Exhibit 4.16
GUARANTY
This GUARANTY ("GUARANTY"), dated as of January 31, 2002, is made by
ARC Service, Inc., a Delaware corporation ("SERVICE"), ARC Solutions, Inc., a
Delaware corporation ("SOLUTIONS"), ARC Midholding, Inc. , a Delaware
corporation ("MIDHOLDING"), and Writers Inc., a California corporation
("Writers") (each of Service, Solutions, Midholding and Writers a "GUARANTOR,"
and collectively, the "GUARANTORS"), for the benefit of Wynnchurch Capital
Partners, L.P., a Delaware limited partnership ("WYNNCHURCH") and Wynnchurch
Capital Partners Canada, L.P., an Alberta, Canada limited partnership
("WYNNCHURCH CANADA") (each of Wynnchurch and Wynnchurch Canada, a "PURCHASER",
and collectively, the "PURCHASERS.")
RECITALS
A. Alternative Resource Corporation, a Delaware corporation ("COMPANY")
and the Purchasers have entered into a Securities Purchase Agreement of even
date herewith (as the same may be amended, supplemented, modified or restated
from time to time, the "SECURITIES PURCHASE AGREEMENT") pursuant to which the
Company has issued the Notes and Warrants, subject to the terms and conditions
of the Securities Purchase Agreement.
B. To secure the Company's Obligations, the Company has executed and
delivered a Company Security Agreement of even date herewith (as the same may be
amended, supplemented modified or restated from time to time, the "COMPANY
SECURITY AGREEMENT") in favor of the Purchasers.
C. The Company owns 100% of the capital stock of each Guarantor.
Accordingly, each Guarantor has a direct financial interest in inducing
Purchasers to enter into the Securities Purchase Agreement and to purchase the
Notes and Warrants.
D. To secure the Guarantors' Obligations, the Guarantors have
collectively executed and delivered a Guarantor Security Agreement of even date
herewith (as the same may be amended, supplemented, modified or restated from
time to time, the "GUARANTOR SECURITY AGREEMENT") in favor of the Purchasers.
The Company Security Agreement and the Guarantor Security Agreement are referred
to in this Guaranty collectively as the "SECURITY AGREEMENTS."
E. The conditions precedent to the obligation of Purchasers to enter
into the Securities Purchase Agreement and purchase the Notes and Warrants
include the execution and delivery by Guarantors of this Guaranty and the
performance by Guarantors of their obligations hereunder.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, each Guarantor hereby agrees as
follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Guaranty
shall have the meanings ascribed to such terms in the Securities Purchase
Agreement. As used herein, the following terms have the following meanings:
1.1 COMPANY'S OBLIGATIONS means the obligations of the Company to
the Purchasers arising under the Notes.
1.2 GUARANTORS' OBLIGATIONS means the obligations of Guarantors
under this Guaranty.
1.3 INTERCREDITOR AGREEMENT means the Intercreditor and
Subordination Agreement of even date herewith among the Purchasers, the
Company, the Guarantors and FCC.
1.4 TOTAL COLLATERAL means (i) the "Collateral," as defined in the
Company Security Agreement, (ii) the "Collateral" as defined in the
Guarantor Security Agreement and (iii) the "Collateral" as defined in
the Pledge Agreement of even date herewith among the Company and the
Purchasers.
2. GUARANTY OF PAYMENT. Each Guarantor hereby unconditionally and
irrevocably guarantees to Purchasers the punctual payment and performance when
due, whether at stated maturity or by acceleration or otherwise, of the
Company's Obligations. Each Guarantor agrees that this Guaranty is a present and
continuing guaranty of payment and not of collectibility, and that neither
Purchaser shall be required to prosecute collection, enforcement or other
remedies against the Company or any other person or entity, or to enforce or
resort to any of the Total Collateral or other rights or remedies pertaining
thereto, before calling on any Guarantor for payment. When Company's Obligations
have been paid in full by the Company or any Guarantor to Purchasers, this
Guaranty shall terminate without further act or action.
