**Exhibit4.1**

 

EIGHTH AMENDMENTTO CREDIT AGREEMENT AND WAIVER

 

This EIGHTH AMENDMENT TOCREDIT AGREEMENT AND WAIVER dated as of November  14, 2003 (this “Amendment”),is made by and among Alternative Resources Corporation (“ARC”), ARCService, Inc., ARC Solutions, Inc., ARC Midholding, Inc., Writers Inc., ARCTechnology Management LLC, ARC Staffing Management LLC, and ARC Shared ServicesLLC (collectively, the “Borrowers”), and Fleet Capital Corporation (the“Lender”).

 

WHEREAS, the Borrowersand the Lender are parties to a Credit and Security Agreement dated as ofJanuary 31, 2002, as amended by a First Amendment to Credit Agreement andWaiver dated as of August 8, 2001, a Second Amendment to Credit Agreement datedas of August 30, 2002, a Third Amendment to Credit Agreement dated as ofNovember 14, 2002, a Waiver, Joinder and Fourth Amendment to Credit Agreementdated as of December 27, 2002, a Fifth Amendment to Credit Agreement and Waiverdated as of April 14, 2003, a Sixth Amendment to Credit Agreement dated as ofJuly 15, 2003, and a Seventh Amendment to Credit Agreement and Waiver dated asof August 14, 2003 (as so amended, the “Credit Agreement”);

 

WHEREAS, ARC and itsSubsidiaries failed to satisfy (a) the Tangible Capital Base covenant set forthin Section 8.10(a) of the Credit Agreement for the fiscal quarter endedSeptember 30, 2003 and (b) the Fixed Charge coverage shortfall covenant setforth in Section 8.10(c) for the nine month fiscal period ended September 30,2003, and each such failure constitutes an Event of Default under Section9.1(c) of the Credit Agreement (collectively, the “September 30, 2003 Eventsof Default”);

 

WHEREAS, the CreditParties have requested that the Lender waive the September 30, 2003 Events ofDefault as provided herein, and amend certain provisions of the CreditAgreement; and

 

WHEREAS, the Lender hasagreed to waive the September 30, 2003 Events of Default and to amend certainprovisions of the Credit Agreement, all subject to the terms, conditions andlimitations set forth herein;

 

NOW, THEREFORE, inconsideration of the foregoing and the agreements contained herein, the partieshereby agree as follows:

 

1.             Capitalized Terms.

 

Capitalized terms usedherein which are defined in the Credit Agreement have the same meanings hereinas therein, except to the extent that such meanings are amended hereby.

 

2.             Waiver ofSeptember 30, 2003 Events of Default.

 

Subject to thesatisfaction of the terms and conditions set forth in Section 5 hereof, theLender hereby waives the September 30, 2003 Events of Default.  The parties agree that the foregoing waiveris limited solely to the Events of Default arising out of the failure of ARCand its Subsidiaries to satisfy (a) the Tangible Capital Base covenant setforth in Section 8.10(a) of the Credit Agreement for the fiscal quarter endedSeptember 30, 2003 and (b) the Fixed Charge coverage shortfall covenant setforth in Section 8.10(c) for the nine month fiscal period ending September 30,2003, and nothing herein shall be construed as a waiver of any other presentlyexisting or future Event of Default (including without limitation, any Event ofDefault caused by reason of the failure of the Borrowers to comply with Section8.10(a) or Section 8.10(c) of the Credit Agreement, as amended hereby, on anyother occasion or for any

 

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other period) or anyfailure of the Borrowers to comply with any other provision, term or conditionof the Loan Documents.

 

3.             Amendments.

 

Subject to thesatisfaction of the terms and conditions set forth in Section 5 hereof, theBorrowers and the Lender agree that the Credit Agreement is hereby amended,effective as of the date hereof, as follows:

 

(a)           *Amendmentsto Section 1.1 of the Credit Agreement*.  Section 1.1 of the Credit Agreement is hereby amended as follows:

 

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

 

“(c)         the lesser of:

 

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

 

(ii)           $3,000,000, minus”

 

(ii)           The definition of “Initial Overadvance Limit” setforth in Section 1.1 of the Credit Agreement is hereby amended and restated inits entirety to read as follows:

 

“‘Initial OveradvanceLimit’ means $2,000,000.”

 

(iii)          The definition of “LC Sublimit” setforth in Section 1.1 of the Credit Agreement is hereby amended and restated inits entirety to read as follows:

 

“LC Sublimit” meansa sublimit of Revolving Credit Commitment available for the issuance of Lettersof Credit for the account of the Borrowers in an aggregate maximum amountavailable to be drawn equal to (a) $2,100,000, during the period from November14, 2003 through January 15, 2004, and (b) $2,000,000 at all other times.

 

(iv)          The definition of “Overadvance Termination Date” setforth in Section 1.1 of the Credit Agreement is hereby amended and restated inits entirety to read as follows:

 

“‘OveradvanceTermination Date’ means March 31, 2004, or such later date as the Lendermay agree in writing.”

