Exhibit 4.3
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("AGREEMENT") is entered into as of
January 31, 2002, by and between Alternative Resources Corporation, a Delaware
corporation (the "COMPANY"), with headquarters located at 000 Xxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000, and Wynnchurch Capital Partners, L.P., a
Delaware limited partnership and Wynnchurch Capital Partners Canada, L.P., an
Alberta, Canada limited partnership (each a "PURCHASER," and collectively, the
"PURCHASERS"):
RECITALS
A. The Purchasers desire to purchase, and the Company desires to issue
and sell, upon the terms and conditions stated in this Agreement, (i) the
Company's 15% Secured Subordinated Convertible Promissory Notes (the "NOTES") in
the aggregate principal amount of Ten Million Dollars ($10,000,000) in the form
of EXHIBIT A attached hereto which is convertible into common stock, par value
$0.01 of the Company (the "COMMON STOCK," and the shares of Common Stock
resulting from the conversion of the Notes, the "NOTE SHARES"), upon the terms
and conditions set forth in the Note and (ii) Warrants (x) in the form of
EXHIBIT B-1 attached hereto (the "B-1 WARRANT"), entitling the holders thereof
to purchase in the aggregate, Ten Million (10,000,000) shares of Common Stock
upon the terms and conditions set forth in the B-1 Warrant and (y) Warrants in
the form of EXHIBIT B-2 hereto (the "B-2 WARRANTS"), entitling the holders
thereof to purchase, in the aggregate One Million (1,000,000) shares of Common
Stock upon the terms and conditions set forth in the B-2 Warrant (each of the
B-1 Warrants and B-2 Warrants a "WARRANT" and collectively the "WARRANTS"; the
Common Stock issuable upon exercise of either Warrant, the "WARRANT SHARES," and
the Note Shares and Warrant Shares collectively, the "SHARES"; the Warrants
together with the Notes, the "PURCHASED SECURITIES," and the Purchased
Securities, collectively with the Shares, the "SECURITIES").
B. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), the rules and regulations promulgated thereunder by the
Securities and Exchange Commission ("SEC") and applicable state securities laws
with respect to the Shares.
C. Contemporaneously with the execution and delivery of this
Agreement, the Company is delivering to the Purchasers a Company Security
Agreement in the form attached hereto as EXHIBIT D-1 and the subsidiaries of the
Company are delivering to the Purchasers a Guaranty in the form attached hereto
as EXHIBIT D-2, a Subsidiary Security Agreement in the form attached hereto as
EXHIBIT D-3, and a Subsidiary Pledge Agreement in the form attached hereto as
EXHIBIT D-4 (collectively, the "SECURITY AGREEMENTS") pursuant to which
Purchasers shall receive a security interest on all of the owned assets of the
Company and its subsidiaries, subordinate only to the security interest of that
of Fleet Capital Corporation ("FCC") described in and pursuant to the terms of
that certain Subordination and Intercreditor Agreement of even date
herewith between Purchasers, the Company, the Company's subsidiaries and FCC
(the "SUBORDINATION AGREEMENT").
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES; SECURITY
1.1 PURCHASE OF NOTES AND WARRANTS. The aggregate purchase price (the
"PURCHASE PRICE") to be paid by the Purchasers for the Notes and Warrants being
purchased by the Purchasers shall be Ten Million Dollars ($10,000,000.00). On
the terms and subject to the conditions set forth in this Agreement, on the
Closing Date (as defined herein), the Company will issue and sell to the
Purchasers, and each Purchaser shall severally and not jointly purchase from the
Company (i) Notes in a principal amount equal to the Purchase Price, in the
amounts to each Purchaser set forth on ANNEX A attached hereto and (ii) B-1
Warrants and B-2 Warrants exercisable into the amount of Warrant Shares to each
Purchaser set forth on ANNEX A attached hereto. The parties agree that the
aggregate value of the Warrants is $300,000, and that the parties hereto will
not take any action that would be inconsistent with the foregoing valuation with
respect to the filing of Tax Returns (as defined herein).
1.2 FORM OF PAYMENT. At the Closing, each Purchaser shall pay its
portion of the Purchase Price for its Notes and Warrants by wire transfer to the
Company, in accordance with the Company's written wiring instructions, of
immediately available funds against delivery of duly executed Notes and
Warrants, and the Company shall deliver to each Purchaser such executed Notes
and Warrants against delivery of such Purchase Price from such Purchaser.
1.3 CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII below, the date and time of the
issuance, sale and purchase of the Note and Warrants pursuant to this Agreement
shall be January 31, 2002 (the "CLOSING"). The Closing shall occur at 10:00 a.m.
Chicago time, at the offices of XxXxxxxxx, Will & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000. The date of the Closing is hereinafter referred to as the
"Closing Date."
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser individually represents and warrants to the Company as
set forth in this Article II. The Purchasers make no other representations or
warranties, express or implied, to the Company in connection with the
transactions contemplated hereby and any and all prior representations and
warranties, if any, which may have been made by any Purchaser to the Company in
connection with the transactions contemplated hereby shall be deemed to have
been merged in this Agreement and any such prior representations and warranties,
if any, shall not survive the execution and delivery of this Agreement.
