**Exhibit4.3**

 

SEVENTH AMENDMENT TOCREDIT AGREEMENT AND WAIVER

 

This SEVENTH AMENDMENT TO CREDIT AGREEMENT AND WAIVERdated as of August 14, 2003 (this “Amendment”), is made by and amongAlternative Resources Corporation (“ARC”), ARC Service, Inc., ARC Solutions,Inc., ARC Midholding, Inc., Writers Inc., ARC Technology Management LLC, ARCStaffing Management LLC, and ARC Shared Services LLC (collectively, the “Borrowers”),and Fleet Capital Corporation (the “Lender”).

 

WHEREAS, the Borrowers and the Lender are parties to aCredit and Security Agreement dated as of January 31, 2002, as amended bya First Amendment to Credit Agreement and Waiver dated as of August 8, 2001, aSecond Amendment to Credit Agreement dated as of August 30, 2002, a ThirdAmendment to Credit Agreement dated as of November 14, 2002, a Waiver, Joinderand Fourth Amendment to Credit Agreement dated as of December 27, 2002, a FifthAmendment to Credit Agreement and Waiver dated as of April 14, 2003, and aSixth Amendment to Credit Agreement dated as of July 15, 2003 (as so amended,the “Credit Agreement”);

 

WHEREAS, ARC and its Subsidiaries failed to satisfy(a) the Tangible Capital Base covenant set forth in Section 8.10(a) of theCredit Agreement for the fiscal quarter ended June 30, 2003 and (b) the FixedCharge coverage shortfall covenant set forth in Section 8.10(c) for the sixmonth fiscal period ended June 30, 2003, and each such failure constitutes anEvent of Default under Section 9.1(c) of the Credit Agreement (collectively,the “June 30, 2003 Events of Default”);

 

WHEREAS, the Credit Parties have requested that theLender waive the June 30, 2003 Events of Default as provided herein, and amendcertain provisions of the Credit Agreement; and

 

WHEREAS, the Lender has agreed to waive the June 30,2003 Events of Default and to amend certain provisions of the Credit Agreement,all subject to the terms, conditions and limitations set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing andthe agreements contained herein, the parties hereby agree as follows:

 

1.             Capitalized Terms.

 

Capitalized terms used herein which are defined in theCredit Agreement have the same meanings herein as therein, except to the extentthat such meanings are amended hereby.

 

2.             Waiver of June 30, 2003 Events of Default.

 

Subject to the satisfaction of the terms andconditions set forth in Section 5 hereof, the Lender hereby waives the June 30,2003 Events of Default.  The partiesagree that the foregoing waiver is limited solely to the Events of Defaultarising out of the failure of ARC and its Subsidiaries to satisfy (a) theTangible Capital Base covenant set forth in Section 8.10(a) of the CreditAgreement for the fiscal quarter ended June 30, 2003 and (b) the Fixed Chargecoverage shortfall covenant set forth in Section 8.10(c) for the six monthfiscal period ending June 30, 2003, and nothing herein shall be construed as awaiver of any other presently existing or future Event of Default (includingwithout limitation, any Event of Default caused by reason of the failure of theBorrowers to comply with Section 8.10(a) or Section 8.10(c) of the CreditAgreement, as amended hereby, on any other occasion or for any other period) orany failure of the Borrowers to comply with any other provision, term or conditionof the Loan Documents.

 

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3.             Amendments.

 

Subject to the satisfaction of the terms andconditions set forth in Section 5 hereof, the Borrowers and the Lender agreethat the Credit Agreement is hereby amended, effective as of the date hereof,as follows:

 

(a)           *Amendments to Section 1.1 of the Credit Agreement*.  Section 1.1 of the Credit Agreement ishereby amended as follows:

 

(i)            The definition of “ApplicableMargin” set forth in Section 1.1 of the Credit Agreement is hereby amended andrestated in its entirety to read as follows:

 

“’Applicable Margin’ means, effective as ofAugust 1, 2003, 2.00% per annum for Base Rate Loans.”

 

(ii)           The definition of “Borrowing Base”set forth in Section 1.1 of the Credit Agreement is hereby amended by replacingclause (c) contained therein in its entirety with the following new clause (c):

 

“(c)         thelesser of:

 

(i)            70% of the aggregate of (x) BilledRestricted Product Line Accounts and (y) Unbilled Restricted Product LineAccounts, and

 

(ii)           $4,000,000,minus”

 

(iii)          The definition of “Revolving CreditCommitment” set forth in Section 1.1 of the Credit Agreement is hereby amendedby deleting the amount “$28,000,000” contained therein, and replacing it withthe amount “$23,000,000”.

 

(b)           *Amendment to Section 7.6 of the Credit Agreement*.  Section 7.6 of the Credit Agreement ishereby amended by deleting the phrase “$800 per man-day” contained therein andreplacing it with the phrase “$850 per man-day”.

(c)           Amendment to Section 8.10 of theCredit Agreement.  Section 8.10 of theCredit Agreement is hereby amended and restated in its entirety to read asfollows:

 

“8.10       **CertainFinancial Covenants**.

