agent may in the exercise of its reasonable credit
judgment based upon (i) the discovery or occurrence of any material liability or
any risk of material liability affecting any particular parcel of real property
that was not previously disclosed to the Agent (including without limitation,
any of the foregoing revealed by any environmental report delivered to the Agent
in respect of any particular parcel of real property after the Effective Date),
or (ii) any material increase in the amount of any liability or any material
increase in the risks posed by any liability affecting any particular parcel of
real property, exclude such particular parcel of real property from, or reduce
the value of such particular parcel of real property to the extent it is
included within, the definition of Qualified Real Estate.
"REAL PROPERTY ASSET" means, at any time of determination, any fee
ownership or leasehold interest owned by any Borrower in any real property.
"REGISTER" has the meaning specified in section 12.05.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REGULATORY CHANGE" means, with respect to any Lender, any change after
the date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including Regulation D) or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including such Lender of or under any United States federal, state,
municipal or foreign laws or regulations (whether or not having the force of
law) by any court, or governmental, or monetary authority charged with the
interpretation or administration thereof.
"REIMBURSEMENT OBLIGATION" means any obligation of the Borrowers to
reimburse the issuer of a Letter of Credit for any amount paid by such issuer
from time to time pursuant to and under any Letter of Credit.
"RENTALS" means and includes as of the date of any determination
thereof all payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property, and all payments, if any, required to be paid by the lessee regardless
of sales volume or gross revenues) payable by the Borrowers or any of their
Subsidiaries, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Borrowers or
any of their Subsidiaries (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar charges.
"REPORTABLE EVENT" has the same meaning as defined in ERISA.
"REQUIRED LENDERS" means, at any time, Lenders having Loans and unused
Revolving Credit Commitments representing at least 66 2/3% of the aggregate
amount of all Loans and unused Revolving Credit Commitments Outstanding at such
time.
20
"REVOLVING CREDIT COMMITMENTS" means the commitments of the Lenders to
make Revolving Credit Loans to the Borrowers as in effect from time to time
hereunder. The aggregate amount of the Revolving Credit Commitments shall
initially equal $45,000,000 and may be reduced pursuant to sections 2.05 or
2.11.
"REVOLVING CREDIT COMMITMENT AMOUNT" means, with respect to each
Lender, the commitment of such Lender to make Revolving Credit Loans hereunder,
as such commitment may be (a) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to section 12.05 and (b) reduced from
time to time pursuant to sections 2.05 or 2.11. The initial Revolving Credit
Commitment Amount of each Lender is the amount set forth opposite such Initial
Lender's name as such Lender's "Revolving Credit Commitment Amount" on SCHEDULE
2.01(A) hereto, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Revolving Credit Commitment, as applicable.
"REVOLVING CREDIT COMMITMENT PERCENTAGE" means for each Lender the
percentage determined by dividing such Lender's Revolving Credit Commitment
Amount by the aggregate amount of Revolving Credit Commitments, as such
Revolving Credit Commitments may be (a) reduced from time to time pursuant to
sections 2.05 or 2.11. The initial Revolving Credit Commitment Percentage of
each Lender is as set forth opposite such Lender's name on SCHEDULE 2.01(A)
hereto, or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Revolving Credit Commitment, as applicable.
"REVOLVING CREDIT LOAN" means a Base Rate Loan or a Eurodollar Loan
made pursuant to section 2.01 hereof.
"REVOLVING CREDIT NOTE" means a Note of the Borrowers issued to a
Lender in substantially the form of EXHIBIT A-1 hereto.
"REVOLVING CREDIT OBLIGATIONS" means all Obligations of the Borrowers
hereunder in respect of the Revolving Credit Loans and the Revolving Credit
Commitments.
"REVOLVING CREDIT TERMINATION DATE" means May 9, 2005; provided that if
such date is not a Banking Day, such date shall be the next succeeding Banking
Day (or, if such next succeeding Banking Day falls in the next calendar month,
the immediately preceding Banking Day).
"SECURITY AGREEMENT" means the Amended and Restated Security Agreement
granted by the Borrowers to the Agent, for the benefit of the Lenders, in
substantially the form of EXHIBIT D hereto, together with any and all future
Security Agreements executed and delivered to the Agent by any Person which
shall secure any part of the debts, liabilities and obligations of the Borrowers
under the Facility Documents, and all modifications and amendments thereto.
"SECURITY DOCUMENTS" means the Security Agreement, the Pledge
Agreement, the Mortgages, the Lockbox Account Agreements, the Blocked Account
Agreements and all other instruments or documents delivered by any Borrower or
any Guarantor or any shareholder of a Borrower or Guarantor pursuant to this
Agreement or any of the other Facility Documents in order to grant to the Agent,
on behalf of the Lenders, a Lien on any real, personal or mixed property of that
Borrower or Guarantor as security for any of the Obligations of the Borrowers
and Guarantors hereunder.
"SECURITY DOCUMENT PARTY" means each party to a Security Document other
than the Borrowers or the Guarantors.
21
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve to which the Agent
is subject with respect to the Adjusted Eurodollar Rate for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board of Governors of the Federal Reserve). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held by the parent, or (b) that is, as of
such date, otherwise Controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent. As used
herein without reference to any "parent", the terms "Subsidiary" and
"Subsidiaries" shall mean a Subsidiary or Subsidiaries, respectively, of the
Borrowers.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Borrowers
incurred after the Effective Date with the prior written consent of the Required
Lenders, which matures in its entirety later than the Loans and by its terms (or
by the terms of a subordination agreement) is made subordinate and junior in
right of payment to the Loans and all other Obligations of the Borrowers and
their Subsidiaries under the Facility Documents. Notwithstanding anything herein
to the contrary, the Indebtedness of the Borrowers set forth in section 7.11(f)
shall not constitute "Subordinated Indebtedness" for purposes of this Agreement.
"TERM LOAN" means a Base Rate Loan or a Eurodollar Loan made by a
Lender pursuant to section 2.04 hereof.
"TERM LOAN MATURITY DATE" means May 9, 2005; provided that if such date
is not a Banking Day, such date shall be the next succeeding Banking Day (or, if
such next succeeding Banking Day falls in the next calendar month, the
immediately preceding Banking Day).
"TERM LOAN NOTE" means a Note of the Borrowers issued to a Lender in
substantially the form of EXHIBIT A-2 hereto.
"TERM LOAN OBLIGATIONS" means all Obligations of the Borrowers
hereunder in respect of the Term Loans.
"TERM LOAN PERCENTAGE" means, for each Lender at any time, the
percentage determined by dividing the outstanding principal balance of the Term
Loan of such Lender at such time, by the aggregate outstanding principal balance
of all Term Loans at such time. The Term Loan Percentage for each Initial Lender
as of the Closing Date is set forth opposite such Initial Lender's name on
SCHEDULE 2.01(A) hereto, and for each Lender at any subsequent time, to the
extent that one or more Assignments and Acceptances have been entered into, the
percentage amount set forth for each Lender in the Register maintained by the
Agent pursuant to section 12.05 as such Lender's "Term Loan Percentage."
22
"TITLE COMPANY" means one or more other title insurance companies
reasonably satisfactory to the Agent.
"TOTAL EXPOSURE" means, at any time, the aggregate outstanding
principal amount of Revolving Credit Loans and Term Loans, accrued and unpaid
interest, fees and charges, Letter of Credit Exposure and Reimbursement
Obligations, owing by the Borrowers to the Lenders and the Agent at such time.
"TOTAL FUNDED DEBT/EBITDA RATIO" means the ratio of the following
computed for any period of four consecutive fiscal quarters then ended in
respect of the Borrowers and their Subsidiaries on a consolidated basis in
accordance with GAAP: (a) the aggregate amount of Funded Indebtedness as of the
end of such period to (b) EBITDA for such fiscal period.
"TRADEMARKS" means all trademarks (including service marks), federal
and state trademark registrations and applications made by the Borrowers, common
law trademarks and trade names owned by or assigned to the Borrowers, all
registrations and applications for the foregoing and all exclusive and
nonexclusive licenses from third parties of the right to use trademarks of such
third parties, including, without limitation, the registrations, applications,
unregistered trademarks, service marks and licenses listed on SCHEDULE 5.11
hereto, along with any and all (a) renewals thereof, (b) income, royalties,
damages and payments now and hereafter due and/or payable with respect thereto,
including, without limitation, damages, claims and payments for past or future
infringements thereof, (c) rights to xxx for past, present and future
infringements thereof, and (d) foreign trademarks, trademark registrations, and
trade name applications for any thereof and any other rights corresponding
thereto throughout the world.
"UK CHARGE AGREEMENT" means the Share Mortgage dated as of May 11,
2001, executed and delivered by CTG Europe in connection with the Existing
Credit Agreement, as such Share Mortgage may previously have been or may in the
future be amended.
"UK SECURITY AGREEMENT" means the Security Deed dated as of May 11,
2001, executed and delivered by the CTG (UK) Ltd. in connection with the
Existing Credit Agreement, as such Security Deed may previously have been or may
in the future be amended.
"UNCOLLECTED FUNDS" means all deposits of items which shall be on
deposit in any Lockbox Account maintained by the Borrowers at JPMorgan from time
to time during the period from the date on which such deposits became Available
Funds to the beginning of the second following Banking Day.
"UNCOLLECTED FUNDS COMPENSATION" means the compensation payable to
JPMorgan pursuant to section 2.10 hereof.
"UNFUNDED VESTED LIABILITIES" means, with respect to any Plan, the
amount (if any) by which the present value of all vested benefits under the Plan
exceeds the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrowers
or any ERISA Affiliate to PBGC or the Plan under Title IV of ERISA.
"UNUSED FACILITY AMOUNT" means, at any time of determination, the
difference between (a) the Maximum Facility Amount and (b) the sum of the
outstanding principal amount of all Loans and Letter of Credit Exposure at such
time.
"VOTING STOCK" means securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
23
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any person, any
corporation or other entity of which all of the Voting Stock is at the time of
determination owned directly or indirectly by such Person.
Section 1.02. ACCOUNTING PRINCIPLES. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined, or any consolidation, combination or other accounting computation is
required to be made, for the purposes of this Agreement, the same shall be done
in accordance with GAAP, to the extent applicable, except where such principles
are inconsistent with the requirements of this Agreement.
Section 1.03. DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken or not to be taken by any Person, such
provision shall be applicable whether the action in question is taken directly
or indirectly by such Person.
Section 1.04. CONSTRUCTION. In the event of any inconsistency between
the covenants contained in the Security Documents and the covenants contained in
this Agreement, the provisions of this Agreement shall govern and be
controlling.
Section 1.05. JOINT AND SEVERAL OBLIGATIONS; BORROWERS' AGENT.
(a) All obligations of the Borrowers hereunder shall be joint
and several. Any notice, request, waiver, consent or other action made, given or
taken by any Borrower shall bind all of the Borrowers.
(b) Each of the Borrowers hereby authorizes CTG and each of
the designated financial officers of CTG listed on SCHEDULE 1.05 hereto, to act
as agent for all of the Borrowers, and to execute and deliver on behalf of any
Borrower such notices, requests, waivers, consents, certificates, and other
documents, and to take any and all actions, required or permitted to be
delivered or taken by the Borrowers hereunder.
ARTICLE 2. THE CREDIT
Section 2.01. THE REVOLVING CREDIT LOANS.
(a) Subject to the terms and conditions of this Agreement,
each of the Lenders severally agrees to make Revolving Credit Loans to the
Borrowers from time to time from and including the date hereof to but excluding
the Revolving Credit Termination Date in an aggregate principal amount at any
one time outstanding up to but not exceeding its Revolving Credit Commitment
Amount; provided that the obligation of each Lender to make Revolving Credit
Loans hereunder is subject to the condition that the Total Exposure (after
giving effect to the funding of such Revolving Credit Loans) shall not exceed
the Borrowing Base.
(b) The Revolving Credit Loans shall be evidenced by Revolving
Credit Notes of the Borrowers issued to the Initial Lenders in the form of
EXHIBIT A-1, dated as of the Effective Date, payable to the order of the Initial
Lenders in the aggregate principal amount equal to the aggregate initial amount
of the Revolving Credit Commitments as of the Effective Date. The Revolving
Credit Loans may be assigned to, and the corresponding Revolving Credit
Commitments may be assumed by, one or more Eligible Assignees pursuant to
section 12.05, whereupon the amounts payable to each such Lender in respect of
Revolving Credit Loans shall be evidenced by a Note in the form of EXHIBIT A-1
issued to each such
24
Lender in accordance with section 12.05 dated as of the date of the
corresponding Assignment and Acceptance and duly completed and executed by the
Borrowers.
(c) Subject to the provisions of section 2.14 hereof and the other
terms and conditions of this Agreement, the Agent may issue Letters of Credit
from time to time from and including the date hereof to but excluding the
Revolving Credit Termination Date up to but not exceeding the lesser of (i) the
difference between (A) the lesser of (x) the aggregate amount of all Revolving
Credit Commitments and (y) the Borrowing Base and (B) the Total Exposure
immediately prior to the issuance of such Letter of Credit and (ii) the
difference between (A) the Letter of Credit Sublimit and (B) the aggregate
amount of the Letter of Credit Exposure which exists immediately prior to the
issuance of such Letter of Credit. The Existing Letters of Credit identified on
SCHEDULE 2.01(C) hereto shall, from and after the Effective Date, be deemed to
be Letters of Credit outstanding under this Agreement, without the necessity for
any further action on the part of the Agent or the Borrowers.
(d) In accordance with the terms of section 2.19, the revolving credit
loans outstanding under the Existing Credit Agreement on the Closing Date shall
automatically be deemed to be Revolving Credit Loans hereunder.
Section 2.02. MAKING THE REVOLVING CREDIT LOANS. Subject to the terms
and conditions of this Agreement, upon the Agent's receipt of a notice of
borrowing given by the Borrowers in accordance section 2.12 requesting the
making of Revolving Credit Loans, the Agent will disburse the proceeds of such
Revolving Credit Loans to such account of the Borrowers as is specified by the
Borrowers in such notice. The Revolving Credit Loans shall be deemed to be made
by each Lender and to be outstanding to each Lender under the Revolving Credit
Note issued to such Lender as of the date that such proceeds are disbursed by
the Agent to the Borrowers pursuant to this section 2.02 without regard to the
settlement procedures between the Agent and the Lenders pursuant to section
2.15.
Section 2.03. PRINCIPAL REPAYMENT OF REVOLVING CREDIT LOANS.
(a) Each Revolving Credit Loan shall mature and be payable in
full on the Revolving Credit Termination Date.
(b) Except to the extent otherwise expressly provided in any
Security Agreement, the Agent shall, not later than as of 1:00 p.m. on each
Banking Day, withdraw from the Collection Account all moneys on deposit therein
and shall apply such moneys to the outstanding principal amount of the Revolving
Credit Loans (including all Revolving Credit Loans made or to be made that day).
All such payments shall be applied first to the outstanding principal amount of
all Base Rate Loans. Except upon the occurrence and during the continuance of an
Event of Default, no payment of a Eurodollar Loan shall be made under this
section on a date other than the last day of an Interest Period or the Revolving
Credit Termination Date. To the extent that a payment hereunder creates a credit
balance under the Revolving Credit Obligations, such credit balance shall bear
interest and Agent shall credit the Revolving Credit Obligations at a rate per
annum equal to the Prime Rate MINUS three percent (3%).
(c) If at any time (i) the Total Exposure exceeds (ii) the
Borrowing Base, then immediately upon a demand by the Agent, the Borrowers shall
either (A) prepay Revolving Credit Loans by an amount equal to such excess, or
(B) provide the Agent and the Lenders with Cash Equivalents as security for the
payment of such excess.
Section 2.04. THE TERM LOANS.
25
(a) In accordance with the terms of section 2.19, the term
loans outstanding under the Existing Credit Agreement on the Closing Date shall
automatically be deemed to be Term Loans hereunder. The Borrowers acknowledge
and agree that the Lenders shall have no further obligation to make Term Loans
hereunder and the Borrowers shall have no right to request that any Term Loans
be made at any later date.
(b) The Term Loans shall be evidenced by Term Loan Notes of
the Borrowers in substantially the form of EXHIBIT A-2 hereto issued to the
Initial Lenders, dated as of the Effective Date, payable to the order of each
Initial Lender in a principal amount equal to such Lender's Term Loan Percentage
of the $5,000,000 aggregate principal amount of Term Loans outstanding on the
Effective Date. The Term Loans may be assigned to one or more Eligible Assignees
pursuant to section 12.05, whereupon the amounts payable to each Lender in
respect of its Term LoaN shall be evidenced by a Term Loan Note issued to each
such Lender in accordance with section 12.05 dated as of the date of the
corresponding Assignment and Acceptance and duly completed and executed by the
Borrowers.
(c) The principal amount of the Term Loans shall mature and be
payable in full on the Term Loan Maturity Date.
Section 2.05. MANDATORY PREPAYMENTS. In addition to the payments
required under section 2.03(c), the Borrowers shall make the following mandatory
prepayments of the Loans:
(a) CASUALTY EVENTS. Within 90 days following the receipt by
the Borrowers or any of their Subsidiaries of the proceeds of insurance,
condemnation award or other compensation in respect of any Casualty Event
affecting any property of the Borrowers or any of their Subsidiaries (or upon
such earlier date as the Borrowers or any of their Subsidiaries, as the case may
be, shall have determined not to repair or replace the property affected by such
Casualty Event), the Borrowers shall prepay the Revolving Credit Loans (and,
after all of the Revolving Credit Loans have been fully paid, the Borrowers
shall prepay the Term Loans) by an aggregate amount, if any, equal to 100% of
the Net Cash Payments from such Casualty Event not theretofore applied or
committed to be applied to the repair or replacement of such property (it being
understood that if Net Cash Payments committed to be applied are not in fact
applied within 90 days of the respective Casualty Event, then such Proceeds
shall be applied to the prepayment of the Revolving Credit Loans (and, after all
of the Revolving Credit Loans have been fully paid, to the prepayment of the
Term Loans) as provided in this clause (a) at the expiration of such 90 day
period) but only if and to the extent that the aggregate amount of such proceeds
received after the Effective Date on account of all Casualty Events is greater
than $250,000 in excess of the aggregate amount applied or committed to be
applied during any Fiscal Year to the repair or replacement of such property,
such prepayment to be effected in each case in the manner and to the extent
specified in paragraph (d) of this section 2.05.
(b) SALE OF EQUITY SECURITIES. Without limiting the obligation
of the Borrowers to obtain the consent of the Lenders in accordance with section
12.01 with respect to any sale of equity securities not otherwise permitted
hereunder, the Borrowers agree, on or prior to the closing of any sale of equity
securities by the Borrowers or any of their Subsidiaries (other than the
issuance of equity securities to employees in accordance with stock option and
related employee benefit programs), to deliver to the Agent a statement
certified by the Chief Financial Officer of CTG, in form and detail reasonably
satisfactory to the Agent, of the estimated amount of the Net Cash Payments of
such sale of equity securities that will (on the date of such sale) be received
by the Borrowers or their Subsidiaries in cash, and, upon the date of such sale
of equity securities, the Borrowers shall prepay the Revolving Credit Loans
(and, after all of the Revolving Credit Loans have been fully paid, the Borrower
shall prepay the Term Loans) by an aggregate amount equal to 100% of the Net
Cash Payments of such sale of equity
26
securities received by the Borrowers or their Subsidiaries, such prepayment to
be effected in each case in the manner and to the extent specified in paragraph
(d) of this section 2.05.
