Exhibit 4.1
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CREDIT AND SECURITY AGREEMENT
dated as of
January 31, 2002
among
ALTERNATIVE RESOURCES CORPORATION,
ARC SERVICE, INC.,
ARC SOLUTIONS, INC.,
ARC MIDHOLDING, INC.,
and
WRITERS INC.,
as joint and several co-borrowers,
and
FLEET CAPITAL CORPORATION,
as Lender
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CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT dated as of January 31, 2002 (this
"Agreement") is by and among ALTERNATIVE RESOURCES CORPORATION, a Delaware
corporation, ARC SERVICE, INC., a Delaware corporation, ARC SOLUTIONS, INC., a
Delaware corporation, ARC MIDHOLDING, INC., a Delaware corporation, and WRITERS
INC., a California corporation, as joint and several co-borrowers, and FLEET
CAPITAL CORPORATION, as Lender.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms have
the meanings specified below:
"ACCOUNTING TRANSITION PERIOD" means the period commencing on the
Closing Date and continuing for not more than sixty (60) days thereafter during
which the Borrowers shall modify their accounting systems to separately report
Restricted Product Line Accounts and Eligible Accounts.
"ACCOUNTS RECEIVABLE/LOAN RECONCILIATION REPORT" means a certificate
signed by a Designated Financial Officer in substantially the form of EXHIBIT
B-3 hereto.
"ADJUSTED BASE RATE" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective 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 Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"AFFILIATE" means, with respect to a specified Person, another Person
that Controls or is Controlled by or is under common Control with the Person
specified.
"APPLICABLE MARGIN" means (i) 1.00% per annum for Base Rate Loans and
(ii) 3.25% per annum for Eurodollar Loans.
"ARC" means Alternative Resources Corporation.
"AVAILABILITY BLOCK" means $2,000,000.
"BASE RATE" and "BASE RATE LOAN" when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Adjusted Base
Rate.
"BILLED ELIGIBLE ACCOUNTS" means the aggregate face amount of Eligible
Accounts (a) in respect of which invoices (in form and substance acceptable to
the Lender) bearing an invoice date contemporaneous with or later than the date
of the rendering of services giving rise to such Eligible Accounts have been
sent to the applicable account debtors and (b) which have not remained
outstanding in whole or in part for more than the lesser of (x) ninety (90) days
after the invoice date (except in the case of "Global Subcontracting Services"
accounts receivables, which may be up to 105 days from invoice date) or (y)
sixty (60) days after the due date thereof.
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"BILLED RESTRICTED PRODUCT LINE ACCOUNTS" means the aggregate face
amount of Restricted Product Line Accounts (a) in respect of which invoices (in
form and substance acceptable to the Lender) bearing an invoice date
contemporaneous with or later than the date of the rendering of service giving
rise to such Restricted Product Line Accounts have been sent to the applicable
account debtors and (b) which have not remained outstanding in whole or in part
for more than the lesser of (x) ninety (90) days after the invoice date or (y)
sixty (60) days after the due date thereof.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWERS" means Alternative Resources Corporation, ARC Service, Inc.,
ARC Solutions, Inc., ARC Midholding, Inc., and Writers Inc.
"BORROWING" means Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Eurodollar Interest Period is in effect.
"BORROWING BASE" means, at the relevant time of reference thereto, an
amount determined by the Lender by reference to the most recent Borrowing Base
Certificate delivered to the Lender pursuant to Section 2.1(b) which is equal to
the sum of:
(a) 85% of Billed Eligible Accounts, PLUS
(b) 75% of Unbilled Eligible Accounts, PLUS
(c) the lesser of:
(i) 70% of the aggregate of (x) Billed Restricted Product
Line Accounts and (y) Unbilled Restricted Product Line
Accounts, and
(ii) $7,000,000, MINUS
(d) reserves in such amounts as Lender in its commercially reasonable
discretion shall deem appropriate from time to time in respect of
invoicing adjustments by Hewlett Packard, accounts payable client
refunds, payroll taxes and, during the Accounting Transition Period,
Restricted Product Line Accounts, and such other reserves as the
Lender in its commercially reasonable discretion shall deem
appropriate from time to time upon reasonable notice to the
Borrowers, MINUS
(e) the Availability Block.
In determining the Borrowing Base from time to time, the Lender may, but shall
not be required to, rely upon reports or analyses generated by the Borrowers
(including, without limitation, Borrowing Base Certificates and Collateral
Update Certificates) and reports or analyses generated by or on behalf of the
Lender. Notwithstanding anything to the contrary set forth herein, the Lender
may in its commercially reasonable discretion at any time and from time to time
upon reasonable notice to the Borrowers adjust the percentages of Billed
Eligible Accounts, Unbilled Eligible Accounts, Billed Restricted Product Line
Accounts and Unbilled Restricted Product Line Accounts included within the
Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate signed by a Designated
Financial Officer certifying the amount of the Borrowing Base as of the date set
forth therein, in substantially the form of EXHIBIT B-1 hereto.
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"BUSINESS DAY" means any day that is not a Saturday, Sunday or other day
on which commercial banks in Boston, Massachusetts are authorized or required by
law to remain closed; PROVIDED that, when used in connection with a Eurodollar
Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are not
open for dealings in U.S. dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum for the Credit
Parties (determined on a consolidated basis without duplication in accordance
with GAAP) of the aggregate amount of expenditures made or liabilities incurred
during such period (including the aggregate amount of Capital Lease Obligations
incurred during such period) to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements, but excluding
repairs) computed in accordance with GAAP; PROVIDED that such term shall not
include any such expenditures in connection with any replacement or repair of
Property affected by a Casualty Event.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CASH MANAGEMENT BANK" means Fleet National Bank, and any other bank,
financial institution or other entity owned or controlled by FleetBoston
Financial, Inc., which at any time provides cash management or other financial
services to the Credit Parties.
"CASUALTY EVENT" means, with respect to any Property of any Person, any
loss of or damage to, or any condemnation or other taking of, such Property for
which such Person or any of its Subsidiaries is entitled to receive insurance
proceeds, or proceeds of a condemnation award or other compensation.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the Closing Date, (b) any change after the Closing Date in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority or (c) compliance by the Lender or the Issuing Lender
(or, for purposes of subsection 2.9(b), by any lending office of the Lender or
by the Lender's or the Issuing Lender's holding company, if any) with any
request, guideline or directive (whether or not having the force of law), other
than a request or directive to comply with any law, rule or regulation in effect
on the Closing Date, of any Governmental Authority made or issued after the
Closing Date.
"CHANGE OF CONTROL" means (a) any event, occurrence or condition which
results in any one Person or group of related Persons holding more than 25% of
the Total Voting Power in respect of ARC (except as a result of the exercise by
Wynnchurch of its warrants to purchase capital stock of ARC or of its rights to
convert Subordinated Indebtedness into capital stock of ARC pursuant to the
Subordinated Debt Documents between the Borrowers and Wynnchurch), (b) any
event, transaction or occurrence as a result of which a majority of the seats
(other than vacant seats) on the board of directors of ARC shall be occupied by
Persons who were neither (i) nominated by the board of directors of ARC (except
as a result of the exercise by Wynnchurch of its rights to elect directors
pursuant to the Subordinated Debt Documents between the Borrowers and
Wynnchurch) nor (ii) appointed by directors so nominated; (c) the failure of ARC
to own, directly or indirectly through one or more Subsidiaries, 100% of the
outstanding capital stock of each of the other Credit Parties; (d) the sale of
all or substantially all of the business or assets of any Credit Party; or (e)
any two of (i) ▇▇▇▇▇▇▇ ▇▇▇▇, (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (iii) Miner ▇▇▇▇▇, or (iv)
▇▇▇▇▇▇ ▇▇▇▇▇▇ shall for any reason cease to serve in their present capacities as
officers of ARC, and ARC shall fail, within ninety (90) days of the date that
the last of any two such Persons cease to serve in such capacities, to retain
replacements for such Persons who have comparable industry experience.
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"CLOSING DATE" means the date during which the Effective Time shall
occur.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means, collectively, all of the Property in which Liens are
purported to be granted hereunder and under the other Loan Documents as security
for the Obligations of the Credit Parties hereunder.
"COLLATERAL UPDATE CERTIFICATE" means a certificate signed by a
Designated Financial Officer, in substantially the form of EXHIBIT B-2 annexed
hereto.
"COMPLIANCE CERTIFICATE" means a certificate signed by a Designated
Financial Officer, in substantially the form of EXHIBIT D annexed hereto, (a)
certifying as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with
respect thereto, (b) setting forth reasonably detailed calculations
demonstrating compliance with Section 8.10, and (c) stating whether any change
in GAAP or in the application thereof has occurred since the date of the audited
financial statements referred to in Section 5.4 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto. A Person who
owns or holds capital stock, beneficial interests or other securities
representing five percent (5%) or more of the Total Voting Power of another
Person shall be deemed, for purposes of this Agreement, to "control" such other
Person.
"CONTROL AGREEMENT" means with respect to any Controlled Account, an
agreement in accordance with Section 4.3(b), substantially in the form of
EXHIBIT G hereto, executed and delivered by the Credit Parties, the depository
institution at which such Controlled Account is maintained and the Lender at the
Effective Time and thereafter in accordance with Section 7.14, as such agreement
may be amended, supplemented or otherwise modified from time to time.
"CONTROLLED ACCOUNT" has the meaning assigned to such term in Section
4.3(a).
"COPYRIGHTS" means all copyrights, whether statutory or common law,
owned by or assigned to the Credit Parties, and all exclusive and nonexclusive
licenses to the Credit Parties from third parties or rights to use copyrights
owned by such third parties, including, without limitation, the registrations,
applications and licenses listed on SCHEDULE 5.5 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 ▇▇▇ for past, present and future
infringements thereof, and (d) foreign copyrights and any other rights
corresponding thereto throughout the world.
"CREDIT PARTIES" means (i) until such time as any acquired or newly
created Subsidiary of the Borrowers shall become a Guarantor of the Obligations
of the Borrowers hereunder, the Borrowers, and (ii) from and after such time as
any acquired or newly created Subsidiary of the Borrowers shall become a
Guarantor of the Obligations of the Borrowers hereunder, the Borrowers and all
Guarantors.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
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"DESIGNATED FINANCIAL OFFICER" means an individual holding one or more
of the following offices with each of the Borrowers or otherwise having
executive responsibilities for financial matters and listed in SCHEDULE 1.4
hereto: chief financial officer, principal accounting officer, treasurer,
assistant treasurer or controller.
"DISCLOSED MATTERS" means the actions, suits and proceedings and the
environmental matters disclosed in SCHEDULE 5.6.
"DISPOSITION" means any sale, assignment, transfer or other disposition
of any property (whether now owned or hereafter acquired) by any Credit Party to
any Person other than to a Borrower excluding (a) the granting of Liens
permitted hereunder and (b) any sale, assignment, transfer or other disposition
of (i) any property sold or disposed of in the ordinary course of business and
on ordinary business terms, (ii) any property no longer used or useful in the
business of the Credit Parties and (iii) any Collateral pursuant to an exercise
of remedies by the Lender hereunder or under any other Loan Document.
"EBITDA" means, for any period, (a) the net income of the Borrowers and
all wholly-owned Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) for such period, PLUS (b) to the extent
deducted in calculating net income (i) income taxes accrued during such period,
(ii) all interest in respect of Indebtedness accrued or paid during such period
(whether or not actually paid during such period), including (A) interest that
is capitalized and not paid in cash during such period, (B) capitalized debt
acquisition costs, (C) capitalized costs associated with the accounting
treatment of the Subordinated Debt Financing, (D) and amounts payable in respect
of Hedging Agreements accrued during such period excluding reimbursement of
legal fees and other similar transaction costs and excluding payments required
by reason of the early termination of Hedging Agreements in effect on the date
hereof, and (E) all fees, including letter of credit fees and expenses, (but
excluding reimbursement of legal fees) incurred hereunder during such period,
(iii) depreciation, amortization and other non-cash charges accrued for such
period and (iv) such extraordinary or unusual losses as shall be approved by the
Lender during such period, MINUS (c) to the extent such items were added in
calculating net income (i) extraordinary or unusual gains during such period and
(ii) proceeds received during such period in respect of Casualty Events and
Dispositions.
"EFFECTIVE TIME" means the time specified in a written notice from the
Lender when the conditions specified in Section 6.1 are satisfied (or waived in
accordance with Section 10.2).
"ELIGIBLE ACCOUNTS" means (a) accounts receivable outstanding and owed
to the Borrowers as determined in accordance with GAAP consistently applied and
as entered on the books and records of the Borrowers in the ordinary course of
the business operations of the Borrowers which satisfy each of the requirements
set forth below, MINUS (b) without duplication, the aggregate amount of any
returns, discounts (which may, at the Lender's option, be calculated on the
shortest term), claims, credits, contra accounts, chargebacks, allowances or
excise taxes of any nature (whether issued, owing, granted or outstanding):
(i) the subject goods have been sold and/or services
have been rendered on an absolute sale basis and on an open account
basis to an account debtor which is not (A) the United States government
or any agency thereof or other Person such that the Assignment of Claims
Act would apply to the pledge of receivables of such account debtor,
unless the Assignment of Claims Act has been complied with to the
satisfaction of the Lender or (B) an Affiliate of any Borrower;
(ii) the account receivable does not arise from a sale to
the account debtor on a deferred revenue, ▇▇▇▇-and-hold, guaranteed
sale, sale-or-return, sale-on-assignment, sale-on-appraisal,
consignment or any other repurchase or return basis;
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(iii) the account is not evidenced by chattel paper or any
note or instrument of any kind, and has not been reduced to judgment;
(iv) the account debtor is not insolvent or the subject of
any bankruptcy or insolvency proceedings of any kind;
(v) the account debtor is credit worthy and not
experiencing financial difficulties that could, in the commercially
reasonable opinion of the Lender, affect the collectability of the
account;
(vi) the account debtor is an entity organized under the
laws of one of the United States or one of the provinces of Canada,
whose main office is also located within the United States (including
Puerto Rico as within the United States) or Canada, or, if the account
debtor is not such an entity organized and located within the United
States or Canada, the account is insured by a letter of credit issued or
confirmed by a bank acceptable to the Lender or by other credit
enhancements, in each case in form and substance satisfactory to the
Lender;
(vii) the account receivable is denominated in U.S.
Dollars;
(viii) the account receivable is a valid and legally
enforceable obligation of the account debtor thereunder, it is not
subject to recoupment, offset (other than discount for prompt payment)
or other defense on the part of such account debtor or to any claim on
the part of such account debtor denying liability thereunder;
(ix) the account receivable is not subject to any Lien of
any kind except for the Lien of the Lender securing the obligations of
the Credit Parties under this Agreement;
(x) the account receivable does not arise out of a
transaction (direct or indirect) with an employee, officer, agent,
director or stockholder of any Credit Party;
(xi) the account receivable is not owing from an account
debtor from whom fifty percent (50%) or more of the dollar amount of all
accounts receivable are greater than (x) ninety (90) days after the
invoice date (except in the case of GSS Accounts Receivable, which may
be up to 105 days from invoice date) or (y) sixty (60) days after the
due date thereof;
(xii) (x) if the account receivable is a Non-GSS Account
Receivable, the total unpaid Non-GSS Accounts Receivable owing from the
subject account debtor do not exceed twenty-five percent (25%) of all
Eligible Accounts, and (y) if the account receivable is a GSS Account
Receivable, the total unpaid GSS Accounts Receivable owing from the
subject account debtor do not exceed thirty-five percent (35%) of all
Eligible Accounts;
(xiii) the account receivable is not owing from an account
debtor which is located in Indiana, Minnesota, New Jersey, West Virginia
or any other jurisdiction where the applicable Borrower must be
qualified to do business in order for the Borrower to commence a legal
action in such jurisdiction, unless the applicable Borrower has
qualified to do business in such jurisdiction and has filed appropriate
notices of business activities reports (or other appropriate filings)
with the appropriate authorities of such jurisdiction for the then
current year;
(xiv) the account receivable constitutes Collateral in
which the Lender has a First Priority Lien securing the Obligations of
the Credit Parties under this Agreement;
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(xv) the account receivable does not arise from the
Borrowers' rendition of "Field Services" or "Technology Deployment
Services"; PROVIDED that during the Accounting Transition Period,
accounts receivable arising from the Borrowers' rendition of "Field
Services" or "Technology Deployment Services" that would be Eligible
Accounts but for the provisions contained in this clause (xv) shall be
deemed to be Eligible Accounts; and
(xvi) the Borrowers have not made an agreement with the
account debtor to extend the time of payment of the subject account
receivable;
PROVIDED, HOWEVER, that (A) the Lender may in its commercially reasonable
discretion exclude particular accounts from the definition of Eligible Accounts
and may impose additional and/or more restrictive eligibility or valuation
criteria than those set forth above as preconditions for any account to be
deemed to be an Eligible Account hereunder, (B) an account deemed to be an
Eligible Account at any one point in time may be excluded by the Lender in its
discretion at a future point in time, and (C) if at any time Hewlett Packard
elects to terminate the Hewlett Packard Agreement or seeks reimbursement under
Sections 18 or 20.1 of the Hewlett Packard Agreement, all accounts receivable
owing from Hewlett Packard shall be excluded from Eligible Accounts.
"ENVIRONMENTAL LAWS" means all applicable laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"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.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Credit Parties, is treated as a single
employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.
Notwithstanding the foregoing, for purposes of any liability related to a
Multiemployer Plan under Title IV of ERISA, the term "ERISA Affiliate" means any
trade or business that, together with the Credit Parties, is treated as a single
employer within the meaning of Section 4001(b) of ERISA.
"ERISA EVENT" means (a) a "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder for which the notice requirement
has not been waived with respect to any Pension Plan, (b) the existence with
respect to any Pension Plan of an "accumulated funding deficiency" (as defined
in Section 412 of the Code or Section 302 of ERISA), whether or not waived, (c)
the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of
an application for a waiver of the
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minimum funding standard with respect to any Pension Plan, (d) the incurrence by
any Borrower or any ERISA Affiliate of any liability under Title IV of ERISA
with respect to the termination of any Pension Plan, (e) the receipt by any
Borrower or any ERISA Affiliate from the PBGC or plan administrator of any
notice relating to an intention to terminate any Pension Plan or Pension Plans
or to appoint a trustee to administer any Pension Plan, or (f) the receipt by
any Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Borrower or any ERISA Affiliate of any notice of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"EURODOLLAR" and "EURODOLLAR LOAN" when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Eurodollar Rate.
"EURODOLLAR INTEREST PERIOD" means with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
four months thereafter, as the Borrowers may elect; PROVIDED, that (i) if any
Eurodollar Interest Period would end on a day other than a Business Day, such
Eurodollar Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Eurodollar Interest Period shall end on the next preceding
Business Day and (ii) any Eurodollar Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Eurodollar Interest Period)
shall end on the last Business Day of the last calendar month of such Eurodollar
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
Notwithstanding the foregoing, if any Eurodollar Interest Period for any
Revolving Credit Borrowing would otherwise end after the Revolving Credit
Maturity Date, such Eurodollar Interest Period shall end on the Revolving Credit
Maturity Date.
"EURODOLLAR RATE" means, with respect to any Eurodollar Borrowing for
any Eurodollar Interest Period, the rate appearing on Dow ▇▇▇▇▇ Markets Page
3750 (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 Lender
from time to time for purposes of providing quotations of interest rates
applicable to U.S. dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Eurodollar Interest Period, as the rate for U.S. 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 Borrowing for such Eurodollar
Interest Period shall be the average of the rates at which U.S. dollar deposits
of $5,000,000, and for a maturity comparable to such Eurodollar Interest Period,
are offered by four major banks in the London interbank market as selected by
the Lender in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Eurodollar Interest Period.
"EURODOLLAR REQUEST" means a written request signed by a Designated
Financial Officer of the Borrowers for the conversion of Base Rate Loans into
Eurodollar Loans or for the continuation of an existing Eurodollar Loan for an
additional Eurodollar Interest Period in accordance with Section 2.3, in
substantially the form of EXHIBIT B-4 annexed hereto.
"EVENT OF DEFAULT" has the meaning assigned to such term in Section 9.1.
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"EXCESS AVAILABILITY" means, as of any date of determination thereof,
the difference between (a) the Gross Availability at such time and (b) the
Revolving Credit Exposure at such time.