3. CONTINUING GUARANTY. Each Guarantor agrees that the Guarantors'
Obligations shall be primary obligations of such Guarantor, shall not be subject
to any counterclaim, set-off, abatement, deferment or defense based upon any
claim that such Guarantor may have against either Purchaser, the Company or any
other Person, and shall remain in full force and effect without regard to, and
shall not be released, discharged, limited or affected in any way by any
circumstance or condition (whether or not such Guarantor shall have any
knowledge thereof), including, without limitation:
(a) any lack of validity or enforceability of any of the
Investment Agreements;
(b) any termination, restatement, amendment, modification or other
change in any of the Investment Agreements;
(c) any furnishing, exchange, substitution or release of any of
the Total Collateral, or any failure to perfect any Lien in any of the
Total Collateral;
(d) any failure, omission or delay on the part of the Company or
either Purchaser to conform or comply with any term of any of the
Investment Agreements or any failure of either Purchaser to give notice
of any Event of Default;
2
(e) any waiver, compromise, release, settlement or extension of
time of payment or performance or observance of any of the obligations
or agreements contained in any of the Investment Agreements;
(f) any action or inaction by either Purchaser under or in respect
of any of the Investment Agreements, any failure, lack of diligence,
omission or delay on the part of either Purchaser to enforce, assert or
exercise any right, power or remedy conferred on either Purchaser in
any of the Investment Agreements, or any other action or inaction on
the part of either Purchaser;
(g) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit
of creditors, composition, receivership, liquidation, marshalling of
assets and liabilities or similar events or proceedings with respect to
any Guarantor, the Company or any other person or entity or any of
their respective property or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(h) any merger or consolidation of any Guarantor, the Company or
any other person or entity into or with any person or entity, or any
sale, lease or transfer of any of the assets of any Guarantor, the
Company or any other person or entity to any other person or entity;
(i) any change in the ownership of any of the equity interests of
the Company or any change in the relationship between any Guarantor and
the Company, or any termination of any such relationship;
(j) any release or discharge by operation of law of any other
Guarantor or the Company from any obligation or agreement contained in
any of the Investment Agreements; and
(k) any other occurrence, circumstance, happening or event,
whether similar or dissimilar to the foregoing and whether foreseen or
unforeseen, which otherwise might constitute a legal or equitable
defense or discharge of the liabilities of a guarantor or surety or
which otherwise might limit recourse against any Guarantor or the
Guarantors.
4. WAIVERS. Each Guarantor unconditionally waives, to the extent
permitted by law, (i) notice of any of the matters referred to in SECTION 3
above, (ii) all notices which may be required by statute, rule of law or
otherwise, now or hereafter in effect, to preserve intact any rights against
such Guarantor, including, without limitation, any demand, presentment and
protest, proof of notice of non-payment under any of the Investment Agreements
and notice of any Event of Default or any failure on the part of any Guarantor
or the Company to perform or comply with any covenant, agreement, term or
condition of any of the Investment Agreements, (iii) any right to the
enforcement, assertion or exercise against any Guarantor or the Company of any
right or remedy conferred under any of the Investment Agreements, (iv) any
requirement of
3
diligence on the part of any person or entity, and (v) any requirement to
exhaust any remedies or to mitigate the damages resulting from any default under
any of the Investment Agreements.
5. SUBORDINATION. Each Guarantor agrees that any and all present and
future debts and obligations of the Company to such Guarantor hereby are
subordinated to the claims of the Purchasers and hereby are assigned by such
Guarantor to the Purchasers as security for the payment and performance of the
Company's Obligations.
6. REINSTATEMENT. The obligations of the Guarantors pursuant to this
Guaranty shall continue to be effective or automatically be reinstated, as the
case may be, if at any time payment of any of the Company's Obligations is
rescinded or otherwise must be restored or returned by either Purchaser upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Guarantor or the Company or for any other reason, all as though such payment had
not been made.
7. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents to each
Purchaser as follows:
7.1 ORGANIZATION AND QUALIFICATION. Each Guarantor other than
Writers is a corporation duly organized, validity existing and in good
standing under the laws of the State of Delaware. Writers is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California. Each Guarantor has the requisite
corporate power and authority to own its properties and to carry on its
business as now being conducted. Each Guarantor is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction where the failure to so qualify would have a Material
Adverse Effect. No Guarantor has any subsidiaries.
7.2 AUTHORIZATION; ENFORCEMENT. Each Guarantor has the requisite
corporate power and authority to enter into, and perform its
obligations under this Guaranty and the Guarantor Security Agreement.
