Document:

Exhibit 4.1

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

This SECOND AMENDMENT TO CREDIT AGREEMENT is dated as

of August 30, 2002 (this “Amendment”), among Alternative Resources

Corporation (“ARC”), ARC Service, Inc., ARC Solutions, Inc., ARC

Midholding, Inc., and Writers Inc. (collectively, the “Borrowers”), and

Fleet Capital Corporation (the “Lender”).

 

WHEREAS, the Borrowers and the Lender are parties to a

Credit and Security Agreement dated as of January 31, 2002, as amended by the

certain First Amendment to Credit Agreement and Waiver dated as of August 8,

2002 (as so amended, the “Credit Agreement”); and

 

WHEREAS, the Borrowers and the Lender desire to amend

and restate Section 8.10(c) of the Credit Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and

the agreements contained herein, the parties hereby agree as follows:

 

1.             Capitalized Terms.

 

Capitalized terms used herein which are defined in the

Credit Agreement have the same meanings herein as therein, except to the extent

that such meanings are amended hereby.

 

2.             Amendment of Section 8.10(c) of the Credit Agreement.

 

The Borrowers and the Lender hereby agree that Section

8.10(c) of the Credit Agreement shall be amended and restated in its entirety

to read as follows:

 

“(c)         Fixed Charge Coverage Shortfall.  The amount by which (a) the aggregate Fixed

Charges of ARC and its Subsidiaries for each fiscal period set forth below,

exceeds (b) the total of (i) EBITDA of ARC and its Subsidiaries for such period

(determined on a consolidated basis without duplication in accordance with

GAAP) minus (ii) the aggregate amount of all Non-Financed Capital

Expenditures during such period minus (iii) the aggregate amount paid,

or required to be paid (without duplication), in cash in respect of the current

portion of all income taxes for such period minus (iv) the aggregate

amount of dividends and distributions permitted to be paid under Section 8.6

and actually paid in cash during such period, shall not be greater than the

maximum shortfall amount set opposite such fiscal period:

 

	

  Fiscal

  Period

  	

   

  	

  Maximum Shortfall

  Amount

  	

   

  
	

  July 1 through July 31,

  2002

  	

   

  	

  $250,000

  	

   

  
	

  July 1 through August

  31, 2002

  	

   

  	

  $150,000

  	

   

  
	

  July 1 through

  September 30, 2002

  	

   

  	

  $250,000”

  	

   

  

 

 

3.             Amendment of Exhibit D to the

Credit Agreement.

 

The Borrowers and the Lender hereby agree that Exhibit

D to the Credit Agreement shall be replaced with the new form of Exhibit D

attached thereto.

 

4.             No Default; Representations and Warranties, etc.

 

The Borrowers hereby represent, warrant and confirm

that: (a) the representations and warranties of the Credit Parties contained in

Article 5 of the Credit Agreement are 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 relate to an earlier date); (b) after giving effect to

this Amendment, the Borrowers are in compliance with all of the terms and

provisions set forth in the Credit Agreement and the other Loan Documents; (c)

after giving effect to this Amendment, no Default has occurred and is

continuing; and (d) the execution, delivery and performance by the

Borrowers of this Amendment (i) have been duly authorized by all necessary

action on the part of the Borrowers, (ii) will not violate any applicable law

or regulation or the organizational documents of any Borrower, (iii) will not

violate or result in a default 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 not require any

consent, waiver or approval of or by any Person (other than the Lender) which

has not been obtained.

 

5.             Miscellaneous.

 

(a)           Except

as specifically amended hereby, all of the terms and provisions of the Credit

Agreement, the other Loan Documents and all related documents, shall remain in

full force and effect.

 

(b)           This

Amendment may be executed in any number of counterparts, each of which, when

executed and delivered, shall be an original, but all counterparts shall

together constitute one instrument. 

Delivery of an executed signature page hereto by facsimile transmission

shall be effective as delivery of a manually executed counterpart hereof.

 

(c)           This

Amendment shall be governed by the laws of The Commonwealth of Massachusetts and

shall be binding upon and inure to the benefit of the parties hereto and their

respective successors and assigns.