(c) SALE OF ASSETS. Without limiting the obligation of the
Borrowers to obtain the consent of the Lenders in accordance with section 12.01
with respect to any sale or other disposition of assets not otherwise permitted
hereunder, the Borrowers agree, on or prior to the occurrence of any sale or
other disposition of assets by the Borrowers or any of their Subsidiaries (other
than Dispositions permitted under sections 7.01 (a), (b), (c) and (h)), to
deliver to the Agent a statement certified by the Chief Financial Officer of
CTG, in form and detail reasonably satisfactory to the Agent, of the estimated
amount of the Net Cash Payments of such sale or other disposition that will (on
the date of such sale or other disposition) be received by the Borrowers or
their Subsidiaries in cash and the Borrowers shall prepay the Revolving Credit
Loans (and, after all of the Revolving Credit Loans have been fully paid, the
Borrowers shall prepay the Term Loans), as follows:
(i) within ten (10) days of the date of such sale or other
disposition, by an aggregate amount equal to 100% of such estimated
amount of the Net Cash Payments of such sale or other disposition
received by the Borrowers or their Subsidiaries in cash on the date of
such sale or other disposition; and
(ii) thereafter, quarterly, on the date of the delivery of the
financial statements for any Fiscal Quarter or Fiscal Year by the
Borrowers to the Agent pursuant tosections 6.08(a) and 6.08(b), to the
extent the Borrowers or any of their Subsidiaries shall receive Net
Cash Payments during the fiscal period ending on the date of such
financial statements in cash under deferred payment arrangements or in
respect of investments entered into or received in connection with any
such sale or disposition, by an amount equal to (A) 100% of the
aggregate amount of such Net Cash Payments MINUS (B) any transaction
expenses associated with such sale or dispositions and not previously
deducted in the determination of Net Cash Payments PLUS (or MINUS, as
the case may be) (C) any other adjustment received or paid by the
Borrowers or any of their Subsidiaries pursuant to the respective
agreements giving rise to such sale or dispositions and not previously
taken into account in the determination of the Net Cash Payments.
Prepayments of the Loans resulting from any sale or other disposition of assets
shall be effected in each case in the manner and to the extent specified in
paragraph (d) of this section 2.05.
(d) APPLICATION. In the event of any mandatory prepayment
pursuant to this section 2.05, such prepayment shall be applied, first, to the
payment of accrued interest in respect of outstanding Base Rate Revolving Credit
Loans, second, to the principal amount of outstanding Base Rate Revolving Credit
Loans, third, to interest in respect of outstanding Eurodollar Revolving Credit
Loans, fourth, to the principal amount of outstanding Eurodollar Revolving
Credit Loans, fifth, to interest in respect of outstanding Base Rate Term Loans,
sixth, to the principal amount of outstanding Base Rate Term Loans in inverse
order of maturity, seventh, to interest in respect of outstanding Eurodollar
Term Loans, eighth, to the principal amount of outstanding Eurodollar Term Loans
in inverse order of maturity.
Section 2.06. INTEREST.
(a) Interest shall accrue on the outstanding and unpaid
principal amount of each Loan for the period from and including the date of such
Loan to but excluding the date such Loan is due, at the following rates per
year: (i) for a Loan Tranche which is outstanding as a Base Rate Loan, at a
variable rate per annum equal to the Adjusted Base Rate plus the Applicable
Margin; and (ii) for a Loan Tranche which is outstanding as a Eurodollar Loan,
at a fixed rate during the applicable Eurodollar
27
Interest Period equal to the corresponding Eurodollar Rate plus the Applicable
Margin; PROVIDED however that after the occurrence and during the continuance of
any Event of Default and a written demand of the Agent to the Borrowers at the
request of the Required Lenders, interest shall accrue on all Loans at the
Default Rate.
(b) Interest on each Loan shall be calculated on the basis of
a year of 360 days for the actual number of days elapsed; PROVIDED, however,
that interest on each Base Rate Loan which is calculated based on the Prime Rate
shall be calculated on the basis of a year of 365 days for the actual number of
days elapsed. Promptly after the determination of any interest rate provided for
herein or any change therein, the Agent shall notify the Borrowers and the
Lenders thereof.
(c) Accrued interest on each Base Rate Loan shall be due and
payable to the Agent for account of each Lender in arrears on the first Banking
Day of each calendar month, regardless of any payment of the principal thereof.
(d) Accrued interest on each Eurodollar Loan shall be due and
payable to the Agent for account of each Lender in arrears upon any payment of
principal and on each corresponding Eurodollar Interest Payment Date.
Section 2.07. EURODOLLAR INTEREST PERIODS. In the case of each Loan
other than a Base Rate Loan, the Borrowers shall select a Eurodollar Interest
Period of any duration in accordance with the definition of Eurodollar Interest
Period in section 1.01, subject to the following limitations: (a) no Eurodollar
Interest Period shall have a duration of less than one month, and if any such
proposed Eurodollar Interest Period would otherwise be for a shorter period (as
a result of the Revolving Credit Termination Date or otherwise), such Eurodollar
Interest Period shall not be available; and (b) if a Eurodollar Interest Period
would end on a day which is not a Banking Day, such Eurodollar Interest Period
shall be extended to the next Banking Day, unless such next Banking Day would
fall in the next calendar month in which event such Eurodollar Interest Period
shall end on the immediately preceding Banking Day. All elections of a
Eurodollar Interest Period shall be made by the Borrowers upon three Banking
Days' notice to the Agent, and the Agent shall quote to the Borrowers the actual
Eurodollar Rate to take effect for such Eurodollar Interest Period (based upon
the rate quotation described in the definition of Eurodollar Rate) on the next
Banking Day.
Section 2.08. CONVERSIONS. Except to the extent specified to the
Initial Lenders prior to the Effective Date, each Loan shall be deemed to be a
Base Rate Loan unless and until converted to a Eurodollar Loan in accordance
with terms of this section 2.08. The Borrowers shall have the right to make
payments of principal, or to convert a Loan Tranche from a Base Rate Loan to a
Eurodollar Loan or from a Eurodollar Loan to a Base Rate Loan at any time or
from time to time, provided that: (a) if the Loan Tranche is outstanding as a
Eurodollar Loan, it may be converted only on the last day of the applicable
Eurodollar Interest Period; (b) if the Loan Tranche is outstanding as a
Eurodollar Loan, it shall automatically convert to a Base Rate Loan on the last
day of the applicable Eurodollar Interest Period, unless the Borrowers give
notice to the Agent three (3) Banking Days prior to the last day of the
corresponding Eurodollar Interest Period specifying a new Eurodollar Interest
Period to apply to such Loan Tranche; (c) no Loan Tranche comprising a
Eurodollar Loan may be in a principal amount less than $1,000,000; (d) there may
be no more than six (6) Loan Tranches comprising Eurodollar Loans outstanding at
any one time; and (e) no Loan Tranche comprising a Eurodollar Loan may be
created (or continued after the last day of the applicable Eurodollar Interest
Period) while any Default or Event of Default exists and continues.
28
Section 2.09. VOLUNTARY PREPAYMENTS. In addition to repayments made
pursuant to section 2.03(b), the Borrowers shall have the right to prepay Loans
at any time or from time to time; provided that: (i) the Borrowers shall give
the Agent notice of each such prepayment as provided in section 2.12; and (ii)
the Borrowers shall be responsible for the payment of such amounts as provided
in section 3.05 with respect to the prepayment of any Eurodollar LoanS prepaid
on any date other than the last day of the corresponding Eurodollar Interest
Period. In addition, but subject to the foregoing, as a condition to giving
effect to any termination of the Revolving Credit Commitments pursuant to
section 2.11, the aggregate principal of all Revolving Credit Loans shall be
fully prepaid, together with interest thereon accrued to the date of such
payment and all amounts payable pursuant to section 2.16(c) and/or section 3.05
in connection therewith.
Section 2.10. UNCOLLECTED FUNDS COMPENSATION. Any credit extended by
JPMorgan to the Borrowers by allowing the Uncollected Funds in any Lockbox
Account maintained by the Borrowers at JPMorgan to be immediately available
funds to the Borrowers shall not be deemed to be Loans hereunder. Uncollected
Funds Compensation to JPMorgan shall accrue on the amount of the Uncollected
Funds in existence from time to time at a variable rate per annum equal to the
Adjusted Base Rate plus the Applicable Margin for Base Rate Loans for two (2)
full days. Upon making such computation, the Agent is authorized to make a
Revolving Credit Loan to the Borrowers for the amount thereof (or during the
continuance of an Event of Default, debit such Lockbox Account maintained at
JPMorgan) for the payment thereof to JPMorgan. The Agent shall notify the
Borrowers of the amount of the Uncollected Funds Compensation for the preceding
calendar month in the next monthly statement rendered by the Agent to the
Borrowers.
Section 2.11. TERMINATION OF REVOLVING CREDIT COMMITMENTS. The
Borrowers shall have the right to terminate the amount of Revolving Credit
Commitments in whole or in part at any time, provided that (a) the Borrowers
shall give notice of such termination to the Agent as provided in section 2.12
and (b) each reduction of the Revolving Credit Commitments shall be in an amount
that is at least equal to $1,000,000 or any greater multiple of $1,000,000. Any
portion of the Revolving Credit Commitments that has been terminated may not be
reinstated.
Section 2.12. CERTAIN NOTICES. Notices by the Borrowers to the Agent of
borrowings, each prepayment of a Loan pursuant to section 2.09 (which does not
include repayments pursuant to section 2.03(b)) or of termination of the
Revolving Credit Commitments pursuant to section 2.11 shall be irrevocable and
shall be effective only if received by the Agent in writing on a Banking Day and
(a) in the case of Base Rate Loans and prepayments of Base Rate Loans given not
later than 11:00 a.m. New York City time on the date of such Base Rate Loan or
such prepayment; (b) in the case of Eurodollar Loans and prepayments of
Eurodollar Loans, given not later than 11:00 a.m. New York City time three (3)
Banking Days prior to the date of such Eurodollar Loan or such prepayment and
(c) in the case of termination of the Revolving Credit Commitments, given not
later than 12:00 noon New York City time four Banking Days prior thereto. Each
such notice of borrowing or prepayment shall specify the amount of the Loans to
be borrowed or prepaid, the date of borrowing or prepayment (which shall be a
Banking Day) and, in the case of a notice of borrowing, the location and number
of the Borrower's account to which funds are to be disbursed.
Section 2.13. CALCULATION OF BORROWING BASE. The Agent shall calculate
from time to time the amount of the Borrowing Base, based upon the most recent
Borrowing Base Certificate, and such amount shall be the "Borrowing Base"
hereunder; provided, however, that the Agent, in its reasonable discretion, may
on written notice to the Borrowers, establish additional reserves against the
Borrowing Base, taking into account, among other things, but without limitation
in any way, changes in the collectibility of receivables as shown in periodic
field examinations.
29
Section 2.14. LETTERS OF CREDIT.
(a) Subject to the terms and conditions set forth herein, the
Borrowers' Agent may request the issuance of Letters of Credit for the account
of any of the Borrowers or their Subsidiaries, in a form reasonably acceptable
to the Agent, by delivering to the Agent by electronic or facsimile transmission
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a letter of credit application in the form required by the Agent. A
Letter of Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit, the
Borrowers shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the Total Exposure at such
time does not exceed the lesser of (x) the Borrower Base at such time or (y) the
aggregate Revolving Credit Commitments at such time, and (ii) the Letter of
Credit Exposure at such time does not exceed the LC Sublimit at such time.
(b) Each Letter of Credit shall expire (without giving effect
to any extension thereof by reason of an interruption of business) at or prior
to the close of business on the earlier of (i) one year, in the case of standby
Letters of Credit, or 180 days, in the case of commercial or documentary Letters
of Credit, after the date of the issuance of such Letter of Credit, and (ii) the
date that is five (5) Business Days prior to the Revolving Credit Termination
Date. No Letter of Credit may be extended beyond the date that is five (5)
Business Days prior to the Revolving Credit Termination Date.
(c) If the Agent shall make any disbursement in respect of any
Letter of Credit, the resulting Reimbursement Obligation created thereby shall
be deemed to be a Revolving Credit Loan from each of the Lenders in accordance
with each Lender's Revolving Credit Commitment Percentage. The Agent shall
notify the Lenders of the creation of any Reimbursement Obligation within two
Banking Days of any disbursement made by the Agent pursuant to or under any
Letter of Credit.
(d) The Borrowers' Reimbursement Obligations with respect to
Letters of Credit shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Agent to the
beneficiary under a Letter of Credit against presentation of a draft or other
document that substantially complies but does not strictly comply with the terms
of such Letter of Credit and (iv) any other event or circumstance whatsoever
(other than gross negligence or willful misconduct of the Agent), whether or not
similar to any of the foregoing, that might, but for the provisions of this
section 2.14, constitute a legal or equitable discharge of the Borrowers'
obligations hereunder.
Section 2.15. SETTLEMENT BETWEEN AGENT AND LENDERS. The Agent and the
Lenders shall settle on an aggregated and netted basis (the "SETTLEMENT AMOUNT")
on a weekly basis or with such greater frequency as the Agent may determine
(each such date on which such a settlement occurs being a "SETTLEMENT DATE") for
all amounts which shall have become due to and due from the Agent and the
Lenders since the immediately preceding Settlement Date with respect to any
Obligations, other than the Settlement Amount which became due on the
immediately preceding Settlement Date. The Agent shall notify the Lenders by
11:00 A.M. on each Settlement Date of the Settlement Amount which is payable by
the Agent or the Lenders, and the Agent or the Lenders, as the case may be,
shall make payment of the Settlement Amount by an electronic funds transfer not
later than 5:00 P.M. on the Settlement Date. Nothing in this section 2.15 or the
settlement procedures made pursuant to this section 2.15 shall be deemed to
change, as between the Borrowers and the Lenders, the amount of the Loans which
are outstanding under the Notes to each of the Lenders or the accrual of
interest due to each of the Lenders on such Loans.
30
Section 2.16. FEES.
(a) The Borrowers agree to pay to the Agent monthly after the
date hereof through the Revolving Credit Termination Date and on the Revolving
Credit Termination Date for the account of each of the Lenders a commitment fee
which shall accrue on the daily average Unused Facility Amount for the period
from and including the date hereof to the earlier of the date the Revolving
Credit Commitments are terminated in their entirety or the Revolving Credit
Termination Date. The commitment fee shall be calculated on the basis of a 360
day year for the actual number of days elapsed at a rate per year equal to the
Applicable Commitment Fee Rate. The commitment fee shall be due and payable in
arrears monthly on the first Banking Day of each calendar month and shall be
computed by Agent. On each such payment date, the Agent is authorized to make a
Revolving Credit Loan to the Borrowers for the amount thereof (or during the
continuance of an Event of Default, debit the Collection Account) for the
payment thereof to the Lenders. The Agent shall notify the Borrowers of the
amount of the commitment fee for the preceding quarter in the next monthly
statement rendered by the Agent to the Borrowers.
(b) The Borrowers agree to pay, with respect to Letters of
Credit issued hereunder, the following fees: (i) to the Agent for the benefit of
the Lenders (according to each Lender's Revolving Credit Commitment Percentage),
a letter of credit fee in respect of each Letter of Credit issued hereunder
which accrues at a rate equal to (x) the face amount of such Letter of Credit
multiplied by (y) the applicable Eurodollar Margin, such fees to be calculated
on the basis of a 360 day year for actual number of days elapsed and paid by the
Borrowers monthly in advance on the first Banking Day of each calendar month,
(ii) to the Agent for its own account, a letter of credit fronting fee payable
in advance on the issuance date of each Letter of Credit in an amount equal to
twelve and one-half (12.5) basis points multiplied by the face amount of such
Letter of Credit and (iii) to the Agent for its own account, the Agent's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Upon making a
computation of the amount of such Letter of Credit fee, the Agent is authorized
to make a Revolving Credit Loan to the Borrowers for the amount thereof. The
Agent shall notify the Borrowers of the amount of such Letter of Credit fee in
the next monthly statement rendered by the Agent to the Borrowers.
(c) Each Lender irrevocably waives its right to receive any
portion of the success fee payable to such Lender pursuant to Section 2.15(c) of
the Existing Credit Agreement. The Borrowers agree to pay to each Initial
Lender, by remitting to the Agent the sum of $200,000 on the Closing Date, a
credit facility fee of $50,000 in consideration of such Initial Lender's making
available to the Borrowers such Initial Lender's portion of the credit
facilities pursuant to this Agreement.
(d) The Borrowers agree to pay the Agent (for its own account)
such fees payable in such amounts and at the times separately agreed in writing
between the Borrowers and the Agent.
Section 2.17. PAYMENTS GENERALLY. All payments under this Agreement or
the Notes shall be made in United States Dollars in funds which are immediately
available not later than 1:00 p.m. New York City time on the relevant dates
specified above (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Banking Day) at the JPMorgan
Office for the account of each Lender, and all such payments may be made by
making a Revolving Credit Loan to the Borrowers for the amount thereof (or
during the continuance of an Event of Default, debiting the Collection Account
for the payment thereof to the Lenders). The Agent, or any Lender for whose
account any such payment is to be made, may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrowers with the Agent or such Lender, as the
case may be, and any Lender so doing shall promptly notify the Agent. Subject to
31
section 11.16, the Borrowers shall, at the time of making each payment under
this Agreement or the Notes, specify to the Agent the principal or other amount
payable by the Borrowers under this Agreement or the Notes to which such payment
is to be applied and in the event that it fails to so specify, or if a Default
or Event of Default has occurred and is continuing, the Agent may, subject to
section 11.16, apply such payment as it may elect in its sole discretion. If the
due date of any payment under this Agreement or the Notes would otherwise fall
on a day which is not a Banking Day, such date shall be extended to the next
succeeding Banking Day and interest shall be payable for any principal so
extended for the period of such extension. Each payment received by the Agent
hereunder or under any Note for the account of a Lender shall be paid promptly
to such Lender, in immediately available funds, for the account of such Lender's
Lending Office.
Section 2.18. PURPOSE. The Borrowers shall use the proceeds of the
Loans (a) to refinance certain Indebtedness of the Borrowers, (b) for working
capital requirements of the Borrowers and their Subsidiaries (subject to the
limitations set forth in section 7.06 and section 7.10), (c) for Permitted
Acquisitions, and (d) for other general corporate purposes.
Section 2.19. TREATMENT OF LOANS OUTSTANDING UNDER EXISTING CREDIT
AGREEMENT. The revolving credit loans and term loans outstanding under the
Existing Credit Agreement as of the Closing Date shall automatically be
continued as Revolving Credit Loans and Term Loans hereunder, and on the Closing
Date, the Agent and the Lenders shall take such actions, and make such
adjustments among themselves and among those "Lenders" under the Existing Credit
Agreement that are not Lenders hereunder, as shall be necessary to ensure that
on the Closing Date, (i) the outstanding Revolving Credit Loans and Term Loans
are properly allocated among the Lenders in accordance with their respective
Revolving Credit Commitment Percentages and Term Loan Percentages, and (ii) each
"Lender" under the Existing Credit Agreement that is not a Lender hereunder (a
"NON-PARTICIPATING LENDER"), receives payment of 100% of the principal amount of
the revolving credit loans and terms loans owing to such Non-Participating
Lender under the Existing Credit Agreement. Such actions to be taken by the
Agent and the Lenders shall include, among other things, purchasing interests in
(rather than paying or discharging) the loans under the Existing Credit
Agreement of each Non-Participating Lender. On the Closing Date, the Borrowers
shall remit to the Agent, and the Agent shall remit to each "Lender" under the
Existing Credit Agreement, all interest and unwaived fees that such "Lender"
would otherwise be entitled to if the "Loans" of such Lender under the Existing
Credit Agreement were being repaid on the Closing Date, whether or not any such
loans are actually repaid on the Closing Date.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. ADDITIONAL COSTS.