Each Guarantor's execution, delivery and performance of this Guaranty
and the Guarantor Security Agreement and the consummation by it of each
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of such Guarantor, its board of directors, or its
stockholders or any other person, body or agency is required with
respect to any of the transactions contemplated hereby or thereby. This
Guaranty and the Guarantor Security Agreement have each been duly
executed and delivered by such Guarantor. Each of this Guaranty and the
Guarantor Security Agreement constitutes a legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor, in
accordance with its terms.
7.3 CAPITALIZATION. The Company owns 100% of the capital stock of
each Guarantor.
7.4 CONSTITUENT DOCUMENTS; NO CONFLICTS. Each Guarantor has
furnished to the Purchaser true and correct copies of such Guarantor's
certificate of incorporation as currently in effect, and such
Guarantor's by-laws as currently in effect. The execution, delivery and
performance of each of this Guaranty and the Guarantor Security
Agreement
4
by the Guarantors and the consummation by the Guarantors of
the transactions contemplated hereby and thereby do not and will not
(a) result in a violation of the certificate of incorporation or
by-laws of any Guarantor, (b) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument
to which any Guarantor is a party, or (c) result in a violation of any
law, rule, regulation, order, judgment or decree (including U.S.
federal and state securities laws and regulations) applicable to any
Guarantor, or by which any property or asset of any Guarantor is bound
or affected. No Guarantor is in violation of its certificate of
incorporation, by-laws or other organizational documents, and no
Guarantor is in default (and no event has occurred which, with notice
or lapse of time or both, would put any Guarantor in default) under,
nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which any
Guarantor is a party which would have a Material Adverse Effect. The
business of the Guarantors is not being conducted in violation of any
law, ordinance, rule, regulation, order, judgment or decree of any
governmental entity, court or arbitration tribunal except for possible
violations the sanctions for which either singly or in the aggregate
would not have a Material Adverse Effect. No Guarantor is required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory
or self-regulatory agency or authority in order for it to execute,
deliver or perform any of its obligations under this Guaranty or the
Guarantor Security Agreement or to perform its obligations in
accordance with the terms hereof or thereof.
7.5 LIABILITIES AND OBLIGATIONS. Except as set forth in the
Financial Statements, no Guarantor has any liabilities, contingent or
otherwise, other than (i) liabilities incurred subsequent to the date
of such financial statements in the ordinary course of business
consistent with past practice and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected
in such financial statements, in each case of clause (i) and (ii) next
above which, individually and in the aggregate, are not material to the
financial condition, business, operations, properties, operating
results or prospects of the Company and its subsidiaries taken as a
whole.
7.6 CONTRACTS. Exhibit 3.8 to the Securities Purchase Agreement
contains a complete and accurate list of all material undischarged
written or oral contracts, agreements, leases or other instruments to
which any Guarantor is a party or by which any Guarantor is bound or to
which any of the properties or assets of any Guarantor is subject (each
a "CONTRACT"). None of the Guarantors or, to the best knowledge of any
Guarantor, any of the other parties thereto, is in breach or violation
of any Contract, which breach or violation relates to indebtedness for
borrowed money or otherwise would have a Material Adverse Effect. No
event, occurrence or condition exists which, with the lapse of time,
the giving of notice, or both, or the happening of any further event or
condition, would become a breach or default by any Guarantor under any
Contract which breach or default would have a Material Adverse Effect.
5
7.7 TITLE TO PROPERTY AND ASSETS. Each Guarantor owns its property
and assets free and clear of all mortgages, liens, loans and
encumbrances, except such mortgages, encumbrances, loans and liens
which arise in the ordinary course of business and do not materially
impair such Guarantor's ownership or use of such property or any assets
and those set forth on SCHEDULE 3.9 of the Securities Purchase
Agreement. With respect to the property and assets it leases, each
Guarantor is in compliance in all material respects with such leases
and holds a valid leasehold interest free of any material liens,
claims, loans or encumbrances. All material facilities, equipment and
other material items of tangible property and assets owned by each
Guarantor are in good operating condition and repair, subject to normal
wear and maintenance, are usable in the regular and ordinary course of
business and conform to all applicable laws relating to their use and
operation, except where such failure, individually or in the aggregate,
would not have a Material Adverse Effect.