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2.1 PURCHASE FOR OWN ACCOUNT. Purchaser is purchasing the Notes and
Warrants for such Purchaser's own account for investment only and not with a
view toward or in connection with the public resale or distribution thereof.
Purchaser understands that it must bear the economic risk of this investment
indefinitely, unless the Securities are registered pursuant to the Securities
Act and any applicable state securities laws or an exemption from such
registration is available, and that the Company has no present intention of
registering any such Securities other than as contemplated by the Registration
Rights Agreement. By making the representations in this Section 2.1, Purchasers
do not agree to hold the Securities for any minimum or other specific term and
reserve the right to dispose of any of the Securities at any time in accordance
with a registration statement or an exemption from registration under the
Securities Act.
2.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D promulgated under the Act
("REGULATION D").
2.3 RELIANCE ON EXEMPTIONS. Purchaser understands that the Purchased
Securities are being offered and sold to the Purchaser in reliance upon specific
exemptions from the registration requirements of the United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of the representations and warranties of the Purchasers set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Purchasers to acquire the Purchased Securities.
2.4 INFORMATION. Purchaser and its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Purchased Securities which have
been specifically requested by each Purchaser. Purchaser has been afforded the
opportunity to ask questions of the Company and have received what the Purchaser
believes to be complete and satisfactory answers to any such inquiries. Neither
such materials or inquiries nor any other due diligence investigation conducted
by Purchaser nor any of its representations, warranties, covenants or agreements
shall modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Article III. Purchaser understands
that the Purchaser's investment in the Securities involves a high degree of
risk.
2.5 GOVERNMENTAL REVIEW. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.6 TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless subsequently registered thereunder or an
exemption from such registration is available (which exemption the Company
expressly agrees may be established as contemplated in clauses (b) and (c) of
Section 4.1 hereof or as otherwise may be permissible under the Securities Act);
(ii) any sale of such Securities made in reliance on Rule 144 of the rules
promulgated under the Securities Act (or a successor rule) ("RULE 144") may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of such Securities without registration under the
Securities Act may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other
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person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to this Agreement or
the Registration Rights Agreement).
2.7 LEGENDS. The Purchaser understands that, subject to Article IV
hereof, the certificates for the Notes, the Warrants, Note Shares upon
conversion of the Notes or Warrant Shares upon exercise of either of the
Warrants will bear a restrictive legend (the "LEGEND") until such time as such
Securities has been registered under the Securities Act as contemplated by the
Registration Rights Agreement or otherwise may be sold by the Purchaser pursuant
to Rule 144 or otherwise without registration, in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Except for the Legend in accordance with this Section 2.7, a legend regarding
original issue discount, and the legend required under the Subordination
Agreement the Securities shall bear no other legend.
2.8 AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser that:
3.1 ORGANIZATION AND QUALIFICATION. The Company and each of its
subsidiaries other than Writers, Inc. ("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, validity existing and in good
standing under the laws of the State of California. The Company and each of its
subsidiaries has the requisite corporate power and authority to own its
properties and to carry on its business as now being conducted. The Company and
each of its subsidiaries 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. "MATERIAL ADVERSE EFFECT" means
any material adverse effect on (i) the business, operations, properties,
financial condition, operating results or prospects of the Company and its
subsidiaries, taken as a whole on a consolidated basis, and (ii) the ability of
the Company to perform its obligations
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under this Agreement, the Notes, the Warrants, the Security Agreements or the
Registration Rights Agreement, including any exhibits thereto (collectively, the
"INVESTMENT AGREEMENTS"). The Company has no subsidiaries, except for Writers,
ARC Service, Inc. ("SERVICE"), ARC Solutions, Inc. ("SOLUTIONS") and ARC
Midholding, Inc. ("MIDHOLDING"). All such subsidiaries are one hundred percent
(100%) owned by the Company. Except as provided on SCHEDULE 3.1, the Company has
no investments, either debt or equity, in any other entity. There are two (2)
vacancies on the Company's Board of Directors.
3.2 AUTHORIZATION; ENFORCEMENT.
(a) The Company has the requisite corporate power and authority to (i)
enter into, and perform its obligations under each of the Investment Agreements,
(ii) issue, sell and perform its obligations with respect to the Notes and the
Warrants in accordance with the terms hereof and thereof, and (iii) issue the
Note Shares in accordance with the terms and conditions of the Notes and the
Warrant Shares in accordance with the terms and conditions of the Warrants. The
Company's execution, delivery and performance of each of the Investment
Agreements and the consummation by it of each of the transactions contemplated
hereby and thereby (including the issuance of the Purchased Securities and the
reservation for issuance and issuance of the Notes Shares and Warrant Shares)
have been duly authorized by all necessary corporate action. In connection with
such authorization, the Company's Board of Directors (the "BOARD") has (x)
concluded that the issuance of the Securities and the other transactions
contemplated hereby are in the best interests of the Company and its
stockholders and (y) approved of the transactions contemplated hereby for
purposes of Section 203 of the Delaware General Corporation Law ("SECTION 203")
so that neither (A) either Purchaser nor (B) Purchasers as a group will be
subject to the restrictions set forth in subsection (a) of Section 203. No
further consent or authorization of the Company, the Board, or its stockholders
or any other person, body or agency is required with respect to any of the
transactions contemplated hereby or the Company's performance of its obligations
hereunder or under any of the Investment Agreements (including under rules of
the National Association of Securities Dealers or otherwise). Each of the
Investment Agreements has been duly executed and delivered by the Company. Each
of the Investment Agreements constitutes a legal, valid and binding obligation
of the Company enforceable against the Company, in accordance with its terms.