 

(b)           *Amendment toSection 8.10 of the Credit Agreement*.  Section 8.10 of the Credit Agreement is hereby amended andrestated in its entirety to read as follows:

 

“8.10       **Certain Financial Covenants**.

 

(a)           Tangible CapitalBase.  ARC and its Subsidiariesshall not (i) as of December 31, 2003, have a consolidated Tangible CapitalBase of less than ($8,500,000) or (ii) as of the end of any fiscal quartercommencing with the fiscal quarter ending March 31, 2004, have a consolidatedTangible Capital Base of less than the sum of (x) ($8,500,000) plus (y)on a cumulative basis, 50% of positive consolidated net income (withoutreduction for losses) for each fiscal quarter ending after December 31, 2003.

 

(b)           Fixed ChargeCoverage Ratio.  The Fixed ChargeCoverage Ratio of ARC and its Subsidiaries shall not at any time during anyperiod set forth below be less than the ratio set opposite such period:

 

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| **Period**                               |   | **Minimum  Fixed  Charge Coverage  Ratio** |   |
|------------------------------------------|--------|--------------------------------------------|--------|
|                                     |   |                                       |   |
| July  1, 2004 through September 30, 2004 |   | 1.00 to 1.00                               |   |
|                                     |   |                                       |   |
| July  1, 2004 through December 31, 2004  |   | 1.00 to 1.00                               |   |

 

(c)           Fixed ChargeCoverage Shortfall.  The amount bywhich (i) the aggregate Fixed Charges of ARC and its Subsidiaries for eachfiscal period set forth below, exceeds (ii) the total of (A) consolidatedEBITDA of ARC and its Subsidiaries for such period (determined on aconsolidated basis without duplication in accordance with GAAP) minus(B) the aggregate amount of all Non-Financed Capital Expenditures during suchperiod minus (C) the aggregate amount paid, or required to be paid(without duplication), in cash in respect of the current portion of all incometaxes for such period minus (D) the aggregate amount of dividends anddistributions permitted to be paid under Section 8.6 and actually paid in cashduring such period, shall not be greater than the maximum shortfall amount setopposite such fiscal period:

 
| **Fiscal Period**                          |   | **Maximum  Shortfall  Amount** |      |
|--------------------------------------------|--------|--------------------------------|-----------|
|                                       |   |                           |      |
| October  1, 2003 through December 31, 2003 |   | $                              | 1,000,000 |   |
| October  1, 2003 through March 31, 2004    |   | $                              | 1,801,000 |   |
| October  1, 2003 through June 30, 2004     |   | $                              | 1,867,000 |   |

 

(d)           Capital Expenditures.  The Credit Parties shall not make anyCapital Expenditures (including, without limitation, incurring any CapitalLease Obligations) which, in the aggregate exceed $50,000 at any time duringany fiscal quarter, commencing with the fiscal quarter 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.

 

TheBorrowers hereby represent, warrant and confirm that: (a) the representationsand warranties of the Credit Parties contained in Article 5 of the CreditAgreement are true and correct on and as of the date hereof as if made on suchdate (except to the extent that such representations and warranties expresslyrelate to an earlier date); (b) after giving effect to this Amendment, theBorrowers are in compliance with all of the terms and provisions set forth inthe Credit Agreement and the other Loan Documents; (c) after giving effect tothis Amendment, no Default has occurred and is continuing; and (d) theexecution, delivery and performance by the Borrowers of this Amendment (i) havebeen duly authorized by all necessary action on the part of the Borrowers, (ii)will not violate any applicable law or regulation or the organizationaldocuments of any Borrower, (iii) will not violate or result in a default

 

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under any indenture,agreement or other instrument binding on any Borrower or any of its assets,including without limitation, any Subordinated Debt Document, and (iv) do notrequire any consent, waiver or approval of or by any Person (other than theLender) which has not been obtained. The Borrowers hereby acknowledge that pursuant to the terms of the FifthAmendment to the Credit Agreement, and notwithstanding anything to the contraryset forth in the Credit Agreement, the Borrowers have no right to request orcontinue Loans as Eurodollar Loans.

 

5.             Conditions toEffectiveness.

 

The effectiveness of this Amendment shall be subjectto the satisfaction of the following conditions precedent:

 

(a)           TheLender shall have received counterparts of this Amendment duly executed by eachof the Borrowers;

 

(b)           TheLender shall have received a Certificate of the Secretary of ARC, certifyingthat this Amendment has been duly authorized by the Boards of Directors of ARCand each of its Subsidiaries;

 

(c)           TheBorrowers shall have delivered to the Lender evidence that Wynnchurch hasexecuted and delivered to the Borrowers a written amendment and waiver withrespect to the Subordinated Debt Documents in form and substance reasonablyacceptable to the Lender, pursuant to which Wynnchurch shall have waived allexisting defaults of the Borrowers under the Subordinated Debt Documents and amendedthe financial covenant provisions of the Subordinated Debt Documents in amanner consistent with the financial covenant amendments set forth in thisAmendment;

 

(d)           TheBorrowers and Wynnchurch shall have executed and delivered to the Lender an amendmentto the Wynnchurch Guaranty, in form and substance satisfactory to the Lender,eliminating the automatic reduction of the amount of Overadvances guarantiedthereunder resulting from payments made in respect of accounts receivable owingby Bluecurrent, and extending the term of the Wynnchurch Guaranty.