7.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3.10
of the Securities Purchase Agreement, since December 31, 2001, there
has been no change or development in the business, properties,
operations, financial condition, results of operations or prospects of
any Guarantor that has had or would reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the
foregoing, since such date, there have not been:
(a) any change in the business, assets, properties, liabilities,
condition (financial or otherwise) or operating results of any
Guarantor from that reflected in the Financial Statements, other than
changes in the ordinary course of business that have not been,
individually or in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business (as such
business is presently conducted and as it is proposed to be conducted),
assets, properties, liabilities, prospects, or condition (financial or
otherwise) or operating results of any Guarantor;
(c) any material adverse change to a Contract;
(d) any material change in any compensation arrangement or agreement
with any employee, officer, director, stockholder, consultant or finder
other than in the ordinary course of business;
(e) any sale, assignment or transfer of any material tangible assets
of any Guarantor;
(f) receipt of notice that there has been a loss of, or order
cancellation by or material reduction in orders from, any major
customer of any Guarantor or any of its subsidiaries or cancellation or
discontinuance by any major supplier or service provider of any
Guarantor.
7.9 ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE 3.11 to
the
6
Securities Purchase Agreement, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, governmental agency or authority, or self-regulatory
organization or body pending or, to the knowledge of any Guarantor,
threatened against or affecting any Guarantor or any of their
respective directors or officers in their capacities as such, wherein
an unfavorable decision, ruling or finding could have a Material
Adverse Effect. There are no facts which, if known by a potential
claimant or governmental agency or authority, could give rise to a
claim or proceeding which, if asserted or conducted with results
unfavorable to any Guarantor, could have a Material Adverse Effect.
7.10 ENVIRONMENTAL MATTERS. (a) Except as would not reasonably be
expected to have a Material Adverse Effect each Guarantor is in
compliance with all applicable Environmental Laws (as defined herein),
(b) no Guarantor has received any written notice with respect to the
business of, or any property owned or leased by, such Guarantor from
any governmental authority or third party alleging that such Guarantor
is not in compliance with any Environmental Law, and (c) there has been
no "release" of petroleum, petroleum-based products, oil or a
"hazardous substance," as those quoted terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Section 9601 et seq., on any real property owned by any
Guarantor or that is used for the business of any Guarantor except a
release not reasonably expected to have a Material Adverse Effect.
7.11 COMPLIANCE WITH LAWS. To the knowledge of such Guarantor, each
Guarantor has complied in all material respects with all material laws,
rules and regulations, ordinances, judgments, decrees, orders, writs
and injunctions of all United States federal, state, local and foreign
governments and agencies thereof that apply to the business, properties
or assets of such Guarantor.
7.12 TAX MATTERS.
(a) Each Guarantor has timely filed (or there have been filed on
their behalf) in correct form with appropriate taxing authorities all
material Tax Returns (as defined herein) required to be filed by them
on or prior to the date hereof. Such Tax Returns are true, accurate and
complete in all material respects. With respect to all amounts in
respect of Taxes imposed upon any Guarantor or for which any Guarantor
is or could be liable, all applicable Tax laws have been complied with
in all material respects, and all such amounts in respect of Taxes
required to be paid by any Guarantor to taxing authorities or others,
have been paid.
(b) Each Guarantor has complied in all material respects with all
applicable laws relating to the withholding of Taxes, and subject to
the foregoing, have, within the time and manner prescribed by law,
withheld and paid over to the proper governmental authorities all
amounts required to be withheld and paid over under all applicable
laws.
(c) No federal, state, local or foreign audits or other
administrative proceedings have formally commenced or are presently
pending with regard to any Taxes
7
due from or with respect to any Guarantor. There are no outstanding
requests, agreements, consents or waivers to extend the statutory
period of limitations applicable to the assessment of any Taxes or
deficiencies against any Guarantor.
(d) No Guarantor is a party to any material Tax sharing, Tax
indemnity or other similar agreement or arrangement with any person or
entity other than a Tax sharing, Tax indemnity or other similar
agreement to which the Company and/or one of the Guarantors are the
sole parties.