"EXCLUDED TAXES" means, with respect to the Lender, the Issuing Lender
or any other recipient of any payment to be made by or on account of any
Obligation hereunder, (a) income, net worth or franchise taxes imposed on (or
measured by) its net income or net worth by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of the Lender, in which its
lending office is located or in which it is taxable solely on account of some
connection other than the execution, delivery or performance of this Agreement
or the receipt of income hereunder, and (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which any Borrower is located.
"EXISTING DEBT" means (i) Indebtedness of the Borrowers existing as of
the Effective Time which is being repaid in full with the proceeds of the Loans
made by the Lender at the Effective Time and (ii) Indebtedness of the Borrowers
existing as of the Effective Time which is permitted to remain outstanding after
the Effective Time under Section 8.1 and is listed on SCHEDULE 8.1 hereto.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
"FIRST PRIORITY" means, with respect to any Lien purported to be created
in any Collateral pursuant to any Collateral Document, that such Lien is the
most senior Lien (other than Permitted Liens) to which such Collateral is
subject.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of (a)
(i) EBITDA of the Borrowers and all 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 to (b) the sum for the Borrowers and all Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of (i) the
aggregate amount of Interest Expense for such period and (ii) 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.
"GAAP" means generally accepted accounting principles in the United
States of America.
"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.
"GROSS AVAILABILITY" means, as of any date of determination thereof, the
lesser of (a) the Revolving Credit Commitment at such time and (b) the Borrowing
Base at such time.
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"GSS ACCOUNTS RECEIVABLE" means accounts receivable arising from the
Borrowers' rendition of "Global Subcontracting Services".
"GUARANTEE" means a guarantee, an endorsement, a contingent agreement to
purchase or to furnish funds for the payment or maintenance of, or otherwise to
be or become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit in the ordinary course of
business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have a
correlative meaning. The amount of any Guarantee shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligations in respect
of which such Guarantee is made, unless the amount guaranteed is limited on the
face of such Guarantee, or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder).
"GUARANTORS" means any Person, including, without limitation, any
Subsidiary of the Borrowers acquired or formed after the Effective Time, which
become a guarantor of the Obligations of the Borrowers hereunder after the
Effective Time.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature, in each case regulated or
subject to regulation pursuant to any Environmental Law.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"HEWLETT PACKARD" means Hewlett-Packard Company.
"HEWLETT PACKARD AGREEMENT" means the On-Site Support Services Agreement
by and between Hewlett Packard and ARC dated as of April 1, 1999, as the same
may be modified, amended, supplemented, restated or replaced from time to time.
"INDEBTEDNESS" means, for any Person, without duplication: (a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, advance, the issuance and sale of debt securities or the sale
of Property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such Property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition price of
Property or services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses and deferred taxes incurred and paid, in
the ordinary course of business; (c) Capital Lease Obligations of such Person;
(d) obligations of such Person in respect of Hedging Agreements; and (e)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
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"INDEMNIFIED TAXES" means all Taxes other than (a) Excluded Taxes and
Other Taxes and (b) amounts constituting penalties or interest imposed with
respect to Excluded Taxes or Other Taxes.
"INTERCOMPANY INDEBTEDNESS" has the meaning assigned to such term in
Section 10.9.
"INTEREST EXPENSE" means, for any period, the sum, without duplication,
for the Borrowers and all Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following: (a) all interest
in respect of Indebtedness accrued or paid during such period (whether or not
actually paid during such period), but excluding (i) interest accrued in respect
of the Wynnchurch Subordinated Notes that is capitalized and not paid in cash,
(ii) capitalized debt acquisition costs (including capitalized fees and expenses
related to this Agreement), and (iii) capitalized costs associated with the
accounting treatment of the Subordinated Debt Financing, PLUS (b) the net
amounts payable (or minus the net amounts receivable) in respect of Hedging
Agreements accrued during such period (whether or not actually paid (or
received) during such period) excluding reimbursement of legal fees and other
similar transaction costs and excluding payments required by reason of the early
termination of Hedging Agreements in effect on the date hereof PLUS (c) all
fees, including letter of credit fees and expenses, (but excluding reimbursement
of legal fees) incurred hereunder during such period.
"INVESTMENT" means, for any Person: (a) the acquisition (whether for
cash, Property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership, limited liability company or other ownership
interests or other securities of any other Person or any agreement to make any
such acquisition (including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by the Person
entering into such short sale); (b) the making of any deposit with, or advance,
loan or other extension of credit to, any other Person (including the purchase
of Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person, but excluding
any such advance, loan or extension of credit representing the purchase price of
inventory or supplies sold by such Person in the ordinary course of business
provided that in no event shall the term of any such inventory or supply
advance, loan or extension of credit exceed 180 days); or (c) the entering into
of any Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such Person.
Notwithstanding the foregoing, Capital Expenditures shall not be deemed
"INVESTMENTS" for purposes hereof.
"IP COLLATERAL" means, collectively, the Collateral relating to
intellectual property rights of the Credit Parties hereunder or under any other
Loan Document.
"ISSUING LENDER" means Fleet National Bank, an affiliate of the Lender,
in its capacity as an issuer of Letters of Credit hereunder.
"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 Lender in its sole discretion.
"LC DISBURSEMENT" means a payment made by the Issuing Lender pursuant to
a Letter of Credit.
"LC SUBLIMIT" means a sublimit of the Revolving Credit Commitment
available for the issuance of Letters of Credit for the account of the Borrowers
in an aggregate maximum amount available to be drawn equal to $2,000,000.
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"LEASEHOLD PROPERTY" means any leasehold interest of any Credit Party as
lessee under any lease of real property, other than any such leasehold interest
designated from time to time by the Lender in its sole discretion as not being
required to be included in the Collateral.
"LENDER" means Fleet Capital Corporation or any other party which
becomes a lender hereunder.
"LETTER OF CREDIT" means any letter of credit issued on a standby basis
or in support of trade obligations of the Credit Parties pursuant to this
Agreement.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing), other than an operating lease, relating to such asset and (c) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities.
"LOAN DOCUMENTS" means this Agreement, the Revolving Credit Note, the
Pledge Agreement, the Subordination and Intercreditor Agreement, each Lockbox
Agreement and each Control Agreement, and any other instruments or documents
delivered or to be delivered from time to time pursuant to this Agreement, as
the same may be supplemented and amended from time to time in accordance with
their respective terms.
"LOANS" means loans made by the Lender pursuant to subsection 2.1(a)
that utilize the Revolving Credit Commitment.
"LOCK BOX" has the meaning assigned to such term in Section 4.3(a).
"LOCKBOX AGREEMENT" means (i) with respect to the Lock Box of the
Borrowers established by the Cash Management Bank, an agreement, in form and
substance satisfactory to the Cash Management Bank, executed and delivered by
the Borrowers, the Cash Management Bank and the Lender at the Effective Time,
and (ii) with respect to any Lock Box of the Borrowers established by any
depository institution other than the Cash Management Bank, an agreement in
accordance with Section 4.3(b), in form and substance satisfactory to the Cash
Management Bank, executed and delivered by the Borrowers and the depository
institution at which such Lock Box is maintained, as such agreements may be
amended, supplemented or otherwise modified from time to time with the consent
of the Lender.
"MATERIAL ADVERSE EFFECT" means, any event, circumstance, happening or
condition, which, in the Lender's commercially reasonable discretion, has
resulted or could result in a material adverse effect on (a) the business,
assets, financial condition or prospects of the Credit Parties taken as a whole,
(b) the ability of the Credit Parties taken as a whole to pay or perform their
obligations under this Agreement or the other Loan Documents or (c) any of the
rights of or benefits available to the Lender under this Agreement and the other
Loan Documents.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans or
Letters of Credit), including obligations in respect of one or more Hedging
Agreements, in an aggregate principal amount exceeding $100,000. For purposes of
determining Material Indebtedness, the "principal amount" of the obligations of
any Person in respect of a Hedging 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 Hedging Agreement were terminated at such time.
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"MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property listed on
SCHEDULE 1.1 hereto or as subsequently determined by the Lender in its
commercially reasonable discretion to be of material value as Collateral or of
material importance to the operations of the Credit Parties.
"MATERIAL RENTAL OBLIGATIONS" means obligations of the Credit Parties to
pay rent in respect of any Material Leasehold Property.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET CASH PAYMENTS" means,
(a) with respect to any Casualty Event, the aggregate
amount of cash proceeds of insurance, condemnation awards and other
compensation received by the Credit Parties in respect of such Casualty
Event net of (i) reasonable expenses incurred by the Credit Parties in
connection therewith and (ii) contractually required repayments of
Indebtedness to the extent secured by a Lien on such property and (iii)
any income and transfer taxes payable by the Credit Parties in respect
of such Casualty Event;
(b) with respect to any Disposition, the aggregate amount
of all cash payments received by the Credit Parties directly or
indirectly in connection with such Disposition, whether at the time of
such Disposition or after such Disposition under deferred payment
arrangements or Investments entered into or received in connection with
such Disposition, net of (i) the amount of any legal, title, transfer
and recording tax expenses, commissions and other fees and expenses
payable by the Credit Parties in connection therewith, (ii) any Federal,
state and local income or other Taxes estimated to be payable by the
Credit Parties as a result thereof, (iii) any repayments by the Credit
Parties of Indebtedness to the extent that such Indebtedness is secured
by a Lien on the property that is the subject of such Disposition and
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 (iv) any repayments by the Credit Parties to minority
stockholders if and to the extent permitted hereby; and
(c) with respect to any incurrence of Indebtedness or
offering of equity securities, the aggregate amount of all cash proceeds
received by the Credit Parties therefrom less all legal, underwriting
and similar fees and expenses incurred in connection therewith.
"NON-FINANCED CAPITAL EXPENDITURES" means Capital Expenditures paid in
cash and not financed with Indebtedness for borrowed money; PROVIDED that
Capital Expenditures financed with the proceeds of Loans shall be deemed to
constitute "Non-Financed Capital Expenditures" for purposes of this Agreement.
"NON-GSS ACCOUNTS RECEIVABLE" means accounts receivable of the Borrowers
which are not GSS Accounts Receivable.
"OBLIGATIONS" means (a) the aggregate outstanding principal balance of
and all interest on the Loans made by the Lender to the Borrowers (including any
interest accruing after the commencement of any proceeding by or against any
Borrower under the federal bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other similar
law, and any other interest that would have accrued but for the commencement of
such proceeding, whether or not any such interest is allowed as a claim
enforceable against such Borrower in any such proceeding), and (b) all LC
Disbursements, overdraft obligations, fees, costs, charges, expenses and other
obligations from time to time owing to the Lender, the Issuing Lender, the Cash
Management Bank, or any other Affiliate of the
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Lender by the Credit Parties hereunder or under any other Loan Document or in
respect of any Hedging Agreement, cash management agreement, operating or
deposit account, or other banking product from time to time made available to
the Credit Parties by the Lender, the Issuing Lender, the Cash Management Bank
or any other Affiliate of the Lender.
"OTHER TAXES" means any and 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, this Agreement and the other Loan Documents,
PROVIDED that there shall be excluded from "Other Taxes" all Excluded Taxes.
"PATENTS" means all patents issued or assigned to and all patent
applications made by the Credit Parties 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 Credit Parties 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 5.5 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 ▇▇▇ for past, present and future infringements thereof, and (e) any
other rights corresponding thereto throughout the world.
"PENSION PLAN" means any Plan that is a defined benefit pension plan
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard and Poor's Ratings Service or from
▇▇▇▇▇'▇ Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $250,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause (c)
above;
(e) advances, loans and extensions of credit to any director,
officer or employee of the Credit Parties, if the aggregate outstanding amount
of all such advances, loans and extensions of credit (excluding travel advances
in the ordinary course of business) does not at any time exceed $100,000; and
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(f) investments in money market mutual funds that are rated AAA by
Standard & Poor's Rating Service.
"PERMITTED LIENS" has the meaning set forth in Section 8.2.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PLAN" means any employee benefit plan within the meaning of Section
3(3) of ERISA in which any Credit Party or any ERISA Affiliate is an "employer"
as defined in Section 3(5) of ERISA, including, but not limited to, any Pension
Plan or Multiemployer Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement in the form of EXHIBIT E
hereto made by the Borrowers in favor of the Lender.
"POST-DEFAULT RATE" means a rate per annum equal to the Adjusted Base
Rate PLUS the Applicable Margin PLUS two percent (2%).
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by Fleet National Bank, as its prime rate for commercial loans
in effect at its principal office in Boston, Massachusetts, which rate is not
necessarily the lowest rate charged by Fleet National Bank to its most preferred
customers; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.
"PROPERTY" means any interest of any kind in property or assets, whether
real, personal or mixed, and whether tangible or intangible.
"PROPRIETARY RIGHTS" has the meaning assigned to such term in Section
5.5(b).
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of the Lender, desirable in order to create or perfect Liens on any IP
Collateral.
"REAL PROPERTY ASSET" means, at any time of determination, any and all
real property owned or leased by the Credit Parties.
"REIMBURSEMENT OBLIGATION" has the meaning assigned to such term in
Section 2.4(d).
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"REGISTERED PROPRIETARY RIGHTS" has the meaning assigned to such term
in Section 5.5(c).
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of, or other equity interest in, any Credit Party now or hereafter outstanding,
except a dividend payable solely in shares of stock or other equity interests,
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of, or other equity interest in, any Credit Party now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of, or other equity interest in, any Credit Party, (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or
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redemption purchase, retirement, defeasance (including economic or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness, and (v) any payment made to any Affiliates of any Credit Party in
respect of management, consulting or other similar services provided to any
Credit Party.
"RESTRICTED PRODUCT LINE ACCOUNTS" means accounts receivable that would
otherwise constitute Eligible Accounts except that such accounts receivable
arise from the Borrowers' rendition of "Field Services" or "Technology
Deployment Services".
"RESTRICTIVE AGREEMENTS" has the meaning assigned to such term in
Section 5.13(b).
"REVOLVING CREDIT AVAILABILITY PERIOD" means the period from and
including the Effective Time to but excluding the earlier of (a) the Revolving
Credit Maturity Date and (b) the date of termination of the Revolving Credit
Commitment, as terminated by the Borrower pursuant to Section 2.7 or by the
Lender pursuant to Section 9.1.
"REVOLVING CREDIT COMMITMENT" means the commitment of the Lender to make
Loans as such commitment may be reduced from time to time pursuant to Section
2.5. The original maximum amount of the Revolving Credit Commitment is equal to
$30,000,000.
"REVOLVING CREDIT EXPOSURE" means at any time the sum of (a) the
outstanding principal amount of Loans at such time and (b) the Total LC Exposure
at such time.
"REVOLVING CREDIT MATURITY DATE" means January 31, 2005.
"REVOLVING CREDIT NOTE" means the promissory note, substantially in the
form of EXHIBIT A annexed hereto, issued by the Borrowers in favor of the
Lender.
"SPECIAL COUNSEL" means ▇▇▇▇▇▇ & Dodge LLP, in its capacity as special
counsel to Fleet Capital Corporation, as Lender of the credit facilities
contemplated hereby.
"SUBORDINATED DEBT DOCUMENTS" means all instruments, agreements and
other documents executed and delivered by the Credit Parties in connection with
Subordinated Indebtedness.
"SUBORDINATED DEBT FINANCING" means the issuance by ARC prior to the
Effective Time of the Wynnchurch Subordinated Notes.
"SUBORDINATED INDEBTEDNESS" means (a) Indebtedness of the Borrowers
pursuant to the Subordinated Debt Financing, and (b) any other Indebtedness of
the Credit Parties incurred after the Closing Date with the consent of the
Lender that by its terms (or by the terms of the instrument under which it is
outstanding and to which appropriate reference is made in the instrument
evidencing such Subordinated Indebtedness) is made subordinate and junior in
right of payment to the Loans and to the other Obligations of the Credit Parties
by provisions in form and substance reasonably satisfactory to the Lender and
Special Counsel.
"SUBORDINATION AND INTERCREDITOR AGREEMENT" means the Subordination and
Intercreditor Agreement in the form of EXHIBIT H hereto by and among the
Borrowers, Wynnchurch and the Lender.
"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
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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 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, or (b) that is, as of such date, otherwise Controlled, by
the parent and/or one or more subsidiaries of the parent. References herein to
"SUBSIDIARIES" shall, unless the context requires otherwise, be deemed to be
references to Subsidiaries of the Borrowers.
"TANGIBLE CAPITAL BASE" means, at any time, (a) Tangible Net Worth PLUS
(b) the outstanding principal balance of the Wynnchurch Subordinated Notes
(including interest accrued in respect of the Wynnchurch Subordinated Notes that
has been capitalized and not paid in cash).
"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.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TOTAL LC EXPOSURE" means, at any time, the sum of (a) 100% of the
aggregate undrawn amount of all outstanding standby and documentary Letters of
Credit at such time PLUS (b) the aggregate amount of all LC Disbursements that
have not yet been reimbursed by or on behalf of the Borrowers at such time.
"TOTAL VOTING POWER" means, with respect to any Person, the total number
of votes which holders of securities having the ordinary power to vote, in the
absence of contingencies, are entitled to cast in the election of directors of
such Person.
"TRADEMARKS" means all trademarks (including service marks), federal and
state trademark registrations and applications made by the Credit Parties,
common law trademarks and trade names owned by or assigned to the Credit
Parties, 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 5.5 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 ▇▇▇ 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.
"TYPE" when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Eurodollar Rate or the Adjusted
Base Rate.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"UNBILLED ELIGIBLE ACCOUNTS" means the aggregate face amount of Eligible
Accounts (a) in respect of which invoices have not been sent to the applicable
account debtors, but in respect of which the applicable account debtors have
executed time cards (in form and substance acceptable to the Lender) and
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(b) which are less than 30 days from the last day of the month in which the
services giving rise to such Eligible Accounts were rendered.
"UNBILLED RESTRICTED PRODUCT LINE ACCOUNTS" means the aggregate face
amount of Restricted Product Line Accounts (a) in respect of which invoices have
not been sent to the applicable account debtors, but in respect of which the
applicable account debtors have executed time cards (in form and substance
acceptable to the Lender) and (b) which are less than 30 days from the last day
of the month in which the services giving rise to such Restricted Product Line
Accounts were rendered.
"U.S. DOLLARS" or "$" refers to lawful money of the United States of
America.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person at any date,
any corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing 100% of the
equity or ordinary voting power (other than directors' qualifying shares) or, in
the case of a partnership, 100% of the general partnership interests are, as of
such date, directly or indirectly owned, controlled or held by such Person or
one or more Wholly Owned Subsidiaries of such Person or by such Person and one
or more Wholly Owned Subsidiaries of such Person.
"WYNNCHURCH" means Wynnchurch Capital Partners, L.P., and Wynnchurch
Capital Partners Canada, L.P., collectively, and their respective transferees,
successors and assigns as permitted in accordance with the Subordination and
Intercreditor Agreement.
"WYNNCHURCH SUBORDINATED NOTES" means the Senior Subordinated Secured
Convertible Promissory Notes due January 31, 2009 issued by ARC to Wynnchurch
immediately prior to the Effective Time for cash proceeds of $10,000,000.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.2 TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented, extended or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person's
successors and assigns, (c) the words "herein", "hereof" and "hereunder", and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e)
the words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
1.3 ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; PROVIDED that, if the
Borrowers notify the Lender that the Borrowers request an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the
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application thereof on the operation of such provision (or if the Lender
notifies the Borrowers that the Lender requests an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision shall have been amended in accordance herewith.
1.4 JOINT AND SEVERAL OBLIGATIONS; DESIGNATED FINANCIAL OFFICERS..
(a) All Obligations of the Credit Parties hereunder shall be joint
and several. Any notice, request, waiver, consent or other action made, given or
taken by any Credit Party shall bind all Credit Parties.
(b) Each Credit Party hereby authorizes each of the Designated
Financial Officers listed in SCHEDULE 1.4 hereto to act as agent for each Credit
Party and to execute and deliver on behalf of each Credit Party 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 any Credit
Party hereunder. The Borrowers may replace any of the Designated Financial
Officers listed in SCHEDULE 1.4 hereto or add any additional Designated
Financial Officers by delivering written notice to the Lender specifying the
names of each new Designated Financial Officer and the offices held by each such
Person. Each Credit Party hereby agrees that Lender shall be entitled to rely on
any such notices, requests, waivers, consents, certificates and other documents
executed, delivered or sent by any Designated Financial Officer without further
investigation.