(b) Each subsidiary of the Company has the requisite corporate power
and authority to enter into, and perform its obligations under each of the
Security Agreements to which it is a party. Such subsidiaries' execution,
delivery and performance of such Security Agreements and the consummation by it
of each of the transactions contemplated thereby have been duly authorized by
all necessary corporate action and no further consent or authorization of such
subsidiary, 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.
3.3 CAPITALIZATION. The capitalization of the Company as of the date of
this Agreement, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares reserved for issuance pursuant to
the Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Purchased Securities), directly or
indirectly, exercisable for, or convertible into or exchangeable for any shares
of Common Stock and the number of shares to be initially reserved for issuance
upon
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conversion of the Notes and the exercise of the Warrants is set forth on
SCHEDULE 3.3. All of such outstanding shares of capital stock have been, or upon
issuance will be, validly issued, fully paid and non-assessable. No shares of
capital stock of the Company (including the Purchased Securities, Note Shares or
the Warrant Shares) are subject to preemptive rights or any other similar rights
of the stockholders of the Company or any liens or encumbrances. Except as
disclosed in SCHEDULE 3.3, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, directly or indirectly, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries, and (ii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of its or their securities under the Securities Act
(except the Registration Rights Agreement). The Company has set forth on
SCHEDULE 3.3 all instruments and agreements (other than the Certificate of
Incorporation and By-laws) governing securities convertible into or exercisable
or exchangeable for Common Stock of the Company (and the Company has provided to
the Purchaser true and accurate copies thereof). Except as set forth on SCHEDULE
3.3, the Company has no indebtedness for borrowed money and no agreement
providing for indebtedness for borrowed money. Except as set forth on SCHEDULE
3.3, the Company has no share purchase agreements, rights plans, agreements or
instruments containing similar provisions and no agreements containing
anti-dilution provisions. The Company has taken all action required to redeem
all preferred share purchase rights issued to its shareholders as of October 15,
1998 ("RIGHTS") other than the filing of the notice of redemption of the Rights
with the Xxxxxx Trust and Savings Bank (the "RIGHTS AGENT") and the notification
of the holders of the Rights in accordance with Section 23(d) of the Rights
Agreement dated as of October 15, 1998 (the "RIGHTS AGREEMENT") between the
Company and the Rights Agent (collectively, the "RIGHTS REDEMPTION NOTICE").
3.4 ISSUANCE OF SHARES. The Note Shares and Warrant Shares have been
duly authorized and reserved for issuance, and, upon conversion of the Notes or
exercise of either of the Warrant, each in accordance with the terms thereof,
the Shares resulting therefrom, as the case may be, will be validly issued,
fully paid and non-assessable, free from all taxes, liens, claims and
encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company. No further corporate or stockholder
authorization or approval is required with respect to the transactions
contemplated by this Agreement, including the issuance of the Note Shares or
Warrant Shares.
3.5 CONSTITUENT DOCUMENTS; NO CONFLICTS. The Company has furnished to
the Purchaser true and correct copies of the Company's Certificate of
Incorporation as currently in effect ("CERTIFICATE OF INCORPORATION"), and the
Company's By-laws as currently in effect (the "BY-LAWS"). The execution,
delivery and performance of each of the Investment Agreements by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including the issuance and reservation for issuance of the Note Shares
and Warrant Shares) do not and will not (a) result in a violation of the
Certificate of Incorporation or By-laws of the Company or any of its
subsidiaries, (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
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instrument to which the Company or any of its subsidiaries 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
the Company or any of its subsidiaries, or by which any property or asset of the
Company or any of its subsidiaries, is bound or affected. Neither the Company
nor any of its subsidiaries is in violation of its Certificate of Incorporation,
by-laws or other organizational documents, and neither the Company nor any of
its subsidiaries is in default (and no event has occurred which, with notice or
lapse of time or both, would put the Company or any of its subsidiaries 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 the Company or
any of its subsidiaries is a party which action would have a Material Adverse
Effect. The business of the Company and its subsidiaries 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. Neither the Company nor any its subsidiaries 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 any of the Investment Agreements or to
perform its obligations in accordance with the terms hereof or thereof. The
purchase and acquisition of the Securities by the Purchaser does not violate any
law, rule, regulation, order, judgment or decree applicable to the Company, or
require further filing by the Company or the Purchaser under such law, rule,
regulation, order, judgment or decree, by virtue of the Company's business or
assets.
3.6 REGISTRATION AND SEC DOCUMENTS. The Common Stock is registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). Since December 31, 1998, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act
(all of the foregoing filed after December 31, 1998 and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, being referred to herein as the "SEC
DOCUMENTS"). The Company has delivered to the Purchaser true and complete copies
of the SEC Documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as disclosed on SCHEDULE 3.6, none of the statements made
in any such SEC Document is, or has been, required to be updated or amended
under applicable law.