7.13 INTELLECTUAL PROPERTY. Each Guarantor owns or possesses
adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively,
"INTANGIBLES") used or necessary for the conduct of its business as now
being conducted and as previously described in the Company's Annual
Report on Form 10-K most recently filed and any subsequently filed
reports on Form 10-Q and Form 8-K. No Guarantor infringes on or is in
conflict with any right of any other person with respect to any
Intangibles nor is there any claim of infringement made by a third
party against or involving any Guarantor, which infringement, conflict
or claim, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
7.14 FOREIGN CORRUPT PRACTICES. To such Guarantor's knowledge, no
Guarantor nor any director, officer, agent, employee or other person
acting on behalf of any Guarantor has, in the course of his actions
for, or on behalf of, such Guarantor, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
Without limiting the generality of the foregoing, no Guarantor has
directly or indirectly made or agreed to make (whether or not said
payment is lawful) any payment to obtain sales other than usual and
regular compensation to its employees and sales representatives with
respect to such sales.
8. AFFIRMATIVE COVENANTS. Until all of the Company's Obligations and
the Guarantors' Obligations are paid and performed in full, each Guarantor shall
do the following, unless such Guarantor receives the written consent of the
Required Note Holders as to a waiver of the covenant:
8.1 CORPORATE EXISTENCE. Each Guarantor shall maintain and preserve
its corporate existence, good standing, certificates of authority,
licenses, permits, franchises, patents, trademarks, trade names,
service marks, copyrights, leases and all other contracts and rights
necessary or desirable to continue its operations and business as now
8
conducted and will generally continue its existing lines of business or
such businesses as are substantially related to those being presently
conducted by such Guarantor.
8.2 TAXES AND LAWS. Each Guarantor will pay when due all Taxes,
including excise taxes and duty, assessments, charges and levies
imposed on such Guarantor or any of its income, profits, property or
assets, or which they are required to withhold and pay out, and will
comply with all applicable present and future laws or contractual
obligations unless such Guarantor is contesting in good faith, by an
appropriate proceeding, the validity, amount or imposition of the
above, subject to appropriate reserves, and such contest does not have
or cause a Material Adverse Effect or impair such Guarantor's ability
to perform any of its material obligations.
8.3 REPAIR AND MAINTENANCE. Each Guarantor will maintain all of
their assets and properties in good condition and repair and in proper
working order, normal wear and tear excepted, and will pay and
discharge, or cause to be paid and discharged, when due, the cost of
repairs, replacement or maintenance to the foregoing and all rentals or
mortgage payments on the foregoing. Notwithstanding the foregoing, a
Guarantor may determine not to repair and maintain certain of its
asset(s) so long as such determination and failure to repair and
maintain such asset(s) shall not have a Material Adverse Effect on the
business of the Guarantors and the Company, taken as a whole. To the
extent not covered by the Company's insurance, each Guarantor shall
maintain insurance on its properties and business with reputable
insurance companies in amounts and against risks as are customarily
maintained by similar businesses.
8.4 EMPLOYEE PLANS. Each Guarantor shall (i) keep in full force and
effect any and all Plans and Employee Benefit Plans which are presently
in existence or may, from time to time, come into existence under
ERISA, and not withdraw from any such Plans or Employee Benefit Plans,
unless such withdrawal can be effected or such Plans or Employee
Benefit Plans can be terminated without material liability to such
Guarantor; (ii) make contributions to all of such Plans and Employee
Benefit Plans in a timely manner and in a sufficient amount to comply
with the requirements of ERISA, including the minimum funding standards
of Section 302 of ERISA; (iii) comply with all material requirements of
ERISA which relate to such Plans and Employee Benefit Plans; (iv)
notify each Purchaser immediately upon receipt by such Guarantor of any
notice concerning the imposition of any withdrawal liability or of the
institution of any proceeding or other action which may result in the
termination of any such Plans or Employee Benefit Plans or the
appointment of a trustee to administer such Plans and Employee Benefit
Plans; and (v) promptly advise the Purchaser of the occurrence of any
Reportable Event or Prohibited Transaction, as defined in ERISA, that
is not exempt by statute with respect to any such Plans and Employee
Benefit Plans.
8.5 ENVIRONMENTAL MATTERS - INDEMNIFICATION. Each Guarantor shall
take or cause to be taken all actions to comply in all material
respects with the requirements of all Environmental Laws including, all
filing and reporting requirements thereof. Each Guarantor hereby agrees
to indemnify, hold harmless and reimburse each Purchaser for any and
all loss, damage, expenses or costs of any kind or nature arising out
of or
9
incurred in connection with any prior, existing or future violations
by such Guarantor of any Environmental Laws.