ARTICLE 2
THE CREDITS
2.1 LOANS.
(a) REVOLVING CREDIT COMMITMENT. Subject to the terms and
conditions set forth herein, the Lender agrees to make Loans to the Borrowers
from time to time during the Revolving Credit Availability Period in an
aggregate principal amount that will not result in the Revolving Credit Exposure
exceeding the lesser of (i) the Revolving Credit Commitment at such time and
(ii) the Borrowing Base at such time. Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrowers may borrow, prepay and
reborrow Loans.
(b) FUNDING OF LOANS. The Borrowers shall deliver to the Lender
not later than 2:00 p.m., Boston, Massachusetts time, on Wednesday of each week
(the "Applicable Week"), by facsimile or electronic mail transmission, a
Borrowing Base Certificate (the "Applicable Borrowing Base Certificate") in
substantially the form of EXHIBIT B-1 hereto, setting forth the Borrowing Base
as of the close of business on the last Business Day of the immediately
preceding week. So long as no Default or Event of Default shall have occurred
and be continuing or shall result therefrom, the Lender shall make Loans to the
Borrowers (x) on such Business Days during the Applicable Week and in such
amounts as shall be requested by the Borrowers in the Applicable Borrowing Base
Certificate and (b) at such other times during the Applicable Week and in such
other amounts as the Lender shall determine in its reasonable discretion. All
Loans hereunder shall be credited to one or more accounts of the Borrowers
maintained with the Lender; PROVIDED that Loans made to finance the
reimbursement of an LC Disbursement under any Letter of Credit as provided in
Section 2.4(e) shall be remitted by the Lender to the Issuing Lender.
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(c) INTEREST ON LOANS. Subject to Section 2.3 hereof, each Loan
made to the Borrower by Lender hereunder shall bear interest at a rate per annum
equal to the Adjusted Base Rate plus the Applicable Margin. Notwithstanding the
foregoing, (i) all Loans which are not paid when due shall automatically bear
interest until paid in full at the Post-Default Rate, (ii) during the period
when any Event of Default of the type described in clauses (g), (h) or (i) of
Section 9.1 shall have occurred and be continuing, the principal of all Loans
hereunder shall automatically bear interest, after as well as before judgment,
at the Post-Default Rate, (iii) if there shall occur and be continuing any Event
of Default (other than an Event of Default of the type described in clauses (g),
(h) or (i) of Section 9.1), following written notice delivered to the Borrower
from the Lender, the principal of all Loans hereunder shall bear interest, after
as well as before judgment, at the Post-Default Rate during the period beginning
on the date such Event of Default first occurred, and ending on the date such
Event of Default is cured or waived. Accrued interest on each Loan shall be
payable in arrears on the first day of each month; PROVIDED that interest
accrued at the Post-Default Rate shall be payable on demand, and all accrued
interest on Loans shall be payable upon expiration of the Revolving Credit
Availability Period. All interest hereunder shall be computed on the basis of a
year of 360 days, and in each case shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(d) REPAYMENT OF LOANS. The Borrowers unconditionally promise to
pay to the Lender the then unpaid principal amount of the Loans on the Revolving
Credit Maturity Date. In addition, if following any reduction in the Revolving
Credit Commitment or at any other time the Revolving Credit Exposure shall
exceed the lesser of (i) the Revolving Credit Commitment at such time or (ii)
the Borrowing Base at such time, the Borrowers shall first, repay the Loans in
an aggregate amount equal to such excess, and second, provide cash collateral
for Total LC Exposure as specified in Section 2.4(g) in an aggregate amount
equal to such excess.
(e) LOAN ACCOUNT. The Lender shall maintain in accordance with
its usual practice an account evidencing the indebtedness of the Borrowers to
the Lender resulting from each Loan made by the Lender, including the amounts of
principal and interest payable and paid to the Lender from time to time
hereunder. The entries made in the account maintained pursuant to this
subsection 2.1(d) shall be prima facie evidence of the existence and amounts of
the obligations recorded therein absent manifest or demonstrable error; PROVIDED
that the failure of the Lender to maintain such account or any error therein
shall not in any manner affect the obligation of the Borrowers to repay the
Loans in accordance with the terms of this Agreement.
(f) REVOLVING CREDIT NOTE. Prior to the Closing Date, the
Borrowers shall prepare, execute and deliver to the Lender a Revolving Credit
Note in the principal amount of the Revolving Credit Commitment.
2.2 [RESERVED].
2.3 EURODOLLAR BORROWINGS.
(a) GENERAL. Each Loan initially shall be a Base Rate Loan.
Thereafter, the Borrowers may elect to convert any portion of the outstanding
Loans to a Eurodollar Borrowing. The Borrowers may elect different options for
continuations and conversions with respect to different portions of the affected
Borrowing, in which case the Loans comprising each such portion shall be
considered a separate Borrowing. The Borrowers shall not be permitted to select
any Eurodollar Interest Period for any Eurodollar Borrowing that ends after the
Revolving Credit Maturity Date.
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(b) INTEREST ON EURODOLLAR BORROWINGS. Each Eurodollar Borrowing
shall bear interest during the applicable Eurodollar Interest Period at a rate
per annum equal to the Eurodollar Rate plus the Applicable Margin.
Notwithstanding the foregoing, (i) all Eurodollar Borrowings which are not paid
when due shall automatically be converted into Base Rate Borrowings and shall
bear interest until paid in full at the Post-Default Rate, (ii) during the
period when any Event of Default of the type described in clauses (g), (h) or
(i) of Section 9.1 shall have occurred and be continuing, all Eurodollar
Borrowings shall automatically be converted into Base Rate Borrowings and shall
bear interest, after as well as before judgment, at the Post-Default Rate, (iii)
if there shall occur and be continuing any Event of Default (other than an Event
of Default of the type described in clauses (g), (h) or (i) of Section 9.1),
following written notice delivered to the Borrowers from the Lender, all
Eurodollar Borrowings shall automatically be converted into Base Rate Borrowings
and shall bear interest, after as well as before judgment, at the Post-Default
Rate during the period beginning on the date such Event of Default first
occurred, and ending on the date such Event of Default is cured or waived.
Accrued interest on each Eurodollar Borrowing shall be payable in arrears on the
first day of each month and on the last Business Day of the Eurodollar Interest
Period applicable to such Eurodollar Borrowing; PROVIDED that interest accrued
at the Post-Default Rate shall be payable on demand. All interest hereunder
shall be computed on the basis of a year of 360 days, and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) PROCEDURE FOR REQUESTING EURODOLLAR BORROWINGS. To request
that any portion of the outstanding Loans be converted into a Eurodollar
Borrowing, or, to request that any Eurodollar Borrowing continue as a Eurodollar
Borrowing for an additional Eurodollar Interest Period, the Borrowers shall
submit to the Lender a Eurodollar Request, in substantially the form of EXHIBIT
B-4 hereto and setting forth all of the information required to be set forth
therein, by electronic mail or facsimile transmission, not later than 1:00 p.m.,
Boston, Massachusetts time, three Business Days before the date of the proposed
conversion or continuation of such Borrowing. Each such Eurodollar Request made
by the Borrowers shall be irrevocable. Subject to the provisions of subsection
2.3(f) and provided that no Default or Event of Default shall have occurred and
be continuing, upon receipt of a Eurodollar Request, the Lender shall on the
requested date of conversion or continuation (i) convert the Base Rate Loan
requested to be converted into a Eurodollar Loan for the Eurodollar Interest
Period set forth in such Eurodollar Request and/or (ii) continue the Eurodollar
Loan requested to be continued as a Eurodollar Loan for the additional
Eurodollar Interest Period set forth in such Eurodollar Request.
(d) INCOMPLETE EURODOLLAR REQUESTS. If any Eurodollar Request is
incomplete in any respect, then such Eurodollar Request shall be void and the
Borrowing which was the subject matter of such Eurodollar Request shall continue
as a Base Rate Borrowing. If, with respect to any existing Eurodollar Borrowing,
the Borrowers fail to deliver a Eurodollar Request to continue such Eurodollar
Borrowing at least three Business Days prior to the expiration of the Eurodollar
Interest Period for such existing Eurodollar Borrowing, such Eurodollar
Borrowing shall automatically convert to a Base Rate Borrowing at the expiration
of such Eurodollar Interest Period.
(e) LIMIT ON EURODOLLAR BORROWINGS. At the commencement of each
Eurodollar Interest Period for a Eurodollar Borrowing, such Borrowing shall be
in an aggregate amount at least equal to $500,000 or any greater multiple of
$100,000. Borrowings of more than one Type may be outstanding at the same time;
PROVIDED that there shall not at any time be more than a total of four (4)
Eurodollar Borrowings outstanding.
(f) ALTERNATE RATE OF INTEREST. If prior to the commencement of
any Eurodollar Interest Period for a Eurodollar Borrowing, the Lender determines
that (i) adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Eurodollar Interest Period, (ii) the Eurodollar Rate
for such Eurodollar Interest Period will not adequately and fairly reflect the
cost to the Lender of
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making or maintaining Eurodollar Borrowings, or (iii) as a result of any Change
in Law it is unlawful or impossible for the Lender to make or maintain any
Eurodollar Borrowing; then in each case the Lender shall give notice thereof to
the Borrowers as promptly as practicable thereafter and, until the Lender
notifies the Borrowers that the circumstances giving rise to such notice no
longer exist, any Eurodollar Request submitted by the Borrowers shall be
ineffective; PROVIDED that if as a result of a Change in Law the Lender is
prohibited from maintaining any outstanding Eurodollar Borrowing, upon notice
from the Lender, the Borrowers shall immediately (A) convert such Eurodollar
Borrowing to a Base Rate Loan, or (B) repay such Eurodollar Borrowing in full,
together with all interest accrued thereon and all fees and other amounts
payable to the Lender hereunder (in either case, subject to the provisions of
subsection 2.3(g) of this Agreement with respect to redeployment costs).
(g) BREAK FUNDING PAYMENTS. In the event of (i) the payment of
any principal of any Eurodollar Loan other than on the last day of the
Eurodollar Interest Period applicable thereto (including as a result of an Event
of Default), (ii) the conversion of any Eurodollar Loan other than on the last
day of the Eurodollar Interest Period applicable thereto, or (iii) the failure
to borrow, convert, continue or prepay any Eurodollar Loan on the date specified
in any notice delivered pursuant hereto (regardless of whether such notice is
permitted to be revocable and is revoked in accordance herewith), then, in any
such event, the Borrowers shall compensate the Lender for the loss, cost and
expense attributable to such event, as determined by the Lender in a manner
consistent with customs and practices in the U.S. banking industry. In the event
that the Lender is entitled to receive compensation pursuant to this subsection
2.3(g), the Lender shall deliver a certificate to the Borrowers setting forth
the amount or amounts that the Lender is entitled to receive, and the Borrowers
shall pay such amount or amounts within three (3) days after receipt of such
certificate.
2.4 LETTERS OF CREDIT.
(a) GENERAL. Subject to the terms and conditions set forth
herein, in addition to the Loans provided for in Section 2.1, any Borrower may
request the issuance of Letters of Credit for its own account by the Issuing
Lender, in a form reasonably acceptable to the Issuing Lender, at any time and
from time to time during the Revolving Credit Availability Period. Letters of
Credit issued hereunder shall constitute utilization of the Revolving Credit
Commitment. In the event of any inconsistency between the terms and conditions
of this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by any Borrowers to, or entered into by
any Borrower with, the Issuing Lender relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrowers shall
deliver to the Issuing Lender and the Lender 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 Issuing Lender. 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 LC Exposure at such time shall not exceed the LC Sublimit, and (ii)
the Revolving Credit Exposure at such time shall not exceed the lesser of (A)
the Revolving Credit Commitment at such time, and (B) the Borrowing Base at such
time.
(c) EXPIRATION DATE. 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) the date 365 days, in
the case of standby Letters of Credit, or 180 days, in the case of documentary
Letters of Credit, after the date of the issuance of such Letter of Credit (or,
in the case of any
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renewal or extension of any standby Letter of Credit, 365 days after such
renewal or extension) PROVIDED that any such standby Letter of Credit may
provide for automatic extensions thereof to a date not later than 365 days
beyond its current expiration date, and (ii) the date that is five Business Days
prior to the Revolving Credit Maturity Date. No Letter of Credit may be extended
beyond the date that is five Business Days prior to the Revolving Credit
Maturity Date.
(d) REIMBURSEMENT. If the Issuing Lender shall make any LC
Disbursement in respect of a Letter of Credit, the Borrowers shall reimburse
(each, a "REIMBURSEMENT OBLIGATION") the Issuing Lender in respect of such LC
Disbursement by paying to the Lender an amount equal to such LC Disbursement not
later than 1:00 p.m., Boston, Massachusetts time, on (i) the Business Day that
the Borrower receives notice of such LC Disbursement, if such notice is received
prior to 11:00 a.m., Boston, Massachusetts time, or (ii) the Business Day
immediately following the day that the Borrowers receive such notice, if such
notice is not received prior to such time, PROVIDED that, subject to the
conditions to borrowing set forth herein, payment of each such Reimbursement
Obligation shall be made through the automatic funding of a Base Rate Borrowing
in an amount equal to the amount of such Reimbursement Obligation, and the
Borrowers hereby irrevocably authorize and direct the Lender to take such
actions as may be necessary to effectuate such automatic funding of such Base
Rate Borrowings. To the extent that any such Reimbursement Obligation is paid
through the automatic funding of a Base Rate Borrowing, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting Base Rate Borrowing. If the Borrowers cannot satisfy the conditions to
borrowing set forth herein such that the payment of any Reimbursement Obligation
cannot be made through the automatic funding of a Base Rate Borrowing and the
Borrowers shall fail to make such payment when due, the Lender shall promptly
pay to the Issuing Lender the unreimbursed portion of the LC Disbursement.
Promptly following receipt by the Lender of any payment from the Borrowers
pursuant to this paragraph, the Lender shall distribute such payment to the
Issuing Lender.
(e) OBLIGATIONS ABSOLUTE. The Borrowers' obligation to reimburse
LC Disbursements as provided in subsection 2.4(d) 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 Issuing Lender 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 Issuing Lender), whether or not similar to any of
the foregoing, that might, but for the provisions of this Section 2.4,
constitute a legal or equitable discharge of the Borrowers' obligations
hereunder.
(f) INTERIM INTEREST. If the Issuing Lender shall make any LC
Disbursement in respect of any Letter of Credit, and if the Borrowers cannot
satisfy the conditions to borrowing set forth herein such that payment of the
Reimbursement Obligation resulting from such LC Disbursement cannot be made
through the automatic funding of a Base Rate Borrowing, then, unless the
Borrowers shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that the Borrowers reimburse such LC Disbursement, at the rate per
annum then applicable to Base Rate Loans; PROVIDED that, if the Borrowers fail
to reimburse such LC Disbursement when due pursuant to subsection 2.4(d), then
interest calculated at the Post-Default Rate shall accrue on the unpaid amount
thereof. Interest accrued pursuant to this paragraph shall be for the account of
the Issuing Lender, except that interest accrued on and after the date of
payment by the Lender pursuant to subsection 2.4(d) shall be for the account of
the Lender to the extent of the payment.
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(g) CASH COLLATERALIZATION. If either (i) an Event of Default
shall occur and be continuing and the Borrowers receive notice from the Lender
demanding the deposit of cash collateral pursuant to this paragraph, or (ii) the
Borrowers shall be required to provide cash collateral for Total LC Exposure
pursuant to subsection 2.1(d), the Borrowers shall immediately deposit with the
Lender an amount in cash equal to, in the case of an Event of Default, the Total
LC Exposure as of such date plus any accrued and unpaid interest thereon and, in
the case of any cash collateral required to be provided pursuant to subsection
2.1(d), the amount required under subsection 2.1(d); PROVIDED that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default described
in clause (g) or (h) of Section 9.1. Such deposit shall be held by the Lender as
collateral in the first instance for the Total LC Exposure under this Agreement,
and the Lender agrees to use such deposit to reimburse the Issuing Lender for
any draws on such Letters of Credit, and thereafter for the payment of any other
obligations of the Credit Parties hereunder.
2.5 EXPIRATION, TERMINATION OR REDUCTION OF REVOLVING CREDIT
COMMITMENT.
(a) EXPIRATION OF REVOLVING CREDIT COMMITMENT. Unless previously
terminated, the Revolving Credit Commitment shall expire at the close of
business on the Revolving Credit Maturity Date.
(b) REDUCTION OF REVOLVING CREDIT COMMITMENT. The Borrowers may
at any time and from time to time reduce the Revolving Credit Commitment;
PROVIDED that (i) each reduction of the Revolving Credit Commitment shall be in
an amount that is at least equal to $500,000 or any greater multiple of
$100,000, and (ii) the Borrowers shall not reduce the Revolving Credit
Commitment if, after giving effect to any concurrent repayment, the total
Revolving Credit Exposure would exceed the total Revolving Credit Commitment.
The Borrowers shall notify the Lender of any election to reduce the Revolving
Credit Commitment at least three Business Days prior to the effective date of
such reduction, specifying the effective date thereof. Each notice of reduction
of the Revolving Credit Commitment shall be irrevocable. Each reduction of the
Revolving Credit Commitment shall be permanent.
(c) OPTIONAL TERMINATION OF REVOLVING CREDIT COMMITMENT. Subject
to the provisions of subsection 2.5(d), the Borrowers shall have the right at
any time to terminate the Revolving Credit Commitment. The Borrowers shall
notify the Lender of any election to terminate the Revolving Credit Commitment
under this subsection 2.5(c) in writing at least ninety (90) days prior to the
effective date of such termination, specifying the effective date thereof. Each
notice of termination of the Revolving Credit Commitment shall be irrevocable.
Any termination of the Revolving Credit Commitment shall be permanent.
(d) TERMINATION FEE. In connection with any termination of the
Revolving Credit Commitment, the Borrower shall (i) repay the entire principal
balance of, and all accrued interest and fees owing with respect to, the Loans,
and (ii) pay to the Lender, a termination fee equal to the product of (A) (x) if
such termination occurs on or prior to the first anniversary of the Closing
Date, the amount of the Revolving Credit Commitment on the Closing Date, or (y)
if such termination occurs after the first anniversary of the Closing Date, the
average amount of the Revolving Credit Commitment during the twelve (12) months
preceding the date of termination MULTIPLIED BY (B) the applicable termination
percentage set forth below:
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Period during which Applicable
Termination Date Occurs Termination Percentage
----------------------- ----------------------
Prior to the first anniversary of the Closing Date 2.00%
On or after the first anniversary of the Closing Date but prior 1.50%
to the second anniversary of the Closing Date
On or after the second anniversary of the Closing Date 1.00%
2.6 PAYMENTS.
(a) PAYMENTS GENERALLY. The Borrowers shall be obligated to make
each payment required to be made by the Borrowers hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or otherwise) to
Lender at its offices in Boston,
Massachusetts, prior to 3:00 p.m., Boston,
Massachusetts time, on the date when due (except that if any payment shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension).
All payments shall be made in immediately available funds, in U.S. dollars
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Lender, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
Notwithstanding anything to the contrary set forth herein, subject to the
conditions to the funding of Loans set forth herein, all payments of interest,
fees and any other amounts due to be paid by the Borrowers hereunder shall be
made through the automatic funding of Base Rate Loans in amounts equal to the
amounts of such interest, fees or other amounts due to be paid by the Borrowers
hereunder, and the Borrowers hereby irrevocably authorize and direct the Lender
to take such actions as may be necessary to effectuate such automatic funding of
Base Rate Loans, and, upon funding of any such Base Rate Loan, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting Base Rate Loan. The Borrowers expressly acknowledge and agree that (i)
the Lender may, in its sole discretion, effectuate the automatic funding of a
Loan pursuant to this subsection 2.6(a) even though at the time of, or after
giving effect to, the funding of such Loans the Revolving Credit Exposure
exceeds the lesser of (x) the Revolving Credit Commitment and (y) the Borrowing
Base, and (ii) if any one or more of the conditions to the funding of Loans
cannot be satisfied and the Lender, in its sole discretion, refuses to fund a
Base Rate Loan in an amount sufficient to satisfy the amount of any interest,
fees or other amounts due hereunder, the Borrowers shall remain obligated to pay
the full amount of such interest, fees or other amounts as and when the same
shall become due.