3.7 FINANCIAL STATEMENTS.
(a) The financial statements of the Company included in the SEC
Documents (the "SEC FINANCIAL STATEMENTS") were prepared in accordance with U.S.
generally accepted accounting principles, consistently applied, and the rules
and regulations of the SEC during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the
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notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they do not include footnotes or are condensed or summary statements) and
present fairly in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, immaterial
year-end audit adjustments).
(b) The Company has furnished to Purchaser its unaudited statements of
income, balance sheet and cash flows as of and for the year ended December 31,
2001 (the "2001 UNAUDITED STATEMENTS"). The 2001 Unaudited Statements have been
prepared in accordance with generally accepted accounting principles applied in
a manner consistent with those used in the preparation of the SEC Financial
Statements and present fairly in all natural respects the consolidated results
of operations, financial position and cash flows for such year subject to normal
audit adjustments which will not be material in the aggregate. The Company and
each subsidiary maintains a system of internal accounting controls that enables
each of them to prepare financial statements in accordance with generally
accepted accounting principles.
(c) Except as set forth in the SEC Financial Statements or the 2001
Unaudited Statements (collectively, the "FINANCIAL STATEMENTS"), the Company has
no 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.
3.8 CONTRACTS. The SEC Documents contain a complete and accurate list
of all material undischarged written or oral contracts, agreements, leases or
other instruments to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the properties or
assets of the Company or any subsidiary is subject (each a "CONTRACT"). None of
the Company, its subsidiaries or, to the best knowledge of the Company, 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 the
Company or its subsidiaries under any Contract which breach or default would
have a Material Adverse Effect. As used in this Agreement "knowledge of the
Company" (or phrases of similar effect) means the actual knowledge of (i) the
Chairman of the Board, President and Chief Executive Officer of the Company,
(ii) the Senior Vice President, Chief Financial Officer, Secretary and Treasurer
of the Company, (iii) the Company's President of Field Operations, (iv) the
Chief Information Officer of the Company, (v) the Company's Senior Vice
President of Human Resources or (vi) the Company's Vice President of Recruiting
(the "KEY EMPLOYEES") and, with respect to the representations and warranties
set forth in Sections 3.13 and 3.16 hereof the knowledge of the Key Employees,
assuming such persons made reasonable inquiries in connection with the operation
of the Company's business and in anticipation of the transactions contemplated
by this Agreement.
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3.9 TITLE TO PROPERTY AND ASSETS. The Company and each of its
subsidiaries 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 the Company's or any such subsidiary's ownership or use of such property
or any assets and those expressly disclosed in the SEC Documents filed prior to
the date hereof or set forth on SCHEDULE 3.9 hereof. With respect to the
property and assets it leases, the Company and each such subsidiary 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 the Company 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.
3.10 ABSENCE OF CERTAIN CHANGES. Except as expressly disclosed in the
SEC Documents filed prior to the date hereof, since December 31, 2001, there has
been no change or development in the business, properties, operations, financial
condition, results of operations or prospects of the Company or its subsidiaries
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 the Company or any of
its subsidiaries 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 the Company or any of its subsidiaries;
(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
the Company or any of its subsidiaries;
(f) any resignation or termination of employment of any officer or key
employee of the Company or any of subsidiaries, and the Company, to the best of
its knowledge, does not know of any impending resignation or termination of
employment of any such officers or employees; or
(g) receipt of notice that there has been a loss of, or order
cancellation by or material reduction in orders from, any major customer of the
Company or any of its subsidiaries or
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cancellation or discontinuance by any major supplier or service provider of the
Company or any of its subsidiaries.
3.11 ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE 3.11, 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 the Company or any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries, 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 the Company or any of its subsidiaries,
could have a Material Adverse Effect.
3.12 ENVIRONMENTAL MATTERS. (a) Except as would not reasonably be
expected to have a Material Adverse Effect, the Company and each Subsidiary of
the Company are in compliance with all applicable Environmental Laws (as defined
herein), (b) neither the Company nor any of its subsidiaries has received any
written notice with respect to the business of, or any property owned or leased
by, the Company or of its subsidiaries from any governmental authority or third
party alleging that the Company or any Subsidiary of the Company 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 the Company or any Subsidiary of the Company or that is used
for the business of the Company or any Subsidiary of the Company except a
release not reasonably expected to have a Material Adverse Effect. As used
herein, "ENVIRONMENTAL LAWS" means all federal, state, city, county or local
laws, ordinances or regulations governing pollution or the protection of human
health or the environment, including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., and the Clean
Air Act 42. U.S.C. Sections 7401 et seq., as amended or hereafter amended.
3.13 COMPLIANCE WITH LAWS. To the knowledge of the Company, the Company
and its subsidiaries have 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 the
Company or any subsidiary.
3.14 TAX MATTERS.
(a) The Company and each of its subsidiaries 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 (as defined herein) imposed upon the Company or any subsidiary or for
which the Company or any such subsidiary of the Company 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 the Company or any
of its subsidiaries to taxing authorities or others, have
10
been paid. The accrual on the 2001 Unaudited Financial Statements for Taxes is
adequate in all material respects to cover the Company's and its subsidiaries'
obligations for Taxes as of the date hereof.
(b) The Company and its subsidiaries have 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 due from or with respect to the Company or any of its subsidiaries. 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 the Company or any of its subsidiaries.