8.6 NOTICES. As promptly as practicable, and in any event not later
than five business days after senior management of a Guarantor becomes
aware thereof, such Guarantor shall provide each Purchaser with written
notice of any breach by such Guarantor of any provision of this of this
Guaranty or the Guarantor Security Agreement, the Credit Agreement or
any note representing Indebtedness, specifying the nature of such
breach and any actions proposed to be taken by such Guarantor to cure
such breach. Each Guarantor shall also provide each Purchaser with the
notices it is to provide to FCC pursuant to Section 7.2 of the Credit
Agreement at the same time it is required to provide such notices to
FCC thereunder.
9. NEGATIVE COVENANTS. Until the Company's Obligations and the
Guarantors' Obligations are paid and performed in full, no Guarantor shall do
the following unless it receives the written consent of the Required Note
Holders as to a waiver of the covenant:
9.1 SALES AND LIQUIDATION. Except as permitted in Section 8.4(c) of
the Credit Agreement, unless the Company exercises its option under
Section 1.1(b) of the Note, no Guarantor may (a) liquidate, wind up or
dissolve such Guarantor, (b) sell, convey, or otherwise dispose of or
encumber a material portion of its property or business (in one or in a
related series of transactions), (c) merge with or into or consolidate
with any other corporation or other entity (other than the merger of a
Guarantor into the Company or another Guarantor) or (d) enter into or
effect any transaction or series of related transactions in which any
of the voting power or equity economic interest of the such Guarantor
is disposed of, or otherwise suffer a Change of Control.
9.2 INVESTMENTS AND LOANS. No Guarantor may make any loans to or
investments in any person or entity, including any officer, director or
employee, except that a Guarantor may make a loan to the Company or
another Guarantor.
9.3 PREPAYMENT OR MODIFICATION OF INDEBTEDNESS; NEW INDEBTEDNESS. No
Guarantor may (i) prepay any Indebtedness except as permitted under the
Credit Agreement, (ii) enter into or modify any agreement as a result
of which the terms of payment of any Indebtedness are amended or
modified in a manner which would accelerate its payment, or (ii) enter
into any note or other arrangement which would result in, or otherwise
incur, additional Indebtedness in an amount in excess of One Hundred
Thousand dollars ($100,000.00) other than in the case of this clause
(iii), (w) the Indebtedness being incurred pursuant to the existing
Credit Agreement or any extension, renewal or replacement thereof
provided that the aggregate principal amount of Indebtedness thereunder
or under any replacement shall not exceed $33,000,000, (x) Indebtedness
listed on Schedule 8.1 of the Credit Agreement (as of the date hereof)
that has been designated on such schedule as Indebtedness that will
remain outstanding following the funding of the initial Loans (as
defined in the Credit Agreement), and any extension, renewal, refunding
or replacement of any such Indebtedness that does not increase the
principal amount thereof, except as permitted under the terms of the
Subordination Agreement, (y) Indebtedness permitted by Section 8.1(e)
and (f) of the
10
Credit Agreement, and (z) Indebtedness used to prepay the Notes in full
pursuant to Section 1.1 of the Notes.
9.4 TRANSACTIONS WITH AFFILIATES. No Guarantor may enter into any
agreement or arrangement, written or oral, directly or indirectly, with
an Affiliate, or provide services or sell goods to, or for the benefit
of, or pay or otherwise distribute monies, goods or other valuable
consideration to, an Affiliate, except (w) upon terms determined by the
board of directors of such Guarantor to be fair and reasonable and no
less favorable to such Guarantor than terms in a comparable arm's
length transaction with an unaffiliated person or entity and except for
existing intercompany debt, (x) any Affiliate who is an individual may
serve as a director, officer, employee or consultant of a Guarantor,
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; or (y) such Guarantor may
engage in and continue the transactions with or for the benefit of
Affiliates which are permitted pursuant to the terms of the Securities
Purchase Agreement and (z) transactions to which a Purchaser is a
party.
9.5 GUARANTEES. Except as permitted under the Credit Agreement, no
Guarantor may guarantee, assume, endorse or otherwise, in any way,
become directly or contingently liable in any manner with respect to
the obligations or liabilities of any other person or entity.
9.6 CHANGE IN BUSINESS. No Guarantor may form or acquire any
subsidiary (except as permitted in Section 8.4(a) or (c) of the Credit
Agreement), enter into any new business or make any material change in
their business objectives, purposes and operations.