(b) APPLICATION OF PAYMENTS. If at any time insufficient funds
are received by and available to the Lender to pay fully all amounts of
principal, unreimbursed LC Disbursements, interest and fees then due hereunder
under any circumstances, including, without limitation during, or as a result of
the exercise by the Lender of remedies hereunder or under any other Loan
Document and applicable law, such funds shall be applied (i) first, to pay
interest, fees, costs and expenses then due hereunder, (ii) second, to pay
principal and unreimbursed LC Disbursements then due hereunder, and (iii) third,
to any other Obligations then due from the Credit Parties to the Lender, the
Issuing Lender, the Cash Management Bank or any other Affiliate of the Lender.
(c) COLLECTION. Any check, instrument or other item of payment
in favor of any Borrower remitted to the Cash Management Bank for processing
shall be subject to a collection charge equal to two days interest on the amount
thereof at the Adjusted Base Rate plus the Applicable Margin,
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which collection charges shall be payable by the Borrowers monthly in arrears on
the first Business Day of each month.
2.7 PREPAYMENT OF LOANS.
(a) OPTIONAL PREPAYMENTS OF LOANS. The Borrowers shall have the
right at any time and from time to time to prepay the Loans in whole or in part,
subject to the payment of any amounts due under subsection 2.3(g) and, if the
Revolving Credit Commitment is terminated, subsection 2.5(d).
(b) MANDATORY PREPAYMENTS. The Borrowers shall be obligated to,
and shall, make prepayments of the Loans hereunder as follows:
(i) INCURRENCE OF DEBT. Without limiting the obligation of
the Borrowers to obtain the consent of the Lender to any incurrence of
Indebtedness not otherwise permitted hereunder, the Borrowers agree, on
the closing of any incurrence of Indebtedness by any Credit Party (other
than Indebtedness permitted pursuant to Section 8.1) to prepay the Loans
hereunder, upon the date of such incurrence of Indebtedness, in an
aggregate amount equal to 100% of the amount of the Net Cash Payments
from such incurrence of Indebtedness received by any Credit Party.
(ii) SALE OR OFFERING OF SECURITIES. The Borrowers agree on
the closing of any offering or sale of equity securities by any Credit
Party (other than any offering or sale of equity securities by any
Credit Party to any other Credit Party), to prepay the Loans hereunder,
upon the date of such sale or offering of securities, in an aggregate
amount equal to 100% of the amount of Net Cash Payments from such
offering of securities received by any such Credit Party.
(iii) SALE OF ASSETS. Without limiting the obligation of the
Borrowers to obtain the consent of the Lender to any Disposition not
otherwise permitted hereunder, the Borrowers agree, on the date of any
Disposition by any Credit Party, to prepay the Loans hereunder, upon the
date of such Disposition, in an aggregate amount equal to 100% of the
amount of such Net Cash Payments from such Disposition received by any
Credit Party on the date of such Disposition.
(iv) PROCEEDS OF CASUALTY EVENTS. Upon the receipt by the
Lender or the Credit Parties of the proceeds of insurance, condemnation
award or other compensation in respect of any Casualty Event affecting
any property of the Credit Parties, the Borrowers shall prepay the Loans
in an aggregate amount equal to 100% of the Net Cash Payments from such
Casualty Event.
(c) NOTIFICATION OF CERTAIN PREPAYMENTS. The Borrowers shall
notify the Lender by telephone (confirmed by telecopy) of any voluntary
prepayment of any Eurodollar Loan not later than 1:00 p.m., Boston,
Massachusetts time, three Business Days before the date of such prepayment. The
Borrowers shall notify the Lender of any mandatory prepayment of the Loans
pursuant to subsection 2.7(b) hereunder as soon as practicable. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid.
(d) PREPAYMENTS ACCOMPANIED BY INTEREST. All prepayments of
Loans shall be accompanied by accrued interest through the date of prepayment.
(e) REVOLVING NATURE OF CREDIT FACILITY. The prepayment of Loans
from time to time hereunder (whether voluntary or mandatory) shall not cause an
automatic reduction in the Revolving
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Credit Commitments, and the amount of Loans so prepaid may be re-borrowed
subject to and in accordance with the other provisions of this Agreement.
2.8 FEES.
(a) CLOSING FEE. The Borrowers shall pay to the Lender on the
Closing Date a closing fee in an amount equal to $600,000 MINUS that portion of
the aggregate amount of all deposits remitted to FCC by ARC prior to the Closing
Date not applied by FCC to expenses incurred by FCC prior to the Closing Date.
(b) UNUSED FEE. The Borrowers shall pay to the Lender unused
fees in respect of the Revolving Credit Commitment, in an aggregate amount equal
to the product of (x) 0.50%, MULTIPLIED BY (y) the daily average unused amounts
of the Revolving Credit Commitment during the period from and including the date
on which the Effective Time shall occur to but excluding the date on which the
Revolving Credit Commitment terminates. Accrued unused fees shall be payable
monthly in arrears on the first day of each month and on the date on which the
Revolving Credit Commitment terminates. All unused fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(c) LETTER OF CREDIT FEES. The Borrowers shall pay with respect
to Letters of Credit issued hereunder the following fees:
(i) with respect to each standby or documentary Letter of
Credit issued hereunder, a fee to the Lender which shall accrue at a
rate per annum equal to (x) 3.25% MULTIPLIED BY (y) the average daily
amount of outstanding Letters of Credit during the period from and
including the Closing Date to but excluding the date on which there
shall no longer be any Letters of Credit outstanding hereunder,
(ii) with respect to each standby or documentary Letter of
Credit issued hereunder, a fronting fee to the Lender equal to 0.125% of
the face amount of each such Letter of Credit, and
(iii) with respect to each documentary or standby Letter of
Credit issued hereunder, the Issuing Lender's standard fees with respect
to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder.
Accrued fees for Letters of Credit shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day), and shall be payable monthly in
arrears on the first day of each month and on the date the Revolving Credit
Commitment terminates, commencing on the first such date to occur after the date
hereof, PROVIDED that any such fees accruing after the date on which the
Revolving Credit Commitment terminates shall be payable on demand.
2.9 INCREASED COSTS.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, the Lender or the Issuing Lender;
or
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(ii) impose on the Lender or the Issuing Lender or the
London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by the Lender or any Letter of Credit;
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to the Issuing Lender
of issuing or maintaining any Letter of Credit or to reduce the amount of any
sum received or receivable by the Lender or the Issuing Lender hereunder
(whether of principal, interest or otherwise), then the Borrowers will pay to
the Lender or the Issuing Lender, as the case may be, such additional amount or
amounts as will compensate the Lender or the Issuing Lender, as the case may be,
for such additional costs incurred or reduction suffered.
(b) If the Lender or the Issuing Lender reasonably determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on the Lender's or the Issuing Lender's
capital or on the capital of the Lender's or the Issuing Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by the
Lender, or the Letters of Credit issued by the Issuing Lender, to a level below
that which the Lender or the Issuing Lender or the Lender's or the Issuing
Lender's holding company could have achieved but for such Change in Law (taking
into consideration the Lender's or the Issuing Lender's policies and the
policies of the Lender's or the Issuing Lender's holding company with respect to
capital adequacy), then from time to time the Borrowers will pay to the Lender
or the Issuing Lender, as the case may be, such additional amount or amounts as
will compensate the Lender or the Issuing Lender, or the Lender's or the Issuing
Lender's holding company, for any such reduction suffered.
(c) A certificate of the Lender or the Issuing Lender setting
forth the amount or amounts necessary to compensate the Lender or the Issuing
Lender or its holding company, as the case may be, as specified in subsections
2.9(a) or 2.9(b) above shall be delivered to the Borrowers and shall be
conclusive so long as it reflects a reasonable basis for the calculation of the
amounts set forth therein and does not contain any manifest error. The Borrowers
shall pay the Lender or the Issuing Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of the Lender or the Issuing
Lender to demand compensation pursuant to this Section 2.9 shall not constitute
a waiver of the Lender's or the Issuing Lender's right to demand such
compensation; PROVIDED that the Borrowers shall not be required to compensate
the Lender or the Issuing Lender pursuant to this Section 2.9 for any increased
costs or reductions incurred more than six months prior to the date that Lender
or the Issuing Lender, as the case may be, notifies the Borrowers of the Change
in Law giving rise to such increased costs or reductions and of Lender's or the
Issuing Lender's intention to claim compensation therefor; PROVIDED FURTHER
that, if the Change in Law giving rise to such increased costs or reductions is
(i) retroactive and (ii) occurred within such six-month period, then the
six-month period referred to above may be extended to include the period of
retroactive effect thereof, but in no event any period prior to the Closing
Date.
2.10 TAXES.
(a) Any and all payments by or on account of any Obligations of
the Borrowers hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; PROVIDED that if the Borrowers shall
be required to deduct any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.10) the Lender or the Issuing Lender (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions and (iii)
the
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Borrowers shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay all Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Lender and the Issuing
Lender, within ten (10) days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.10) paid by the Lender or the Issuing Lender, as the case may be (and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto during the period prior to the Borrowers making the payment
demanded under this paragraph (c)), whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrowers by the Lender or the Issuing Lender, shall
be conclusive absent manifest or demonstrable error. The Lender or the Issuing
Bank, as applicable, after receiving payment of Indemnified Taxes or Other Taxes
pursuant to this paragraph (c), shall, at the request and the sole cost and
expense of the Borrowers, take reasonable action to pursue a refund of such
Indemnified Taxes or Other Taxes, and in the event any such Indemnified Taxes or
Other Taxes are refunded to the Lender or the Issuing Bank, as applicable, such
refund shall be paid over to the Lender for application to the prepayment of the
Loans.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to a Governmental Authority, the Borrowers
shall deliver to the Lender the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Lender.
ARTICLE 3
[RESERVED.]
ARTICLE 4
THE COLLATERAL
4.1 GRANT OF SECURITY INTEREST. As security for due and punctual
payment and performance of the Obligations, each Credit Party hereby grants to
the Lender a continuing security interest in and lien on all tangible and
intangible property and assets of such Credit Party, whether now owned or
existing or hereafter acquired or arising, together with any and all additions
thereto and replacements therefor and proceeds and products thereof
(collectively referred to for purposes of this Article 4 as "COLLATERAL"),
including without limitation the property described below:
(a) all tangible personal property, including without limitation
all present and future goods, inventory (including, without limitation, all
merchandise, raw materials, work in process, finished goods and supplies),
machinery, equipment, motor vehicles, rolling stock, tools, furniture, real
property, fixtures, office supplies, computers, computer software and associated
equipment, whether now owned or hereafter acquired, including, without
limitation, all tangible personal property used in the operation of the business
of such Credit Party;
(b) all rights under all present and future authorizations,
permits, licenses and franchises issued, granted or licensed to such Credit
Party for the operation of its business;
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(c) all Patents of such Credit Party;
(d) all Trademarks of such Credit Party;
(e) all Copyrights of such Credit Party;
(f) the entire goodwill of business of such Credit Party and all
other general intangibles (including know-how, trade secrets, customer lists,
proprietary information, inventions, domain names, methods, procedures and
formulae) connected with the use of and symbolized by any Patents, Trademarks or
Copyrights of such Credit Party;
(g) all rights under all present and future vendor or customer
contracts and all franchise, distribution, design, consulting, construction,
engineering, management and advertising and related agreements;
(h) all rights under all present and future leases of real and
personal property; and all other personal property, including, without
limitation, all present and future accounts, accounts receivable, cash, cash
equivalents, deposits, deposit accounts, loss carry back, tax refunds, insurance
proceeds, premiums, rebates and refunds, choses in action, investment property,
securities, partnership interests, limited liability company interests,
contracts, contract rights, general intangibles (including without limitation,
all customer and advertiser mailing lists, intellectual property, patents,
copyrights, trademarks, trade secrets, trade names, domain names, goodwill,
customer lists, advertiser lists, catalogs and other printed materials,
publications, indexes, lists, data and other documents and papers relating
thereto, blueprints, designs, charts, and research and development, whether on
paper, recorded electronically or otherwise), all websites (including without
limitation, all content, HTML documents, audiovisual material, software, data,
hardware, access lines, connections, copyrights, trademarks, patents and trade
secrets relating to such websites) and domain names, any information stored on
any medium, including electronic medium, related to any of the personal property
of such Credit Party, all financial books and records and other books and
records relating, in any manner, to the business of such Credit Party, all
proposals and cost estimates and rights to performance, all instruments and
promissory notes, documents and chattel paper, and all debts, obligations and
liabilities in whatever form owing to such Credit Party from any person, firm or
corporation or any other legal entity, whether now existing or hereafter
arising, now or hereafter received by or belonging or owing to such Credit
Party; and all guaranties and security therefor, and all letters of credit and
other supporting obligations in respect of such debts, obligations and
liabilities.
Any of the foregoing terms which are defined in the Uniform Commercial Code
shall have the meaning provided in the Uniform Commercial Code, as amended and
in effect from time to time, as supplemented and expanded by the foregoing.
4.2 SPECIAL WARRANTIES AND COVENANTS OF THE CREDIT PARTIES. Each
Credit Party hereby warrants and covenants to the Lender that:
(a) Such Credit Party has delivered to the Lender a Perfection
Certificate in substantially the form of EXHIBIT C hereto. All information set
forth in such Perfection Certificate is true and correct in all material
respects and the facts contained in such Perfection Certificate are accurate in
all material respects as of the date of this Agreement. Each Credit Party agrees
to supplement its Perfection Certificate promptly after obtaining information
which would require a correction or addition to such Perfection Certificate.
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(b) No Credit Party will change its jurisdiction of
organization, principal or any other place of business, or the location of any
Collateral from the locations set forth in the Perfection Certificate delivered
by such Credit Party, or make any change in its name or conduct its business
operations under any fictitious business name or trade name, without, in any
such case, at least thirty (30) days' prior written notice to the Lender;
provided that the inventory of such Credit Party may be in the possession of
manufacturers or processors in any jurisdiction in which all necessary UCC
financing statements have been filed by the Lender and with respect to which the
Lender has received waiver letters from all landlords, warehousemen and
processors in form and substance acceptable to Lender.
(c) Except for Collateral that is obsolete or no longer used in
their business, the Credit Parties will keep the Collateral in good order and
repair (normal wear excepted) and adequately insured at all times in accordance
with the provisions of Section 7.5. The Credit Parties will pay promptly when
due all taxes and assessments on the Collateral or for its use or operation,
except for taxes and assessments permitted to be contested as provided in
Section 7.4. Following the occurrence and during the continuance of an Event of
Default, the Lender may at its option discharge any taxes or Liens to which any
Collateral is at any time subject (other than Permitted Liens), and may, upon
the failure of the Credit Parties to do so in accordance with this Agreement,
purchase insurance on any Collateral and pay for the repair, maintenance or
preservation thereof, and each Credit Party agrees to reimburse the Lender on
demand for any payments or expenses incurred by the Lender pursuant to the
foregoing authorization and any unreimbursed amounts shall constitute
Obligations for all purposes hereof.
(d) The Lender may from time to time request and each Credit
Party shall deliver copies of all customer lists and vendor lists subject to the
provisions of Section 10.13.
(e) Each Credit Party will promptly execute and deliver to the
Lender such financing statements, certificates and other documents or
instruments as may be necessary to enable the Lender to perfect or from time to
time renew the Liens granted in favor of the Lender under the Loan Documents,
including, without limitation, such financing statements, certificates and other
documents as may be necessary to perfect a security interest in any additional
Collateral hereafter acquired by such Credit Party or in any replacements or
proceeds thereof. Each Credit Party authorizes and appoints the Lender, in case
of need, to execute such financing statements, certificates and other documents
pertaining to the Lender's Liens on the Collateral in its stead if such Credit
Party fails to so execute such documents, with full power of substitution, as
such Credit Party's attorney in fact. Each Credit Party further agrees that a
carbon, photographic or other reproduction of a security agreement or financing
statement is sufficient as a financing statement under this Agreement and the
other Loan Documents.
(f) Each Credit Party agrees that it will join with the Lender
in executing and, at its own expense, will file and refile, or permit the Lender
to file and refile such financing statements, continuation statements and other
documents (including, without limitation, this Agreement and licenses to use
software and other property protected by copyright), in such offices (including,
without limitation, the PTO, the United States Copyright Office, and appropriate
state patent, trademark and copyright offices), as the Lender may reasonably
deem necessary or appropriate, wherever required or permitted by law in order to
perfect and preserve the rights and interests granted to the Lender in Patents,
Trademarks and Copyrights hereunder. Each Credit Party will give the Lender
notice of each office at which records of such Credit Party pertaining to all
intangible items of Collateral are kept. Except as may be provided in such
notice, the records concerning all intangible Collateral are and will be kept at
the address shown in the respective Perfection Certificate for such Credit Party
as the principal place of business of such Credit Party.
(g) The Credit Parties are the sole and exclusive owners of the
websites and domain names listed on SCHEDULE 4.2 hereto and have registered such
domain names with the entities listed on
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SCHEDULE 4.2 or the applicable authority which provides for the exclusive use by
the Credit Parties of such domain names. The websites do not contain any
material, the publication of which may result in (a) the violation of rights of
any person or (b) a right of any person against the publisher or distributor of
such material.
(h) The Credit Parties shall, annually by the end of the first
calendar quarter following the previous calendar year, provide written notice to
the Lender of all applications for registration of Patents, Trademarks or
Copyrights, to the extent such applications exist, made during the preceding
calendar year. The Credit Parties shall file and prosecute diligently all
applications for registration of Patents, Trademarks or Copyrights now or
hereafter pending that would be necessary to the business of the Credit Parties
to which any such applications pertain, and to do all acts, in any such
instance, necessary to preserve and maintain all rights in such registered
Patents, Trademarks or Copyrights unless such Patents, Trademarks or Copyrights
are not material to the business of the Credit Parties, as reasonably determined
by the Credit Parties consistent with prudent and commercially reasonable
business practices. Any and all costs and expenses incurred in connection with
any such actions shall be borne by the Credit Parties.
(i) The domain name servers used in connection with the domain
names of the Credit Parties and all other relevant information pertaining to
such domain names, and the administrative contacts used in connection with the
registration of such domain names are identified on SCHEDULE 4.2 hereof.
Promptly, and in any event, no later than thirty (30) days after any change in
the identity of such domain name servers or of any domain name administrative
contact, the Credit Parties shall provide notice thereof to the Lender.
(j) To the extent that any Credit Party is a beneficiary under
any written letter of credit, the Credit Parties shall, at the request of
Lender, deliver such letter of credit to the Lender, and execute and deliver to
the issuer of and any Person that has confirmed such letter of credit an
assignment of proceeds form, in favor of the Lender and satisfactory to the
Lender and such issuer or (as the case may be) such Person that has confirmed
such letter of credit, requiring the proceeds of any drawing under such letter
of credit to be paid directly to the Lender for application against the
Obligations.
4.3 COLLECTION OF PROCEEDS OF ACCOUNTS RECEIVABLE.
(a) On or before the Closing Date, the Credit Parties shall (i)
direct all of their account debtors to make all payments on accounts receivable
of the Credit Parties directly to post office boxes (each a "Lock Box" and
collectively the "Lock Boxes") under the control of the Cash Management Bank
and/or such other financial institutions as shall be acceptable to the Lender,
(ii) establish accounts (each a "Controlled Account " and collectively the
"Controlled Accounts") in the Lender's name for the benefit of the Borrowers
with the Cash Management Bank and/or such other financial institutions as shall
be acceptable to the Lender, into which all payments received in the Lock Boxes
shall be deposited, and into which the Borrowers will immediately deposit all
payments made for inventory or services sold or rendered by the Borrowers and
received by the Credit Parties in the identical form in which such payments were
made, whether by cash or check, and (iii) cause each Subsidiary and Affiliate,
and any other Person acting for or in concert with the Credit Parties that
receives any monies, checks, notes, drafts or other payments relating to or as
proceeds of accounts receivable or other Collateral, to receive and hold such
items in trust for, and as the sole and exclusive property of, the Lender and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in hand to the Controlled Accounts; PROVIDED that, for purposes of
administrative convenience, the Lender may in its reasonable discretion, permit
the Credit Parties from time to time to maintain one or more accounts with one
or more financial institutions other than the Cash Management Bank and with such
maximum cash balances as the
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Lender deems appropriate, and for which the Credit Parties may, at the
discretion of the Lender, be permitted to have direct access.