(a) The Borrowers shall pay directly to each Lender from time
to time within five Banking Days of demand therefore such amounts as such Lender
may reasonably determine to be necessary to compensate it for any costs which
such Lender determines are attributable to its making or maintaining any
Eurodollar Loans under this Agreement or its Note or its obligation to make any
such Loans hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "ADDITIONAL
COSTS"), resulting from any Regulatory Change which: (i) changes the basis of
taxation of any amounts payable to such Lender under this Agreement or its Note
in respect of any of such Loans (other than taxes imposed on the overall net
income of such Lender or of its Lending Office for any of such Loans by the
jurisdiction in which such Lender has its principal office or such Lending
Office); or (ii) imposes or modifies any reserve, special deposit, deposit
insurance or assessment, minimum capital, capital ratio or similar requirements
relating to any extensions of credit or other assets of, or any deposits
32
with or other liabilities of, such Lender; or (iii) imposes any other condition
affecting this Agreement or its Note (or any of such extensions of credit or
liabilities). Each Lender will notify the Borrowers of any event occurring after
the date of this Agreement which will entitle such Lender to compensation
pursuant to this section 3.01(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation. If any Lender
requests compensation from the Borrowers under this section 3.01(a), or under
section 3.01(c), the Borrowers may, by notice to such Lender with a copy to the
Agent, suspend the obligation of such Lender to make Loans of the type with
respect to which such compensation is requested (in which case the provisions of
section 3.04 shall be applicable).
(b) Without limiting the effect of the foregoing provisions of
this section 3.01, in the event that, by reason of any Regulatory Change, any
Lender either (i) incurs Additional Costs based on or measured by the excess
above a specified level of the amount of a category of deposits or other
liabilities of such Lender which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Lender which includes
Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Borrowers with a copy to the Agent, the obligation of
such Lender to make Loans of such type hereunder shall be suspended until the
date such Regulatory Change ceases to be in effect (in which case the provisions
of section 3.04 shall be applicable).
(c) Without limiting the effect of the foregoing provisions of
this section 3.01 (but without duplication), the Borrowers shall pay directly to
each Lender from time to time within five Banking Days of request therefore such
amounts as such Lender may determine to be necessary to compensate such Lender
for any costs which it determines are attributable to the maintenance by the
Lender or its bank holding company or any of its Affiliates, pursuant to any law
or regulation of any jurisdiction or any interpretation, directive or request
(whether or not having the force of law) of any court or governmental or
monetary authority, whether in effect on the date of this Agreement or
thereafter, of capital in respect of its Loans hereunder or its obligation to
make Loans hereunder (such compensation to include, without limitation, an
amount equal to any reduction in return on assets or equity of such Lender or
its bank holding company or any of its Affiliates to a level below that which it
could have achieved but for such law, regulation, interpretation, directive or
request). Each Lender will notify the Borrowers if such Lender is entitled to
compensation pursuant to this section 3.01(c) as promptly as practicable afteR
it determines to request such compensation.
(d) Determinations and allocations by a Lender for purposes of
this section 3.01 of the effect of any RegulatorY Change pursuant to subsections
(a) or (b), or of the effect of capital maintained pursuant to subsection (c),
on its costs of making or maintaining Loans or its obligation to make Loans, or
on amounts receivable by, or the rate of return to, it in respect of Loans or
such obligation, and of the additional amounts required to compensate such
Lender under this section 3.01, shall be conclusive absent manifest error,
provided that such determinations and allocations are made on a reasonable
basis. Each Lender demanding payment from the Borrowers pursuant to this section
3.01 shall furnish to the Borrowers at the time of such demand a statement
showing the basiS for and the method of calculation of such demand.
Section 3.02. LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if:
(a) the Agent reasonably determines (which determination shall
be conclusive absent manifest error) that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Rate" in section
1.01 are not being provided in the relevant amounts or for the relevant
maturities
33
for purposes of determining the rate of interest for any type of Eurodollar
Loans as provided in this Agreement; or
(b) any Lender reasonably determines (which determination
shall be conclusive absent manifest error) and notifies the Agent that the
relevant rates of interest referred to in the definition of "Eurodollar Rate" in
section 1.01 upon the basis of which the rate of interest for any type of
Eurodollar Loans is to be determined do not adequately cover the cost to such
Lender of making or maintaining such Loans;
then the Agent shall give the Borrowers and each Lender prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make Loans of such type.
Section 3.03. ILLEGALITY. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Lender or its Lending
Office to honor its obligation to make or maintain Eurodollar Loans hereunder,
then such Lender shall promptly notify the Borrowers thereof (with a copy to the
Agent) and such Lender's obligation to make or maintain Eurodollar Loans
hereunder shall be suspended until such time as such Lender may again make and
maintain such affected Loans (in which case the provisions of section 3.04 shall
be applicable).
Section 3.04. CERTAIN BASE RATE LOANS PURSUANT TO SECTIONS 3.01 AND
3.03. If the obligations of any Lender to make Loans of a particular type (Loans
of such type being herein called "Affected Loans" and such type being herein
called the "Affected Type") shall be suspended pursuant to sections 3.01 or
3.03, all Loans which would otherwise be made by such Lender as Loans of the
Affected Type shall be made instead as Base Rate Loans and, if an event referred
to in section 3.01(b) or 3.03 has occurred and such Lender so requests by notice
to the Borrowers with a copY to the Agent, all Affected Loans of such Lender
then outstanding shall be automatically converted into Base Rate Loans on the
date specified by such Lender in such notice, and, to the extent that Affected
Loans are so made as (or converted into) Base Rate Loans, all payments of
principal which would otherwise be applied to such Lender's Affected Loans shall
be applied instead to its Base Rate Loans.
Section 3.05. CERTAIN COMPENSATION. The Borrowers shall pay to the
Agent for the account of each Lender, upon the request of such Lender through
the Agent, such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost or expense which
such Lender determines is attributable to:
(a) any payment of a Eurodollar Loan made by the Borrowers on
a date other than the last day of a Eurodollar Interest Period or the maturity
date, respectively, for such Loan (whether by reason of acceleration or
otherwise) (other than pursuant to section 3.04); or
(b) any failure by the Borrowers to borrow any Loan to be made
by such Lender on the date specified therefore in the relevant notice under
section 2.12.
Without limiting the foregoing, such compensation shall include an amount equal
to the excess, if any, of (i) the amount of interest which otherwise would have
accrued on the principal amount so paid or not borrowed for the period from and
including the date of such payment or failure to borrow to but excluding the
last day of the Eurodollar Interest Period for such Loan (or, in the case of a
failure to borrow, to but excluding the last day of the Eurodollar Interest
Period for such Loan which would have commenced on the date specified therefore
in the relevant notice) at the applicable rate of interest for such Loan
provided for herein over (ii) the amount of interest (as reasonably determined
by such Lender) such Lender would have bid in the London interbank market for
Dollar deposits for amounts comparable to
34
such principal amount and maturities comparable to such period. A determination
of any Lender as to the amounts payable pursuant to this section 3.05 shall be
conclusive, provided thaT such determination is made on a reasonable basis.
Section 3.06. MITIGATION OBLIGATIONS. If any Lender requests
compensation under section 3.01, then such Lender shall use reasonable efforts
to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the reasonable judgment of such Lender,
such designation or assignment (i) would eliminate or reduce amounts payable
pursuant to section 3.01 in the future and (ii) would not subject such Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO THE INITIAL LOANS. Effectiveness
of this Agreement (and the amendment and restatement of the Existing Credit
Agreement to be effected hereby) and of the obligations of the Initial Lenders
to make the Loans constituting the initial borrowings are subject to the
condition precedent that on or before the Effective Date each of the following
documents shall have been delivered to the Agent and, where so required below in
this section 4.01, to the Lenders, in form and substance satisfactory to the
Agent and its counsel, and each of the following actions shall have been
performed to the satisfaction of the Agent and its counsel:
(a) The Agent shall have received the Facility Documents
(including this Agreement, the Notes and the Security Documents) duly executed
by each of the parties thereto, and in full force and effect;
(b) The Agent shall have received a certificate of the
Secretary of each of the Borrowers, dated the Effective Date, attesting to all
corporate action taken by the Borrowers, including resolutions of the Boards of
Directors of the Borrowers authorizing the execution, delivery and performance
of the Facility Documents and each other document to be executed and delivered
by the Borrowers pursuant to this Agreement and certifying the names and true
signatures of the officers of the Borrowers authorized to sign the Facility
Documents and the other documents to be executed and delivered by the Borrowers
under this Agreement;
(c) The Agent shall have received evidence satisfactory to it
that the Borrowers shall have taken or caused to be taken all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items delivered to
the Agent for filing contemporaneous with the Closing Date) that may be
necessary or, in the opinion of the Agent, desirable in order to create in favor
of the Agent, for the benefit of the Lenders, a valid and (upon such filing and
recording) perfected First Priority security interest in the entire personal and
mixed property Collateral. Such actions shall include, without limitation, the
following: (i) delivery to the Agent of all the Security Documents, duly
executed by the applicable Borrower, together with accurate and complete
schedules to all such Security Documents; (ii) to the extent not previously
delivered to the Agent in connection with the Existing Credit Agreement,
delivery to the Agent of (A) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank and
otherwise reasonably satisfactory in form and substance to the Agent)
representing all capital stock and other equity interests pledged pursuant to
the Security Documents and (B) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner reasonably satisfactory to the Agent)
evidencing any Collateral;
35
(iii) delivery to the Agent of (A) the results of a recent search, by one or
more Persons satisfactory to the Agent, of all effective UCC financing
statements and (as to the New York Properties only) fixture filings and all
judgment and tax lien filings which may have been made with respect to any
Collateral, together with copies of all such filings disclosed by such search,
(B) to the extent not previously delivered to the Agent in connection with the
Existing Credit Agreement, UCC termination statements duly executed by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements, fixture filings
or comparable filings disclosed in such search (other than any such financing
statements or fixture filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement) or if UCC termination
statements cannot be obtained from a creditor whose debt is to be repaid with
the proceeds of the Initial Loans, an agreement to deliver such termination
statements upon receipt by such creditor of payment in full of the amounts due
such creditor, and (C) to the extent not previously delivered to the Agent in
connection with the Existing Credit Agreement, UCC financing statements and (as
to the New York Properties only) fixture filings, duly executed by each
applicable Borrower with respect to all Collateral of such party, for filing in
all jurisdictions as may be necessary or, in the opinion of the Agent, desirable
to perfect the security interests created in such Collateral pursuant to the
Security Documents; (iv) delivery to the Agent of all cover sheets or other
documents or instruments required to be filed in order to create or perfect
Liens in respect of any IP Collateral; and (v) delivery to the Agent of opinions
of counsel (which counsel shall be reasonably satisfactory to the Lender) under
the local laws of each jurisdiction where each of the Borrowers is organized or
maintains an office or facility with respect to the creation and perfection of
the security interests in favor of the Agent in the Collateral and such other
matters governed by the laws of such jurisdiction regarding such security
interests as the Agent may reasonably request, in each case in form and
substance reasonably satisfactory to the Agent.
(d) The Agent shall have received from the Borrowers:
(i) To the extent not previously delivered to the
Agent in connection with the Existing Credit Agreement, with
respect to each of the New York Properties and the Florida
Property (each such parcel, a "MORTGAGED PROPERTY"), all such
surveys, deeds, recorded documents and leases, title insurance
policies and endorsements, title reports, opinions of counsel,
reports regarding environmental matters and other reports,
documents and information as the Agent may reasonably require;
and
(ii) To the extent not previously delivered to the
Agent in connection with the Existing Credit Agreement, in the
case of each Material Leasehold Property existing as of the
Closing Date, copies of all leases between any Borrower and
any landlord or tenant and a Landlord's Waiver and Consent
with respect to such Material Leasehold Property.
(e) The Borrowers shall have obtained all required
environmental permits, licenses, authorizations and consents that are necessary
in connection with the transactions contemplated by the Facility Documents from
the appropriate Governmental Authorities, and each of the foregoing permits,
licenses, authorizations and consents shall be in full force and effect. The
Credit Parties shall have also obtained all other permits, licenses,
authorizations and consents from all other Governmental Authorities and all
consents of other Persons with respect to Material Indebtedness, Liens and
material agreements, in each case that are necessary or advisable in connection
with the transactions contemplated by the Facility Documents, and each of the
foregoing shall be in full force and effect.
(f) The Agent and the Lenders shall have received and shall be
satisfied with the certified financial statements referred to in section 5.05
hereof, including, without limitation, the audited
36
consolidated financiaL statements of the Borrowers for the fiscal year ended on
or about December 31, 2001;
(g) The Agent and the Lenders shall have received and shall be
satisfied with its review of (i) estimated opening balance sheets for the
Borrowers and their Subsidiaries (including all Foreign Subsidiaries), prepared
in accordance with GAAP (subject to year-end adjustments and the absence of
footnotes), and (ii) consolidated and consolidating quarterly profit and loss
statements and balance sheets and consolidated cash flow projections for the
Borrowers and their Subsidiaries (including all Foreign Subsidiaries), prepared
in accordance with GAAP (subject to year-end adjustments and the absence of
footnotes), for the 2002 Fiscal Year, and on an annual basis for Fiscal Years
2003 and 2004, together with the written assumptions on which such projections
are based;
(h) The Agent shall have received a certificate of a duly
authorized officer of the Borrowers dated the Effective Date, stating that the
representations and warranties in Article 5 are true and correct on such date as
though made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(i) The Agent shall have received (i) a favorable opinion of
Xxxxxxx Xxxx LLP, counsel for the Borrowers, dated the Effective Date, in
substantially the form of EXHIBIT H hereto, and covering such matters as the
Agent or any Lender may reasonably request, (ii) a favorable opinion of Xxxxx
Xxxxxxxx, general counsel for the Borrowers, covering such matters as the Agent
or any Lender may reasonably request and (iii) a favorable opinion of local
Kansas counsel to CTG Healthcare Kansas covering such matters as the Agent or
any Lender may reasonably request;
(j) The Agent shall have received a certificate of a duly
authorized officer of CTG in the form of EXHIBIT F annexed hereto certifying as
to the solvency of the Borrowers and their Subsidiaries after giving effect to
the funding of the initial Loans.
(k) The Agent shall have received insurance certificates in
form satisfactory to the Agent evidencing casualty, all-risk, product liability
and other insurance of the Borrowers, their Subsidiaries and their properties
and assets having coverages and issued by insurance companies satisfactory to
the Agent and naming the Agent as a lender's loss payee and (as appropriate) an
additional insured.
(l) The Agent shall have received an initial Borrowing Base
Certificate, remittance, debit and credit reports, and a statement of accounts
in a form acceptable to the Agent with respect to the Borrowers and consistent
with the requirements of section 6.09 hereof, dated as of not more than 45 days
prior to the Closing Date;
(m) The Agent shall be satisfied with its due diligence review
of the Borrowers and their Subsidiaries, including, but not limited to,
satisfactory review by the Agent of the projections of the Borrowers and their
Subsidiaries;
(n) The Agent shall be satisfied with the cash management
arrangements (including domestic lock box arrangements) and management
information systems in place with respect to the Borrowers and their
Subsidiaries;
(o) The Agent shall have received evidence that all principal,
interest and other amounts owing in respect of all Indebtedness of the Borrowers
existing as of the Effective Date
37
(other than Indebtedness permitted to remaining outstanding in accordance with
Section 7.11) will be repaid in full;
(p) The Agent shall have completed a recent field examination
of the Borrowers and the results thereof shall be satisfactory to the Agent and
shall demonstrate, among other things, that the Availability hereunder is
sufficient to meet the ongoing working capital needs of the Borrowers and their
Subsidiaries;
(q) No Default or Event of Default under and as defined in the
Existing Credit Agreement shall have occurred and be continuing under the
Existing Credit Agreement;
(r) To the extent not previously delivered to the Agent in
connection with the Existing Credit Agreement, the Agent shall have received
counterparts of the Lockbox Account Agreements duly executed by all parties
thereto and such Lockbox Account Agreements shall be in full force and effect
and in form and substance satisfactory to the Agent;
(s) Except as otherwise expressly provided on SCHEDULE 6.14,
to the extent not previously delivered to the Agent in connection with the
Existing Credit Agreement, the Agent shall have received counterparts of the
Blocked Account Agreements with respect to each deposit or other bank account
(other than a Lockbox Account) maintained by the Borrowers with any financial
institution other than JPMorgan, duly executed by all parties thereto and such
Blocked Account Agreements shall be in full force and effect and in form and
substance satisfactory to the Agent;
(t) The Agent shall have received counterparts of the
Affiliate Subordination Agreement duly executed by the Borrowers and the Foreign
Subsidiaries;
(u) The "Lenders" under the Existing Credit Agreement shall
have received all interest and fees accrued and unpaid under the Existing Credit
Agreement through the Closing Date, and the Agent and the Lenders shall have
received all fees and other amounts payable to such Persons on or prior to the
Closing Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses of the Agent required to be reimbursed or paid by the
Borrowers hereunder; and
(v) The Agent shall have received such other documents as the
Agent or any Lender shall have reasonably requested and the same shall be
reasonably satisfactory to each of them.
Section 4.02. ADDITIONAL CONDITIONS PRECEDENT. The obligations of the
Lenders to make any Loans (including the initial Loans) and of the Agent to
issue, amend, renew or extend any Letter of Credit, shall be subject to the
further conditions precedent that on the date of such Loan or the date of
issuance, amendment, renewal or extension of such Letter of Credit:
(a) The following statements shall be true:
(i) the representations and warranties contained in
Article 5 of this Agreement are true and correct on and as of
the date of such Loan, or (as applicable) the date of
issuance, amendment, renewal or extension of such Letter of
Credit, as though made on and as of such date (except to the
extent that such representations and warranties are updated to
reflect transactions expressly permitted by this Agreement and
not resulting in or constituting a Default or Event of
Default, provided such any update is specified in a
certificate delivered by the Borrower to the Agent before such
date, and except to the extent that such representations and
warranties relate expressly to an earlier date); and
38
(ii) No Default or Event of Default has occurred and
is continuing, or would result from such Loan;
(b) The Agent shall have received such approvals, opinions or
documents as the Agent or any Lender may reasonably request;
(c) At or before the time of making the first Revolving Credit
Loans hereunder and as of the date of each subsequent Revolving Credit Loan
hereunder, the Agent shall determine that the making of such Revolving Credit
Loan will not cause the amounts outstanding hereunder to exceed the Borrowing
Base, and there shall be delivered or in the possession of the Agent all
documents pertaining to the Qualified Domestic Accounts, Qualified Domestic
Unbilled Accounts and Qualified Real Estate, as the Agent shall reasonably
require, dated as of not more than 30 days prior to the date of the Loan; (d)
The Borrowers shall have paid to the Agent all accrued fees and expenses payable
to the Agent in connection with this Agreement, including all reasonable fees
and disbursements of legal counsel to the Agent.