9.7 LIENS. No Guarantor may create or suffer to exist any Lien upon
any of its property now owned or hereafter acquired, or acquire any
property upon any conditional sale or other title retention device or
arrangement or any purchase money security agreement other than may be
permitted under the Security Agreements or the Credit Agreement.
9.8 AMENDMENT OF CONSTITUENT DOCUMENTS. No Guarantor may amend its
certificate of incorporation or by-laws.
9.9 REDEMPTION OF EQUITY SECURITIES. No Guarantor may, nor may they
subject themselves to any obligation to, redeem, repurchase or
otherwise acquire or retire any of the Notes or any of such Guarantor's
equity interests or any securities convertible into or exchangeable for
any of the Company's equity interests, including the Equity Securities
except as otherwise permitted in this Article VII.
9.10 INTENTIONALLY OMITTED.
9.11 ISSUANCES. No Guarantor may issue any Equity Securities,
including securities convertible or exchangeable (directly or
indirectly) into Equity Securities or other securities (including debt
securities) having features substantially similar to that of
11
Equity Securities, other than Common Stock, so long as no person or
group (as defined under the Exchange Act) owns in excess of 25% of the
outstanding Common Stock as a result of such issuance.
9.12 ACQUISITIONS. No Guarantor may acquire (whether directly or
through acquisition of stock, merger, consolidation or otherwise, in
one transaction or a series of related transactions) any business or
entity or any material portion of the assets thereof other than
Permitted Investments.
9.13 CERTAIN AMENDMENTS OF CREDIT AGREEMENT. No Guarantor may enter
into any amendment or modification (including in any replacement) of
the Credit Agreement that would require the consent of the Subordinated
Creditors (as defined in the Subordination Agreement) pursuant to
Section 9(a) or 9(b) of the Subordination Agreement.
10. INTERCREDITOR AGREEMENT. This Guaranty is subject to an
Intercreditor and Subordination Agreement of even date herewith among the
Purchasers, the Company, the Guarantors and FCC, which among other things,
subordinates the Guarantors' Obligations to the Purchasers to the Company's and
Guarantors' obligations to the holders of Senior Obligations as defined in that
agreement.
11. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default ("EVENT OF DEFAULT") under this Guaranty:
11.1 COMPANY'S OBLIGATIONS. If an Event of Default under the Notes
shall have occurred.
11.2 BREACH OF COVENANTS. If any Guarantor fails to observe or
perform any covenant or agreement made by such Guarantor contained in
this Guaranty or the Guarantor Security Agreement.
11.3 BREACH OF WARRANTY. If any representation or warranty made by
any Guarantor in this Guaranty or the Guarantor Security Agreement
proves to be false or misleading in any material respect on the day on
which it is made.
12. REMEDIES ON DEFAULT. Subject to the provisions of the Intercreditor
Agreement, if any Event of Default occurs and is continuing, (i) the Guarantors
shall pay the Guarantors' Obligations in full, immediately upon demand and (ii)
each Purchaser, at its option, may enforce its rights and remedies under this
Guaranty or the Guarantor Security Agreement in accordance with their respective
terms and enforce any other rights or remedies accorded to the Purchasers at
equity or law, by virtue of statute or otherwise.
13. SUCCESSORS AND ASSIGNS. This Guaranty shall inure to the benefit of
the Purchasers and their respective successors and assigns of whom the
Guarantors have notice. After the transfer of a Note or any portion thereof, no
Guarantor will have any further obligation under this Guaranty to the transferor
of the Note with respect to the obligations arising under the transferred Note
to the extent transferred. This Guaranty shall be binding on each Guarantor and
12
its successors and assigns, and shall continue in full force and effect until
all of the Company's Obligations are indefeasibly paid and performed in full, at
which time the Guaranty shall terminate. Notwithstanding the foregoing, no
Guarantor may assign all or any of its obligations hereunder.
14. NO WAIVER OF RIGHTS. Neither any delay in exercising, nor any
failure on the part of any Purchaser to exercise any right, power or privilege
under this Guaranty or any of the other Investment Agreements shall operate as a
waiver thereof, and no single or partial exercise of any right, power or
privilege shall preclude any other or further exercise thereof or the exercise
of any other power or right, or be deemed to establish a custom or course of
dealing or performance among the parties hereto. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided by
law. No notice to or demand on any Guarantor in any case shall entitle such
Guarantor or any other Guarantor to any other or further notice or demand in the
same, similar or any other circumstance.