(b) Each Credit Party acknowledges that the Cash Management Bank
is an affiliate of the Lender and that the Cash Management Bank and the Lender
are parties to cash management agreements that confirm that the Lender has
dominion and control over all accounts of the Credit Parties or the Lender
maintained by the Cash Management Bank, and all funds from time to time held in
such accounts. Each Credit Party agrees to enter into such Lock Box Agreements
and Control Agreements with the Cash Management Bank and the Lender as the
Lender may reasonably request. Each Credit Party also agrees to cause each
financial institution other than the Cash Management Bank with which a Lock Box
and/or Controlled Account has been established to enter into a Lock Box
Agreement and/or Control Agreement, as applicable, confirming that the amounts
on deposit in such Lock Box and/or Controlled Account, as applicable, are the
property of and are under the control of the Lender, that such financial
institution has no right to setoff against such Lock Box or Controlled Account
or against any other account maintained by such financial institution into which
the contents of such Controlled Account are transferred, and that upon written
notice from the Lender, such financial institution shall wire, or otherwise
transfer in immediately available funds in a manner satisfactory to the Lender,
funds deposited in the Controlled Account on a daily basis as such funds are
collected.
(c) The Credit Parties agree to pay all reasonable fees, costs
and expenses which the Credit Parties incur in connection with opening and
maintaining a Lock Box and Controlled Account. All of such fees, costs and
expenses which remain unpaid pursuant to any Lock Box or Controlled Account
Agreement with the Credit Parties, to the extent same shall have been paid by
the Lender hereunder, shall constitute Loans hereunder, shall be payable to the
Lender by the Credit Parties upon demand, and, until paid, shall bear interest
at the highest rate then applicable to Base Rate Loans hereunder. All checks,
drafts, instruments and other items of payment or proceeds of Collateral
delivered to the Lender or the Cash Management Bank in kind shall be endorsed by
the Credit Parties, to the Lender, and, if that endorsement of any such item
shall not be made for any reason, the Lender and the Cash Management Bank are
each hereby irrevocably authorized to endorse the same on behalf of the Credit
Parties. For the purpose of this subsection 4.3(c), each Credit Party
irrevocably hereby makes, constitutes and appoints the Lender (and all Persons
designated by the Lender for that purpose, including, without limitation, the
Cash Management Bank) as such Credit Party's true and lawful attorney and
agent-in-fact (i) to endorse the name of such Credit Party upon said items of
payment and/or proceeds of Collateral of the Credit Parties and upon any chattel
paper, document, instrument, invoice or similar document or agreement relating
to any account receivable of the Credit Parties or goods pertaining thereto;
(ii) to take control in any manner of any item of payment or proceeds thereof;
(iii) to have access to any lock box or postal box into which any checks or
other forms of payment in respect of accounts receivable of the Credit Parties
are remitted; and (iv) open all mail containing checks and other forms of
payment in respect of accounts receivable of the Credit Parties and process such
checks and other forms of payment.
(d) The Lender (and all Persons designated by the Lender for
such purpose, including, without limitation, the Cash Management Bank) may, at
any time and from time to time after the occurrence and during the continuance
of an Event of Default, whether before or after notification to any account
debtor and whether before or after the maturity of any of the Obligations, (i)
enforce collection of any accounts receivable or contract rights of the Credit
Parties by suit or otherwise; (ii) exercise all of the rights and remedies of
the Credit Parties with respect to proceedings brought to collect any accounts
receivable; (iii) surrender, release or exchange all or any part of any accounts
receivable of the Credit Parties, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder; (iv) sell or assign any account receivable of the Credit Parties
upon such terms, for such amount and at such time or times as the Lender deems
advisable; (v) prepare, file and sign the names of the Credit Parties on any
proof of claim in bankruptcy or other similar
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document against any account debtor indebted on an account receivable of the
Credit Parties; and (vi) do all other acts and things which are necessary, in
the Lender's sole discretion, to fulfill the Obligations of the Credit Parties
under this Agreement and to allow the Lender to collect the accounts receivable.
In addition to any other provision hereof or in any of the other Loan Documents,
the Lender may at any time on or after the occurrence of an Event of Default, at
the sole expense of the Credit Parties, notify any parties obligated on any of
the accounts receivable of the Credit Parties to make payment directly to the
Lender of any amounts due or to become due thereunder.
4.4 FIXTURES, ETC. It is the intention of the parties hereto that none
of the Collateral shall become fixtures and each Credit Party will take all such
reasonable action or actions as may be necessary to prevent any of the
Collateral from becoming fixtures. Without limiting the generality of the
foregoing, each Credit Party will, if requested by the Lender, use commercially
reasonable efforts to obtain waivers of Liens, in form satisfactory to the
Lender, from each lessor of real property on which any of the Collateral is or
is to be located to the extent requested by the Lender.
4.5 RIGHT OF LENDER TO DISPOSE OF COLLATERAL, ETC. Upon the occurrence
of any Event of Default, such Event of Default not having previously been
waived, remedied or cured, but subject to the provisions of the Uniform
Commercial Code or other applicable law, in addition to all other rights under
applicable law and under the Loan Documents, the Lender shall have the right to
take possession of the Collateral and, in addition thereto, the right to enter
upon any premises on which the Collateral or any part thereof may be situated
and remove the same therefrom. The Lender may require the Credit Parties to make
the Collateral (to the extent the same is moveable) available to the Lender at a
place to be designated by the Lender or transfer any information related to the
Collateral to the Lender by electronic medium. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Lender will give the Credit Parties at least
seven (7) days' prior written notice of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. Any such notice shall be deemed to meet any
requirement hereunder or under any applicable law (including the Uniform
Commercial Code) that reasonable notification be given of the time and place of
such sale or other disposition.
4.6 RIGHT OF LENDER TO USE AND OPERATE COLLATERAL, ETC. Upon the
occurrence and during the continuance of any Event of Default, subject to the
provisions of the Uniform Commercial Code or other applicable law, the Lender
shall have the right and power (a) to take possession of all or any part of the
Collateral, and to exclude the Credit Parties and all persons claiming under the
Credit Parties wholly or partly therefrom, and thereafter to hold, store, and/or
use, operate, manage and control the same, and (b) to grant a license to use, or
cause to be granted a license to use, any or all of the Patents, Trademarks and
Copyrights (in the case of Trademarks, along with the goodwill associated
therewith), but subject to the terms of any licenses. Upon any such taking of
possession, the Lender may, from time to time, at the expense of the Credit
Parties, make all such repairs, replacements, alterations, additions and
improvements to and of the Collateral as the Lender may deem proper. In any such
case the Lender shall have the right to manage and control the Collateral and to
carry on the business and to exercise all rights and powers of the Credit
Parties in respect thereto as the Lender shall deem best, including the right to
enter into any and all such agreements with respect to the operation of the
Collateral or any part thereof as the Lender may see fit; and the Lender shall
be entitled to collect and receive all rents, issues, profits, fees, revenues
and other income of the same and every part thereof. Such rents, issues,
profits, fees, revenues and other income shall be applied to pay the expenses of
holding and operating the Collateral and of conducting the business thereof, and
of all maintenance, repairs, replacements, alterations, additions and
improvements, and to make all payments which the Lender may be required or may
elect to make, if any, for taxes, assessments, insurance and other charges upon
the Collateral or any part thereof, and all other payments which the Lender may
be required or authorized to make under any provision of
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this Agreement (including legal costs and reasonable attorneys' fees). The
Lender shall apply the remainder of such rents, issues, profits, fees, revenues
and other income as provided in Section 4.7.
4.7 PROCEEDS OF COLLATERAL. After deducting all reasonable costs and
expenses of collection, storage, custody, sale or other disposition and delivery
(including reasonable legal costs and attorneys' fees) and all other charges
against the Collateral, the Lender shall apply the residue of the proceeds of
any such sale or disposition to the Obligations in accordance with the terms
hereof and any surplus shall be returned to the Credit Parties or to any Person
or party lawfully entitled thereto (including, if applicable, any holders of
Subordinated Indebtedness). In the event the proceeds of any sale, lease or
other disposition of the Collateral are insufficient to pay all of the
Obligations in full, the Credit Parties will be liable for the deficiency,
together with interest thereon at the Post-Default Rate, and the cost and
expenses of collection of such deficiency, including (to the extent permitted by
law), without limitation, reasonable attorneys' fees, expenses and
disbursements.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Each Credit Party represents and warrants to the Lender and the Issuing
Lender as to itself and each other Credit Party, that:
5.1 ORGANIZATION; POWERS. Each Credit Party has been duly formed or
organized and is validly existing and in good standing under the laws of its
jurisdiction of organization. Each Credit Party has all requisite power and
authority to carry on its business as now conducted and is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure to have such power or
authority or to be so qualified or in good standing, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
5.2 AUTHORIZATION; ENFORCEABILITY. The borrowing of the Loans and the
grant of security interests pursuant to the Loan Documents are within the power
and authority of the Credit Parties and have been duly authorized by all
necessary action on the part of the Credit Parties. This Agreement and the other
Loan Documents have been duly authorized, executed and delivered by the Credit
Parties and constitute legal, valid and binding obligations of the Credit
Parties, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
5.3 GOVERNMENTAL APPROVALS; NO CONFLICTS. The borrowing of the Loans
and the grant of the security interests pursuant to the Loan Documents (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority which has not been obtained, except
as disclosed on SCHEDULE 5.3, (b) will not violate any applicable law, policy or
regulation or the organizational documents of the Credit Parties or any order of
any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Credit Parties, or
any assets, or give rise to a right thereunder to require any payment to be made
by the Credit Parties, and such violation or default or right to payment would
have a Material Adverse Effect, and (d) except for the Liens created by the Loan
Documents, will not result in the creation or imposition of any Lien on any
asset of the Credit Parties.
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5.4 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.
(a) The Credit Parties have heretofore delivered to the Lender the
following financial statements:
(i) the consolidated balance sheets and statements of
operations, shareholders' equity and cash flows of ARC and its
Subsidiaries, as of and for the fiscal year ended December 31, 2000,
audited and accompanied by an opinion of ARC's independent public
accountants;
(ii) the unaudited consolidated balance sheet and statements
of operations, shareholder's equity and cash flows of ARC and its
Subsidiaries, as of and for the fiscal year ended December 31, 2001,
certified by a Designated Financial Officer that such financial
statements fairly present the financial condition of ARC and its
Subsidiaries as at such date and the results of the operations of ARC
and its Subsidiaries for the fiscal year ended on such date and that all
such financial statements have been prepared in all material respects in
accordance with GAAP applied consistently throughout the periods
involved, except as disclosed on SCHEDULE 5.4; and
(iii) the projected consolidated balance sheets, statements of
operations and cash flows, and projected Excess Availability for ARC and
its Subsidiaries on a monthly basis for fiscal year 2002.
Except as disclosed on SCHEDULE 5.4, 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 management of ARC in good faith and were based on assumptions
that were reasonable when made.
(b) Except as disclosed on SCHEDULE 5.4, since December 31,
2001, there has been no material adverse change in the business, assets,
operations or condition, financial or otherwise, of the Credit Parties from that
set forth in the December 31, 2001 financial statements referred to in clause
(ii) of paragraph (a) above.
(c) None of the Credit Parties 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 5.4 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
5.4.
5.5 PROPERTIES.
(a) Each Credit Party has good and marketable title to, or
valid, subsisting and enforceable leasehold interests in, all its Property
material to its business. All machinery and equipment of the Credit Parties is
in good operating condition and repair, and all necessary replacements of and
repairs thereto have been made so as to preserve and maintain the value and
operating efficiency of such machinery and equipment.
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(b) Set forth on SCHEDULE 5.5 hereto is a complete list of all
Patents, Trademarks and Copyrights. Each Credit Party owns, or is licensed to
use, all Patents, Trademarks and Copyrights and other intellectual property
material to its business ("PROPRIETARY Rights"), and to the knowledge of the
Borrowers, the use thereof by the Credit Parties does not infringe upon the
rights of any other Person, except for any such infringements that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
(c) SCHEDULE 5.5 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 Credit
Parties 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.
(d) As of the date hereof, SCHEDULE 5.5 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 Leasehold Property, regardless of
whether such Credit Party 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 5.5, 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 Credit Party, enforceable against such Credit Party 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.
5.6 LITIGATION AND ENVIRONMENTAL MATTERS.
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of the
Credit Parties, threatened against or affecting any Credit Party as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters set forth in part (a) of SCHEDULE 5.6).
(b) Except for the Disclosed Matters set forth in SCHEDULE 5.6
and except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, the Credit Parties (i) have not failed to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval
required in connection with the operation of the Credit Parties' business to be
in compliance with all applicable Environmental Laws, (ii) have not become
subject to any Environmental Liability; (iii) have not received notice of any
claim with respect to any Environmental Liability or any inquiry, allegation,
notice or other communication from any Governmental Authority which is currently
outstanding or pending concerning its compliance with any Environmental Law or
(iv) do not know of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
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5.7 COMPLIANCE WITH LAWS AND AGREEMENTS. Except as set forth on
SCHEDULE 5.7, each Credit Party is in compliance with all laws, regulations,
policies and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
5.8 INVESTMENT AND HOLDING COMPANY STATUS. No Credit Party is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, (b) a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company Act of
1935, as amended or (c) a "bank holding company" as defined in, or subject to
regulation under, the Bank Holding Company Act of 1956, as amended.
5.9 TAXES. Except as set forth on SCHEDULE 5.9, each Credit Party has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Credit Party has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, which
reserves shall be acceptable to Lender, or (b) to the extent that the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
5.10 ERISA. Except as set forth on SCHEDULE 5.10, no Credit Party has
any Pension Plans. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. No Credit Party has a present intention to
terminate any Pension Plan with respect to which any Credit Party would incur a
cost of more than $100,000 to terminate such Plan, including amounts required to
be contributed to fund such Plan on Plan termination and all costs and expenses
associated therewith, including without limitation attorneys' and actuaries'
fees and expenses in connection with such termination and a reasonable estimate
of expenses and settlement or judgment costs and attorneys' fees and expenses in
connection with litigation related to such termination.
5.11 DISCLOSURE. As of the Effective Time, the Credit Parties have
disclosed to the Lender all material agreements, instruments and corporate or
other restrictions to which any Credit Party is subject after the Effective
Time, and all other matters known to the Credit Parties, that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. The organizational structure of the Credit Parties is as set forth on
SCHEDULE 5.12 annexed hereto. The information, reports, financial statements,
exhibits and schedules furnished at or prior to the Effective Time in writing by
or on behalf of the Credit Parties to the Lender in connection with the
negotiation, preparation or delivery of this Agreement and the other Loan
Documents or included herein or therein or delivered pursuant hereto or thereto,
at the Effective Time, when taken as a whole do not contain any untrue statement
of material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not materially misleading. All written information furnished after
the Effective Time by the Credit Parties to the Lender in connection with this
Agreement and the other Loan Documents and the transactions contemplated hereby
and thereby will be true, complete and accurate in every material respect, or
(in the case of pro-forma information and projections) prepared in good faith
based on reasonable assumptions, on the date as of which such information is
stated or certified. There is no fact known to the Credit Parties that could
reasonably be expected to have a Material Adverse Effect that has not been
disclosed herein, in the other Loan Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Lender for use in connection with the transactions contemplated hereby or
thereby.
5.12 CAPITALIZATION. As of the date indicated, the capital structure
and ownership of the Credit Parties are correctly described on SCHEDULE 5.12. As
of the Effective Time, the authorized, issued
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and outstanding capital stock of the Credit Parties consists of the capital
stock described on SCHEDULE 5.12, all of which is duly and validly issued and
outstanding, fully paid and nonassessable. Except as set forth on SCHEDULE 5.12,
as of the date hereof, (x) there are no outstanding Equity Rights with respect
to any Credit Party and, (y) there are no outstanding obligations of any Credit
Party to repurchase, redeem, or otherwise acquire any shares of capital stock of
or other interest in any Credit Party, nor are there any outstanding obligations
of any Credit Party to make payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market value or equity value of any Credit Party.
5.13 SUBSIDIARIES.
(a) Set forth on SCHEDULE 5.13 is a complete and correct list of
all Subsidiaries of ARC as of the date hereof, together with, for each such
Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each
Person holding ownership interests in such Subsidiary and (iii) 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 5.13, (x) ARC 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 5.13, (y) all of the issued and outstanding capital stock of each
such Person organized as a corporation is validly issued, fully paid and
nonassessable and (z) there are no outstanding Equity Rights with respect to
such Person.
(b) Except as set forth on SCHEDULE 8.8, as of the date of this
Agreement no Credit Party is subject to any indenture, agreement, instrument or
other arrangement containing any provision of the type described in Section 8.8
("RESTRICTIVE AGREEMENTS"), other than any such provision the effect of which
has been unconditionally, irrevocably and permanently waived.
5.14 MATERIAL INDEBTEDNESS, LIENS AND AGREEMENTS.
(a) SCHEDULE 5.14 hereto contains a complete and correct list,
as of the date of this Agreement, of all Material Indebtedness or any extension
of credit (or commitment for any extension of credit) to, or guarantee by, any
Credit Party the aggregate principal or face amount of which equals or exceeds
(or may equal or exceed) $100,000, and the aggregate principal or face amount
outstanding or that may become outstanding with respect thereto is correctly
described on SCHEDULE 5.14.
(b) SCHEDULE 5.14 hereto is a complete and correct list, as of
the date of this Agreement, of each Lien (other than the Liens in favor of the
Lender) securing Indebtedness of any Person and covering any property of the
Credit Parties, and the aggregate Indebtedness secured (or which may be secured)
by each such Lien and the Property covered by each such Lien is correctly
described in the appropriate part of SCHEDULE 5.14.
(c) SCHEDULE 5.14 hereto is a complete and correct list, as of
the date of this Agreement, of each contract and arrangement to which any Credit
Party is a party for which breach, nonperformance, cancellation or failure to
renew would have a Material Adverse Effect other than purchase orders made in
the ordinary course of business and subject to customary terms.
(d) To the extent requested by Lender, true and complete copies
of each agreement listed on the appropriate part of SCHEDULE 5.14 have been
delivered to the Lender, 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
Credit Party that is a party thereto and, to the best knowledge of the Credit
Parties, binding upon the other parties thereto in
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accordance with their terms. The Credit Parties are not in default under any
such agreements, which default could have a Material Adverse Effect.
5.15 FEDERAL RESERVE REGULATIONS. No Credit Party is engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying margin stock (as defined in
Regulation U of the Board). The making of the Loans hereunder, the use of the
proceeds thereof as contemplated hereby, and the security arrangements
contemplated by the Loan Documents, will not violate or be inconsistent with any
of the provisions of Regulations T, U, or X of the Board of Governors of the
Federal Reserve System.
5.16 SOLVENCY. As of the Effective Time and after giving effect to the
initial Loans hereunder, the consummation of the Subordinated Debt Financing and
the other transactions contemplated hereby:
(a) the aggregate value of all properties of ARC and its
Subsidiaries at their present fair saleable value on a going concern basis
(I.E., the amount that may be realized within a reasonable time, considered to
be six months to one year, either through collection or sale at the regular
market value, conceiving the latter as the amount that could be obtained for
such properties within such period by a capable and diligent businessman from an
interested buyer who is willing to purchase under ordinary selling conditions),
exceed the amount of all the debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of ARC and its
Subsidiaries;
(b) ARC and its Subsidiaries will not, on a consolidated basis,
have an unreasonably small capital with which to conduct their business
operations as heretofore conducted; and
(c) ARC and its Subsidiaries will have, on a consolidated basis,
sufficient cash flow to enable them to pay their debts as they mature.
5.17 FORCE MAJEURE. Since December 31, 2000, the business, properties
and other assets of the Credit Parties have not been materially and adversely
affected in any way as the result of any fire or other casualty, strike, lockout
or other labor trouble, embargo, sabotage, confiscation, contamination, riot,
civil disturbance, activity of armed forces or act of God.