Section 4.03. DEEMED REPRESENTATIONS. Each notice of a Loan or
Letter of Credit and acceptance by the Borrowers of the proceeds of such Loan or
issuance of a Letter of Credit shall constitute a representation and warranty
that the conditions set forth in Subsection (a) of section 4.02 are true and
correct as of the date of eacH such Loan. The Agent may from time to time
require certificate(s) of duly authorized officer(s) of one or more of the
Borrowers, stating that the representations and warranties in Article 5 are true
and correct on such date as though made on and as of such date and that no event
has occurred and is continuing which constitutes a Default or an Event of
Default.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Borrowers hereby jointly and severally represent and warrant, as of
the date hereof and as of the date of each Loan, that:
Section 5.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION. Each
of the Borrowers and each of their Subsidiaries is an entity which is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its assets and to transact the business in which it is now engaged or proposed
to be engaged, and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
is duly qualified as a foreign corporation and in good standing under the laws
of each other jurisdiction in which such qualification is required.
Section 5.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance of the Facility Documents: (a) have been
duly authorized by all necessary corporate action by the Borrowers party thereto
and do not and will not require any consent or approval of the equityholders of
the Borrowers or contravene their charters or by-laws; (b) will not violate any
provision of, or require any filing, registration, consent or approval under,
any law, rule, regulation (including, without limitation, Regulation U), order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to the Borrowers or any of their Subsidiaries; (c) will not
result in a breach of or constitute a default in any material respect or require
any consent which has not been obtained under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any of the
Borrowers is a party or by which the properties of any of the Borrowers may be
bound or affected; (d) will not result in, or require, the creation or
imposition of any Lien, upon or with respect to any of the properties now owned
or hereafter acquired by the Borrowers or any of their Subsidiaries,
39
except as provided in the Security Documents; or (e) will not cause the
Borrowers, as the case may be, to be in default in any material respect under
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
Section 5.03. LEGALLY ENFORCEABLE AGREEMENTS. Each Facility Document
is, or when delivered under this Agreement will be, a legal, valid and binding
obligation of the Borrowers, enforceable against the Borrowers, in accordance
with its terms, except to the extent that enforceability may be subject to
limitations imposed by general principles of equity or applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
Section 5.04. LITIGATION. Except as set forth on SCHEDULE 5.04 hereto,
there are no actions, suits or proceedings pending or, to the knowledge of the
Borrowers, threatened, against or affecting the Borrowers or any of their
Subsidiaries before any court, governmental agency or arbitrator, which may, in
any one case or in the aggregate, materially adversely affect the financial
condition, operations, properties or business of the Borrowers and their
Subsidiaries taken as a whole or the ability of any Borrower to perform its
obligations under the Facility Documents.
Section 5.05. FINANCIAL STATEMENTS. (a) The Borrowers have heretofore
delivered to the Lenders the following financial statements:
(i) the consolidated balance sheets and statements of
operations, shareholders' equity and cash flows of the Borrowers and
their Subsidiaries, as of and for the fiscal year ended December 31,
2001, audited and accompanied by an opinion of the Borrowers'
independent public accountants;
(ii) the unaudited consolidated balance sheet and statement of
operations of the Borrowers and their Subsidiaries, as of and for the
Fiscal Months ended January 25, 2002 and February 22, 2002, certified
by the chief financial officer of CTG that such financial statements
fairly present the financial condition of the Borrowers and their
Subsidiaries as at such dates and the results of the operations of the
Borrowers and their Subsidiaries for the period ended on such dates and
that all such financial statements, including the related schedules and
notes thereto have been prepared in all material respects in accordance
with GAAP applied consistently throughout the periods involved; and
(iii) consolidated quarterly profit and loss statements,
balance sheets and cash flow projections for the Borrowers and their
Subsidiaries (including all Foreign Subsidiaries), prepared in
accordance with GAAP, for the 2002 Fiscal Year, and on an annual basis
for Fiscal Years 2003 and 2004, together with the written assumptions
on which such projections are based.
Except as disclosed on SCHEDULE 5.05, such financial statements (except
for the projections) present fairly, in all material respects, the respective
consolidated financial position and results of operations and cash flows of the
respective entities as of such respective dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of such unaudited or pro forma statements. The projections
were prepared by the Borrowers in good faith and were based on assumptions that
were reasonable when made.
(b) Except as disclosed on SCHEDULE 5.05, since December 31,
2001, there has been no material adverse change in the business, assets,
operations or condition, financial or otherwise, of the Borrowers or any of
their Subsidiaries (other than Inactive Subsidiaries) from that set forth in the
December 31, 2001 financial statements referred to in clause (i) of paragraph
(a) above.
40
(c) None of the Borrowers or any of their Subsidiaries has on
the date hereof any contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments in each case that are material, except as referred to or
reflected or provided for in the balance sheets as at the end of their
respective fiscal years ended in 2001, referred to above, as provided for in
SCHEDULE 5.05 annexed hereto, or as otherwise permitted pursuant to this
Agreement, or as referred to or reflected or provided for in the financial
statements described in this Section 5.05.
Section 5.06. OWNERSHIP AND LIENS. The Borrowers and their Subsidiaries
have title to, or valid leasehold interests in, all of its properties and
assets, real and personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in section 5.05
(other than any properties oR assets disposed of in the ordinary course of
business), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes, and none of the properties and assets
owned by the Borrowers or any of their Subsidiaries (excluding any of its
leasehold interests) is subject to any Lien, except as disclosed in such
financial statements or as may be permitted hereunder or as listed in SCHEDULE
5.06 hereto.
Section 5.07. EXISTING INDEBTEDNESS. None of the Borrowers nor any of
their Subsidiaries owes Indebtedness as of the Effective Date for borrowed money
or under any title retention agreements (including conditional sale contracts
and Capital Leases) except as listed on SCHEDULE 5.07 hereto.
Section 5.08. TAXES. Except as set forth on SCHEDULE 5.08 hereto, the
Borrowers and each of their Subsidiaries have filed all tax returns (federal,
state and local) required to be filed and have paid all taxes, assessments and
governmental charges and levies thereon to be due, including interest and
penalties, except for such taxes which are not material in amount and are being
contested by the Borrowers in good faith in appropriate proceedings.
Section 5.09. ERISA. Except as set forth on SCHEDULE 5.09 hereto, the
Borrowers and their Subsidiaries have no Plans. The Borrowers and their
Subsidiaries are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred with respect to any Plan; no notice of intent to terminate a Plan has
been filed nor has any Plan been terminated; no circumstance exists which
constitutes grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; none of the Borrowers nor any ERISA
Affiliate has completely or partially withdrawn under Sections 4201 or 4204 of
ERISA from a Multiemployer Plan; the Borrowers and each of their ERISA
Affiliates have met all minimum funding requirements under ERISA with respect to
all of their Plans and there are no Unfunded Vested Liabilities in excess of
$250,000; and none of the Borrowers nor any ERISA Affiliate has incurred any
liability to the PBGC under ERISA in excess of $250,000.
Section 5.10. SUBSIDIARIES AND AFFILIATES. Set forth on SCHEDULE 5.10
is a complete and correct list of all Subsidiaries of CTG as of the date hereof,
together with, for each such Subsidiary, (a) the jurisdiction of organization of
such Subsidiary, (b) each Person holding ownership interests in such Subsidiary
and (c) the nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed in SCHEDULE 5.10, (i) each Borrower and its
respective Subsidiaries owns, free and clear of Liens (other than Liens
permitted hereunder), and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it in SCHEDULE 5.10, (ii)
all of the issued and outstanding capital stock of each such Person organized as
a corporation is validly issued, fully paid and nonassessable and (iii) there
are no outstanding Equity Rights with respect to such Person. As of the
Effective Date, the authorized,
41
issued and outstanding capital stock of the Borrowers and their Subsidiaries
consists of the capital stock described on SCHEDULE 5.10, all of which is duly
and validly issued and outstanding, fully paid and nonassessable. The Inactive
Subsidiaries do not engage in any business or activity of any kind and no
Inactive Subsidiary owns assets having a total book value in excess of $250,000
in the aggregate (other than intercompany receivables reflected on the books of
such Inactive Subsidiaries as to which no cash has been or will be paid by the
Borrowers or any Subsidiary to such Inactive Subsidiaries).
Section 5.11. OPERATION OF BUSINESS. (a) The Borrowers and each of
their Subsidiaries possess all licenses, permits, franchises, Patents,
Copyrights, Trademarks and trade names, or rights thereto, to conduct their
business substantially as now conducted and as presently proposed to be
conducted, and none of the Borrowers nor any of their Subsidiaries is in
violation of any rights of others with respect to any of the foregoing, except
for any such violations that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. Set forth on
SCHEDULE 5.11 hereto is a complete list of all Patents, Trademarks and
Copyrights (each of the foregoing, together with any other intellectual property
material to the business of the Borrowers and their Subsidiaries being referred
to herein as "Proprietary Rights"). SCHEDULE 5.11 clearly identifies all
Patents, Trademarks and Copyrights that have been duly registered in, filed in
or issued by the PTO or the United States Register of Copyrights (collectively,
the "Registered Proprietary Rights"). The Registered Proprietary Rights have
been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations in the United States, as
applicable. The Borrowers have taken commercially reasonable steps to protect
their Registered Proprietary Rights and to maintain the confidentiality of all
Proprietary Rights that are not generally in the public domain.
(b) As of the date hereof, SCHEDULE 5.11 annexed hereto
contains a true, accurate and complete list of (i) all Real Property Assets,
whether owned or leased, and (ii) all leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting each Material Leasehold Property,
regardless of whether such Borrower is the landlord or tenant (whether directly
or as an assignee or successor in interest) under such lease, sublease or
assignment. Except as specified in SCHEDULE 5.11, each agreement listed in
clause (ii) of the immediately preceding sentence is in full force and effect
and the Borrowers have no knowledge of any default that has occurred and is
continuing thereunder, and each such agreement constitutes the legal, valid and
binding obligation of each applicable Borrower, enforceable against such
Borrower in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles.
Section 5.12. NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. The
Borrowers and each of their Subsidiaries have satisfied all judgments and none
of the Borrowers nor any of their Subsidiaries is in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court, arbitrator
or federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, except for judgments
which are not material in amount and are being contested in good faith by the
Borrowers in appropriate proceedings.
Section 5.13. NO DEFAULTS ON OTHER AGREEMENTS. SCHEDULE 5.13 hereto is
a complete and correct list, as of the date of this Agreement of each contract
and arrangement to which any Borrower or Subsidiary is a party for which breach,
nonperformance, cancellation or failure to renew would have a Material Adverse
Effect. True and complete copies of each agreement listed on the appropriate
part of SCHEDULE 5.13 have been delivered to the Agent, together with all
amendments, waivers and other modifications thereto. All such agreements are
valid, subsisting, in full force and effect, are currently binding and will
continue to be binding upon each Borrower or Subsidiary that is a party thereto
and, to
42
the best knowledge of the Borrowers, binding upon the other parties thereto in
accordance with their terms. None of the Borrowers nor any of their Subsidiaries
is a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction which
could reasonably be expected to have a Material Adverse Effect. None of the
Borrowers nor any of their Subsidiaries is in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument material to its business
to which it is a party.
Section 5.14. LABOR MATTERS. (a) Except as set forth on SCHEDULE 5.14
as of the Effective Time (i) no employee of any Borrower of any Subsidiary is
represented by a labor union, no labor union has been certified or recognized as
a representative of any such employee, and no Borrower or Subsidiary has any
obligation under any collective bargaining agreement or other agreement with any
labor union or any obligation to recognize or deal with any labor union, and
there are no such contracts or other agreements pertaining to or which determine
the terms or conditions of employment of any employee of any Borrower or
Subsidiary thereof; (ii) there are no pending or threatened representation
campaigns, elections or proceedings; (iii) no Borrower has any knowledge of any
strikes, slowdowns or work stoppages of any kind, or threats thereof, and no
such activities occurred during the 24-month period preceding the date hereof;
(iv) no Borrower or Subsidiary has engaged in, admitted committing or been held
to have committed any unfair labor practice; and (v) there are no controversies
or grievances between any Borrower or Subsidiary and any of its employees or
representatives thereof, except, in the case of this clause (v), for any such
controversies or grievances which, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on SCHEDULE 5.14, each of the
Borrowers and their Subsidiaries has at all times complied in all material
respects, and are in material compliance with, all applicable laws, rules and
regulations respecting employment, wages, hours, compensation, benefits, and
payment and withholding of taxes in connection with employment.
(c) Except as set forth on SCHEDULE 5.14, the Borrowers and
their Subsidiaries have at all times complied with, and are in compliance with,
all applicable laws, rules and regulations respecting occupational health and
safety, whether now existing or subsequently amended or enacted, including,
without limitation, the Occupational Safety & Health Act of 1970, 29 U.S.C.
Section 651 et seq. and the state analogies thereto, all as amended or
superseded from time to time, and any common law doctrine relating to worker
health and safety.
Section 5.15. INVESTMENT COMPANY ACT. None of the Borrowers nor any of
their Subsidiaries is an "investment company" within the meaning of the United
States Investment Company Act of 1940, as amended.
Section 5.16. ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
5.16 hereto, no real property currently or previously owned or leased by the
Borrowers or any of their Subsidiaries is in violation of any Environmental
Laws, no Hazardous Materials are present on said real property other than
Hazardous Materials used, generated, treated, stored, disposed of or otherwise
introduced compliance with all applicable Environmental Laws. Except as set
forth on SCHEDULE 5.16 hereto, none of the Borrowers nor any of their
Subsidiaries has been identified in any litigation, administrative proceedings
or investigation as a responsible party or potentially responsible party for any
liability under any Environmental Laws.
Section 5.17. REGULATION U. None of the Borrowers nor any of their
Subsidiaries owns, directly or indirectly any "margin stock" (as defined in
Regulation U of the Board of Governors of the
43
Federal Reserve System, as supplemented from time to time). The proceeds of the
Loans are not being used for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock".
Section 5.18. NO GUARANTIES OR INDEMNITIES. Except as set forth on
SCHEDULE 5.07 hereto, none of the Borrowers nor any of their Subsidiaries is
obligated on any Guaranty or any indemnification of any kind for the debts,
liabilities or obligations of any Person, including without limitation any
Affiliate, other than indemnities and hold harmless provisions entered into in
favor of customers, bonding agencies and sureties in the ordinary course of
business.
Section 5.19. BANK ACCOUNTS. SCHEDULE 5.19 lists all banks and other
financial institutions at which any Borrower maintains deposits and/or other
accounts as of the Closing Date, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number.
Section 5.20. TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between any Borrower or any Subsidiary and any
customer or any group of customers whose purchases of goods or services
individually or in the aggregate are material to the business of such Borrower
or such Subsidiary, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially adversely
affect the Borrowers or their Subsidiaries or prevent the Borrowers or their
Subsidiaries from conducting their businesses after the consummation of the
transactions contemplated by this Agreement in substantially the same manner in
which such businesses heretofore have been conducted.
ARTICLE 6. AFFIRMATIVE COVENANTS
So long as any of the Loans or Letters of Credit remain outstanding or
any Lender shall have any Revolving Credit Commitment under this Agreement, each
of the Borrowers shall:
Section 6.01. MAINTENANCE OF EXISTENCE. Except as permitted by section
7.03, preserve and maintain, and cause each of their Subsidiaries to preserve
and maintain, its legal existence and good standing in the jurisdiction of its
organization, and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, qualify and remain qualified, and cause each of its Subsidiaries to
qualify and remain qualified, as a foreign organization in each jurisdiction in
which such qualification is required.
Section 6.02. CONDUCT OF BUSINESS. Continue, and cause each of their
Subsidiaries to continue, to engage in an efficient and economical manner in a
business of the same general type as conducted by it on the date of this
Agreement.
Section 6.03. MAINTENANCE OF PROPERTIES. Maintain, keep and preserve,
and cause each of their Subsidiaries to maintain, keep and preserve, all of its
properties, (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
Section 6.04. MAINTENANCE OF RECORDS; FISCAL YEAR. Keep, and cause each
of their Subsidiaries to keep, adequate records and books of account, in which
complete entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrowers and their Subsidiaries. To enable the ready and
consistent determination of compliance with the covenants set forth in Article 8
of this
44
Agreement, each of the Borrowers shall maintain, and shall cause each of their
Subsidiaries (including each Foreign Subsidiary) to maintain, December 31st of
each year as the end of such Borrower's or such Subsidiary's Fiscal Year.
Section 6.05. MAINTENANCE OF INSURANCE. Maintain, and cause each of
their Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
the Agent reasonably deems appropriate. The Agent will be named "Lender's Loss
Payable" and/or "Additional Named Insured," as appropriate, on all insurance
policies.
Section 6.06. PAYMENT OF TAXES; COMPLIANCE WITH LAWS. Comply, and cause
each of their Subsidiaries to comply, with (a) all applicable laws, rules,
regulations and orders relating to the payment of taxes, assessments and
governmental charges, such compliance to include, without limitation, paying all
taxes, assessments and governmental charges imposed upon it or upon its property
before the same become delinquent, except for such taxes, assessments, and
governmental charges which are not material in amount and which are being
contested by the Borrowers in appropriate proceedings (it being understood that,
without limiting the generality of the foregoing and for avoidance of doubt, any
taxes set forth on SCHEDULE 5.08 shall be deemed to be material in amount) and
(b) all applicable laws, rules, regulations and orders (including ERISA and
Environmental Laws) other than those referred in clause (a) of this section
6.06, except, in the case of this clause (b), where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
Section 6.07. RIGHT OF INSPECTION. At any reasonable time and from time
to time during regular business hours and upon reasonable prior notice (except
that no such prior notice shall be required after the occurrence and during the
continuance of a Default or Event of Default), permit the Agent or any agent or
representative thereof, to examine and make copies and abstracts from the
records and books of account of, and visit the properties of, the Borrowers and
any of their Subsidiaries, and the Borrowers hereby give to the Agent and to any
of its agents or representatives the Borrowers' irrevocable permission to
discuss to the extent necessary the affairs, finances and accounts of the
Borrowers and any of their Subsidiaries with the Borrowers' or their
Subsidiaries' respective officers and directors and the Borrowers' independent
accountants.