(d) Neither the Company nor any of its subsidiaries 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 its subsidiaries are the
sole parties.
(e) As used herein: (x) the term "TAX" or "TAXES" shall mean all taxes,
charges, fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including income, gross
receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, profit, gift, severance, value added, disability,
premium, recapture, credit, occupation, service, leasing, employment, stamp and
other taxes, and shall include interest, penalties or additions attributable
thereto or attributable to any failure to comply with any requirement regarding
Tax Returns; and (y) the term "TAX RETURN" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any such document prepared on a consolidated, combined or unitary
basis and also including any schedule or attachment thereto, and including any
amendment thereof.
3.15 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
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. Neither the Company nor any subsidiary of the
Company 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 the Company or any of its subsidiaries, 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.
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3.16 FOREIGN CORRUPT PRACTICES. To the Company's knowledge, neither the
Company, nor any of its subsidiaries, nor any director, officer, agent, employee
or other person acting on behalf of the Company or any subsidiary has, in the
course of his actions for, or on behalf of, the Company, 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, the Company and its subsidiaries have not 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 or their employees and
sales representatives with respect to such sales.
3.17 KEY EMPLOYEES. Each Key Employee is currently serving the Company
in the capacity disclosed in SCHEDULE 3.17. No Key Employee, to the best of the
knowledge of the Company and its subsidiaries, is, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each Key Employee does not subject the Company or any of its
subsidiaries to any liability with respect to any of the foregoing matters. No
Key Employee has, to the best of the knowledge of the Company and its
subsidiaries, any intention to terminate or limit his employment with, or
services to, the Company or any of its subsidiaries, nor is any such Key
Employee subject to any constraints (e.g., litigation) which would cause such
employee to be unable to devote his full time and attention to such employment
or services.
3.18 SOLVENCY. Immediately before and after giving effect to the
transactions contemplated by this Agreement, the Company (i) has not incurred
and does not intend to incur, or believe that it will incur, debts beyond its
ability to pay such debts as they become due, and (ii) owns and will have
assets, the fair saleable value of which is (a) greater than the total amount of
its liabilities (including contingent liabilities) and (b) greater than the
amount that will be required to pay the probable liabilities of its then
existing debts as they become absolute and matured.
3.19 EXEMPTIONS. Neither the Company nor any Affiliate of the Company is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act or the Federal Power
Act, or is subject to any legal requirement (other than legal requirements
applicable to borrowers or issuers of securities generally) which regulates the
incurring of Indebtedness by the Company, or any of its Affiliates, for money
borrowed or the issuing by any of them of any equity security.
3.20 REGULATION D. The transactions contemplated hereby are exempt from
the registration requirements of the Securities Act by virtue of Regulation D,
assuming the accuracy of the representations and warranties herein contained of
the Purchaser to the extent relevant for such determination.
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3.21 NO BROKERS. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by the Purchaser or Company relating to this Agreement or the
transactions contemplated hereby other than the fee owed to Deutsche Banc Alex.
Xxxxx Inc. pursuant to the agreement previously provided to Purchasers; the
payment amount and terms of which are disclosed in Schedule 3.21 hereto.
3.22 ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE SECURITIES.
The Company acknowledges and agrees that the Purchaser is acting independently
and is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement or the transactions
contemplated hereby, that this Agreement and the transaction contemplated
hereby, and the relationship between the Purchaser and the Company, are
"arms-length", and that any statement made by the Purchaser, or any of its
representatives or agents, in connection with this Agreement or the transactions
contemplated hereby is not advice or a recommendation, and has not been relied
upon in any way by the Company, its officers, directors or other
representatives. The Company further represents to the Purchaser that the
Company's decision to enter into this Agreement and the transactions
contemplated hereby has been based solely on an independent evaluation by the
Company and its representatives.
3.23 EMPLOYEE BENEFITS. Neither the Company nor any affiliate of the
Company as determined under Code section 414(b), (c), (m) or (o) ("ERISA
AFFILIATE") maintains, administers or contributes to, or maintained,
administered or contributed to, or has any liability with respect to, nor do the
employees of the Company or any ERISA Affiliate receive or expect to receive as
a condition of employment, benefits pursuant to:
(a) any employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("PLAN"),
including, without limitation, any multiemployer plan as defined in Section
3(37) of ERISA ("MULTIEMPLOYER PLAN"); or
(b) any bonus, deferred compensation, performance compensation, stock
purchase, stock option, stock appreciation, severance, salary continuation,
vacation, sick leave, holiday pay, fringe benefit, personnel policy,
reimbursement program, incentive, insurance, welfare or similar plan, program,
policy or arrangement ("EMPLOYEE BENEFIT PLAN");
other than those Plans and Employee Benefit Plans described in SCHEDULE 3.23.