5.18 ACCOUNTS RECEIVABLE. The Lender may rely, in determining which
accounts receivable are Eligible Accounts, on all statements and representations
made by the Credit Parties with respect to such accounts receivable. Unless
otherwise indicated to the Lender in writing:
(a) Each account receivable is genuine and in all respects what
it purports to be, and it is not evidenced by a judgment;
(b) Each account receivable arises out of a completed, bona fide
sale and delivery of goods or rendition of services by a Credit Party in the
ordinary course of its business and in accordance with the terms and conditions
of all purchase orders, contracts or other documents relating thereto and
forming a part of the contract between such Credit Party and the account debtor,
and, in the case of goods, title to the goods has passed from the Credit Party
to the account debtor;
(c) Each account receivable is for a liquidated amount maturing
as stated in the duplicate invoice covering such sale or rendition of services,
a copy of which has been furnished or is available to the Lender;
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(d) Each account receivable, and the Lender's security interest
therein, is not, and will not (by voluntary act or omission of the Credit
Parties) be in the future, subject to any offset, Lien, deduction, defense,
dispute, counterclaim or any other adverse condition except for disputes
resulting in returned goods where the amount in controversy is deemed by the
Lender to be immaterial, and each such account receivable is absolutely owing to
one of the Credit Parties and is not contingent in any respect or for any
reason;
(e) No Credit Party has made any agreement with any account
debtor for any extension, compromise, settlement or modification of any account
receivable or any deduction therefrom, except discounts or allowances which are
granted by the Credit Parties in the ordinary course of their businesses for
prompt payment and which are reflected in the calculation of the net amount of
each respective invoice related thereto and are reflected in the Borrowing Base
Certificates and Collateral Update Certificates furnished to the Lender
hereunder;
(f) To the best knowledge of the Credit Parties, the account
debtor under each account receivable had the capacity to contract at the time
any contract or other document giving rise to an account receivable was executed
and such account debtor is not insolvent; and
(g) To the best knowledge of the Credit Parties, there are no
proceedings or actions which are threatened or pending against any account
debtor which might result in any material adverse change in such account
debtor's financial condition or the collectibility of any account receivable.
5.19 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth on SCHEDULE 5.19 as of the Effective
Time, and thereafter with respect to which such would have a Material Adverse
Effect, (A) no employee of the Credit Parties is represented by a labor union,
no labor union has been certified or recognized as a representative of any such
employee, and the Credit Parties do not have 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 the Credit Parties; (B) there are no pending or
threatened representation campaigns, elections or proceedings; (C) the Credit
Parties do not have 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; (D) no Credit Party has engaged in, admitted
committing or been held to have committed any unfair labor practice; and (E)
there are no controversies or grievances between any Credit Party and any of its
employees or representatives thereof.
(b) Except as set forth on SCHEDULE 5.19, the Credit Parties
have 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 5.19, except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, the Credit Parties 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.
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5.20 BANK ACCOUNTS. SCHEDULE 5.20 lists all banks and other financial
institutions at which any Credit Party maintains deposits and/or other accounts
as of the Closing Date, and such Schedule correctly identifies the name and
address of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number.
ARTICLE 6
CONDITIONS
6.1 EFFECTIVE TIME. The obligations of the Lender to make Loans and of
the Issuing Lender to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 10.2):
(a) COUNTERPARTS OF AGREEMENT. The Lender shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the Lender (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.
(b) NOTE. The Lender shall have received a duly completed and
executed Revolving Credit Note.
(c) PLEDGE AGREEMENT. The Lender shall have received from each
party thereto (i) a counterpart of the Pledge Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Lender that such party has
signed a counterpart thereof.
(d) ORGANIZATIONAL STRUCTURE. The corporate organizational
structure, capitalization and ownership of the Credit Parties, shall be as set
forth on SCHEDULES 5.12 and 5.13 annexed hereto.
(e) EXISTENCE AND GOOD STANDING. The Lender shall have received
such documents and certificates as the Lender or Special Counsel may reasonably
request relating to the organization, existence and good standing of each Credit
Party, the authorization of the transactions contemplated hereby and any other
legal matters relating to the Credit Parties, this Agreement or the other Loan
Documents, all in form and substance reasonably satisfactory to the Lender and
Special Counsel.
(f) SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. The
Lender shall have received evidence satisfactory to it that the Credit Parties
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 filings or recordings to be made by the Lender on or after the Closing
Date) that may be necessary or, in the opinion of the Lender, desirable in order
to create in favor of the Lender, valid and (upon such filing and recording)
perfected First Priority security interests in the entire personal and mixed
property Collateral.
(g) [RESERVED.]
(h) LEASES; LANDLORD'S WAIVERS AND CONSENTS. In the case of each
Material Leasehold Property existing as of the Closing Date, copies of the
lease, and all amendments thereto, between the Credit Party and the landlord or
tenant party thereto, together with a Landlord's Waiver and Consent with respect
thereto and where required by the terms of any lease, the consent of the
mortgagee, ground lessor or other party.
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(i) EVIDENCE OF INSURANCE. The Lender shall have received
certificates from the Credit Parties' insurance brokers that all insurance
required to be maintained pursuant to Section 7.5 is in full force and effect
and that the Lender has been named as additional insured or loss payee
thereunder to the extent required under Section 7.5.
(j) NECESSARY GOVERNMENTAL PERMITS, LICENSES AND AUTHORIZATIONS
AND CONSENTS; ETC. The Credit Parties shall have 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 listed on SCHEDULE 5.14 (and so identified thereon)
annexed hereto, in each case that are necessary or advisable in connection with
the transactions contemplated by the Loan Documents, and each of the foregoing
shall be in full force and effect, in each case other than those the failure to
obtain or maintain which, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. No action, request for
stay, petition for review or rehearing, reconsideration or appeal with respect
to any of the foregoing shall be pending, and the time for any applicable
Governmental Authority to take action to set aside its consent on its own motion
shall have expired.
(k) SUBORDINATED DEBT FINANCING. Prior to the Effective Time,
the Lender shall have received evidence that the Subordinated Debt Financing
shall have been consummated pursuant to documentation in form and substance
satisfactory to the Lender, and that the Borrowers have received cash proceeds
from the Subordinated Debt Financing in an aggregate amount of $10,000,000 and
that the Borrowers have deposited such cash proceeds into an account of the
Borrowers maintained with the Cash Management Bank.
(l) SUBORDINATION AGREEMENT. The Lender shall have received from
each party thereto (i) a counterpart of the Subordination and Intercreditor
Agreement signed on behalf of such party or (ii) written evidence satisfactory
to the Lender that such party has signed a counterpart thereof.
(m) EXISTING DEBT; LIENS. The Lender shall have received
evidence that all principal, interest, and other amounts owing in respect of all
Existing Debt of the Credit Parties (other than Indebtedness permitted to remain
outstanding in accordance with Section 8.1 hereof) will be repaid in full as of
the Effective Time, and that with respect to all Indebtedness permitted to
remain outstanding in accordance with Section 8.1 hereof, any defaults or events
of default existing as of the Closing Date with respect to such Indebtedness
will be cured or waived immediately following the funding of the initial Loans.
The Lender shall have received evidence that, as of the Effective Time, the
Property of the Credit Parties is not subject to any Liens (other than Liens
permitted to remain outstanding in accordance with Section 8.2 hereof).
(n) TAKEOVER EXAMINATION. The Lender shall have completed, to
its satisfaction, an examination of the Borrowers' books and records relating to
Borrowers' accounts receivable, and such examination shall confirm (i) that
since the date of the immediately preceding field examination conducted by the
Lender, there has been no material change in the accounts receivable to be
included in the Borrowing Base on the Closing Date, and (ii) the amount of
Excess Availability as of the Closing Date.
(o) FINANCIAL STATEMENTS; PROJECTIONS. The Lender shall have
received the certified financial statements and projections referred to in
Section 5.4 hereof and the same shall be satisfactory to the Lender in its sole
discretion and not inconsistent with the information previously provided to the
Lender.
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(p) SOLVENCY CERTIFICATE. The Lender shall have received a
certificate, substantially in the form of EXHIBIT J hereto, dated the Closing
Date and signed by a Designated Financial Officer.
(q) FINANCIAL OFFICER CERTIFICATE. The Lender shall have
received a certificate, dated the Closing Date and signed by a Designated
Financial Officer, confirming compliance with the conditions set forth in
paragraphs (a) and (c) of Section 6.2 at the Effective Time.
(r) NO MATERIAL ADVERSE CHANGE. There shall have occurred no
material adverse change (in the commercially reasonable opinion of the Lender)
in the businesses, operations, properties (including tangible properties), or
conditions (financial or otherwise), assets, liabilities or income of the Credit
Parties, taken as a whole.
(s) OPINION OF COUNSEL TO THE CREDIT PARTIES. The Lender shall
have received favorable written opinions (addressed to the Lender and dated the
Closing Date) of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel to the Credit Parties,
substantially in the form of EXHIBIT I annexed hereto and covering such matters
relating to the Credit Parties, this Agreement, the other Loan Documents or the
transactions contemplated hereby as the Lender shall reasonably request.
(t) BORROWING BASE AND COLLATERAL UPDATE CERTIFICATES. A
Designated Financial Officer shall have executed and delivered to the Lender a
Borrowing Base Certificate substantially in the form of EXHIBIT B-1 annexed
hereto, which Borrowing Base Certificate shall show Excess Availability of not
less than $1 (after giving effect to the payment of all sums and expenses, the
issuance of all Letters of Credit and the funding of all Loans to be paid,
issued or funded at the Effective Time), and a Collateral Update Certificate
substantially in the form of EXHIBIT B-2 annexed hereto.
(u) LOCKBOX ACCOUNTS/CONTROLLED ACCOUNTS. The Credit Parties
shall have established such Lock Box Accounts and Controlled Accounts with the
Cash Management Bank and such other financial institutions as may be approved by
the Lender as required in accordance with Section 4.3 hereof, and shall have
entered into all Lockbox Agreements and/or Control Agreements as shall be
required by the Lender.
(v) FEES AND EXPENSES. The Lender and the Issuing Lender shall
have received all fees and other amounts due and payable to such Person and
Special Counsel at or prior to the Effective Time, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder.
(w) OTHER DOCUMENTS. The Lender shall have received all material
contracts, instruments, opinions, certificates, assurances and other documents
as the Lender or Special Counsel shall have reasonably requested and the same
shall be reasonably satisfactory to each of them.
6.2 EACH EXTENSION OF CREDIT. The obligation of the Lender to make a
Loan on the occasion of any Borrowing, and of the Issuing Lender to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Credit Party set forth in this Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the
date of such Borrowing, or (as applicable) the date of issuance, amendment,
renewal or extension of such Letter of Credit, both before and after giving
effect thereto and to the use of the proceeds thereof (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, such representation or warranty shall be or have been true and
correct as
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of such specific date and provided that, to the extent any change in
circumstances expressly permitted by this Agreement causes any representation
and warranty set forth herein to no longer be true, such representation and
warranty shall be deemed modified to reflect such change in circumstances).
(b) EXCESS AVAILABILITY. The Borrowers' shall have Excess
Availability of not less than $1 after giving effect to the funding of such
requested Loan or the issuance of such requested Letter of Credit.
(c) NO DEFAULTS. At the time of, and immediately after giving
effect to, such Borrowing, or (as applicable) the date of issuance, amendment,
renewal or extension of such Letter of Credit, no Default shall have occurred
and be continuing.
ARTICLE 7
AFFIRMATIVE COVENANTS
Until the Revolving Credit Commitment has expired or been terminated and
the principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full and all Letters of Credit shall have expired or
terminated and all LC Disbursements shall have been reimbursed, each Credit
Party covenants and agrees with the Lender that:
7.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Credit Parties
will furnish to the Lender:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Credit Parties:
(i) consolidated statements of operations, shareholders'
equity and cash flows of ARC and its Subsidiaries for such fiscal year
and the related consolidated balance sheets of ARC and its Subsidiaries
as at the end of such fiscal year, setting forth in each case in
comparative form the corresponding consolidated figures for the
preceding fiscal year, and
(ii) an opinion of independent certified public accountants
of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as
to the scope of such audit) stating that the consolidated financial
statements referred to in the preceding clause (i) fairly present in all
material respects the consolidated financial condition and results of
operations of ARC and its Subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP.
(b) as soon as available and in any event within 45 days after
the end of each fiscal quarter of the Credit Parties:
(i) consolidated statements of operations, shareholders'
equity and cash flows of ARC and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the respective fiscal
year to the end of such fiscal quarter, and the related consolidated
balance sheets of ARC and its Subsidiaries as at the end of such period,
setting forth in each case in comparative form the corresponding
consolidated figures for the corresponding period in the preceding
fiscal year (except that, in the case of balance sheets, such comparison
shall be to the last day of the prior fiscal year), and the
corresponding figures for the forecasts most recently delivered to the
Lender for such period, and
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(ii) a certificate of a Designated Financial Officer, which
certificate shall state that said consolidated financial statements
referred to in the preceding clause (i) fairly present in all material
respects the financial condition and results of operations of the Credit
Parties, in each case in accordance with GAAP, consistently applied, as
at the end of, and for, such period (subject to normal year-end audit
adjustments and the omission of footnotes);
(c) as soon as available and in any event within 30 days after
the end of each month:
(i) consolidated statements of operations, shareholders'
equity and cash flows of ARC and its Subsidiaries for such month and for
the period from the beginning of the respective fiscal year to the end
of such month, and the related consolidated balance sheets of ARC and
its Subsidiaries as at the end of such period, setting forth in each
case in comparative form the corresponding consolidated figures for the
corresponding period in the preceding fiscal year, and the corresponding
figures for the forecasts most recently delivered to the Lender for such
period, and
(ii) a certificate of a Designated Financial Officer, which
certificate shall state that said consolidated financial statements
referred to in the preceding clause (i) fairly present in all material
respects the financial condition and results of operations of the Credit
Parties, in each case in accordance with GAAP, consistently applied, as
at the end of, and for, such period (subject to normal year-end audit
adjustments and the omission of footnotes);
(d) concurrently with any delivery of (i) the audited financial
statements under clause (a) above, and (ii) the quarterly financial statements
under clause (b) above, a Compliance Certificate duly executed by a Designated
Financial Officer;
(e) as soon as available and in any event within fifteen (15)
days after the end of each month with respect to such month (or more frequently
if requested by the Lender), (i) a Collateral Update Certificate in the form
attached hereto as EXHIBIT B-2, (ii) an Accounts Receivable/Loan Reconciliation
Report in the form attached hereto as EXHIBIT B-3, (iii) a summary accounts
payable listing or summary open listing, and (iv) such other information
relating to the Collateral as the Lender shall reasonably request, in each case,
accompanied by such supporting detail and documentation as the Lender shall
reasonably request;
(f) as soon as available and in any event no later than
2:00 p.m.(Boston time) of the first Business Day of each week, a Borrowing Base
Certificate in the form attached hereto as EXHIBIT B-1 (together with a
supporting summary accounts receivable aging report), with respect to the
Collateral of the Borrowers as of the close of business on the last Business Day
of the immediately preceding week, together with such other information relating
to the Collateral as the Lender shall reasonably request, and accompanied by
such supporting detail and documentation as the Lender shall reasonably request;
(g) as soon as available and in any event within 30 days after
the beginning of the fiscal year of the Credit Parties, statements of forecasted
consolidated income and cash flows for the Credit Parties for each fiscal month
in such fiscal year and a forecasted consolidated balance sheet of the Credit
Parties as of the last day of each fiscal month in such fiscal year, and a
comparison of the projected Excess Availability as of the last day of each
fiscal month in such fiscal year, together with supporting assumptions which
were reasonable when made, all prepared in good faith in reasonable detail and
consistent with the Credit Parties' past practices in preparing projections and
otherwise reasonably satisfactory in scope to the Lender;
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(h) promptly upon receipt thereof, copies of all management
letters and accountants' letters received by the Credit Parties; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Credit Parties, or compliance with the terms of this Agreement, as the
Lender may reasonably request.
7.2 NOTICES OF MATERIAL EVENTS. The Credit Parties will furnish to the
Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting any
Credit Party or Affiliate that could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event related to the Plan of any
Credit Party or knowledge after due inquiry of any ERISA Event related to a Plan
of any other ERISA Affiliate that, alone or together with any other ERISA Events
that have occurred, could reasonably be expected to result in liability of the
Credit Parties in an aggregate amount exceeding $100,000;
(d) the existence of any Lien on any Property or Asset of the
Credit Parties other than a Permitted Lien; and
(e) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect. Each notice delivered under
this Section 7.2 shall be accompanied by a statement of a Designated Financial
Officer setting forth the details of the event or development requiring such
notice and any action taken or proposed to be taken with respect thereto.
7.3 EXISTENCE; CONDUCT OF BUSINESS. Each Credit Party shall do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; PROVIDED that the foregoing
shall not prohibit any merger, consolidation, liquidation, dissolution or any
discontinuance or sale of such business permitted under Section 8.4.
7.4 PAYMENT OF OBLIGATIONS. Each Credit Party shall pay its
obligations, including Tax liabilities, that, if not paid, could result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) such Credit Party has set aside on its books
adequate reserves with respect thereto in accordance with GAAP, which reserves
shall be acceptable to Lender, and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
7.5 MAINTENANCE OF PROPERTIES; INSURANCE. Each Credit Party shall (a)
keep and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and (b) maintain
insurance, with financially sound and reputable insurance companies, as may be
required by law and such other insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or
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similar locations, including, without limitation, business interruption and
product liability insurance. Without limiting the generality of the foregoing,
the Credit Parties will maintain or cause to be maintained replacement value
casualty insurance on the Collateral under such policies of insurance, in each
case with such insurance companies, in such amounts, with such deductibles, and
covering such terms and risks as are at all times satisfactory to the Lender in
its commercially reasonable judgment. All general liability and other liability
policies with respect to the Credit Parties shall name the Lender as an
additional insured thereunder as its interests may appear, and all business
interruption and casualty insurance policy shall contain a loss payable clause
or endorsement, satisfactory in form and substance to the Lender that names the
Lender as the loss payee thereunder. All policies of insurance shall provide for
at least 30 days prior written notice to the Lender of any modifications or
cancellation of such policy.
7.6 BOOKS AND RECORDS; INSPECTION RIGHTS. Each Credit Party shall keep
proper books of record and account in which entries are made of all dealings and
transactions in relation to its business and activities which fairly record such
transactions and activities. Each Credit Party shall permit any representatives
designated by the Lender to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants as frequently as the
Lender deems appropriate PROVIDED that, so long as no Default has occurred and
is continuing, such visits shall be on reasonable prior notice, at reasonable
times during regular business hours of such Credit Party and shall not occur
more frequently than four (4) times during any twelve-month period, and PROVIDED
FURTHER that after the occurrence and during the continuance of any Default, the
Lender may visit at any reasonable times and as often as the Lender deems
necessary or appropriate. The Borrowers shall reimburse the Lender for all
examination and inspections costs, internal costs at the rate of $800 per
man-day, plus all out-of-pocket expenses incurred in connection with such
inspections.
7.7 FISCAL YEAR. To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8.10 hereof, the Credit
Parties shall maintain their current fiscal year and current method of
determining the last day of the first three fiscal quarters in each fiscal year.
7.8 COMPLIANCE WITH LAWS; ETC. Each Credit Party shall comply with (i)
all permits, licenses and authorizations, including, without limitation,
environmental permits, licenses and authorizations, issued by a Governmental
Authority, (ii) all laws, rules, regulations and orders including, without
limitation, Environmental Laws, of any Governmental Authority and (iii) all
contractual obligations, in each case applicable to it or its Property, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
7.9 USE OF PROCEEDS. The proceeds of the Loans will be used only for
(i) the refinancing of existing senior secured indebtedness of the Borrowers,
(ii) fees and expenses incurred in connection with the transactions contemplated
by this Agreement, and (iii) general corporate and working capital purposes of
the Credit Parties. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X.
7.10 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES. Each Credit Party
will take such action from time to time as shall be necessary to ensure that the
percentage of the issued and outstanding shares of capital stock of any class or
character owned by it in any Subsidiary on the date hereof is not at any time
decreased, other than by reason of transfers to one of the Borrowers.
7.11 ERISA. Except where a failure to comply with any of the following,
individually or in the aggregate, would not or could not reasonably be expected
to result in a Material Adverse Effect, (i) the Credit Parties will maintain,
and cause each ERISA Affiliate to maintain, each Plan in compliance
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with all applicable requirements of ERISA and of the Code and with all
applicable rulings and regulations issued under the provisions of ERISA and of
the Code and (ii) the Credit Parties will not and, to the extent authorized,
will not permit any of the ERISA Affiliates to (a) engage in any transaction
with respect to any Plan which would subject any Credit Party to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section
4975 of the Code, (b) fail to make full payment when due of all amounts which,
under the provisions of any Plan, any Credit Party or any ERISA Affiliate is
required to pay as contributions thereto, or permit to exist any accumulated
funding deficiency (as such term is defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, with respect to any Pension Plan or (c)
fail to make any payments to any Multiemployer Plan that any Credit Party or any
of the ERISA Affiliates may be required to make under any agreement relating to
such Multiemployer Plan or any law pertaining thereto.