 

(a)           Tangible Capital Base.  ARC and its Subsidiaries shall not (i) as ofSeptember 30, 2003, have a consolidated Tangible Capital Base of less than($5,000,000) or (ii) as of the end of any fiscal quarter commencing withthe fiscal quarter ending December 31, 2003, have a consolidated TangibleCapital Base of less than the sum of (x) ($5,000,000) plus (y) on a cumulativebasis, 50% of positive consolidated net income (without reduction for losses)for each fiscal quarter ending after September 30, 2003.

 

(b)           Fixed Charge Coverage Ratio.  The Fixed Charge Coverage Ratio of ARC andits Subsidiaries shall not at any time during any period set forth below beless than the ratio set opposite such period:

 

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| **Period**                                     |   | **Minimum  Fixed  Charge Coverage  Ratio** |   |
|------------------------------------------------|--------|--------------------------------------------|--------|
| January 1, 2004  through March 31, 2004        |   | 1.00 to 1.00                               |   |
|                                           |   |                                       |   |
| January 1, 2004  through June 30, 2004         |   | 1.00 to 1.00                               |   |
|                                           |   |                                       |   |
| January 1, 2004  through September 30, 2004    |   | 1.00 to 1.00                               |   |
|                                           |   |                                       |   |
| January 1, 2004  through December 31, 2004     |   | 1.00 to 1.00                               |   |
|                                           |   |                                       |   |
| Thereafter (on a  rolling four quarters basis) |   | 1.00 to 1.00                               |   |

 

(c)           Fixed Charge Coverage Shortfall.  The amount by which (i) the aggregate FixedCharges of ARC and its Subsidiaries for each fiscal period set forth below,exceeds (ii) the total of (A) consolidated EBITDA of ARC and its Subsidiariesfor such period (determined on a consolidated basis without duplication inaccordance with GAAP) minus (B) the aggregate amount of all Non-FinancedCapital Expenditures during such period minus (C) the aggregate amountpaid, or required to be paid (without duplication), in cash in respect of thecurrent portion of all income taxes for such period minus (D) the aggregateamount of dividends and distributions permitted to be paid under Section 8.6and actually paid in cash during such period, shall not be greater than themaximum shortfall amount set opposite such fiscal period:

 
| **Fiscal Period**                        |   | **Maximum  Shortfall  Amount** |    |
|------------------------------------------|--------|--------------------------------|---------|
| July 1, 2003  through September 30, 2003 |   | $                              | 650,000 |   |
|                                     |   |                           |    |   |
| July 1, 2003  through December 31, 2003  |   | $                              | 950,000 |   |

 

(d)           Capital Expenditures.  The Credit Parties shall not make anyCapital Expenditures (including, without limitation, incurring any CapitalLease Obligations) which, in the aggregate exceed $500,000 at any time duringany fiscal year, commencing with the fiscal year ending December 31,2003.”

 

(c)           *Amendment ofExhibit D to the Credit Agreement*. Exhibit D to the Credit Agreement is hereby replaced with the new formof Exhibit D attached thereto.

 

4.             No Default; Representations and Warranties, etc.

 

The Borrowershereby represent, warrant and confirm that: (a) the representations andwarranties of the Credit Parties contained in Article 5 of the Credit Agreementare true and correct on and as of the date hereof as if made on such date(except to the extent that such representations and warranties expressly relateto an earlier date); (b) after giving effect to this Amendment, the Borrowersare in compliance with all of the terms and provisions set forth in the CreditAgreement and the other Loan Documents; (c) after giving effect to thisAmendment, no Default has occurred and is continuing; and (d) theexecution, delivery and performance by the Borrowers of this Amendment (i) havebeen duly

 

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authorized by allnecessary action on the part of the Borrowers, (ii) will not violate anyapplicable law or regulation or the organizational documents of any Borrower,(iii) will not violate or result in a default under any indenture, agreement orother instrument binding on any Borrower or any of its assets, includingwithout limitation, any Subordinated Debt Document, and (iv) do not require anyconsent, waiver or approval of or by any Person (other than the Lender) whichhas not been obtained.  The Borrowershereby acknowledge that pursuant to the terms of the Fifth Amendment to theCredit Agreement, and notwithstanding anything to the contrary set forth in theCredit Agreement, the Borrowers have no right to request or continue Loans asEurodollar Loans.

 

5.             Conditions to Effectiveness.

 

Theeffectiveness of this Amendment shall be subject to the satisfaction of thefollowing conditions precedent:

 

(a)           The Lender shall have receivedcounterparts of this Amendment duly executed by each of the Borrowers;

 

(b)           The Lender shall have received aCertificate of the Secretary of ARC, certifying that this Amendment has beenduly authorized by the Boards of Directors of ARC and each of its Subsidiaries;

 

(c)           The Borrowers shall have delivered tothe Lender evidence that Wynnchurch has executed and delivered to the Borrowersa written amendment and waiver with respect to the Subordinated Debt Documentsin form and substance reasonably acceptable to the Lender, pursuant to whichWynnchurch shall have waived all existing defaults of the Borrowers under theSubordinated Debt Documents and amended the financial covenant provisions ofthe Subordinated Debt Documents in a manner consistent with the financialcovenant amendments set forth in this Amendment;