 

[Remainder of Page Left Intentionally Blank]

 

2

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be

duly executed by their respective authorized officers as of 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:

  

 

3

 

	

   

  	

   

  
	

   

  	

  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:

  

 

4THIRD

AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

This THIRD AMENDMENT TO

CREDIT AGREEMENT AND WAIVER dated as of November 14, 2002 (this “Amendment”),

among Alternative Resources Corporation (“ARC”), ARC Service, Inc., ARC

Solutions, Inc., ARC Midholding, Inc., and Writers Inc. (collectively, the “Borrowers”),

and Fleet Capital Corporation (the “Lender”), amends the Credit and

Security Agreement dated as of January 31, 2002 (the “Credit Agreement”),

between the Borrowers and the Lender.

WHEREAS, ARC and its Subsidiaries

failed to have the minimum Tangible Capital Base required by Section 8.10(a) of

the Credit Agreement for the fiscal quarter ended September 30, 2002 and such

failure constitutes an Event of Default under Section 9.1(c) of the Credit

Agreement (the “September 30, 2002 Event of Default”);

WHEREAS, the Credit

Parties have requested that the Lender waive the September 30, 2002 Event of

Default as provided herein, and amend certain provisions of the Credit

Agreement; and

WHEREAS, the Lender has

agreed to waive the September 30, 2002 Event 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 and the agreements contained herein, the parties

hereby agree as follows:

1.             Capitalized

Terms.

Capitalized terms used

herein which are defined in the Credit Agreement have the same meanings herein

as therein, except to the extent that such meanings are amended hereby.

2.             Waiver

of September 30, 2002 Event of Default.

                Subject to the satisfaction of

the terms and conditions set forth in Section 5 hereof, the Lender hereby

waives the September 30, 2002 Event of Default.  The parties agree that the foregoing waiver is limited solely to

the Event of Default arising out of the failure of ARC and its Subsidiaries to

satisfy the minimum Tangible Capital Base covenant set forth in Section 8.10(a)

of the Credit Agreement for the fiscal quarter ended September 30, 2002, and

nothing herein shall be construed as a waiver of any other presently existing

or future Event of Default (including without limitation, any Event of Default

caused by reason of the failure of the Borrowers to comply with Section 8.10(a)

of the Credit Agreement, as amended hereby, on any other occasion or for any

other period) or any failure of the Borrowers to comply with any other

provision, term or condition of the Loan Documents.

3.             Amendments.

Subject to the

satisfaction of the terms and conditions set forth in Section 5 hereof, the

Borrowers and the Lender agree that 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 is hereby amended as

follows:

                                (i)  The definition of the term “Fixed

Charges” set forth in Section 1.1 of the Credit Agreement is hereby

amended and restated in its entirety to read as follows:

 

 

“‘Fixed Charges’

means, for any period, the sum for the Borrowers and all Subsidiaries

(determined on a consolidated basis without duplication in accordance with

GAAP), of (a) the aggregate amount of Interest Expense for such period

(excluding, for the purpose of computing Fixed Charges, that certain amendment

fee required to be paid by the Borrowers to the Lender in connection with that

certain First Amendment to Credit Agreement and Waiver dated as of August 8,

2002 among the Borrowers and the Lender and that certain amendment fee required

to be paid by the Borrowers to the Lender in connection with that certain Third

Amendment to Credit Agreement and Waiver dated as of November 14, 2002 among

the Borrowers and the Lender) plus (b) the aggregate amount of regularly

scheduled payments of principal in respect of Indebtedness for borrowed money

(including the principal component of any payments in respect of Capital Lease

Obligations) paid or required to be paid during such period, plus (c)

the aggregate amount of cash disbursements made by the Borrowers after June 30,

2002, pursuant to that certain severance agreement between ARC and its former

Chief Executive Officer, plus (d) the aggregate amount of cash

disbursements made by the Borrowers to reduce the accrued restructuring

liability created as of September 30, 2002 in connection with the relocation of

the Borrowers’ Client Services Management.”

                                (ii) The definition of the term “Tangible

Net Worth” set forth in Section 1.1 of the Credit Agreement is

hereby amended and restated in its entirety to read as follows:

“‘Tangible Net Worth’ means, at any time an

amount (determined on a consolidated basis without duplication in accordance

with GAAP) equal to (a) the book net worth of the Borrowers and all

Subsidiaries on a consolidated basis, minus (b) the total book value of

all assets of the Borrowers and all Subsidiaries on a consolidated basis which

would be treated as intangible assets under GAAP, including without limitation,

such items as goodwill, customer lists, Patents, Copyrights and Trademarks, and

rights (including rights under licenses) with respect to the foregoing, minus

(c) the aggregate amount of liabilities which are or would be accounted for as

“Loan Origination Fees” on the Borrower’s balance sheet based on the

application of GAAP used in connection with the preparation of the Borrower’s

balance sheet dated September 30, 2002 (notwithstanding any term contained in

this Agreement to the contrary, including without limitation Section 1.3).