Except as required by section 4980B of the Code, neither the Company nor any
ERISA Affiliate has promised any former employee or other individual not
employed by the Company or any ERISA Affiliate medical or other benefit coverage
and neither the Company nor any ERISA Affiliate maintains or contributes to any
plan, program, policy or arrangement providing medical benefits, life insurance
or other welfare benefits to former employees, their spouses or dependents or
any other individual not employed by the Company or any ERISA Affiliate. All
Plans and Employee Benefit Plans and any related trust agreements or annuity
contracts (or any related trust instruments) comply with and are and have been
operated in accordance with each applicable provision of ERISA, the Code
(including, without limitation, the requirements, of Code section 401(a) to the
extent any Plan is intended to conform to that section), other Federal statutes,
state law (including, without limitation, state insurance law) and the
regulations and rules promulgated pursuant thereto or in connection therewith
except when the failure to so comply would not have
13
a Material Adverse Effect. A favorable determination as to the qualification
under the Code of each of the Plans that is intended to be qualified under
Section 401(a) of the Code and each amendment thereto has been made by the
Internal Revenue Service ("IRS"), each trust funding a Plan is and has been
tax-exempt and each Plan and related trust agreements remain qualified under the
Code. No Plan is a Multiemployer Plan subject to Title IV of ERISA. The bonus
plan adopted by the Company's compensation committee and the Board in October,
2001 has been amended in the manner set forth on Schedule 3.23.
3.24 DISCLOSURE. No information relating to or concerning the Company
set forth in this Agreement or provided to the Purchaser by or on behalf of the
Company in connection with the transactions contemplated hereby contains an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. Except for the
execution and performance of this Agreement and the other Investment Agreements,
no material fact (within the meaning of the federal securities laws of the
United States) exists with respect to the Company or any of its subsidiaries
which has not been publicly disclosed.
ARTICLE IV
LEGEND REMOVAL, TRANSFER, AND CERTAIN SALES
4.1 REMOVAL OF LEGEND. The Legend shall be removed and the Company
shall issue a certificate without any legend to the holder of any Shares upon
which such Legend is stamped, and a certificate for Shares shall be originally
issued without the Legend if (a) the sale of such Security is registered under
the Securities Act, (b) such holder provides the Company with an opinion of
counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions (the reasonable cost of which shall be borne by the
Company, so long as the Shares represented by such legended certificate(s) are
not registered on an effective Registration Statement which is available for
immediate use and all the Shares may be publicly sold or transferred in reliance
thereon) to the effect that a public sale or transfer of such Shares may be made
without registration under the Securities Act or (c) such Shares can be sold
pursuant to Rule 144.
4.2 TRANSFER AGENT INSTRUCTIONS. The Company shall instruct its
transfer agent to issue certificates, registered in the name of the Purchaser or
its nominee, for the Note Shares and Warrant Shares in such amounts as specified
from time to time by the Purchaser to the Company upon, and in accordance with,
the exercise of either of the Warrants and the conversion of the Notes. Such
certificates shall bear a legend only in the form of the Legend and only to the
extent permitted by Section 4.1 above. The Company warrants that no instruction
other than such instructions referred to in this Article IV, and no stop
transfer instructions other than stop transfer instructions to give effect to
Section 2.6 hereof in the case of the Note Shares or Warrant Shares prior to
registration under the Securities Act, will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely transferable on
the books and records of the Company.
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ARTICLE V
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
5.1 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Purchased Securities to a Purchaser
at Closing is subject to the satisfaction, as of the date of such Closing, of
each of the following conditions thereto, provided that these conditions are for
the Company's sole benefit and may be waived by the Company at any time in its
sole discretion:
(a) Each Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same to the
Company.
(b) Each Purchaser shall deliver the applicable Purchase Price for the
Notes and the Warrants purchased by it at Closing.
(c) The representations and warranties of each Purchaser shall be true
and correct as of the date when made and as of the Closing as though made at
that time, and each Purchaser shall have performed, satisfied and complied in
all material respects with the covenants and agreements required by this
Agreement to be performed or complied with by such Purchaser at or prior to the
Closing.
(d) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE VI
CONDITIONS TO PURCHASERS' OBLIGATION TO PURCHASE
6.1 CONDITIONS TO THE CLOSING. The obligation of each Purchaser
hereunder to purchase the Purchased Securities to be purchased by it on the
Closing Date is subject to the satisfaction of each of the following conditions,
provided that these conditions are for the Purchaser's sole benefit and may be
waived by the Purchasers at any time in their sole discretion:
(a) The Company shall have executed the signature page to this
Agreement and delivered the same to the Purchaser.
(b) The Company shall have executed and delivered a duly executed Notes
and Warrants being so purchased by each Purchaser at the Closing.
(c) The Company shall have executed the signature page to the
Registration Rights Agreement and delivered the same to the Purchaser.
(d) The Company and each of its subsidiaries shall have executed and
delivered duly executed Security Agreements to which it is a party, and have
delivered all certificates and instruments to be delivered thereunder.
15
(e) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing as though made at that
time and the Company shall have performed, satisfied and complied with the
covenants and agreements required by this Agreement to be performed or complied
with by the Company at or prior to the Closing. The Purchasers shall have
received a certificate, executed by the Chief Executive Officer or Chief
Financial Officer of the Company, dated as of the Closing to the foregoing
effect and as to such other matters as may be reasonably requested by the
Purchaser.
(f) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(g) The Company shall have delivered to Purchasers a certificate dated
as of the Closing and signed by the Company's Secretary certifying, among other
things, copies of the Board resolutions approving the transactions contemplated
by this Agreement and the Investment Agreements and the resolutions of the
boards of directors of the Company's subsidiaries as to their entry into the
Security Agreements to which they are a party, and true and correct copies of
the Company's and its subsidiary's Certificate of Incorporation and Bylaws.