Section 6.08. REPORTING REQUIREMENTS. Furnish to the Agent which shall
in turn furnish to each of the Lenders:
(a) As soon as available and in any event within 90 days after
the end of each Fiscal Year of the Borrowers, consolidated and consolidating
balance sheets of the Borrowers and their Subsidiaries as of the end of such
Fiscal Year, consolidated and consolidating statements of income and
stockholders' equity of the Borrowers and their Subsidiaries for such Fiscal
Year and consolidated statements of cash flows of the Borrowers and their
Subsidiaries for such Fiscal Year, all in reasonable detail and all prepared in
accordance with GAAP (subject to the absence of footnotes, in the case of the
consolidating statements), and as to the consolidated statements, accompanied by
an opinion thereon by Deloitte & Touche LLP or other independent accountants of
national standing selected by the Borrowers and reasonably acceptable to Agent,
which opinion shall not be qualified by reason of audit limitations imposed by
the Borrowers;
(b) As soon as available and in any event within 45 days after
the end of each Fiscal Quarter of the Borrowers (including the Fiscal Quarter
ending December 31 of each Fiscal Year), consolidated and consolidating balance
sheets of the Borrowers and their Subsidiaries as of the end of such Fiscal
Quarter, consolidated and consolidating statements of income and consolidated
statements of cash flows of the Borrowers and their Subsidiaries for the period
commencing at the end of the previous
45
Fiscal Year and ending with the end of such Fiscal Quarter, all in reasonable
detail and stating in comparative form the respective consolidated figures for
the corresponding date in the previous Fiscal Year, and all prepared in
accordance with GAAP and certified by the chief financial officer of CTG
(subject to year-end adjustments and the absence of footnotes);
(c) Simultaneously with the delivery of the financial
statements referred to above for each Fiscal Year and each Fiscal Quarter of the
Borrowers, a certificate of the chief financial officer of CTG in substantially
the form of EXHIBIT J hereto (a "COMPLIANCE CERTIFICATE") (i) certifying that to
the best of his knowledge no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is continuing,
a statement as to the nature thereof and the action which is proposed to be
taken with respect thereto, (ii) with computations set forth in reasonable
detail satisfactory to the Lenders which demonstrate compliance with the
covenants contained in Article 8, (iii) with a schedule listing all Liens of
which they have knowledge on the assets of the Borrowers and their Subsidiaries
which are in addition to those in favor of the Agent and Lenders or those listed
on SCHEDULE 5.16 hereto; and (iv) with a schedule listing all environmental
matters of the type described in section 5.16 which are in addition to those
listed on SCHEDULE 5.16 hereto if the aggregate amount of all liabilities,
losses, damages, costs and expenses of such additional environmental matters,
including but not limited to clean-up or remediation costs, is estimated to
exceed an aggregate amount of $500,000;
(d) Promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
against any of the Borrowers or any of their Subsidiaries which, if determined
adversely to the Borrowers or their Subsidiaries, could reasonably be expected
to have a Material Adverse Effect;
(e) As soon as possible and in any event within 3 days after
the occurrence of each Default or Event of Default, a written notice setting
forth the details of such Default or Event of Default and the action which is
proposed to be taken by the Borrowers with respect thereto;
(f) Promptly after the receiving thereof, copies of all
reports and notices which the Borrowers or any of their Subsidiaries receives
from the PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within 10 days after the Borrowers or any of their
Subsidiaries know or have reason to know that any Reportable Event or Prohibited
Transaction has occurred with respect to any Plan or that the PBGC or the
Borrowers or any of their Subsidiaries have instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, the Borrowers will
deliver to each of the Lenders a certificate of the chief financial officer of
CTG setting forth details as to such Reportable Event or Prohibited Transaction
or Plan termination and the action the Borrowers propose to take with respect
thereto;
(g) Within 90 days of the end of each Fiscal Year, a forecast
of the balance sheet, income statement and statement of cash flows for the then
current Fiscal Year of the Borrowers and their Subsidiaries in a form reasonably
acceptable to the Agent and prepared by management and computed in accordance
with GAAP;
(h) Contemporaneously with the filing, copies of all material
and reports filed with the Securities and Exchange Commission; and
(i) Such other information respecting the condition or
operations, financial or otherwise, of the Borrowers or any of their
Subsidiaries as the Agent at the request of any Lender may from time to time
reasonably request.
46
Section 6.09. SPECIAL PERIODIC REPORTS. The Borrowers shall execute and
deliver to the Agent the following documents compiled as of the last day of the
Applicable Billing Period then most recently ended, and the Borrowers
acknowledge that the Agent and the Lenders will rely on such documents in making
loans hereunder:
(a) Within 17 calendar days after the end of such Applicable
Billing Period (or by such other date as the Agent may specify in the event the
Agent requests that such information be provided more frequently):
(i) a declaration or statement of: (A) Accounts
(identifying Qualified Domestic Accounts, Qualified Domestic
Unbilled Accounts and ineligible Accounts), (B) sales, (C)
aging of Accounts, (D) aging of accounts payable, (E) approval
or comments on the loan reconciliation provided to the
Borrowers by the Agent, and (F) an accounts receivable
reconciliation; all as of the last day of such Applicable
Billing Period and certified by the chief financial officer of
CTG and in form reasonably acceptable to the Agent and
computed in accordance with such procedures and principles as
may be reasonably acceptable to the Agent;
(ii) a Borrowing Base Certificate, together with a
reconciliation between such Applicable Billing Period and the
Fiscal Month ended on or most recently ended prior to the last
day of such Applicable Billing Period; and
(iii) Updates in form reasonably satisfactory to the
Agent and covering such other matters as the Agent may
reasonably request, including without limitation, measurements
of utilization and billed hours, all as of the end of such
Applicable Billing Period.
(b) At the Agent's reasonable request, and within ten (10)
days of any such request, certified true copies of customer's invoices, or the
equivalent, for all services rendered;
(c) At the Agent's reasonable request, and within a reasonable
time period, certified true copies of all contracts, security agreements,
mortgages and other documents executed by the customers in connection with all
services rendered and any other information, reports, reconciliations, Account
debtor's addresses or documents the Agent may call upon the Borrowers to submit
from time to time; and
(d) Within 5 days after receipt thereof by the Borrowers,
copies of all account statements provided by any depository bank party to a
Lockbox Account Agreement or Blocked Account Agreement to the extent that such
bank is not then obligated to provide such statements directly to the Agent
pursuant to the terms of such Lockbox Account Agreement or Blocked Account
Agreement.
The failure by the Agent or the Lenders to request any or all of the foregoing
or the failure of the Borrowers to perform the same shall not affect the
security interest of the Agent or the Lenders in or rights to any of the
Collateral. The pledge and assignment of each Account under the Security
Agreement shall constitute and be a transaction separate from and independent of
each other, but all such transactions shall be subject to and governed by each
and every one of the terms and provisions of this Agreement. In addition to any
and all representations and warranties contained in any such documents or
otherwise made or deemed to be made hereunder or in connection herewith by the
Borrowers with respect thereto, the delivery by the Borrowers of each of the
documents set forth in section 6.09(a) and (b) shall be deemed to constitute a
representation by the Borrowers that thE representation and warranty set forth
in section 5.08 is true and correct as of the date that each such document iS
delivered.
47
Section 6.10. REPORTS ON DISPUTES AND FEDERAL CONTRACTS. The Borrowers
shall notify the Agent:
(a) within ten days after any Borrower's acquiring knowledge
of the occurrence of any material dispute or claim involving Accounts in the
amount of $500,000 for any one Account or $1,000,000 in the aggregate for all
Accounts; and
(b) immediately in writing of each Account which arises out of
contracts with the United States of America or any department, agency, or
instrumentality thereof.
Section 6.11. FIELD AUDITS. The Borrowers will permit the Agent to
conduct field audit examinations of, among other things, the Borrowers' and
their Subsidiaries' assets, liabilities, books, records, billing and collection
processes and management information systems twice each Fiscal Year; provided
further that the Borrowers will permit the Agent to conduct such examinations at
any time and with any reasonable frequency upon the occurrence and during the
continuance of a Default or Event of Default. The Borrowers will reimburse the
Agent for the expense of each field audit examination at a rate per person per
day equal to the prevailing rate then charged by the Agent for performing
comparable field audit examinations, plus reasonable out-of-pocket expenses. In
connection with such field audits, the Borrowers will permit the Agent to make
test verifications of the Accounts with the Borrowers' and their Subsidiaries'
customers.
Section 6.12. COOPERATION AND FURTHER ASSURANCE. At all times until the
Loans are repaid in full, the Borrowers shall, and shall cause each of their
Subsidiaries to, cooperate with the Agent and the Lenders to effectuate the
intent and purposes of the Facility Documents. Without limiting the foregoing,
the Borrowers agree to execute and deliver any financing statements or other
instruments and do such other acts and things, as Agent may reasonably deem
necessary or advisable to effectuate the intent and purposes of this Agreement,
and shall cause their Subsidiaries to do likewise.
Section 6.13. DEPOSITS INTO COLLECTION ACCOUNT. The Borrowers shall
remit immediately to the Agent upon receipt, and shall hold in trust for the
Agent and the Lenders until so remitted, any and all moneys received from any
source for deposit into the Collection Account, including without limitation any
proceeds from any equity investment or extraordinary transaction. The Borrowers
shall take all actions necessary to maintain, preserve and protect the rights
and interests of the Agent with respect to all cash deposits of the Borrowers
and all other proceeds of Collateral and shall not, without the Agent's prior
written consent, open any deposit or other bank account.
Section 6.14. CASH MANAGEMENT SYSTEM. The Borrowers shall establish and
maintain a cash management system pursuant to the terms of SCHEDULE 6.14 hereto
and shall comply in all respects with SCHEDULE 6.14.
Section 6.15. CERTAIN OBLIGATIONS RESPECTING INACTIVE SUBSIDIARIES. In
the event that the Agent at any time determines in its reasonable discretion
that an Inactive Subsidiary is engaged in any business or activity or owns
assets having a total book value of $250,000 or more in the aggregate (other
than intercompany receivables reflected on the books of such Inactive
Subsidiaries as to which no cash has been or will be paid by the Borrowers or
any Subsidiary to such Inactive Subsidiaries), as soon as possible but in any
event no later than fifteen (15) days after receipt of written notice from the
Agent as to such determination, the Borrowers shall, without in any way limiting
the Borrowers' obligation to obtain the consent of the Lenders with respect to
such Subsidiary's engaging in such business or activity or ownership of such
assets, take or cause to be taken the actions set forth in section 7.09(b) with
respect to such Subsidiary.
48
Section 6.16. MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL.
In the event that any Borrower acquires any fee interest in real property after
the Closing Date, upon the request of the Agent, such Borrower shall execute and
deliver to the Agent a Mortgage, in recordable form, sufficient to create in
favor of the Agent for the ratable benefit of the Lenders a perfected First
Priority Lien on such Real Property Asset, together with a title insurance
policy acceptable to Lender, a favorable opinion of local counsel, an
environmental report or audit, and such instruments, agreements and other
documents as the Agent shall reasonably request.
Section 6.17. MODIFICATIONS TO FOREIGN PLEDGE AGREEMENTS. Upon the
request of the Required Lenders, the Borrowers shall, at their reasonable
expense, execute and deliver, or caused to be executed and delivered, to the
Agent such modifications to the Belgian Pledge Agreement, the Netherlands Pledge
Agreement and the UK Charge Agreement and such certificates, opinions of counsel
and other documents and take, or caused to be taken, such other actions as the
Required Lenders may reasonably request to confirm that the Agent and the
Lenders have a valid and perfected First Priority Lien in the collateral pledged
pursuant to such pledge agreements as security for the payment and performance
of the Obligations.
ARTICLE 7. NEGATIVE COVENANTS
So long as any of the Loans or Letters of Credit shall remain
outstanding or any Lender shall have any Revolving Credit Commitment under this
Agreement, each of the Borrowers covenants and agrees that it shall not (unless
waived in accordance with the provisions of section 12.01 hereof):
Section 7.01. SALE OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of, or permit any Subsidiary to sell, lease, assign, transfer
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of any
Subsidiary, receivables and leasehold interests); except:
(a) inventory disposed of, or other assets consumed, in the
ordinary course of business;
(b) any sale, lease, assignment or other transfer by any
Borrower of its assets to any other Borrower;
(c) any sale or other disposition of assets no longer used or
useful in the conduct of its business;
(d) any sale of the Florida Property to a third party which is
not an Affiliate of the Borrower or any Subsidiary PROVIDED that (i) at the time
of and immediately after giving effect to such sale, no Default or Event of
Default exists and (ii) 100% of the Net Cash Payments from such sale are applied
to prepay the Loans in accordance with section 2.05(c);
(e) any sale of one or more of the New York Properties to a
third party which is not an Affiliate of the Borrower or any Subsidiary,
PROVIDED that (i) at the time of and immediately after giving effect to any such
sale, no Default or Event of Default exists and (ii) 100% of the Net Cash
Payments from any such sale are applied to prepay the Loans in accordance with
section 2.05(c);
(f) any sale by the Borrower or any Subsidiary of any capital
stock or assets of any Foreign Subsidiary to a third party which is not an
Affiliate of the Borrower or any Subsidiary, PROVIDED that (i) at least 50% of
the total consideration received by the Borrower or such Subsidiary in
connection therewith consists of cash, (ii) at the time of and immediately after
giving effect to any such sale, no
49
Default or Event of Default exists, and (iii) 100% of the Net Cash Payments from
any such sale are applied to prepay the Loans in accordance with section
2.05(c);
(g) any sale, factoring, assignment or other transfer by any
Borrower or Subsidiary, in its ordinary course of business, of any of its
Accounts (i) with respect to which more than 180 days have elapsed since the
invoice/mail date with respect thereto or (ii) owing by an Account debtor that
has commenced or had commenced against it any bankruptcy, reorganization,
insolvency or similar proceeding under applicable law, PROVIDED that (x) the
aggregate amount of all such Accounts (calculated based on the amount owed by
the Account debtors under such Accounts as of the invoice/mail date with respect
thereto) sold, factored, assigned or otherwise transferred by the Borrowers and
their Subsidiaries pursuant to this Section 7.01(g) shall not exceed $1,000,000
cumulatively from the Effective Date and (y) 100% of the Net Cash Payments from
any such sale, factoring, assignment or other transfer are applied to prepay the
Loans in accordance with section 2.05(c); and
(h) any other sale, lease, assignment, or other transfer of
assets by any Borrower or any Subsidiary, PROVIDED that (i) Borrowers are in
compliance with the covenants set forth in Article 8, (ii) the aggregate value
of such assets, together with all assets of the type described in clause (c)
above, shall not exceed $250,000 during any fiscal year and (iii) 100% of the
Net Cash Payments from such sale, lease, assignment or other transfer are
utilized by the Borrowers or their Subsidiaries to replace the property disposed
of within 90 days of such sale, lease, assignment or other transfer.
The Lenders and the Agent (as the case may be), at the Borrower's
reasonable expense, hereby agree to complete, execute and deliver to the
Borrowers, upon reasonable prior notice to the Agent and upon provision by the
Borrowers of a draft of such instrument, any release or termination of security
interest required to permit the applicable Borrower conveying, selling, leasing,
transferring or otherwise disposing of any part of its property pursuant to and
in accordance with this section 7.01 to convey, sell, lease, transfer or
otherwise dispose oF such property free and clear of any Lien under the Security
Documents.
Section 7.02. STOCK OF SUBSIDIARIES, ETC. Sell or otherwise dispose of
any shares of capital stock of any Subsidiary, or permit any Subsidiary to do
so, except in connection with a transaction permitted under section 7.01(f) or
section 7.03, or permit any such Subsidiary to issue any additional shares of
its capital stock, except (a) directors' qualifying shares, and (b) the issuance
of shares by any Subsidiary to any Borrower, PROVIDED that such Borrower shall
forthwith deliver to the Agent pursuant to the applicable Security Documents the
certificates evidencing such shares of stock, accompanied by undated stock
powers executed in blank, and shall take such other action as the Agent shall
request to create a valid and enforceable First Priority Lien on such shares
pursuant to such Security Documents.
Section 7.03. MERGERS, ETC. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or permit any Subsidiary to do so, except
that (a) any Borrower may merge into any other Borrower (so long as CTG is the
surviving corporation of any merger involving CTG), (b) any Borrower may
transfer assets to any other Borrower and (c) any Subsidiary may engage in any
sale transaction permitted by section 7.01(f).
Section 7.04. DIVIDENDS. Without the prior written consent of the
Lenders in accordance with section 12.01, take or permit any Subsidiary to take
any of the following actions: (a) declare or pay any dividends, (b) purchase,
redeem, retire or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or make any distribution of assets to its stockholders as
such whether in cash, assets or in obligations of the Borrowers or any
Subsidiary, (c) allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption or retirement of
any shares of its capital stock, or (d) make any other distribution by reduction
of capital or otherwise in respect of any
50
shares of its capital stock or permit any Subsidiary to purchase or otherwise
acquire for value any stock of the Borrowers or another Subsidiary, except that:
(i) CTG may declare and deliver dividends and make
distributions payable solely in common stock of CTG;
(ii) CTG may purchase or otherwise acquire shares of its
capital stock from employees or directors in connection with the termination of
their employment or affiliation with CTG, PROVIDED that the aggregate cash
consideration paid by CTG to all such employees and directors for such shares
does not exceed $1,000,000 during any fiscal year;
(iii) Any Subsidiary may declare and deliver dividends or
other distributions directly to any Borrower;
(iv) any Foreign Subsidiary of CTG Europe may declare and
deliver dividends to CTG Europe, PROVIDED that, in the case of any dividend by
CTG (UK) Ltd., (i) immediately upon its receipt of any such dividend, CTG Europe
shall distribute the entire amount thereof (except for any portion thereof
required to pay any franchise or like fee then due and payable by CTG Europe
under applicable law in order to maintain its legal existence) to a Borrower and
(ii) at the time of and after giving effect to any such dividend, the Borrowers
shall be in compliance with section 7.16;
(v) CTG may purchase or otherwise acquire shares of its
capital stock from employees as consideration for the contemporaneous issuance
by CTG of shares of its capital stock to such employees in connection with the
exercise of stock options held by such employees, PROVIDED that no cash payments
are made by CTG or any other Borrower in connection with any such transaction;
(vi) CTG may repurchase all or any portion of the remaining
209,882 shares of CTG capital stock authorized to be repurchased pursuant to the
CTG Stock Repurchase Plan, as in effect on the date hereof (the "PLAN SHARES"),
PROVIDED that (X) at the time of and immediately after giving effect to any such
repurchase, no Default or Event of Default exists and (y) the total amount of
consideration paid by the Borrowers in respect of all such repurchases made from
and after the Effective Date does not exceed $1,500,000 in the aggregate; and
(vii) CTG may pay other dividends, repurchase other shares of
its capital stock and make other payments to its shareholders in respect of its
capital stock, PROVIDED that (x) at the time of and immediately after giving
effect to any such payment, no Default or Event of Default Exists, (x) CTG shall
have demonstrated to the Agent that (A) the pro forma Availability after giving
effect to each such payment equals or exceeds $8,000,000 and (B) the pro forma
Total Funded Debt/EBITDA Ratio after giving effect to each such payment does not
exceed 3.00 to 1.00, and (y) the aggregate amount expended by CTG in respect of
all such payments from and after the Effective Date under this section 7.04(vii)
shall not exceed the difference between (A) 50% of thE cumulative net income of
the Borrowers (measured from January 1, 2002 in accordance with GAAP) minus (B)
the aggregate amount expended to repurchase the Plan Shares pursuant to section
7.04(vi) above.
Section 7.05. LIENS. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except (the following being called "PERMITTED LIENS"):
(a) Liens in favor of the Agent on behalf of the Lenders
securing the Loans hereunder;
51
(b) Liens for taxes or assessments or other government charges
or levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established;
(d) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) Judgment and other similar Liens arising in connection
with court proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(g) Easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any of its Subsidiaries of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(h) Liens in existence on the Effective Date and listed on
SCHEDULE 5.06 hereto;
(i) Liens on fixed or capital assets, including real or
personal property, acquired, constructed or improved by any Borrower, PROVIDED
that (i) such Liens secure Indebtedness (including Capitalized Leases) permitted
by section 7.11(i), (ii) such Liens and the Indebtedness secured thereby are
incurred prior to or within 90 days after sucH acquisition or the completion of
such construction or improvement or were in effect at the time the Borrowers
acquired the assets or stock, (iii) the Indebtedness secured thereby does not
exceed the cost of acquiring, constructing or improving such fixed or capital
assets and reasonable costs of collection in connection therewith, (iv) such
security interests shall not apply to any other property or assets of any
Borrower; and (v) the Borrowers shall be in compliance with Article 8 of this
Agreement after giving effect to such transactions; or
(j) Liens granted by Foreign Subsidiaries on their assets,
PROVIDED that (i) each such Lien shall secure Indebtedness permitted by section
7.11, (ii) no such Lien applies to any assets of any Foreign Subsidiary
consisting oF capital stock or other equity interests held in any other
Subsidiary and (iii) no such Lien applies to any property or assets of any
Borrower or any domestic Subsidiary.