7.12 ENVIRONMENTAL MATTERS; REPORTING. The Credit Parties will observe
and comply with, and cause each Subsidiary to observe and comply with all
Environmental Laws to the extent non-compliance could reasonably be expected to
have a Material Adverse Effect. The Credit Parties will give the Lender prompt
written notice of any violation as to any Environmental Law by any Credit Party
and of the commencement of any judicial or administrative proceeding relating to
Environmental Laws (a) in which an adverse result would have a material adverse
effect on any operating permits, air emission permits, water discharge permits,
hazardous waste permits or other environmental permits held by any Credit Party,
or (b) which will, or is likely to, have a Material Adverse Effect on such
Credit Party or which will require a material expenditure by such Credit Party
to cure any alleged problem or violation.
7.13 MATTERS RELATING TO ADDITIONAL LEASEHOLD COLLATERAL. From and
after the Effective Time, in the event that any Credit Party enters into any
lease with respect to any Material Leasehold Property, the Credit Parties shall
deliver to the Lender copies of the lease, and all amendments thereto, between
the Credit Party and the landlord or tenant, together with a Landlord's Waiver
and Consent with respect thereto and where required by the terms of any lease,
the consent of the mortgagee, ground lessor or other party.
7.14 CASH DEPOSITS/BANK ACCOUNTS. The Credit Parties shall take all
actions necessary to maintain, preserve and protect the rights and interests of
the Lender with respect to all cash deposits of the Credit Parties and all other
proceeds of Collateral and shall not, without the Lender's prior written
consent, open any deposit or other bank account, or instruct any account debtor
to make payment to any account other than to an established dominion account,
Lock Box Account or other Controlled Account under the Lender's control;
PROVIDED that so long as no Event of Default shall have occurred and be
continuing, the Credit Parties shall be permitted to maintain (i) payroll
accounts not subject to the Lender's control so long as the aggregate amount of
funds on deposit in all such payroll accounts does not materially exceed
estimated payroll for the next payroll period, and (ii) local bank accounts not
subject to the Lender's control so long as (x) the aggregate amount of funds on
deposit in all such local banks accounts does not exceed $25,000 during any
period of more than 72 consecutive hours, and (y) the aggregate amount of funds
on deposit in any such local bank account does not exceed $2,500 during any
period of more than 72 consecutive hours.
7.15 ACCOUNTING TRANSITION. Promptly and in any event within sixty (60)
days from the Closing Date, the Borrowers shall modify their accounting systems
to separately report Eligible Accounts and Restricted Product Line Accounts.
7.16 MINIMUM EXCESS AVAILABILITY. The Borrowers shall maintain Excess
Availability at all times of not less than $1.
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ARTICLE 8
NEGATIVE COVENANTS
Until the Revolving Credit Commitment has expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit shall have expired or terminated and all
LC Disbursements shall have been reimbursed, each Credit Party covenants and
agrees with the Lender that:
8.1 INDEBTEDNESS. The Credit Parties will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness created hereunder;
(b) Existing Debt on the Closing Date which is set forth in
SCHEDULE 8.1 and has been designated on such schedule as Indebtedness that will
remain outstanding following the funding of the initial Loans, and any
extension, renewal, refunding or replacement of any such Indebtedness that does
not increase the principal amount thereof;
(c) Intercompany loans among the Credit Parties;
(d) other Indebtedness incurred after the Closing Date
(determined on a consolidated basis without duplication in accordance with GAAP)
consisting of Capital Lease Obligations and/or secured by Liens permitted under
Section 8.2(h), in an aggregate principal amount at any time outstanding not in
excess of $100,000;
(e) Subordinated Indebtedness; and
(f) Guarantees permitted under section 8.3.
8.2 LIENS. The Credit Parties will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any Property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except (the following being called "PERMITTED LIENS"):
(a) Liens created hereunder or under the other Loan Documents;
(b) any Lien on any property or asset of any Credit Party
existing on the date hereof and set forth in SCHEDULE 8.1 (excluding, however,
following the making of the initial Loans hereunder, the Liens in favor of any
Person other than the Lender securing Indebtedness not designated on said
schedule as Indebtedness to remain outstanding following the funding of the
initial Loans), PROVIDED that (i) such Lien shall not apply to any other
property or asset of any Credit Party and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(c) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet delinquent or (in the case of property taxes and
assessments not exceeding $100,000 in the aggregate more than 90 days overdue)
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
applicable Credit Party in accordance with GAAP and which reserves shall be
acceptable to the Lender;
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(d) landlords', carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens, and vendors' Liens imposed by
statute or common law not securing the repayment of Indebtedness, arising in the
ordinary course of business which are not overdue for a period of more than 60
days or which are being contested in good faith and by appropriate proceedings
and Liens securing judgments (including, without limitation, pre-judgment
attachments) but only to the extent for an amount and for a period not resulting
in an Event of Default under Section 9.1(j) hereof;
(e) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation and pledges or
deposits to secure the performance of bids, tenders, trade contracts (other than
for borrowed money), leases (other than capital leases), utility purchase
obligations, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of Property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not, in the aggregate, materially detract
from the value of the Property of any Credit Party or materially interfere with
the ordinary conduct of the business of any Credit Party;
(g) Liens consisting of bankers' liens and rights of setoff, in
each case, arising by operation of law, and Liens on documents presented in
letter of credit drawings; and
(h) Liens on fixed or capital assets, including real or personal
property, acquired, constructed or improved by any Credit Party, PROVIDED that
(A) such Liens secure Indebtedness (including Capital Lease Obligations)
permitted by Section 8.1(d), (B) 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 Credit
Parties acquired the assets or stock, (C) the Indebtedness secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets, and (D) such security interests shall not apply to any other
property or assets of the Credit Parties or Subsidiary.
8.3 CONTINGENT LIABILITIES. The Credit Parties will not Guarantee the
Indebtedness or other obligations of any Person, or Guarantee the payment of
dividends or other distributions upon the stock of, or the earnings of, any
Person, except:
(a) endorsements of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(b) Guarantees and letters of credit in effect on the date
hereof which are disclosed in SCHEDULE 8.1, and any replacements thereof in
amounts not exceeding such Guarantees;
(c) Guarantees by one Credit Party of Indebtedness or other
obligations of another Credit Party permitted to be incurred under Sections
8.1(b), (d) or (e); and
(d) obligations in respect of Letters of Credit.
8.4 FUNDAMENTAL CHANGES; ASSET SALES.
(a) The Credit Parties will not enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). The
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Credit Parties will not acquire any business or property from, or capital stock
of, or other equity interests in, or be a party to any acquisition of, any
Person except for purchases of property to be used in the ordinary course of
business, Investments permitted under Section 8.5 and Capital Expenditures. The
Credit Parties will not form or acquire any Subsidiary without the express prior
written consent of the Lender.
(b) The Credit Parties will not convey, sell, lease, transfer or
otherwise dispose (including any Disposition) of, in one transaction or a series
of transactions, any part of their business or property, whether now owned or
hereafter acquired (including, without limitation, receivables and leasehold
interests, but excluding (x) obsolete or worn-out property (including leasehold
interests), tools or equipment no longer used or useful in their business and
(y) any inventory or other property sold or disposed of in the ordinary course
of business and on ordinary business terms), PROVIDED that the Credit Parties
may sublease real property to the extent such sublease would not interfere with
the operation of the business of the Credit Parties.
(c) Notwithstanding the foregoing provisions of this
Section 8.4:
(i) any Credit Party (other than ARC) may be merged or
combined with or into any Borrower (provided that if such merger
involves ARC, (x) ARC shall be the surviving entity and (y) no Change of
Control shall occur); and
(ii) any Credit Party may sell, lease, transfer or otherwise
dispose of any or all of its property (upon voluntary liquidation or
otherwise) to any Borrower.
8.5 INVESTMENTS; HEDGING AGREEMENTS.
(a) The Credit Parties will not make or permit to remain
outstanding any Investment, except:
(i) Investments consisting of Guarantees permitted by
Section 8.3(c) and Indebtedness permitted by Section 8.1; Intercompany
Indebtedness; and capital contributions by any Credit Party to any other
Credit Party;
(ii) Permitted Investments; and
(iii)Checking and deposit accounts with banks used in the
ordinary course of business.
(b) The Credit Parties will not enter into any Hedging
Agreement, other than Hedging Agreements entered into in the ordinary course of
business with the prior written consent of the Lender to hedge or mitigate risks
to which the Credit Parties are exposed in the conduct of their business or the
management of their liabilities.
8.6 RESTRICTED JUNIOR PAYMENTS.
(a) The Credit Parties will not declare or make any Restricted
Junior Payment at any time; PROVIDED, HOWEVER, that (i) any Credit Party (other
than ARC) may pay dividends to a Borrower, and (ii) so long as (A) no Payment
Default (as defined below) exists, (B) no Blockage Period (as defined below)
shall be continuing, and (C) no Event of Default shall result from the making of
such payment, ARC may pay or cause to be paid to Wynnchurch and any other
holders from time to time of the
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Wynnchurch Subordinated Notes, and Wynnchurch and any other holders from time to
time of the Wynnchurch Subordinated Notes may accept and retain regularly
scheduled quarterly payments of interest but no principal in respect of the
Wynnchurch Subordinated Notes on the dates and in the amounts set forth in the
applicable Subordinated Debt Documents; provided that in no event shall the
aggregate amount of interest payments made in respect of the Wynnchurch
Subordinated Notes during any calendar quarter beginning with the calendar
quarter beginning January 1, 2002 and ending with the calendar quarter ending
December 31, 2005 exceed 1.875% of the outstanding principal balance of the
Wynnchurch Subordinated Notes without the prior written consent of the Lender,
except that if (1) the Lender has received a Compliance Certificate indicating
that the Borrowers are in compliance with Section 8.10(b) for the period from
January 1, 2002 through June 30, 2002 or any other two consecutive fiscal
quarters following the Effective Time, (2) no Payment Default exists, (3) no
Blockage Period shall have commenced and be continuing, (4) no Event of Default
shall result from the making of such payment, and (5) prior to such payment, the
Borrowers shall have delivered evidence to the Lender that after giving effect
to such payment, Excess Availability shall equal or exceed $5,000,000, the
aggregate amount of interest payments made in respect of the Wynnchurch
Subordinated Notes during any calendar quarter may total up to (x) 4.50% of the
outstanding principal balance of the Wynnchurch Subordinated Notes PLUS (y) the
amount of prior interest payments that were not paid in respect of the
Wynnchruch Subordinated Notes as a result of the prior existence of a Payment
Default or prior commencement of a Blockage Period. Notwithstanding anything to
the contrary set forth herein, beginning with the calendar quarter beginning
January 1, 2006, so long as no Payment Default exists, no Blockage Period shall
have commenced and be continuing, and no Event of Default shall result from the
making of such payment, ARC may pay or cause to be paid to Wynnchurch and any
other holder of the Wynnchurch Subordinated Notes, and Wynnchurch and any other
holder of the Wynnchurch Subordinated Notes may accept and retain regularly
scheduled quarterly payments of interest but no principal in respect of the
Wynnchurch Subordinated Notes on the dates and in the amounts provided for in
the Wynnchurch Subordinated Notes (as in effect on the date hereof).
(b) In addition to the interest payments permitted under Section
8.6(a) above, so long as no Payment Default exists and no Blockage Period is
continuing: (i) the Borrowers may pay reasonable directors' fees and reimburse
Wynnchurch and any other holder of the Wynnchurch Subordinated Notes for
reasonable costs and expenses incurred by Wynnchurch or such holder in
connection with the Subordinated Indebtedness owing to Wynnchurch or such
holder, and (ii) with the written consent of the Lender, which consent shall not
be unreasonably withheld or delayed, the Borrowers may retain Wynnchurch or any
other holder of the Wynnchurch Subordinated Notes to perform, and pay to
Wynnchurch or such holder, fees for, advisory services at market rates.
(c) As used in this Section 8.6, the terms:
(i) "Payment Default" shall mean any failure by the
Borrowers to pay any principal of or premium, if any, or interest on any
Obligations or any fee or other amount owing to the Lender when the same
becomes due and payable, whether at maturity or at date fixed for the
payment of any installment or prepayment thereof or by declaration or
acceleration or otherwise (but after giving effect to the period of
grace, if any, applicable thereto). No Payment Default shall be deemed
to have been cured unless the full amount of the overdue payment to
which such Payment Default relates shall have been paid in full prior to
any acceleration of the Obligations or unless waived by the Lender.
(ii) "Blockage Notice" shall mean a written notice from the
Lender to Wynnchurch of the existence of an Event of Default and the
commencement of a Blockage Period.
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(iii) "Blockage Period" shall mean the period commencing on
the date of delivery to Wynnchurch of a Blockage Notice and ending on
the earlier to occur of (A) the 181st day following delivery of such
Blockage Notice and (B) the date the Event of Default giving rise to
such Blockage Notice is cured to the satisfaction of, or waived by, the
Lender.
8.7 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by
this Agreement, the Credit Parties will not directly or indirectly (a) make any
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:
(i) any Affiliate who is an individual may serve as a
director, officer, employee or consultant of any Credit Party, receive
reasonable compensation for his or her services in such capacity and
benefit from Permitted Investments to the extent specified in clause (e)
of the definition thereof;
(ii) the Credit Parties may engage in and continue the
transactions with or for the benefit of Affiliates which are described
in SCHEDULE 8.7 or are referred to in Section 8.6 (but only to the
extent specified in such section); and
(iii) the Credit Parties may engage in transactions with
Affiliates in the ordinary course of business on terms which are no less
favorable to the Credit Parties than those likely to be obtained in an
arms' length transaction between a Credit Party and a non-affiliated
third party.
8.8 RESTRICTIVE AGREEMENTS. The Credit Parties will not directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement (other than this Agreement) that prohibits, restricts or imposes any
condition upon (a) the ability of any Credit Party to create, incur or permit to
exist any Lien upon any of its property or assets, or (b) the ability of any
Credit Party that is a Subsidiary of another Credit Party to pay dividends or
other distributions with respect to any shares of its capital stock or other
equity interests or to make or repay loans or advances to any other Credit Party
or to Guarantee Indebtedness of any other Credit Party; 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 8.8 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of stock or assets of a Subsidiary of a Credit Party pending such
sale, PROVIDED such restrictions and conditions apply only to the Subsidiary
that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness, and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts (excluding license agreements)
restricting the assignment thereof.
8.9 SALE-LEASEBACK TRANSACTIONS; ▇▇▇▇-AND-HOLD SALES, ETC. The Credit
Parties will not directly or indirectly, enter into any arrangements with any
Person whereby such Credit Party shall sell or transfer (or request another
Person to purchase) any property, real, personal or mixed, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property from any Person.
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8.10 CERTAIN FINANCIAL COVENANTS.
(a) TANGIBLE CAPITAL BASE. ARC and its Subsidiaries shall not
(i) as of March 31, 2002, have a consolidated Tangible Capital Base of less than
$10,000,000 or (ii) as of the end of any fiscal quarter commencing with the
fiscal quarter ending June 30, 2002, have a consolidated Tangible Capital Base
of less than the sum of (x) $10,000,000 PLUS (y) on a cumulative basis, 50% of
positive consolidated net income (without reduction for losses) in each fiscal
quarter ending after March 31, 2002.
(b) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio
of ARC and its Subsidiaries shall not at any time during any period set forth
below to be less than the ratio set opposite such period:
MINIMUM FIXED CHARGE
PERIOD COVERAGE RATIO
January 1, 2002 through June 30, 2002 1.00x
January 1, 2002 through September 30, 2002 1.25x
January 1, 2002 through December 31, 2002 1.25x
Thereafter (on a rolling four quarters basis) 1.25x
(c) EBITDA. The consolidated EBITDA of ARC and its Subsidiaries
shall be not less than $500,000 for the fiscal quarter ending March 31, 2002.
(d) CAPITAL EXPENDITURES. The Credit Parties shall not make any
Capital Expenditures (including, without limitation, incurring any Capital Lease
Obligations) which, in the aggregate exceed (i) $600,000 at any time during the
fiscal quarter ending March 31, 2002, and (ii) $2,500,000 at any time during any
fiscal year, commencing with the fiscal year ending December 31, 2002.
8.11 LINES OF BUSINESS. The Credit Parties shall not engage to any
substantial extent in any line or lines of business activity other than (i) the
types of businesses engaged in by the Borrowers as of the Effective Time and
businesses substantially related thereto, and (ii) such other lines of business
as may be consented to by the Lender.
8.12 OTHER INDEBTEDNESS. The Credit Parties shall not 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 any voluntary payment or prepayment of the
principal of or interest on, or any other amount owing in respect of any
Subordinated Indebtedness, except to the extent permitted by Section 8.6.
8.13 MODIFICATIONS OF CERTAIN DOCUMENTS. The Credit Parties shall not
consent to any modification, supplement or waiver of any of the provisions of
any documents or agreements evidencing or governing any Subordinated
Indebtedness or any other Existing Debt without the prior written consent of the
Lender.
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ARTICLE 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall be deemed to constitute an "EVENT OF DEFAULT" hereunder:
(a) the Credit Parties shall fail to pay to the Lender, the
Issuing Lender, the Cash Management Bank or any other Affiliate of the Lender,
any principal of or interest on any Loan or any Reimbursement Obligation in
respect of any LC Disbursement or any other Obligation of the Credit Parties to
the Lender, the Issuing Lender, the Cash Management Bank or any other Affiliate
of the Lender 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 or on
behalf of any Credit Party or any Subsidiary in or in connection with this
Agreement, any of the other Loan Documents or any amendment or modification
hereof or thereof, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement, any of the
other Loan Documents or any amendment or modification hereof or thereof, shall
prove to have been incorrect in any material respect when made or deemed made;
(c) the Credit Parties (i) shall fail to observe or perform any
covenant, condition or agreement contained in Sections 7.1, 7.2, 7.5, 7.6, 7.9,
7.10, 7.14, 7.15, 7.16 or in Article 8 (it being expressly acknowledged and
agreed that any Event of Default resulting from the failure of the Credit
Parties at any measurement date to satisfy any financial covenant set forth in
Section 8.10 shall not be deemed to be "cured" or remedied by the Credit
Parties' satisfaction of such financial covenant at any subsequent measurement
date) or (ii) shall fail to observe or perform any other covenant, condition or
agreement contained in Sections 7.3, 7.4, 7.7, 7.8, 7.11, 7.12 or 7.13 and such
failure described in this clause (ii) shall continue unremedied for a period of
30 days after the earlier of (x) actual knowledge by an officer of any Credit
Party or (y) notice thereof from the Lender to the Credit Parties;
(d) the Credit Parties shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in clauses (a), (b) or (c) of this Section 9.1) or any other Loan
Document, and such failure shall continue unremedied for a period of 30 days
after notice thereof from the Lender to the Credit Parties;
(e) the Credit Parties shall fail to make any payment (whether
of principal, interest or otherwise and regardless of amount) in respect of any
Material Indebtedness or any Material Rental Obligation, when and as the same
shall become due and payable, after giving effect to any grace period with
respect thereto;
(f) any event or condition occurs that results in (i) any
Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause such Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity, or (ii) the lease with respect to any Material Rental
Obligation being terminated prior to its scheduled expiration date or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the counterparty to such lease to cause such lease to be terminated prior
to its scheduled expiration date;
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(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of any Credit Party or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for any Credit Party or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered;
(h) any Credit Party shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (g) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Credit Party or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the
foregoing;
(i) any Credit Party shall admit in writing that it is unable to
pay its debts as they become due;
(j) a final judgment or judgments for the payment of money (x)
in excess of $500,000 in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect of such
judgment) or (y) in excess of $1,000,000 in the aggregate (regardless of
insurance coverage), shall be rendered by one or more courts, administrative
tribunals or other bodies having jurisdiction against any Credit Party and the
same shall not be discharged (or provision shall not be made for such
discharge), bonded, or a stay of execution thereof shall not be procured, within
60 days from the date of entry thereof and the relevant Credit Party shall not,
within said period of 60 days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal;
(k) an ERISA Event shall have occurred that, in the reasonable
opinion of the Lender, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
(l) there shall occur any Change of Control;
(m) any of the following shall occur: (i) the Liens created
hereunder or under the other Loan Documents shall at any time (other than by
reason of the Lender relinquishing such Lien) cease in any material respect to
constitute valid and perfected Liens on the Collateral intended to be covered
thereby; (ii) except for expiration in accordance with its respective terms, any
Collateral Document shall for whatever reason be terminated, or shall cease to
be in full force and effect; or (iii) the enforceability of any Loan Document
shall be contested by any Credit Party;
(n) there shall occur any material loss theft, damage or
destruction of any Collateral not fully covered (subject to such reasonable
deductibles as the Lender shall have approved) by insurance;
(o) any Guarantor shall assert that its obligations under any of
the Loan Documents shall be invalid or unenforceable; or
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(p) there shall occur any material adverse change (in the
commercially reasonable opinion of the Lender) on the businesses, operations,
properties, conditions (financial or otherwise), assets, liabilities, income or
prospects of the Credit Parties taken as a whole;
then, and in every such event (other than an event described in clause (g) or
(h) of this Section 9.1), and at any time thereafter during the continuance of
such event, the Lender may, by notice to the Borrowers, take any or all of the
following actions, at the same or different times: (i) terminate the Revolving
Credit Commitment, and thereupon the Revolving Credit Commitment shall terminate
immediately, (ii) notify the Borrowers that the outstanding principal of the
Loans shall bear interest at the Post-Default Rate, and thereupon the
outstanding principal of the Loans shall bear interest at the Post-Default Rate,
(iii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other Obligations, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Credit Parties, and (iv) the Lender, the
Issuing Lender, the Cash Management Bank and any other Affiliate of the Lender
may exercise all of the rights as secured party and mortgagee hereunder or under
the other Loan Documents; and in case of any event with respect to the Credit
Parties or any Subsidiary described in clause (g) or (h) of this Section 9.1,
the Revolving Credit Commitment shall automatically terminate, the principal of
the Loans then outstanding shall automatically bear interest at the Post-Default
Rate, the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other Obligations shall automatically become
due and payable, and the Borrower shall provide cash collateral in accordance
with Section 2.4(g) without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Credit Parties, and the Lender, the
Issuing Lender and the Cash Management Bank shall be permitted to exercise such
rights as secured party and mortgagee hereunder or under the other Loan
Documents to the extent permitted by applicable law.