(h) The Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing, in the form attached hereto as EXHIBIT F.
(i) The transactions contemplated by the Credit Agreement (as defined
herein) shall have been consummated.
(j) CLOSING FEE; EXPENSES. The Company shall pay at the Closing to
Wynnchurch Capital, Ltd. ("CAPITAL") (x) Fifty Thousand Dollars ($50,000.00) at
the Closing as a closing fee plus, plus (y) the expenses incurred by Purchasers
and its advisors in connection with the negotiation, preparation, execution, and
delivery of this Agreement and the other agreements and documents to be executed
in connection herewith, including Purchaser's and its affiliates' and advisors'
due diligence and attorneys' fees and expenses (the "EXPENSES").
(k) The Rights Redemption Notice shall have been irrevocably filed with
the Rights Agent (and following the Closing, the Company shall send the Rights
Redemption Notice to the holders of the Rights within the time period set forth
in the Rights Agreement).
(l) No event has occurred which constitutes an Event of Default (as
defined in the Note) or an event of default under any Indebtedness (as defined
herein) or which would constitute an Event of Default or an event of default
under any capitalized lease with notice or the passage of time or both which
have not been cured or waived to the satisfaction of such Purchasers.
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ARTICLE VII
ADDITIONAL COVENANTS
7.1 EFFECT. Except as specifically provided below, the provisions of
this Article VII will remain in effect so long as at least One Million Dollars
($1,000,000) in aggregate principal amount of the Notes remain outstanding.
7.2 DEFINITIONS. For purposes of this Article VII, the following terms
shall have the indicated meaning:
(a) "AFFILIATE" means (a) any officer, director or shareholder of the
Company or any of its subsidiaries, (b) any corporation or any other person or
entity that directly or indirectly, through one or more intermediaries, controls
or is controlled by or is under common control with the Company or any of its
subsidiaries or (c) any officer, director, trustee, partner or shareholder of
any corporation or any other person or entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with the Company or any of its subsidiaries.
(b) "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.
(c) "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.
(d) "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.
(e) "COLLATERAL" means, collectively, all of the Property in which
Liens are purported to be granted under the Credit Agreement and under the other
Loan Documents (as defined in the Credit Agreement) as security for the
Obligations (as defined under the Credit Agreement) of the Credit Parties under
the Credit Agreement.
(f) "CREDIT AGREEMENT" means the Credit and Security Agreement dated as
of January [31], 2002 among, the Company, Service, Solutions, Midholding, and
Writers, as joint and several co-borrowers, and Fleet Capital Corporation, as
Lender as amended, extended or replaced in accordance with the terms of the
Subordination Agreement. If at any time there is no
17
Credit Agreement outstanding, the term "Credit Agreement" shall mean the Credit
Agreement in place immediately prior to its termination or expiration.
(g) "CREDIT PARTIES" means (i) until such time as any acquired or newly
created subsidiary of the Company or its subsidiaries shall become a Guarantor
of the Obligations under the Credit Agreement, the Company and its subsidiaries
as of the date hereof, and (ii) from and after such time as any acquired or
newly created subsidiary of the Company or any of its subsidiaries shall become
a Guarantor of the Obligations under the Credit Agreement, the Company, its
subsidiaries as of the date hereof and all Guarantors.
(h) "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 the Company and its subsidiaries as of
the date hereof excluding (a) the granting of Liens permitted under the Credit
Agreement 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 under the Credit Agreement or under any other Loan Document.
(i) "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.
(j) "FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
(a) (i) EBITDA of the Borrowers (as defined in the Credit Agreement) 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 of
the Credit Agreement 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
18
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.
(k) "GAAP" means "generally accepted accounting principles in the
United States of America.
(l) "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 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).
(m) "GUARANTORS" means any person, including, any subsidiary of the
Company or its subsidiaries acquired or formed after the Closing Date, which
become a guarantor of the Obligations under the Credit Agreement after the
Closing Date.
(n) "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.
(o) "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.
19
(p) "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 with respect to the 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 sale of the Securities under this Agreement,
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 under the Credit Agreement
during such period.
(q) "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 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.
(r) "LENDER" means Fleet Capital Corporation or any other party which
becomes a lender under the Credit Agreement.
(s) "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.
(t) "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
20
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.
(u) "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 (as defined in the
Credit Agreement) shall be deemed to constitute "Non-Financed Capital
Expenditures" for purposes of this Agreement.
(v) "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 Xxxxx'x 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
21
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 Company or its subsidiaries,
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
(f) investments in money market mutual funds that are rated
AAA by Standard & Poor's Rating Service.
(w) "PROPERTY" means any interest of any kind in property or assets,
whether real, personal or mixed, and whether tangible or intangible.
(x) "SUBORDINATED INDEBTEDNESS" means (a) Indebtedness of the Company
pursuant to the sale of the Notes hereunder, 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 (as defined in the Credit Agreement).
(y) "TANGIBLE CAPITAL BASE" means, at any time, (a) Tangible Net Worth
PLUS (b) the outstanding principal balance of the Notes (including interest
accrued with respect to the Notes that had been capitalized and not paid in
cash).