Section 7.06. TRANSACTIONS WITH AFFILIATES. Except as expressly
permitted by this Agreement, take any of the following actions or permit any
Subsidiary to take any of the following actions: (a) make any loan, advance or
investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise
dispose of any property to an Affiliate; (c) merge into or consolidate with an
Affiliate, or purchase or acquire property from an Affiliate; or (d) enter into
any other transaction directly or indirectly with or for the benefit of an
Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate); PROVIDED that the Borrowers may engage in and
continue the transactions with or for the benefit of
52
Affiliates which are described in SCHEDULE 7.06 so long as the terms of such
transactions are not less favorable to the Borrowers than the terms of a
commercially reasonable, arms' length transaction between non-affiliated
parties.
Section 7.07. HAZARDOUS MATERIALS. Use, generate, treat, store,
dispose of or otherwise introduce, or permit any Subsidiary to use, generate,
treat, store, dispose of or otherwise introduce, any Hazardous Materials into or
on any real property owned or leased by any of them and will not cause, suffer,
allow or permit anyone else to do so, except in compliance with all applicable
Environmental Laws
Section 7.08. ACQUISITIONS. Make or permit any Subsidiary to make any
Acquisition; PROVIDED, however, that so long as no Default or Event of Default
shall have occurred and be continuing and no Default or Event of Default shall
be caused thereby and the Borrowers have given the Agent not less than 10
Banking Days' prior written notice of such proposed Acquisition, the Borrowers
may:
(a) Make Permitted Acquisitions, PROVIDED that the aggregate
purchase price paid by the Borrowers for all such Acquisitions under this
section 7.08(a) shall not exceed $3,000,000 cumulatively from the Effective
Date; and
(b) Make additional Permitted Acquisitions, PROVIDED that (i)
the business or assets so acquired are owned by an entity organized under the
laws of a jurisdiction within the United States and are located in the United
States, (ii) in the case of a Permitted Acquisition structured as a stock
purchase, the issuer of the stock to be purchased is organized under the laws of
a jurisdiction within the United States, (iii) the Borrowers shall have
demonstrated to the Agent that pro forma Availability after giving effect to
such Acquisition would equal or exceed $8,000,000, (iv) the Borrowers shall have
demonstrated to the Agent that the proforma Total Funded Debt/EBITDA Ratio after
giving effect to such Acquisition would not exceed 3.00 to 1.00, and (v) the
aggregate purchase price paid by the Borrowers for all such Acquisitions under
this section 7.08(b) shall not exceed $7,000,000 cumulatively from the Effective
Date.
Section 7.09. SUBSIDIARIES. Create, or permit any Subsidiary to create,
any Subsidiary after the date hereof unless the Borrowers shall (a) have
obtained the Agent's prior written consent, which consent shall not be
unreasonably withheld (provided that no such consent shall be required under
this section 7.09(a) to the extent thaT such Subsidiary is created solely to
effect an Acquisition permitted by section 7.08), and (b) as soon as possible
but in any case not later than fifteen (15) days subsequent to the creation of
such Subsidiary (i) cause such Subsidiary (other than a Foreign Subsidiary) to
(x) execute and deliver to the Agent a counterpart to this Agreement (and
thereby to become a party to this Agreement, as a "Borrower" hereunder), a
counterpart to the Security Agreement, a counterpart to the Pledge Agreement and
such other documentation in such form as the Lenders may reasonably require, (y)
take such other action as shall be necessary to create and perfect valid and
enforceable First Priority Liens in favor of the Agent on all or substantially
all of the assets of such Subsidiary consistent with the provisions of the
applicable Security Documents and (z) deliver proof of corporate action,
incumbency of officers and other documents and opinions as is consistent with
those delivered by each Borrower pursuant to section 4.01 as of the Effective
Date and (ii) execute and deliver to the Agent such amendments to the Pledge
Agreement or such new pledge agreements and take such other actions (including
delivering the certificates representing such shares of stock to the Agent) as
shall be necessary to create and perfect valid and enforceable First Priority
Liens in favor of the Agent on all of the issued and outstanding stock of such
Subsidiary.
Section 7.10. CERTAIN INVESTMENTS. Make or permit to remain
outstanding, or permit any Subsidiary to make or permit to remain outstanding,
any loans, advances, capital contributions or investments of any kind in or make
any distributions of cash or other assets of any kind to any other
53
Person, except that (a) any Borrowers may make loans to or investments in any
other Borrower, (b) any Borrower may make loans to a Foreign Subsidiary to the
extent (but only to the extent) permitted by section 7.11(e), (c) any Foreign
Subsidiary may make loans to any Borrower to the extent (but only to the extent)
permitted by section 7.11(f), (d) the Borrowers and their Subsidiaries may
continue to own their existing equity investments in their respective
Subsidiaries, to the extent (but only to the extent) such investments are
outstanding as of the date of this Agreement and (e) the Borrowers and the
Subsidiaries may make other investments, PROVIDED that the aggregate amount
expended by the Borrowers and their Subsidiaries for all such investments under
this section 7.10(e) cumulatively from the Effective Date less thE aggregate
amount of any cash proceeds received by the Borrowers and the Subsidiaries from
and after the Effective Date from the liquidation of any such investments made
under this section 7.10(e) shall not exceed $1,500,000.
Section 7.11. INDEBTEDNESS. Create, incur, assume or suffer to exist,
or permit any Subsidiary to create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness of the Borrowers under this Agreement or the
Notes;
(b) Subordinated Indebtedness;
(c) Trade debt incurred in the ordinary course of business;
(d) Indebtedness existing on the date hereof which is set
forth on SCHEDULE 7.11 annexed hereto and has been designated on such schedule
as Indebtedness that will remain outstanding following the funding of the
initial Loans;
(e) Indebtedness of the Foreign Subsidiaries to the Borrowers,
PROVIDED that the aggregate principal amount of all Indebtedness of the Foreign
Subsidiaries to the Borrowers does not exceed $2,500,000 in the aggregate at any
one time outstanding;
(f) Indebtedness of the Borrowers to the Foreign Subsidiaries,
PROVIDED that (i) such Indebtedness shall be unsecured, (ii) subject to the
terms of section 7.17 and the Affiliate Subordination Agreement, no such
IndebtednesS shall remain outstanding for more than 45 days after the date on
which it is incurred, (iii) no such Indebtedness shall accrue interest at a rate
exceeding the then prevailing market rate for loans made in arms' length
transactions between non-affiliated parties and (iv) such Indebtedness shall be
subordinated to the Obligations pursuant to the Affiliate Subordination
Agreement;
(g) Indebtedness of any Foreign Subsidiary to any other
Foreign Subsidiary, provided that the aggregate principal amount of such
Indebtedness does not exceed $2,500,000 in the aggregate at any one time
outstanding;
(h) Indebtedness in respect of Interest Rate Protection
Obligations or Foreign Exchange Obligations entered into in the ordinary course
of business to hedge or mitigate risks to which any Borrower is exposed in the
conduct of its business or the management of its liabilities; and
(i) other Indebtedness of the Borrowers and their Subsidiaries
(determined on a consolidated basis without duplication in accordance with GAAP)
to a third party which is not an Affiliate of any Borrower or Subsidiary and
consisting of unsecured Indebtedness, Capitalized Leases and/or other
Indebtedness secured by Liens permitted under section 7.05, in an aggregate
principal amount at any time outstanding not in excess of $5,000,000 at any one
time outstanding, PROVIDED that the
54
Borrowers shall be in compliance with Article 8 of this Agreement after giving
effect to such each such transaction.
Section 7.12. GUARANTEES, ETC. Except as set forth in section 5.18 or
otherwise expressly permitted by section 7.06 assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guarantee, endorse or otherwise be or become directly
or contingently responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except (a) guarantees by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business and (b) guarantees by any Subsidiary of Indebtedness of the
Borrowers permitted hereunder.
Section 7.13. SUBORDINATED INDEBTEDNESS. Purchase, redeem, retire or
otherwise acquire for value, or set apart any money for a sinking, defeasance or
other analogous fund for the purchase, redemption, retirement or other
acquisition of, or make, or permit any Subsidiary to do any of the foregoing in
respect of any voluntary payment or prepayment of the principal of or interest
on, or other amount owing in respect of, any Subordinated Indebtedness.
Section 7.14. RESTRICTIVE AGREEMENTS. Enter into, incur or permit to
exist, or permit any Subsidiary to enter into, incur or permit to exist, any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of any Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets in favor of
the Agent or the Lenders, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrowers or the ability of any Guarantor
to Guarantee Indebtedness of the Borrowers; provided that (i) the foregoing
shall not apply to restrictions and conditions imposed by law or by this
Agreement, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on SCHEDULE 7.14 hereto (but shall apply
to any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition) and (iii) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted to be incurred by the Borrowers or
their Subsidiaries under the terms of this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness.
Section 7.15. SPECIAL RESTRICTIONS ON FOREIGN SUBSIDIARIES AND INACTIVE
SUBSIDIARIES. Notwithstanding anything herein to the contrary, take any of the
following actions or permit any Subsidiary to take any of the following actions:
(a) make any loan, advance, capital contribution or investment in a Foreign
Subsidiary or an Inactive Subsidiary; (b) transfer, sell, lease, assign or
otherwise dispose of any property to a Foreign Subsidiary or an Inactive
Subsidiary; (c) merge into or consolidate with a Foreign Subsidiary or an
Inactive Subsidiary, or purchase or acquire property from a Foreign Subsidiary
or an Inactive Subsidiary; (d) enter into any other transaction directly or
indirectly with or for the benefit of a Foreign Subsidiary or an Inactive
Subsidiary; or (e) permit any Inactive Subsidiary to engage in any business or
activity of any kind or own assets having a total book value in excess of
$250,000 in the aggregate (other than intercompany receivables reflected on the
books of such Inactive Subsidiaries as to which no cash has been or will be paid
by the Borrowers or any Subsidiary to such Inactive Subsidiaries); PROVIDED that
(i) the Borrowers may make loans to Foreign Subsidiaries to the extent (but only
to the extent) permitted by section 7.11(e), (ii) the Foreign Subsidiaries may
make loans tO the Borrowers to the extent (but only to the extent) permitted by
section 7.11(f) and (iii) the Borrowers and theiR Subsidiaries may make the
other investments permitted by section 7.10(e).
55
Section 7.16. CTG EUROPE. Notwithstanding anything herein to the
contrary, permit CTG Europe to (a) engage in any business or activity other than
holding title to all of the capital stock or other equity interests of its
existing Subsidiaries as of the date hereof as set forth on SCHEDULE 5.10, (b)
hold any assets except for the capital stock or other equity interests of its
existing Subsidiaries as of the date hereof as set forth on SCHEDULE 5.10, or
(c) incur or permit to exist any Indebtedness or other liabilities (other than
under the Facility Documents), assume or Guarantee any Indebtedness of any other
Person or create, incur, assume or permit to exist any Liens on any or all of
its assets (other than any Liens created under the Facility Documents).
Section 7.17. PAYMENTS ON FOREIGN SUBSIDIARY LOANS. Make or permit any
Subsidiary to make any payment or prepayment of principal of, premium, if any,
or interest on, or redemption purchase, retirement, defeasance (including
economic or legal defeasance), sinking fund or similar payment with respect to
any Indebtedness of a Borrower to a Foreign Subsidiary permitted under section
7.11(f), PROVIDED that so long as no Default or Event oF Default shall have
occurred and be continuing and no Default or Event of Default shall be caused
thereby, any Borrower may repay the principal amount of any such Indebtedness in
accordance with section 7.11(f), together with interest thereon at a per annum
rate not exceeding the rate permitted by section 7.11(f).
ARTICLE 8. FINANCIAL COVENANTS
So long as any of the Loans or Letters of Credit shall remain
outstanding or any Lender shall have any Revolving Credit Commitment under this
Agreement:
Section 8.01. TOTAL FUNDED DEBT/ EBITDA RATIO. The Borrowers shall not
permit the Total Funded Debt/EBITDA Ratio for any period of four consecutive
Fiscal Quarters, commencing with the period of four Fiscal Quarters ending
December 31, 2001, to exceed 3.50 to 1.00.
ARTICLE 9. EVENTS OF DEFAULT
Section 9.01. EVENTS OF DEFAULT. Any of the following events shall be
an "Event of Default":
(a) The Borrowers shall fail to pay any principal of or
interest on the Loans or any Reimbursement Obligation or any fee or other amount
due hereunder when the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof, by acceleration of such
due or prepayment date, or otherwise;
(b) Any representation or warranty made or deemed made by the
Borrowers or any of their Subsidiaries in this Agreement or in any other
Facility Document or which is contained in any certificate, document, opinion,
financial or other statement furnished at any time under or in connection with
any Facility Document shall prove to have been incorrect in any material respect
on or as of the date made or deemed made;
(c) The Borrowers or any of their Subsidiaries shall fail to
perform or observe (i) any of the covenants set forth in sections 6.01, 6.06,
6.07, 6.11, 6.13, 6.14 or 6.16 or in Articles 7 or 8, (ii) any of the covenants
set foRTH in sections 6.08, 6.09 or 6.10 and, in the case of this clause (ii),
such failure shall continue for three (3) consecutive days after such failure
first occurred, or (iii) any term, covenant or agreement contained in this
Agreement (other than those referred to elsewhere in this section 9.01) or fail
to perform or observe any term, covenant or agreement on its part to be
performed or observed in any other Facility Document, and, in the case of this
clause (iii), such failure shall continue for 30 consecutive days
56
after notice of such failure shall have been made to the Borrowers by the Agent
at the request of the Required Lenders;
(d) Any Borrower or any Subsidiary shall: (i) fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness of the Borrowers or such Subsidiary when due
(whether by scheduled maturity, required prepayment, demand or otherwise); or
(ii) fail to perform or observe any term, covenant or condition on its part to
be performed or observed under any agreement or instrument relating to any such
Material Indebtedness, when required to be performed or observed, if the effect
of such failure to pay, perform or observe is to accelerate the maturity of such
Material Indebtedness (or, after the giving of applicable notice or passage of
time, or both, to permit the acceleration of the maturity of such Material
Indebtedness), or any such Material Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) Any Borrower or any Subsidiary: (i) shall generally not,
or be unable to, or shall admit in writing its inability to, pay its debts as
such debts become due; or (ii) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (iii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 60 days or more; or (v) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (vi)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of 45 days or more;
(f) One or more judgments, decrees or orders for the payment
of money in excess of $1,000,000 in the aggregate shall be rendered against any
Borrower or any Subsidiary and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 45 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) Any of the following events shall occur or exist with
respect to any Borrower or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; or (ii) any Reportable Event shall occur with respect to any
Plan; or (iii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; or (iv) any event or
circumstance exists which might constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the termination of, or for
the appointment of a trustee to administer, any Plan, or the institution by the
PBGC of any such proceedings; or (v) complete or partial withdrawal under
Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other events or conditions, if any,
could subject the Borrower to any tax, penalty, or other liability to a Plan,
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the aggregate exceed or may exceed $500,000;
(h) Any Change of Control shall occur;
(i) The Security Documents shall at any time or for any reason
cease: (i) to create a valid and perfected security interest or lien in and to
the property purported to be subject to the same; or (ii) to be in full force
and effect or shall be declared null and void, or the validity or enforceability
thereof
57
shall be contested by any party thereto or any party thereto shall deny it has
any further liability or obligations to the secured parties thereunder;
(j) Any Facility Document shall at any time or for any reason
cease to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Borrower or any
Subsidiary, or any Borrower or any Subsidiary shall deny it has any further
liability or obligations thereunder; or
(k) The Agent shall have reasonably determined that an event
or condition has occurred which has had, or which could be expected to have, a
Material Adverse Effect.
Section 9.02. REMEDIES. If any Event of Default shall occur and be
continuing, the Agent shall, upon request of the Required Lenders, by a written
notice to the Borrowers: (a) declare the Revolving Credit Commitments to be
terminated, whereupon the same shall forthwith terminate, and (b) declare the
outstanding principal of the Loans, all interest thereon and all other amounts
payable under this Agreement and the Loans to be forthwith due and payable,
whereupon the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrowers;
provided that, in the case of an Event of Default referred to in section 9.01(e)
above, thE Revolving Credit Commitments shall be immediately terminated, and the
Loans, all interest thereon and all other amounts payable under this Agreement
and the Notes shall be immediately due and payable without notice, presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrowers. Further, upon the occurrence and during the
continuance of an Event of Default, the Agent, acting on behalf of and at the
direction of the Required Lenders (and subject to the provisions of section
11.17), may theN exercise any and all rights and remedies available under the
Facility Documents or at law or in equity.
ARTICLE 10. RELEASE OF GUARANTY AND CERTAIN SECURITY DOCUMENTS
Section 10.01. RELEASE OF THE GUARANTEE OF CTG (UK) LTD. The Agent and
the Lenders hereby release CTG (UK) Ltd. from its obligations as a guarantor
under Article 10 of the Existing Credit Agreement.
Section 10.02. RELEASE OF CERTAIN SECURITY.
(a) The Agent and the Lenders agree that, upon the request of
the Borrowers and provided that no Default or Event of Default shall have
occurred and be continuing, the Agent shall (and the Lenders hereby authorize
the Agent to) (i) release the security interests held by the Agent and the
Lenders under the UK Security Agreement and (ii) release the security interests
held by the Agent and the Lenders under the UK Charge Agreement, the Belgian
Pledge Agreement and the Netherlands Pledge Agreements, so long as, in the case
of this clause (ii), any release of the security interest under any such pledge
agreement is required to permit and is requested in connection with the sale by
the Borrowers or the Subsidiaries of 100% of the outstanding capital stock of
the Foreign Subsidiary whose stock has been pledged pursuant to such pledge
agreement and such sale is permitted by section 7.01(f).
(b) The Agent and the Lenders agree that, upon the request of
the Borrowers and subject to the satisfaction of the conditions set forth in
sections 7.01 (d) and (e), as applicable, the Agent shall (and the Lenders
herEBY authorize the Agent to) terminate the Liens held by the Agent and the
Lenders in the Florida Property and the New York Properties.
58
(c) The Agent and the Lenders (as the case may be), at the
Borrowers' reasonable expense, hereby agree to complete, execute and deliver to
the Borrowers, upon reasonable prior notice to the Agent and upon provision by
the Borrowers of a draft of such instrument, any release or termination of
security interest required to give effect to any termination of a security
interest permitted by paragraphs (a) and (b) of this section 10.02.
ARTICLE 11. THE AGENT; RELATIONS AMONG LENDERS AND BORROWER
Section 11.01. APPOINTMENT, POWERS AND IMMUNITIES OF AGENT. Each Lender
hereby irrevocably (but subject to removal by the Required Lenders pursuant to
section 11.09) appoints and authorizes the Agent to act as its agent hereunder
and under any other Facility Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Facility
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Facility Document, and shall not by reason
of this Agreement be a trustee for any Lender. The Agent shall not be
responsible to the Lenders for any recitals, statements, representations or
warranties made by the Borrowers or any officer or official of the Borrowers or
any other Person contained in this Agreement or any other Facility Document, or
in any certificate or other document or instrument referred to or provided for
in, or received by any of them under, this Agreement or any other Facility
Document, or for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Facility Document
or any other document or instrument referred to or provided for herein or
therein, for the perfection or priority of any collateral security for the
Loans, or for any failure by the Borrowers to perform any of their obligations
hereunder or thereunder. The Agent may employ agents and attorneys-in-fact and
shall not be responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the Agent nor any
of its directors, officers, employees or agents shall be liable or responsible
for any action taken or omitted to be taken by it or them hereunder or under any
other Facility Document or in connection herewith or therewith, except for its
or their own gross negligence or willful misconduct.