 

(e)           TheLender shall have received from Wynnchurch a certificate pursuant to whichWynnchurch shall have (i) ratified and confirmed its obligations under theWynnchurch Guaranty, (ii) made the representations and warranties contained inthe first sentence of Section 9(e) of the Wynnchurch Guaranty as of September30, 2003, (iii) certified as to the continued veracity of the representationsand warranties contained in Section 9 of the Wynnchurch Guaranty, other thanthose representations and warranties contained in the first sentence of Section9(e) of the Wynnchurch Guaranty, and (iv) shall have confirmed Wynnchurch’scompliance with Section 11 of the Wynnchurch Guaranty;

 

(f)            TheLender shall have received a written acknowledgement from Wynnchurch withrespect to the existence of the September 30, 2003 Events of Default and themodifications to the Credit Agreement contemplated by this Amendment; and

 

(g)           TheLender shall have received from the Borrowers, an amendment fee in an amountequal to $50,000.

 

6.             Miscellaneous.

 

(a)           Exceptas specifically amended hereby, all of the terms and provisions of the CreditAgreement, the other Loan Documents and all related documents, shall remain infull force and effect.  Nothingcontained herein shall constitute a waiver of any provision of the CreditAgreement or the other

 

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Loan Documents,except for the waiver of the September 30, 2003 Events of Default expressly setforth herein.

 

(b)           ThisAmendment may be executed in any number of counterparts, each of which, whenexecuted and delivered, shall be an original, but all counterparts shalltogether constitute one instrument. Delivery of an executed signature page hereto by facsimile transmissionshall be effective as delivery of a manually executed counterpart hereof.

 

(c)           ThisAmendment shall be governed by the laws of The Commonwealth of Massachusettsand shall be binding upon and inure to the benefit of the parties hereto andtheir respective successors and assigns.

 

(d)           TheBorrowers shall reimburse the Lender for all reasonable costs and expenses,including reasonable legal fees and disbursements, incurred by the Lender inconnection with this Amendment and the transactions contemplated hereby.

 

[Remainder of PageLeft Intentionally Blank]

 

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IN WITNESS WHEREOF, theparties hereto have caused this Amendment to be duly executed by theirrespective authorized officers as of the day and year first above written.

 
|   | BORROWERS                          |
|--------|------------------------------------|
|   |                               |
|   | ALTERNATIVE RESOURCES  CORPORATION |
|   |                               |
|   | By:                                |  /s/ Steven Purcell |   |
|   | Name: Steven Purcell               |
|   | Title: CFO                         |
|   |                               |
|   | ARC SERVICE, INC.                  |
|   |                               |
|   | By                                 |  /s/ Steven Purcell |   |
|   | Name: Steven  Purcell              |
|   | Title:CFO                          |
|   |                               |
|   | ARC SOLUTIONS, INC.                |
|   |                               |
|   | By                                 |  /s/ Steven Purcell |   |
|   | Name: Steven  Purcell              |
|   | Title: CFO                         |
|   |                               |
|   | ARC MIDHOLDING, INC.               |
|   |                               |
|   | By                                 |  /s/ Steven Purcell |   |
|   | Name: Steven  Purcell              |
|   | Title: CFO                         |
|   |                               |
|   | WRITERS INC.                       |
|   |                               |
|   | By                                 |  /s/ Steven Purcell |   |
|   | Name: Steven  Purcell              |
|   | Title:CFO                          |
|        |                                    |  |  |  |

 

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

 

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|   | LENDER                                        |
|--------|-----------------------------------------------|
|   |                                          |
|   | FLEET CAPITAL  CORPORATION, as Lender         |
|   |                                          |
|   | By                                            |  /s/ Christopher Godfrey |   |
|   | Name: Christopher  Godfrey                    |
|   | Title: Senior Vice  President                 |
|   |                                          |
|   |                                          |
|   | ISSUING LENDER                                |
|   |                                          |
|   | FLEET NATIONAL BANK, as  Issuing Lender       |
|   |                                          |
|   | By                                            |  /s/ Christopher Godfrey |   |
|   | Name: Christopher  Godfrey                    |
|   | Title: Senior Vice  President                 |
|   |                                          |
|   |                                          |
|   | CASH MANAGEMENT BANK                          |
|   |                                          |
|   | FLEET NATIONAL BANK, as  Cash Management Bank |
|   |                                          |
|   | By                                            |  /s/ Christopher Godfrey |   |
|   | Name: Christopher  Godfrey                    |
|   | Title: Senior Vice  President                 |

 

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