15. MODIFICATION. The terms of this Guaranty may be waived, discharged
or terminated only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. No
amendment, modification, waiver or other change of any of the terms of this
Guaranty shall be effective without the prior written consent of the Required
Note Holders.
16. COSTS AND EXPENSES. Each Guarantor agrees to pay on demand all
costs and expenses incurred by or on behalf of either Purchaser (including,
without limitation, reasonable attorneys' fees and expenses) in enforcing the
Guarantors' Obligations, provided that if Purchasers receive any amount in
excess of the costs and expenses described in this Section 16 as a result of
demanding payment therefor from more than one Guarantor, the Purchasers will
return such excess pro rata to any Guarantors that made such payments.
17. GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Illinois applicable to
contracts made and to be performed in the State of Illinois. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of Illinois and the State Courts in the County of Xxxx in
the State of Illinois in any suit or proceeding based on or arising under this
Guaranty or the transactions contemplated hereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
Each Guarantor irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Each Guarantor further agrees that
service of process upon such Guarantor mailed by the first class mail shall be
deemed in every respect effective service of process upon such Guarantor in any
suit or proceeding arising hereunder. Nothing herein shall affect either
Purchaser's right to serve process in any other manner permitted by law. The
parties hereto agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner
18. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE GUARANTORS AND PURCHASERS HEREBY WAIVE
AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY
13
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS GUARANTY OR THE SUBJECT MATTER HEREOF
OR ANY OBLIGATION HEREUNDER OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PURCHASERS OR SUCH GUARANTOR OR ANY OF THEM IN
CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE
GUARANTORS AND THE PURCHASERS ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION 17
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH EACH OF THE GUARANTORS AND THE
PURCHASERS HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS GUARANTY
AND THE GUARANTOR SECURITY AGREEMENT. Either Purchaser or any Guarantor may file
an original counterpart or a copy of this Section 17 with any court as written
evidence of the consent of the parties hereto to the waiver of their respective
right to trial by jury.
19. WAIVER OF RIGHTS AGAINST THE COMPANY. Notwithstanding anything to
the contrary which may be contained herein, each Guarantor hereby
unconditionally and irrevocably agrees that, until the Company's Obligations are
indefeasibly paid and performed in full, such Guarantor (i) will not at any time
assert against the Company (or the Company's estate if the Company becomes
bankrupt or becomes the subject of any case or proceeding under the bankruptcy
laws of the United States of America) any right or claim, at law or in equity,
to indemnification, reimbursement, contribution, restitution or payment for or
with respect to any and all amounts any Guarantor may pay or be obligated to pay
to Purchaser, including, without limitation, the Guarantor's Obligations under
or with respect to this Guaranty, and (ii) waives and releases all such rights
and claims, at law or in equity, to indemnification, reimbursement,
contribution, restitution or payment which such Guarantor may have now or at any
time against the Company (or the Company's estate if the Company becomes
bankrupt or becomes the subject of any case or proceeding under the bankruptcy
laws of the United States of America). Each Guarantor further unconditionally
and irrevocably agrees that, until the Company's Obligations are indefeasibly
paid and performed in full, such Guarantor shall have no right of subrogation,
and waives any right to enforce any remedy which either Purchaser now has or
hereafter may have against the Company, and waives any defense based upon an
election of remedies by either Purchaser, which destroys or otherwise impairs
any subrogation rights of such Guarantor and/or the right of such Guarantor to
proceed against the Company for reimbursement.
20. NO JOINDER. Each Guarantor agrees that any action to enforce this
Guaranty may be brought against such Guarantor without any reimbursement or
joinder of the Company or any other person or entity in such action.
21. SEVERABILITY. In the event that any provision of this Guaranty is
deemed to be invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court, the validity, legality and
enforceability of the remaining terms and provisions of this Guaranty shall not
in any way be affected or impaired thereby, all of which shall remain in full
force and effect, and the affected term or provision shall be modified to the
minimum extent permitted by law so as to achieve most fully the intention of
this Guaranty.
14
[remainder of this page intentionally left blank]
15
IN WITNESS WHEREOF, the Guarantors have executed this Guaranty as of
the date first above written.
ARC SERVICE, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and Secretary
ARC SOLUTIONS, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and Secretary
ARC MIDHOLDING, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and Secretary
WRITERS INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and Secretary