Section 11.02. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram, telecopier or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent may deem and
treat each Lender as the holder of the Loans made by it for all purposes hereof
unless and until a notice of the assignment or transfer thereof satisfactory to
the Agent signed by such Lender shall have been furnished to the Agent but the
Agent shall not be required to deal with any Person who has acquired a
participation in any Loan from a Lender. As to any matters not expressly
provided for by this Agreement or any other Facility Document, the Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required Lenders, and
such instructions of the Required Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and any other holder of
all or any portion of any Loan.
Section 11.03. DEFAULTS. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
non-payment of principal of or interest on the Loans to the extent the same is
required to be paid to the Agent for the account of the Lenders) unless the
Agent has received notice from a Lender or the Borrowers specifying such Default
or Event of Default and stating that such notice is a "Notice of Default." In
the event that the Agent receives such a notice of the occurrence of a Default
or Event of Default, the Agent shall give prompt notice thereof to the Lenders
(and shall give each Lender prompt notice of each such non-payment). The Agent
shall (subject to section
59
11.08) take such action with respect to such Default or Event of Default which
is continuing as shall be directed by the Required Lenders; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders; and provided further that the Agent shall not be required to take
any such action which it determines to be contrary to law.
Section 11.04. RIGHTS OF AGENT AS A LENDER. With respect to any
Revolving Credit Commitment and the Loans made by it, the Agent in its capacity
as a Lender hereunder shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as the
Agent, and the term "Lenders" shall, unless the context otherwise indicates,
include the Agent in its capacity as a Lender. The Agent and its Affiliates may
(without having to account therefore to any Lender) accept deposits from, lend
money to (on a secured or unsecured basis), and generally engage in any kind of
banking, trust or other business with, the Borrowers (and any of their
Affiliates) as if it were not acting as the Agent, and the Agent may accept fees
and other consideration from the Borrowers for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
Although the Agent and its Affiliates may in the course of such relationships
and relationships with other Persons acquire information about the Borrowers,
their Affiliates and such other Persons, the Agent shall have no duty to
disclose such information to the Lenders.
Section 11.05. INDEMNIFICATION OF AGENT. The Lenders agree to indemnify
the Agent (to the extent not reimbursed under section 12.03 or under the
applicable provisions of any other Facility Document, but without limitinG the
obligations of the Borrower under section 12.03 or such provisions), ratably in
accordance with the aggregate unpaid principal amount of the Loans made by the
Lenders (without giving effect to any participations, in all or any portion of
such Loans, sold by them to any other Person) (or, if no Loans are at the time
outstanding, ratably in accordance with their respective Revolving Credit
Commitments), for any and all 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 this Agreement, any
other Facility Document or any other documents contemplated by or referred to
herein or the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses which the Borrowers are obligated to pay
under section 12.03 or under the applicable provisions of any otheR Facility
Document but excluding, unless a Default or Event of Default has occurred,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents or instruments; provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent.
Section 11.06. DOCUMENTS. The Agent will forward to each Lender,
promptly after the Agent's receipt thereof, a copy of each report, notice or
other document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Lender.
Section 11.07. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and their
Subsidiaries and its own decision to enter into this Agreement and 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 analysis and decisions in taking or not taking action
under this Agreement or any other
60
Facility Document. The Agent shall not be required to keep itself informed as to
the performance or observance by the Borrowers of this Agreement or any other
Facility Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrowers or any
Subsidiary. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of the Borrowers or any of their Subsidiaries which may come into the
possession of the Agent or any of its Affiliates. The Agent shall not be
required to file this Agreement, any other Facility Document or any document or
instrument referred to herein or therein, for record or give notice of this
Agreement, any other Facility Document or any document or instrument referred to
herein or therein, to anyone.
Section 11.08. FAILURE OF AGENT TO ACT. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Lenders under section 11.05 in respect of any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
Section 11.09. RESIGNATION OR REMOVAL OF AGENT. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrowers, and the Agent may be removed at any time with or without cause by the
Required Lenders; provided that the Borrowers and the other Lenders shall be
promptly notified thereof. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a bank which has an office in the United States. The Required Lenders
or the retiring Agent, as the case may be, shall upon the appointment of a
successor Agent promptly so notify the Borrower and the other Lenders. 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 retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article 11 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
Section 11.10. AMENDMENTS CONCERNING AGENCY FUNCTION. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Facility Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
Section 11.11. LIABILITY OF AGENT. The Agent shall not have any
liabilities or responsibilities to the Borrowers on account of the failure of
any Lender to perform its obligations hereunder or to any Lender on account of
the failure of the Borrowers to perform their obligations hereunder or under any
other Facility Document. The Agent shall have no liability to the Borrowers or
to any Lender by reason of any error in the computation of the Borrowing Base.
Section 11.12. TRANSFER OF AGENCY FUNCTION. Without the consent of the
Borrowers or any Lender, the Agent may at any time or from time to time transfer
its functions as Agent hereunder to any of its offices wherever located,
provided that the Agent shall promptly notify the Borrowers and the Lenders
thereof.
Section 11.13. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent
shall have been notified by a Lender or the Borrowers (any such party as
appropriate being the "Payor") prior to the date on which
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such Lender is to make payment hereunder to the Agent of the proceeds of a Loan
or the Borrowers are to make payment to the Agent, as the case may be (either
such payment being a "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment (and if such recipients are the Borrowers and the Payor Lender fails to
pay the amount thereof to the Agent upon demand, the Borrowers) shall, on
demand, repay to the Agent the amount made available to the Borrowers together
with interest thereon for the period from 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 the average daily Federal Funds Rate for such period;
provided further that as used in this section 11.13, "Required Payment" does not
include any amounts due from a Lender to the Agent which are to be settled on
the next Settlement Date pursuant to section 2.15, but "Required Payment" shall
include as of each Settlement Date any amountS due from a Lender to the Agent as
part of the Settlement Amount to be paid on such Settlement Date pursuant to
section 2.15.
Section 11.14. WITHHOLDING TAXES. Each Lender represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Agent such forms, certifications,
statements and other documents as the Agent may request from time to time to
evidence such Lender's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Agent to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Lender is not created or organized under the laws of the United States of
America or any state thereof, in the event that the payment of interest by the
Borrowers is treated for U.S. income tax purposes as derived in whole or in part
from sources from within the U.S., such Lender will furnish to the Agent Form
4224 or Form 1001 of the Internal Revenue Service, or such other forms,
certifications, statements or documents, duly executed and completed by such
Lender as evidence of such Lender's exemption from the withholding of U.S. tax
with respect thereto. The Agent shall not be obligated to make any payments
hereunder to such Lender in respect of any Loan or such Lender's Revolving
Credit Commitment until such Lender shall have furnished to the Agent the
requested form, certification, statement or document.
Section 11.15. SEVERAL OBLIGATIONS AND RIGHTS OF LENDERS. The failure
of any Lender to make any Loan to be made by it on the date specified therefore
shall not relieve any other Lender of its obligation to make its Loan on such
date, but no Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender. The amounts payable at any time
hereunder to each Lender shall be a separate and independent debt, and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement, and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
Section 11.16. PRO RATA TREATMENT OF LOANS, ETC.
(a) Each Lender shall at all times maintain a uniform, and not
a varying, undivided percentage of all rights and obligations under and in
respect of the Revolving Credit Commitments, Revolving Credit Loans and Term
Loans. The Revolving Credit Commitment Percentage of each Lender and the Term
Loan Percentage of such Lender shall be equivalent at all times.
(b) Except to the extent otherwise provided, (i) each
borrowing under section 2.02 shall be made from the Lenders and each payment of
commitment fees accruing under section 2.16 shall be made for the account of the
Lenders, pro rata according to the relative amounts of the Revolving Credit
Commitments of each Lender, (ii) each prepayment and payment of principal of or
interest on Revolving
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Credit Loans shall be made for the account of the Lenders, pro rata according to
each Lender's proportionate share of the principal amount of all Revolving
Credit Loans then outstanding, and (iii) each prepayment and payment of
principal of or interest on the Term Loans shall be made for the account of the
Lenders, pro rata according to each Lender's Term Loan Percentage.
(c) In the event that, following the occurrence or during the
continuance of an Event of Default, the Agent receives any funds in connection
with the enforcement of any of the Security Documents or otherwise with respect
to the realization upon any of the Collateral, or in the event that, at any time
(whether or not an Event of Default has occurred and is continuing),
insufficient funds are received by and available to the Agent at such time to
pay fully all amounts of principal, Reimbursement Obligations, interest, fees
and other amounts then due hereunder under any circumstances, such funds shall
be applied (i) first, to pay interest and fees then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, (ii) second, to pay principal and Reimbursement
Obligations then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and Reimbursement Obligations then due
to such parties and (iii) third, to Interest Rate Protection Obligations and
Foreign Exchange Obligations owing by the Borrowers to the Lenders, in each case
regardless of whether such funds are the proceeds of Collateral that is security
for less than all of the Loans.
Section 11.17. SHARING OF PAYMENTS AMONG LENDERS. If a Lender shall
obtain payment of any principal of or interest on any Loan made by it through
the exercise of any right of setoff, banker's lien, counterclaim, or by any
other means (including any receipt of proceeds from the Collection Account), it
shall promptly purchase from the other Lenders participations in (or, if and to
the extent specified by such Lender, direct interests in) the Loans made by the
other Lenders in such amounts, and make such other adjustments from time to time
as shall be equitable to the end that all the Lenders shall share the benefit of
such payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such benefit) pro rata in accordance with the unpaid
principal and interest on the Loans held by each of them. To such end the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. The Borrowers agree that any Lender so purchasing a participation
(or direct interest) in the Loans made by other Lenders may exercise all rights
of setoff, banker's lien, counterclaim or similar rights with respect to such
participation (or direct interest). Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness of the Borrower.
Section 11.18. ENFORCEMENT OF FACILITY DOCUMENTS. After the Agent has
received written notice from any Lender that an Event of Default has occurred
and is continuing, the Agent shall, subject to the other provisions of this
Article 11 and to the terms of the Facility Documents (and subject to the
rights, if any, of other persons holding liens on, security interests in or
claims to the Collateral which are prior to those of the Security Agreement),
take such steps toward collection or enforcement of any Facility Document and
the Collateral (or any portion thereof), including without limitation an action
to enforce the Security Agreements, as may be instructed in writing by the
Required Lenders, provided, however, that in no event shall the Agent be
required, and in all cases it shall be fully justified in failing or refusing,
to take any action under or pursuant to this Agreement (including without
limitation this section 11.18) which, in the reasonable opinion of the Agent,
would be contrary to law or to the terms of this Agreement or any Facility
Document or would subject it or its officers, employees or directors to
liability, unless and until the Agent shall be indemnified or tendered security
to its satisfaction by the Lenders, ratably as provided in section 11.05 hereof,
against any and all loss, cost, expense or liability in connection therewith,
anything herein or elsewhere contained to the contrary notwithstanding. Except
as expressly provided in this section 11.18, the Agent shall not be required to
take steps toward the collection of any amounts becoming
63
payable upon any Collateral, or to take any action towards enforcing any
Facility Document or to institute, appear in or defend any action, suit or other
proceeding in connection therewith. The foregoing provisions of this paragraph
shall not be construed to limit the power of the Agent to take any action
permitted under any Facility Document to be taken by the Agent, and the Agent
may, in accordance with this agreement, take any aforesaid action without the
receipt of indemnity or security or any request therefore and the taking of any
such action shall not be construed as a waiver of any provision of this
Agreement. Each Lender agrees with the other Lenders and the Agent that (i) such
Lender will not take any action whatsoever to enforce any term or provision of
any Facility Document or otherwise to realize the benefits of the Collateral,
except through the Agent in accordance with this Agreement, and (ii) if the
Required Lenders shall instruct the Agent pursuant to this section 11.18 to
commence action to enforce any Facility Document, such Lender (a) shall not
thereafter commencE any proceeding of its own seeking payment of the Loans
and/or any other Obligation held by such Lender so long as such enforcement
action is ongoing, and (b) if such a proceeding shall be pending at the time
such instructions are given to the Agent, shall promptly (but in no event later
than the commencement of such enforcement action) cause such proceeding to be
discontinued, provided that if such Lender shall fail to discontinue such
proceeding, the Agent is hereby authorized and directed by such Lender and the
other Lenders to commence and maintain such foreclosure action on behalf of such
other Lenders (excluding such Lender) and any distribution of amounts required
by this Agreement or the Facility Documents shall be made only to such other
Lenders and/or the Agent as provided therein and, notwithstanding anything
herein or in the Security Agreement to the contrary, such Lender shall not be
entitled to share therein.
Section 11.19. BORROWING BASE STATEMENTS, ETC. The Agent shall provide
to the Lenders and the Borrowers, promptly following the Agent's receipt of the
Borrowers' reports required under section 6.09(b), a copy of the computations of
the Borrowing Base made by the Agent on the basis of such reports in
substantially the same format which has been furnished to the Lenders as of the
date of this Agreement; provided, however, that the Agent shall not be liable to
the Lenders for the accuracy of any information contained in such statements.
The Agent shall provide to the Lenders each Borrowing Base Certificate promptly
after receipt thereof from the Borrowers.
ARTICLE 12. MISCELLANEOUS
Section 12.01. AMENDMENTS AND WAIVERS. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement or any of the other
Facility Documents may be amended or modified only by an instrument in writing
signed by the Borrowers, the Agent and the Required Lenders, or by the Borrowers
and the Agent acting with the consent of the Required Lenders and any provision
of this Agreement or the other Facility Documents for the benefit of the
Required Lenders or the Agent may be waived by the Required Lenders or by the
Agent acting with the consent of the Required Lenders; provided that no
amendment, modification or waiver shall
(a) increase the Revolving Credit Commitment of any Lender
without the written consent of such Lender and the Agent;
(b) reduce the principal amount of any Loan or Reimbursement
Obligation or reduce the rate of interest thereon (other than the decision not
to charge, or to cease to charge, interest at the Default Rate), or reduce any
fees payable hereunder, without the written consent of each Lender directly
affected thereby;
(c) postpone the scheduled date of payment of the principal
amount of any Loan or Reimbursement Obligation other than mandatory prepayments
of the Loans required under section 2.05, or any interest thereon, or any fees
payable hereunder, or reduce the amount of any such payment, change the
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maturity date of any Loan, or postpone the scheduled date of expiration of any
Revolving Credit Commitment, or extend the ultimate expiration date of any
Letter of Credit beyond the Revolving Credit Termination Date, without the
written consent of each Lender directly affected thereby;
(d) change any of the provisions of this section 12.01 or the
definition of "Required Lenders", or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or under any other Facility Document or make any determination or
grant any consent hereunder or thereunder, without the written consent of each
Lender;
(e) release any material Guarantor from its obligations in
respect of its Loan Guaranty or release all or substantially all of the
Collateral (or terminate all or substantially all of the Liens in favor of the
Agent on the Collateral), except as expressly permitted in this Agreement,
without the written consent of each Lender; or
(f) modify the Borrowing Base to increase the advance rate
percentages applicable to any category of Collateral included therein, to
decrease the Availability Block Amount, to add new categories of eligible
Collateral or to make less restrictive the eligibility criteria applicable to
any category of Collateral (other than the adjustment or elimination of reserves
in the Agent's reasonable discretion), without the written consent of each
Lender and the Agent;
PROVIDED, FURTHER, that any amendment of Article 11 hereof or any amendment
which increases the obligations of the Agent hereunder shall require the consent
of the Agent. No failure by any party (Agent, any Lender or the Borrowers) to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 12.02. USURY. Anything herein to the contrary notwithstanding,
the obligations of the Borrowers under this Agreement and the Notes shall be
subject to the limitation that payments of interest shall not be required to the
extent that receipt thereof would be contrary to provisions of law applicable to
a Lender limiting rates of interest which may be charged or collected by such
Lender.
Section 12.03. EXPENSES; INDEMNIFICATION. The Borrowers jointly and
severally agree to pay, or to reimburse the Agent or the Lenders, as applicable,
for paying: (a) all reasonable out-of-pocket expenses incurred by the Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel to the Agent, in connection with the preparation and administration of
this Agreement and the other Facility Documents or any amendments, modifications
or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (b) all reasonable
out-of-pocket expenses incurred by the Agent in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder, (c) all reasonable out-of-pocket expenses incurred by the
Agent or any Lender, including the reasonable fees, charges and disbursements of
any counsel for the Agent or any Lender, in connection with the investigation,
enforcement or protection of its rights in connection with this Agreement and
the other Facility Documents, including its rights under this section 12.03, or
in connection with the Loans made or Letters of Credit issued hereunder
following a Default or Event of Default, including in connection with any
workout, restructuring or negotiations in respect thereof; (d) all reasonable
out-of-pocket costs, expenses and advances incurred by the Agent in the
protection of its security interests (including but not limited to reasonable
fees and out-of-pocket expenses incurred in perfection of, or checking the
status of such security interests and examinations to determine the value of
Accounts), (e) all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to
65
this Agreement and the other Facility Documents, all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording, perfection or termination of any security interest
contemplated hereby or by any other Facility Document or any other document
referred to therein; and (f) the amount of any and all reasonable out-of-pocket
expenses which Agent may incur in connection with the collection of any item
received by Agent in connection with any Collateral, together with interest on
any of the above from the date of such expenditure to the date of repayment in
full to Agent at the rate of interest payable on the Notes. The Borrowers
jointly and severally agree to indemnify the Agent and each Lender and their
respective directors, officers, employees and agents (each, an "Indemnified
Party") from, and hold each of them harmless against, any and all demands,
losses, liabilities, claims, suits, actions, legal or administrative
proceedings, damages, costs or expenses (including the reasonable fees and
disbursements of counsel) asserted against, imposed on or incurred by any of
them arising out of or by reason of (i) any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to any actual or proposed use by the Borrowers or any
Subsidiary of the proceeds of the Loans, including without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of any Indemnified Party) or (ii) the
application of any Environmental Law to acts or omissions occurring at any time
on or in connection with any real estate owned or leased by the Borrowers or any
Subsidiary or any business conducted thereon. At its option, Agent may charge
such costs, expenses and amounts as a Revolving Credit Loan pursuant to this
Agreement.
Section 12.04. SURVIVAL. The obligations of the Borrowers underss.12.03
shall survive the repayment of the Loans and the termination of the Revolving
Credit Commitments.
Section 12.05. ASSIGNMENT; PARTICIPATIONS.
(a) Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or an undivided portion of all of its Revolving Credit
Commitment, Revolving Credit Loans and Term Loans and all Notes held by it);
PROVIDED, HOWEVER, that (i) each such assignment shall be of a uniform, and not
a varying, undivided percentage of all rights and obligations under and in
respect of the Revolving Credit Commitments, Revolving Credit Loans and Term
Loans; (ii) except in the case of an assignment to a Person that, immediately
prior to such assignment, was a Lender or an assignment of all of a Lender's
rights and obligations under this Agreement, the amount of the Revolving Credit
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000; (iii)
each such assignment shall be to an Eligible Assignee; (iv) no such assignments
shall be permitted without the consent of the Agent and the Borrowers (not to be
unreasonably withheld) except that if a Default or Event of Default shall have
occurred and be continuing, the consent of the Borrowers shall not be required;
and (v) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500.