 

(d)           The Lender shall have received fromWynnchurch a certificate pursuant to which Wynnchurch shall have (i) ratifiedand confirmed its obligations under the Wynnchurch Guaranty, (ii) made therepresentations and warranties contained in the first sentence of Section 9(e)of the Wynnchurch Guaranty as of [June 30, 2003], (iii) certified as to thecontinued veracity of the representations and warranties contained in Section 9of the Wynnchurch Guaranty, other than those representations and warrantiescontained in the first sentence of Section 9(e) of the Wynnchurch Guaranty, and(iv) shall have confirmed Wynnchurch’s compliance with Section 11 of theWynnchurch Guaranty;

 

(e)           The Lender shall have received awritten acknowledgement from Wynnchurch with respect to the existence of theJune 30, 2003 Events of Default and the modifications to the Credit Agreementcontemplated by this Amendment; and

 

(f)            The Lender shall have received fromthe Borrowers, an amendment fee in an amount equal to $25,000.

 

6.             Miscellaneous.

 

(a)           Except as specifically amendedhereby, all of the terms and provisions of the Credit Agreement, the other LoanDocuments and all related documents, shall remain in full force andeffect.  Nothing contained herein shallconstitute a waiver of any provision of the Credit Agreement or the other LoanDocuments, except for the waiver of the June 30, 2003 Events of Defaultexpressly set forth herein.

 

(b)           This Amendment may be executed in anynumber of counterparts, each of which, when executed and delivered, shall be anoriginal, but all counterparts shall together constitute one instrument.

 

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Delivery of an executedsignature page hereto by facsimile transmission shall be effective as deliveryof a manually executed counterpart hereof.

 

(c)           This Amendment shall be governed bythe laws of The Commonwealth of Massachusetts and shall be binding upon andinure to the benefit of the parties hereto and their respective successors andassigns.

 

(d)           The Borrowers shall reimburse theLender for all reasonable costs and expenses, including reasonable legal feesand disbursements, incurred by the Lender in connection with this Amendment andthe transactions contemplated hereby.

 

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Amendment to be duly executed by their respective authorized officers asof the day and year first above written.

 
|   | BORROWERS                         |
|--------|-----------------------------------|
|   |                              |
|   | ALTERNATIVE RESOURCES CORPORATION |
|   |                              |
|   |                              |
|   | By:                               |   |   |
|   | Name:                             |
|   | Title:                            |
|   |                              |
|   |                              |
|   | ARC SERVICE, INC.                 |
|   |                              |
|   |                              |
|   | By                                |   |   |
|   | Name:                             |
|   | Title:                            |
|   |                              |
|   |                              |
|   | ARC SOLUTIONS, INC.               |
|   |                              |
|   |                              |
|   | By                                |   |   |
|   | Name:                             |
|   | Title:                            |
|   |                              |
|   |                              |
|   | ARC MIDHOLDING, INC.              |
|   |                              |
|   |                              |
|   | By                                |   |   |
|   | Name:                             |
|   | Title:                            |
|   |                              |
|   |                              |
|   | WRITERS INC.                      |
|   |                              |
|   |                              |
|   | By                                |   |   |
|   | Name:                             |
|   | Title:                            |

 

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|   | ARC TECHNOLOGY MANAGEMENT LLC                             |
|--------|-----------------------------------------------------------|
|   |                                                      |
|   | By:  ARC  SERVICE, INC., its Manager and sole member |
|   |                                                      |
|   | By:                                                       |   |   |
|   | Name:                                                     |
|   | Title:                                                    |
|   |                                                      |
|   | ARC STAFFING MANAGEMENT LLC                               |
|   |                                                      |
|   | By:  ARC  SERVICE, INC., its Manager and sole member |
|   |                                                      |
|   | By:                                                       |   |   |
|   | Name:                                                     |
|   | Title:                                                    |
|   |                                                      |
|   | ARC SHARED SERVICES LLC                                   |
|   |                                                      |
|   | By:  ARC SERVICE,  INC., its Manager and sole member |
|   |                                                      |
|   | By:                                                       |   |   |
|   | Name:                                                     |
|   | Title:                                                    |

 

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|   | LENDER                                       |
|--------|----------------------------------------------|
|   |                                         |
|   | FLEET CAPITAL CORPORATION, as Lender         |
|   |                                         |
|   | By                                           |   |   |
|   | Name:                                        |
|   | Title:                                       |
|   |                                         |
|   |                                         |
|   | ISSUING LENDER                               |
|   |                                         |
|   | FLEET NATIONAL BANK, as Issuing Lender       |
|   |                                         |
|   | By                                           |   |   |
|   | Name:                                        |
|   | Title:                                       |
|   |                                         |
|   |                                         |
|   | CASH MANAGEMENT BANK                         |
|   |                                         |
|   | FLEET NATIONAL BANK, as Cash Management Bank |
|   |                                         |
|   | By                                           |   |   |
|   | Name:                                        |
|   | Title:                                       |

 

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