                (b)           Amendment to Section 8.10(a) of the Credit Agreement.  Section 8.10(a) of the Credit Agreement is

hereby amended and restated in its entirety to read as follows:

                (a)           Tangible Capital Base.  ARC and its Subsidiaries shall not (i) as of

September 30, 2002, have a consolidated Tangible Capital Base of less than

$2,750,000 or (ii) as of the end of any fiscal quarter commencing with the

fiscal quarter ending December 31, 2002, have a consolidated Tangible Capital

Base of less than the sum of (x) $2,750,000 plus (y) on a cumulative

basis, 50% of positive consolidated net income (without reduction for losses)

for each fiscal quarter ending after September 30, 2002.

                (c)           Amendment of Exhibit D to the Credit Agreement.  Exhibit D to the Credit Agreement is hereby

replaced with the new form of Exhibit D attached thereto.

2

 

4.             No

Default; Representations and Warranties, etc.

                The

Borrowers hereby represent, warrant and confirm that: (a) the representations

and warranties of the Credit Parties contained in Article 5 of the Credit

Agreement are 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

relate to an earlier date); (b) after giving effect to this Amendment, the

Borrowers are in compliance with all of the terms and provisions set forth in

the Credit Agreement and the other Loan Documents; (c) after giving effect to

this Amendment, no Default has occurred and is continuing; and (d) the

execution, delivery and performance by the Borrowers of this Amendment (i) have

been duly authorized by all necessary action on the part of the Borrowers, (ii)

will not violate any applicable law or regulation or the organizational

documents of any Borrower, (iii) will not violate or result in a default 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 not require any consent, waiver or approval of or by any Person (other

than the Lender) which has not been obtained.

5.             Conditions

to Effectiveness.

                The

effectiveness of this Amendment shall be subject to the satisfaction of the

following conditions precedent:

(a)           The Lender shall have received

counterparts of this Amendment duly executed by each of the Borrowers;

(b)           The Lender shall have received a

Certificate of the Secretary of ARC, certifying that this Amendment has been

duly authorized by the Boards of Directors of ARC and each of its Subsidiaries;

(c)           The Borrowers shall have delivered to

the Lender evidence that Wynnchurch has executed and delivered to the Borrowers

a written amendment and waiver with respect to the Subordinated Debt Documents

in form and substance reasonably acceptable to the Lender, pursuant to which

Wynnchurch shall have waived all existing defaults of the Borrowers under the

Subordinated Debt Documents and amended the financial covenant provisions of

the Subordinated Debt Documents in a manner consistent with the financial

covenant amendments set forth in this Amendment;

(d)           The Lender shall have received a

written acknowledgement from Wynnchurch with respect to the existence of the

September 30, 2002 Event of Default and the modifications to the Credit

Agreement contemplated by this Amendment;

(e)           The Borrowers shall have reimbursed

the Lender for all reasonable costs and expenses, including reasonable legal

fees and disbursements, incurred by the Lender in connection with this

Amendment and the transactions contemplated hereby; and

(f)            The Lender shall have received from

the Borrowers, an amendment fee in an amount equal to $10,000.

6.             Miscellaneous.

(a)           Except as specifically amended

hereby, all of the terms and provisions of the Credit Agreement, the other Loan

Documents and all related documents, shall remain in full force and

effect.  Nothing contained herein shall

constitute a waiver of any provision of the Credit Agreement or the Other Loan

Documents, except for the waiver of the September 30, 2002 Event of Default

expressly set forth herein.

3

 

(b)           This Amendment may be executed in any

number of counterparts, each of which, when executed and delivered, shall be an

original, but all counterparts shall together constitute one instrument.  Delivery of an executed signature page

hereto by facsimile transmission shall be effective as delivery of a manually

executed counterpart hereof.

(c)           This Amendment shall be governed by

the laws of The Commonwealth of Massachusetts and shall be binding upon and

inure to the benefit of the parties hereto and their respective successors and

assigns.

4

IN WITNESS WHEREOF, the

parties hereto have caused this Amendment to be duly executed by their

respective authorized officers as of 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:

  	 

	

   

   

  	 

						

5

 

	

  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:

  	

   

  	

   

  
									

 

 

6

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