(b) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance, (i)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder and (ii)
the Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations
66
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or any of their Subsidiaries or the
performance or observance by the Borrowers or their Subsidiaries of any of
their obligations under any Facility Document or any other instrument or
document furnished pursuant thereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in sections 5.05 and 6.08(a) and such other documents
and information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such assigning Lender
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; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
and discretion under the Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Agent shall maintain at its address referred to in section
12.06 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Revolving Credit Commitment and principal amount of the Loans owing to each
Lender from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT I hereto, (i) accept such
Assignment and Acceptance; (ii) record the information contained therein in the
Register; and (iii) give prompt notice thereof to the Borrowers. In the case of
any assignment by a Lender, within five Banking Days after its receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Notes, new Notes to the order of such
Eligible Assignee in amounts equal to the Revolving Credit Commitment and Term
Loans assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Revolving Credit Commitment or any Term Loans
hereunder, new Notes to the order of the assigning Lender in amounts equal to
the Revolving Credit Commitment and Term Loans retained by it hereunder. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such
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surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the forms of EXHIBITS A-1
and A-2 hereto, respectively.
(f) Each Lender may sell participations to one or more Persons
(other than the Borrowers or any of their Affiliates) in or to all or any
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitments, Revolving
Credit Loans or Term Loans and any Note or Notes held by it); PROVIDED, HOWEVER,
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Revolving Credit Commitment) shall remain unchanged; (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations; (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement; (iv) the Borrowers, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement; (v) no participant under any such participation shall have any right
to approve any amendment or waiver of any provision of any Facility Document, or
any consent to any departure by the Borrowers or any of their Subsidiaries
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation,
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or release all or substantially all of the
Collateral; and (vi) the identity of the participant shall have been approved by
the Agent in writing to such Lender.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this ss.
12.05, disclose to the assignee or participant or proposed assignee oR
participant, any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; PROVIDED, HOWEVER, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree in writing to preserve the confidentiality of any confidential
information received by it from such Lender.
(h) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Loans owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
Section 12.06. NOTICES. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing and,
telecopied, mailed or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature page hereof or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
Section 12.07. TABLE OF CONTENTS; HEADINGS. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 12.08. SEVERABILITY. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such
68
invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.09. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart. Delivery of an executed counterpart of a signature page to
this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 12.10. GOVERNING LAW. Pursuant to Section 5-1401 of the New
York General Obligations Law, the whole of this Agreement and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with, the laws of the State of New York without regard to any
conflicts-of-laws rules which would require the application of the laws of any
other jurisdiction.
Section 12.11. INCORPORATION BY REFERENCE; CONFLICTS. The rights and
remedies of Agent and the Lenders under the other Facility Documents are
incorporated herein by reference and the rights and remedies of the Agent and
the Lenders under this Agreement and all of the terms of this Agreement, are
likewise incorporated in the other Facility Documents by reference. In the case
of any conflict between the terms of this Agreement and the terms of any other
Facility Document, the terms of this Agreement shall govern.
Section 12.12. JURISDICTION, VENUE AND SERVICE. For purposes of this
Agreement, each of the Borrowers hereby irrevocably consents and submits to the
nonexclusive jurisdiction and venue of all federal and state courts located in
the County of Erie, State of New York and consents that any order, process,
notice of motion or other application to or by any of said courts or a judge
thereof may be served within or without such court's jurisdiction by registered
mail or by personal service, PROVIDED a reasonable time for appearance is
allowed, in connection with any action or proceeding arising out of, under or
relating to this Agreement or the Facility Documents. Each of the Borrowers
hereby irrevocably waives (to the fullest extent permitted by applicable law)
any objection that it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of, under or relating to this Agreement
or any Facility Document brought in any federal or state court located in the
County of Erie, State of New York, and hereby further irrevocably waives (to the
fullest extent permitted by applicable law) any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
Section 12.13. RIGHT OF SETOFF. Subject to the provisions respecting
the sharing of payments among Lenders under ss. 11.17 hereof, the Borrowers
hereby grant to the Agent and Lenders, a continuing lien, security interesT and
right of setoff as security for the Obligations, whether now existing or
hereafter arising, upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
the Agent or the Lenders. Upon the occurrence and at any time during the
continuance of a Default or Event of Default, without demand or notice (any such
notice being expressly waived by the Borrowers), the Agent and each Lender may
set off the same or any part thereof and apply the same to any of the
Obligations held by the Agent or such Lender, as applicable, even though
unmatured and regardless of the adequacy of any other collateral security for
any such Obligations. The rights of the Agent and each Lender under this ss.
12.13 are in addition tO any other rights and remedies (including other rights
of setoff) that the Agent or any such Lender may have hereunder, under any of
the other Facility Documents or otherwise. ANY AND ALL RIGHTS TO REQUIRE THE
AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT
OF SETOFF WITH RESPECT TO SUCH DEPOSITS,
69
CREDITS OR OTHER PROPERTY OF THE BORROWERS ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
Section 12.14. INTEGRATION. This Agreement is intended by the parties
as the final, complete and exclusive statement of the transactions evidenced by
this Agreement. All prior or contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superceded by this
Agreement, and no party is relying on any promise, agreement or understanding
not set forth in this Agreement.
Section 12.15. WAIVER OF JURY TRIAL.
EACH OF THE AGENT, THE LENDERS, AND THE BORROWERS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING
UNDER OR RELATING TO THIS AGREEMENT OR ANY FACILITY DOCUMENT, AND AGREES THAT
ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY AND AGREES
THAT IT WILL NOT SEEK AND CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE BORROWERS CERTIFY THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR EACH OF THE LENDERS HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY OF THE LENDERS, WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS TO ACCEPT
THIS AGREEMENT. IN ADDITION, EACH OF THE AGENT, THE LENDERS, AND THE BORROWERS
WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE BASED UPON ANY STATUTE OF LIMITATIONS
OR ANY CLAIM OF LACHES AND, IN ANY LEGAL PROCEEDING COMMENCED AGAINST IT OR
THEM, ANY SET-OFF OR NON-MANDATORY COUNTER CLAIM OF ANY NATURE OR DESCRIPTION.
EACH OF THE AGENT, THE LENDERS, AND THE BORROWERS ACKNOWLEDGE THAT THE FOREGOING
WAIVERS ARE FREELY MADE.
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BORROWERS:
COMPUTER TASK GROUP, INCORPORATED
By:
------------------------------------
Name:
Title:
Address for Notices:
Attn: Chief Financial Officer
Facsimile #:
CTG SERVICES, INC.
By:
------------------------------------
Name:
Title:
Address for Notices:
Attn: Chief Financial Officer
Facsimile #:
COMPUTER TASK GROUP INTERNATIONAL , INC.
By:
------------------------------------
Name:
Title:
Address for Notices:
Attn: Chief Financial Officer
Facsimile #:
CTG HEALTHCARE SOLUTIONS, INC.
By:
------------------------------------
Name:
Title:
Address for Notices:
Attn: Chief Financial Officer
Facsimile #:
CTG HEALTHCARE SOLUTIONS (KANSAS), INC.
By:
------------------------------------
Name:
Title:
Address for Notices:
Attn: Chief Financial Officer
Facsimile #:
AGENT:
JPMORGAN CHASE BANK, AS ADMINISTRATIVE,
DOCUMENTATION, COLLATERAL AND
SYNDICATION AGENT
By:
------------------------------------
Name:
Title:
Address for Notices:
Attn: Computer Task Group, Inc. Account
Representative
Telecopier #
LENDERS:
JPMORGAN CHASE BANK
By:
-------------------------------------
Name:
Title:
Address for Notices:
Attn: Computer Task Group, Inc.
Account Representative
Telecopier #
KEY BANK NATIONAL
ASSOCIATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address for Notices:
Attn:
Telecopier #
HSBC BANK USA
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
Attn:
Telecopier #
MANUFACTURERS AND TRADERS TRUST COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
Attn:
Telecopier #
EXHIBITS AND SCHEDULES
EXHIBIT A-1 - FORM OF REVOLVING CREDIT NOTE
EXHIBIT A-2 - FORM OF TERM NOTE
EXHIBIT B - FORM OF AUTHORIZATION LETTER
EXHIBIT C - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT D - FORM OF SECURITY AGREEMENT (TOGETHER WITH
PERFECTION CERTIFICATE)
EXHIBIT E - FORM OF STOCK PLEDGE AGREEMENT
EXHIBIT F - FORM OF SOLVENCY CERTIFICATE
EXHIBIT G - FORM OF HAZARDOUS MATERIALS INDEMNITY AGREEMENT
EXHIBIT H - FORM OF OPINION OF COUNSEL TO CREDIT PARTIES
EXHIBIT I - FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT J - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT K - FORM OF AFFILIATE SUBORDINATION AGREEMENT
SCHEDULE 1.05 - DESIGNATED FINANCIAL OFFICERS
SCHEDULE 2.01(a) - LENDERS AND COMMITMENTS
SCHEDULE 2.01(c) - OUTSTANDING LETTERS OF CREDIT
SCHEDULE 5.04 - LITIGATION
SCHEDULE 5.05 - FINANCIAL CONDITION; NO MATERIAL ADVERSE
CHANGES
SCHEDULE 5.06 - OUTSTANDING LIENS
SCHEDULE 5.07 - OUTSTANDING INDEBTEDNESS
SCHEDULE 5.08 - TAXES
SCHEDULE 5.09 - PENSION PLANS
SCHEDULE 5.10 - SUBSIDIARIES AND AFFILIATES; CAPITALIZATION
SCHEDULE 5.11 - PROPERTIES; PROPRIETARY AND REGISTERED RIGHTS
SCHEDULE 5.13 - MATERIAL CONTRACTS
SCHEDULE 5.14 - LABOR AND EMPLOYMENT MATTERS
SCHEDULE 5.16 - ENVIRONMENTAL MATTERS
SCHEDULE 5.19 - BANK ACCOUNTS
SCHEDULE 6.14 - CASH MANAGEMENT SYSTEM
SCHEDULE 7.06 - TRANSACTIONS WITH AFFILIATES
SCHEDULE 7.11 - CERTAIN INDEBTEDNESS PERMITTED TO REMAIN
OUTSTANDING
SCHEDULE 7.14 - RESTRICTIVE AGREEMENTS
SCHEDULE 2.01(a)
TO
COMPUTER TASK GROUP, INCORPORATED
CREDIT AGREEMENT
LIST OF LENDERS AND COMMITMENTS
-------------------------------------------------------------------------------------------------------------------
REVOLVING CREDIT REVOLVING CREDIT
COMMITMENT AMOUNT COMMITMENT TERM LOAN TERM LOAN
NAME OF LENDER PERCENTAGE AMOUNT PERCENTAGE
-------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank $15,750,000 35% $1,750,000 35%
Key Bank National Association $9,000,000 20% $1,000,000 20%
HSBC Bank USA $6,750,000 15% $750,000 15%
-------------------------------------------------------------------------------------------------------------------
Manufacturers and Traders Trust $13,500,000 30% $1,500,000 30%
Company
-----------------------------------------------------------------------------------------------------------------
TOTAL $45,000,000 100.00000000% $5,000,000 100.00000000
%
-------------------------------------------------------------------------------------------------------------------
ARTICLE 1.DEFINITIONS; ACCOUNTING TERMS..................................................1
Section 1.01.Definitions........................................................1
Section 1.02Accounting Principles...............................................27
Section 1.03Directly or Indirectly..............................................27
Section 0.00.Xxxxxxxxxxxx.......................................................27
Section 1.05.Joint and Several Obligations; Borrowers' Agent....................27
ARTICLE 2.THE CREDIT.....................................................................27
Section 2.01.The Revolving Credit Loans.........................................27
Section 2.02.Making the Revolving Credit Loans..................................28
Section 2.03.Principal Repayment of Revolving Credit Loans......................28
Section 2.04.The Term Loans.....................................................29
Section 2.05.Mandatory Prepayments..............................................29
Section 2.06.Interest...........................................................31
Section 2.07.Eurodollar Interest Periods........................................31
Section 2.08.Conversions........................................................32
Section 2.09.Voluntary Prepayments..............................................32
Section 2.10.Uncollected Funds Compensation.....................................32
Section 2.11.Termination of Revolving Credit Commitments........................33
Section 2.12.Certain Notices....................................................33
Section 2.13.Calculation of Borrowing Base......................................33
Section 2.1.Letters of Credit...................................................33
Section 2.1Settlement Between Agent and Lenders.................................34
Section 2.16Fees................................................................34
Section 2.17.Payments Generally.................................................35
Section 2.18.Purpose............................................................36
Section 2.19.Treatment of Loans Outstanding under Existing
Credit Agreement.............................................................36
ARTICLE 3.YIELD PROTECTION; ILLEGALITY; ETC..............................................36
Section 3.01.Additional Costs...................................................36
Section 3.02.Limitation on Types of Loans.......................................38
Section 3.03.Illegality.........................................................38
Section 3.04.Certain Base Rate Loans pursuant to sections 3.01 and 3.03.........38
Section 3.05.Certain Compensation...............................................39
Section 3.06.Mitigation Obligations.............................................39
ARTICLE 4.CONDITIONS PRECEDENT...........................................................39
Section 4.01.Conditions Precedent to the Initial Loans..........................39
Section 4.02.Additional Conditions Precedent....................................43
Section 4.03.Deemed Representations.............................................44
ARTICLE 5.REPRESENTATIONS AND WARRANTIES.................................................44
Section 5.01.Incorporation, Good Standing and Due Qualification.................44
Section 5.02.Corporate Power and Authority; No Conflicts........................44
Section 5.03.Legally Enforceable Agreements.....................................45
Section 5.04.Litigation.........................................................45
Section 0.00.Xxxxxxxxx Statements...............................................45
Section 5.06.Ownership and Liens................................................46
Section 5.07.Existing Indebtedness..............................................46
Section 5.08.Taxes..............................................................46
Section 5.09.ERISA..............................................................46
Section 5.10.Subsidiaries and Affiliates........................................47
Section 5.11.Operation of Business..............................................47
Section 0.00.Xx Default on Outstanding Judgments or Orders......................48
Section 0.00.Xx Defaults on Other Agreements....................................48
Section 5.14.Labor Matters......................................................48
Section 5.15.Investment Company Act.............................................49
Section 5.16.Environmental Matters..............................................49
Section 5.17.Regulation U.......................................................49
Section 0.00.Xx Guaranties or Indemnities.......................................49
Section 0.00.Xxxx Accounts......................................................49
Section 0.00.Xxxxx Relations....................................................50
ARTICLE 6.AFFIRMATIVE COVENANTS..........................................................50
Section 6.01.Maintenance of Existence...........................................50
Section 6.02.Conduct of Business................................................50
Section 6.03.Maintenance of Properties..........................................50
Section 6.04.Maintenance of Records; Fiscal Year................................50
Section 6.05.Maintenance of Insurance...........................................50
Section 6.06.Payment of Taxes; Compliance with Laws.............................51
Section 6.07.Right of Inspection................................................51
Section 6.08.Reporting Requirements.............................................51
Section 6.09.Special Periodic Reports...........................................53
Section 6.10.Reports on Disputes and Federal Contracts..........................54
Section 6.11.Field Audits.......................................................54
Section 6.12.Cooperation and Further Assurance..................................54
Section 6.13.Deposits Into Collection Account...................................54
Section 0.00.Xxxx Management System.............................................55
Section 6.15.Certain Obligations Respecting Inactive Subsidiaries...............55
Section 6.16.Matters Relating to Additional Real Property Collateral............55
Section 6.17.Modifications to Foreign Pledge Agreements.........................55
ARTICLE 7.NEGATIVE COVENANTS.............................................................55
Section 0.00.Xxxx of Assets.....................................................55
Section 7.02.Stock of Subsidiaries, Etc.........................................57
Section 7.03.Mergers, Etc.......................................................57
Section 7.04.Dividends..........................................................57
Section 7.05.Liens..............................................................58
Section 7.06.Transactions with Affiliates.......................................59
Section 7.07.Hazardous Materials ...............................................60
Section 7.08.Acquisitions.......................................................60
Section 7.09.Subsidiaries.......................................................60
Section 7.10.Certain Investments................................................61
Section 7.11.Indebtedness.......................................................61
Section 7.12.Guarantees, Etc....................................................62
Section 7.13.Subordinated Indebtedness..........................................62
Section 7.14.Restrictive Agreements.............................................62
Section 7.15.Special Restrictions on Foreign Subsidiaries and
Inactive Subsidiaries........................................................63
Section 7.16.CTG Europe.........................................................63
Section 7.17.Payments on Foreign Subsidiary Loans...............................63
ARTICLE 0.XXXXXXXXX COVENANTS............................................................63
Section 0.00.Xxxxx Funded Debt/ EBITDA Ratio....................................63
ARTICLE 0.XXXXXX OF DEFAULT..............................................................64
Section 0.00.Xxxxxx of Default..................................................64
Section 9.02.Remedies...........................................................65
ARTICLE 10.RELEASE OF GUARANTY AND CERTAIN SECURITY DOCUMENTS............................66
Section 10.01.Release of the Guarantee of CTG (UK) Ltd..........................66
Section 10.02.Release of Certain Security.......................................66
ARTICLE 11.THE AGENT; RELATIONS AMONG LENDERS AND BORROWER...............................67
Section 11.01.Appointment, Powers and Immunities of Agent.......................67
Section 00.00.Xxxxxxxx by Agent.................................................67
Section 11.03.Defaults..........................................................67
Section 11.04.Rights of Agent as a Lender.......................................68
Section 11.05.Indemnification of Agent..........................................68
Section 11.06.Documents.........................................................68
Section 11.07.Non-Reliance on Agent and Other Lenders...........................69
Section 11.08.Failure of Agent to Act...........................................69
Section 11.09.Resignation or Removal of Agent...................................69
Section 11.10.Amendments Concerning Agency Function.............................69
Section 11.11.Liability of Agent................................................70
Section 11.12.Transfer of Agency Function.......................................70
Section 11.13.Non-Receipt of Funds by the Agent.................................70
Section 11.14.Withholding Taxes.................................................70
Section 11.15.Several Obligations and Rights of Lenders.........................71
Section 00.00.Xxx Rata Treatment of Loans, Etc..................................71
Section 11.17.Sharing of Payments Among Lenders.................................72
Section 11.18.Enforcement of Facility Documents.................................72
Section 11.19.Borrowing Base Statements, Etc....................................73
ARTICLE 12.MISCELLANEOUS.................................................................73
Section 12.01.Amendments and Waivers............................................73
Section 12.02.Usury.............................................................74
Section 12.03.Expenses; Indemnification.........................................74
Section 12.04.Survival..........................................................75
Section 12.05.Assignment; Participations........................................75
Section 12.06.Notices...........................................................78
Section 12.07.Table of Contents; Headings.......................................78
Section 12.08.Severability......................................................78
Section 12.09.Counterparts......................................................78
Section 12.10.Governing Law.....................................................78
Section 12.11.Incorporation By Reference; Conflicts.............................78
Section 12.12.Jurisdiction, Venue and Service...................................79
Section 12.13.Right of Setoff...................................................79
Section 12.14.Integration.......................................................79
Section 12.15.Waiver of Jury Trial..............................................79