9.2 RECEIVERSHIP. Without limiting the generality of the foregoing or
limiting in any way the rights of the Lender hereunder or under the other Loan
Documents or otherwise under applicable law, at any time after (i) the entire
principal balance of any Loan shall have become due and payable (whether at
maturity, by acceleration or otherwise) and (ii) the Lender shall have provided
to the Borrowers not less than ten (10) days' prior written notice of its
intention to apply for a receiver, the Lender shall be entitled to apply for and
have a receiver appointed under state or federal law by a court of competent
jurisdiction in any action taken by the Lender to enforce its rights and
remedies hereunder and under the other Loan Documents in order to manage,
protect, preserve, sell and otherwise dispose of all or any portion of the
Collateral and continue the operation of the business of the Credit Parties, and
to collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership, including the compensation
of the receiver, and to the payment of the Loans and other fees and expenses due
hereunder and under the Loan Documents as aforesaid until a sale or other
disposition of such Collateral shall be finally made and consummated. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, EACH CREDIT PARTY HEREBY IRREVOCABLY
CONSENTS TO AND WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE
APPOINTMENT OF A RECEIVER AS PROVIDED ABOVE. EACH CREDIT PARTY (I) GRANTS SUCH
WAIVER AND CONSENT KNOWINGLY AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF
WITH COUNSEL; (II) ACKNOWLEDGES THAT (A) THE UNCONTESTED RIGHT TO HAVE A
RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS CONSIDERED ESSENTIAL BY THE
LENDER IN CONNECTION WITH THE ENFORCEMENT OF ITS RIGHTS AND REMEDIES HEREUNDER
AND UNDER THE OTHER LOAN DOCUMENTS, AND (B) THE AVAILABILITY OF SUCH APPOINTMENT
AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING
THE LENDER TO MAKE THE LOANS TO THE BORROWERS; AND (III) AGREES TO ENTER INTO
ANY AND ALL STIPULATIONS IN ANY
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LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN CONNECTION WITH THE
FOREGOING AND TO COOPERATE FULLY WITH THE LENDER IN CONNECTION WITH THE
ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF
THE COLLATERAL. THE LENDER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS SECTION
9.2 SHALL BE DEEMED TO CONSTITUTE A WAIVER OF THE RIGHT OF THE CREDIT PARTIES TO
FILE FOR PROTECTION UNDER TITLE 11 OF THE UNITED STATES CODE AT ANY TIME.
ARTICLE 10
MISCELLANEOUS
10.1 NOTICES. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telephonic facsimile (fax), as follows:
(a) if to any Credit Party, to
Alternative Resources
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer (Fax no. (▇▇▇) ▇▇▇-▇▇▇▇) with a copy to ▇▇▇▇▇▇▇▇▇, Will
& ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Esq. (Fax no. (▇▇▇) ▇▇▇-▇▇▇▇); and
(b) if to the Lender, to Fleet Capital Corporation, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Fax no. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇ & Dodge LLP,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Esq. (Fax no. (▇▇▇) ▇▇▇-▇▇▇▇).
Any party hereto may change its address or fax number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
10.2 WAIVERS; AMENDMENTS.
(a) No failure or delay by the Lender, the Issuing Lender or the
Cash Management Bank in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Lender, the Issuing Lender
or the Cash Management Bank hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Credit Party or Subsidiary therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section
10.2, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Event of Default, regardless of whether the
Lender or the Issuing Lender may have had notice or knowledge of such Event of
Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended, extended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrowers
and the Lender.
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10.3 EXPENSES; INDEMNITY: DAMAGE WAIVER.
(a) The Credit Parties jointly and severally agree to pay, or
reimburse the Lender for paying, (i) all reasonable out-of-pocket expenses
incurred by the Lender and its Affiliates, including the reasonable fees,
charges and disbursements of Special Counsel, in connection with the preparation
of this Agreement and the other Loan 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), (ii) to the extent not
already paid or reimbursed by the Credit Parties, all reasonable out-of-pocket
expenses incurred by the Issuing Lender in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder, (iii) all out-of-pocket expenses incurred by the Lender, the
Issuing Lender or the Cash Management Bank, including the fees, charges and
disbursements of any counsel for the Lender, the Issuing Lender or the Cash
Management Bank, in connection with the enforcement or protection of their
rights in connection with this Agreement and the other Loan Documents, including
their rights under this Section 10.3, or in connection with the Loans made or
Letters of Credit issued hereunder, including in connection with any workout,
restructuring or negotiations in respect thereof, and (iv) all Other Taxes
levied by any Governmental Authority in respect of this Agreement or any of the
other Loan Documents or any other document referred to herein or therein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by any Loan Document or any other document referred to therein.
(b) The Credit Parties jointly and severally agree to indemnify
the Lender, the Issuing Lender, the Cash Management Bank, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee and settlement costs, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement, the other Loan
Documents or any agreement or instrument contemplated hereby, the performance by
the parties hereto and thereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or any
other transactions contemplated hereby or thereby, (ii) any Loan or Letter of
Credit or the use of the proceeds therefrom (including any refusal by the
Issuing Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned, leased or operated
by any Credit Party or any Subsidiary, or any Environmental Liability related in
any way to any Credit Party or any Subsidiary, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) To the extent permitted by applicable law, none of the
Credit Parties shall assert, and each Credit Party hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, the other
Loan Documents or any agreement or instrument contemplated hereby or thereby,
the transactions contemplated hereby, any Loan or Letter of Credit or the use of
the proceeds thereof.
(d) All amounts due under this Section 10.3 shall be payable
promptly after written demand therefor.
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10.4 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that no Credit Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of the Lender (and any attempted assignment or transfer without such
consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of the Lender, the
Issuing Lender and the Cash Management Bank) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) The Lender may at any time and from time to time assign to
one or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of the Revolving Credit Commitment and the
Loans at the time owing to it).
(c) The Lender may at any time and from time to time, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of the Lender's rights and obligations under this Agreement
(including all or a portion of the Revolving Credit Commitment and the Loans
owing to it); PROVIDED that (i) the Lender's obligations under this Agreement
shall remain unchanged, (ii) the Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrowers shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement. The
Borrowers agree that each Participant shall be entitled to the benefits of this
Agreement to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section 10.4; PROVIDED
that a Participant shall not be entitled to receive any greater payment under
this Agreement than the Lender would have been entitled to receive with respect
to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrowers' prior written
consent.
(d) The Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of the Lender, including any such pledge or assignment to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; PROVIDED that no such pledge or assignment of a security
interest shall release the Lender from any of its obligations hereunder or
substitute any such assignee for the Lender as a party hereto.
(e) The Lender may furnish any information concerning any Credit
Party or any Subsidiary in the possession of the Lender from time to time to
assignees and participants (including prospective assignees and participants)
subject, however, to and so long as the recipient agrees in writing to be bound
by, the provisions of Section 10.13. In addition, the Lender may furnish any
information concerning any Credit Party or any Subsidiary or Affiliate in the
Lender's possession to any Affiliate of the Lender, subject, however, to the
provisions of Section 10.13. The Credit Parties shall assist the Lender in
effectuating any assignment or participation pursuant to this Section 10.4 in
whatever manner the Lender reasonably deems necessary, including participation
in meetings with prospective transferees.
10.5 SURVIVAL. All covenants, agreements, representations and
warranties made by the Credit Parties and Subsidiaries herein and in the other
Loan Documents, and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement and the other Loan Documents,
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Lender or the Issuing Lender may have had notice or
knowledge of any Default
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or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect so long as the principal
of or any accrued interest on any Loan or any fee or any other Obligation
payable under this Agreement or the other Loan Documents is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Revolving
Credit Commitment has not expired or terminated. The provisions of Sections 2.9,
2.10 and 10.3 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the Revolving
Credit Commitment or the termination of this Agreement or any other Loan
Document or any provision hereof or thereof.
10.6 COUNTERPARTS; INTEGRATION; REFERENCES TO AGREEMENT; EFFECTIVENESS.
This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the Lender or
its counsel constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Whenever
there is a reference in any Loan Document or UCC Financing Statement to the
"Credit Agreement" to which the Lender and the Credit Parties are parties, such
reference shall be deemed to be made to this Agreement among the parties hereto.
Except as provided in Section 6.1, this Agreement shall become effective when it
shall have been executed by the Lender and when the Lender shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
10.7 SEVERABILITY. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
10.8 RIGHT OF SETOFF. Each Credit Party hereby grants to the Lender,
the Issuing Lender and the Cash Management Bank a security interest in all
deposits (general or special, time or demand, provisional or final) and funds at
any time held and other indebtedness at any time owing by the Lender, the
Issuing Lender or the Cash Management Bank to or for the credit or the account
of any Credit Party as security for the Obligations, and the Credit Parties
hereby agree that if an Event of Default shall have occurred and be continuing,
the Lender, the Issuing Lender and the Cash Management Bank are hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) or other funds at any time held and other
indebtedness at any time owing by the Lender, the Issuing Lender or the Cash
Management Bank to or for the credit or the account of any Credit Party against
any and all of the Obligations, irrespective of whether or not the Lender shall
have made any demand under this Agreement and although any of the Obligations
may be unmatured. The rights of the Lender, the Issuing Lender and the Cash
Management Bank under this Section 10.8 are in addition to any other rights and
remedies (including other rights of setoff) which the Lender, the Issuing Lender
or the Cash Management Bank may have.
10.9 SUBORDINATION BY CREDIT PARTIES. The Credit Parties hereby agree
that all present and future Indebtedness of any Credit Party to another Credit
Party ("INTERCOMPANY INDEBTEDNESS") shall be subordinate and junior in right of
payment and priority to the Obligations, and each Credit Party agrees not to
make, demand, accept or receive any payment in respect of any present or future
Intercompany
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Indebtedness, including, without limitation, any payment received through the
exercise of any right of setoff, counterclaim or cross claim, or any collateral
therefor, unless and until such time as the Obligations shall have been
indefeasibly paid in full; PROVIDED that, so long as no Event of Default shall
have occurred and be continuing and no Event of Default shall be caused thereby,
the Credit Parties may make and receive such payments as shall be customary in
the ordinary course of the Credit Parties' business. Without in any way limiting
the foregoing, in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, dissolution or other similar
proceedings relative to any Credit Party or to its businesses, properties or
assets, the Lender shall be entitled to receive payment in full of all of the
Obligations before any Credit Party shall be entitled to receive any payment in
respect of any present or future Intercompany Indebtedness.
10.10 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) This Agreement shall be construed in accordance with and
governed by the law of The Commonwealth of
Massachusetts.
(b) Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of The Commonwealth of Massachusetts and of the United States District
Court for the District of Massachusetts, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such Massachusetts court (or, to the extent permitted by law,
in such Federal court). Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that the Lender, the
Issuing Lender or the Cash Management Bank may otherwise have to bring any
action or proceeding relating to this Agreement against any Credit Party or any
Subsidiary or its properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any court referred to in paragraph (b) of this Section 10.10.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 10.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
10.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, LENDER OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.
- 63 -
10.12 HEADINGS. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
10.13 CONFIDENTIALITY. The Lender agrees to keep confidential
information with respect to the Borrowers obtained by it pursuant hereto and the
other Loan Documents confidential in accordance with the Lender's customary
practices and agrees that it will only use such information in connection with
the transactions contemplated by this Agreement and not disclose any of such
information other than (a) to the Lender's employees, representatives,
directors, attorneys, auditors, agents, professional advisors, trustees or
Affiliates who are advised of the confidential nature of such information or to
any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section 10.13), (b) to the extent such
information presently is or hereafter becomes available to the Lender on a
non-confidential basis from any source of such information that is in the public
domain at the time of disclosure, (c) to the extent disclosure is required by
law (including applicable securities law), regulation, subpoena or judicial
order or process (PROVIDED that notice of such requirement or order shall be
promptly furnished to the Borrowers unless such notice is legally prohibited) or
requested or required by bank, securities, insurance or investment company
regulators or auditors or any administrative body or commission to whose
jurisdiction the Lender may be subject, (d) to any rating agency to the extent
required in connection with any rating to be assigned to the Lender, (e) to
assignees or participants or prospective assignees or participants who agree to
be bound by the provisions of this Section 10.13, (f) to the extent required in
connection with any litigation between any Credit Party and the Lender with
respect to the Loans or this Agreement and the other Loan Documents or (g) with
the Borrowers' prior written consent.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
BORROWER
ALTERNATIVE RESOURCES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
ARC SERVICE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
ARC SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
ARC MIDHOLDLING, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
WRITERS INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
- 65 -
LENDER
FLEET CAPITAL CORPORATION,
as Lender
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
ISSUING LENDER
FLEET NATIONAL BANK,
as Issuing Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
CASH MANAGEMENT BANK
FLEET NATIONAL BANK,
as Cash Management Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
- 66 -
SCHEDULES & EXHIBITS
Schedules [Omitted.]
Exhibits [Exhibits that constitute material agreements have
been filed as separate exhibits to
Alternative
Resources Corporation's current report on Form 8-K.
The other exhibits have been omitted.]
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS................................................................1
1.1 Defined Terms..................................................................1
1.2 Terms Generally...............................................................18
1.3 Accounting Terms; GAAP........................................................18
1.4 Joint and Several Obligations; Designated Financial Officers..................19
ARTICLE 2 THE CREDITS...............................................................19
2.1 Loans.........................................................................19
2.2 [RESERVED]....................................................................20
2.3 Eurodollar Borrowings.........................................................20
2.4 Letters of Credit.............................................................22
2.5 Expiration, Termination or Reduction of Revolving Credit Commitment...........24
2.6 Payments......................................................................25
2.7 Prepayment of Loans...........................................................26
2.8 Fees..........................................................................27
2.9 Increased Costs...............................................................27
2.10 Taxes.........................................................................28
ARTICLE 3 [RESERVED.]...............................................................29
ARTICLE 4 THE COLLATERAL............................................................29
4.1 Grant of Security Interest....................................................29
4.2 Special Warranties and Covenants of the Credit Parties........................30
4.3 Collection of Proceeds of Accounts Receivable.................................32
4.4 Fixtures, etc.................................................................34
4.5 Right of Lender to Dispose of Collateral, etc.................................34
4.6 Right of Lender to Use and Operate Collateral, etc............................34
4.7 Proceeds of Collateral........................................................35
ARTICLE 5 REPRESENTATIONS AND WARRANTIES............................................35
5.1 Organization; Powers..........................................................35
5.2 Authorization; Enforceability.................................................35
5.3 Governmental Approvals; No Conflicts..........................................35
- i -
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.4 Financial Condition; No Material Adverse Change...............................36
5.5 Properties....................................................................36
5.6 Litigation and Environmental Matters..........................................37
5.7 Compliance with Laws and Agreements...........................................38
5.8 Investment and Holding Company Status.........................................38
5.9 Taxes.........................................................................38
5.10 ERISA.........................................................................38
5.11 Disclosure....................................................................38
5.12 Capitalization................................................................38
5.13 Subsidiaries..................................................................39
5.14 Material Indebtedness, Liens and Agreements...................................39
5.15 Federal Reserve Regulations...................................................40
5.16 Solvency......................................................................40
5.17 Force Majeure.................................................................40
5.18 Accounts Receivable...........................................................40
5.19 Labor and Employment Matters..................................................41
5.20 Bank Accounts.................................................................42
ARTICLE 6 CONDITIONS................................................................42
6.1 Effective Time................................................................42
6.2 Each Extension of Credit......................................................44
ARTICLE 7 AFFIRMATIVE COVENANTS.....................................................45
7.1 Financial Statements and Other Information....................................45
7.2 Notices of Material Events....................................................47
7.3 Existence; Conduct of Business................................................47
7.4 Payment of Obligations........................................................47
7.5 Maintenance of Properties; Insurance..........................................47
7.6 Books and Records; Inspection Rights..........................................48
7.7 Fiscal Year...................................................................48
7.8 Compliance with Laws; Etc.....................................................48
- ii -
TABLE OF CONTENTS
(CONTINUED)
PAGE
7.9 Use of Proceeds...............................................................48
7.10 Certain Obligations Respecting Subsidiaries...................................48
7.11 ERISA.........................................................................48
7.12 Environmental Matters; Reporting..............................................49
7.13 Matters Relating to Additional Leasehold Collateral...........................49
7.14 Cash Deposits/Bank Accounts...................................................49
7.15 Accounting Transition.........................................................49
7.16 Minimum Excess Availability...................................................49
ARTICLE 8 NEGATIVE COVENANTS........................................................50
8.1 Indebtedness..................................................................50
8.2 Liens.........................................................................50
8.3 Contingent Liabilities........................................................51
8.4 Fundamental Changes; Asset Sales..............................................51
8.5 Investments; Hedging Agreements...............................................52
8.6 Restricted Junior Payments....................................................52
8.7 Transactions with Affiliates..................................................54
8.8 Restrictive Agreements........................................................54
8.9 Sale-Leaseback Transactions; ▇▇▇▇-and-Hold Sales, Etc. .......................54
8.10 Certain Financial Covenants...................................................55
8.11 Lines of Business.............................................................55
8.12 Other Indebtedness............................................................55
8.13 Modifications of Certain Documents............................................55
ARTICLE 9 EVENTS OF DEFAULT.........................................................56
9.1 Events of Default.............................................................56
9.2 Receivership..................................................................58
ARTICLE 10 MISCELLANEOUS.............................................................59
10.1 Notices.......................................................................59
10.2 Waivers; Amendments...........................................................59
10.3 Expenses; Indemnity: Damage Waiver............................................60
- iii -
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.4 Successors and Assigns........................................................61
10.5 Survival......................................................................61
10.6 Counterparts; Integration; References to Agreement; Effectiveness.............62
10.7 Severability..................................................................62
10.8 Right of Setoff...............................................................62
10.9 Subordination by Credit Parties...............................................62
10.10 Governing Law; Jurisdiction; Consent to Service of Process....................63
10.11 WAIVER OF JURY TRIAL..........................................................63
10.12 Headings......................................................................64
10.13 Confidentiality...............................................................64
- iv -