(z) "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 (as defined in the Credit Agreement), Copyrights (as defined in
the Credit Agreement) and Trademarks (as defined in the Credit Agreement), and
rights (including rights under licenses) with respect to the foregoing.
7.3 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Securities to refinance existing senior Indebtedness, for working capital
and general corporate purposes.
7.4 FINANCIAL INFORMATION AND REPORTING. The Company shall cause to be
furnished to each Holder of at least Two Million Dollars ($2,000,000) in
principal amount of Notes or any holder of the Warrants exercisable into at
least two million (2,000,000) Shares (a "MAJOR HOLDER"):
22
(a) Within five (5) business days after the filing with the SEC, a copy
of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, any proxy
statements and any Current Reports on Form 8-K, any filings made pursuant to the
Securities Act and any amendments of any of the foregoing (it being understood
that, should the Company no longer be required to file such reports, that the
Company shall provide the information specified in Sections 7.1(a) and (b) of
the Credit Agreement with such certificates required therein also addressed to
Purchasers); and (b) within three (3) day after release, copies of all press
releases issued by the Company or any of its subsidiaries;
(b) As soon as practicable and, in any event, within ninety (90) days
after the end of each of the Company's fiscal years, beginning with the fiscal
year ending December 31, 2001, a written statement of such Company's independent
certificated public accountant that in performing its audit such accountant has
not obtained knowledge of any Event of Default or disclosing all Events of
Default of which it has obtained knowledge;
(c) Together with the delivery of the Company's 10-Q and 10-K or such
other reports required to be delivered under this Agreement, a certificate of
the Company executed by an authorized officer of the Company stating whether any
Event of Default or any event which, with the passage of time or giving of
notice or both, would constitute such an Event of Default currently exists and
is continuing and what action, if any, the Company and/or any of its
subsidiaries is taking or propose to take with respect thereto;
(d) Within thirty (30) days after the end of each month, an unaudited
income statement and balance sheet for and as of the end of such month, in
reasonable detail, setting forth a comparison to the annual budget and
year-to-date statements, all in the form reasonably prepared for the internal
use of senior management of the Company as well as access to all other financial
reports provided to management, including so-called "ARC Corporate Dashboard",
"management dashboard", "Resources coming off Project", "Field Service Dashboard
Metrics", "Cashflow Forecast Daily Detail" and "run-off" reports;
(e) Within thirty (30) days after the commencement of each fiscal year,
an annual budget prepared on a monthly basis for the Company and its
subsidiaries for such fiscal year displaying anticipated statements of income
and cash flows, and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or other
budgets, and within thirty days after any monthly period in which there is a
material adverse deviation from the annual budget, an officer's certificate
explaining the deviation and what actions the Company has taken and proposes to
take with respect thereto;
(f) All other financial statements and reports as are required to be
delivered to the senior lenders under the Credit Agreement at the same time such
reports are delivered to such senior lenders; and
(g) Promptly (but in any event within five business days) after the
occurrence of a Material Adverse Effect or a prepayment event under the Note,
written notice thereof.
The Company further agrees to promptly provide to each Major Holder any
information with respect to the Company, its properties, its financial
condition, its business or a Purchaser's
23
investment (or to provide access to same) and to make available its officers,
employees and accountants to discuss the foregoing matters as a Major Holder may
reasonably request. Each Major Holder understands that some of the information
furnished to it pursuant to this Section 7.4 may not be available to the public,
and includes confidential information and agrees that it will make all
reasonable efforts to keep all information so furnished to it pursuant to this
Section 7.4 confidential and will make no use or disclosure to other persons of
such information until such information shall have become public; PROVIDED,
HOWEVER, that it shall not be precluded from making disclosure regarding such
information (i) to its counsel, accountants or other professional advisors, (ii)
to any lender to the Company, (iii) in connection with the enforcement of any
rights hereunder or under the Investment Agreements, (iv) as required by law or
applicable regulation or (v) to its members, managers and investment advisors,
to any parents or corporate affiliates or to any prospective purchaser of
Securities (so long as such person agrees to keep such information confidential
in accordance with this Section 7.4).
7.5 AFFIRMATIVE COVENANTS. The Company shall do the following, unless
the Company receives the written consent of the holders of a majority in
principal amount of the Notes (the "REQUIRED NOTE HOLDERS") as to a waiver of
the covenant:
(a) CORPORATE EXISTENCE. The Company and each of its material
subsidiaries shall maintain and preserve their 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 their operations and
business as now conducted and will generally continue its existing lines of
business or such businesses as are substantially related to those being
presently conducted by the Company and its material subsidiaries.
(b) REPORTING STATUS. So long as the Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
(c) TAXES AND LAWS. The Company and each of its subsidiaries will pay
when due all Taxes, including excise taxes and duty, assessments, charges and
levies imposed on the Company and each of its subsidiaries or any of their
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 the Company or any of its affiliates 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 the Company or any of its
affiliates ability to perform any of its material obligations.
(d) REPAIR AND MAINTENANCE. The Company and each of its subsidiaries
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, the Company may determine not
to repair and maintain certain of its asset(s) so long as such determination and
24
failure to repair and maintain such asset(s) shall not have a Material Adverse
Effect. The Company and each of its subsidiaries shall maintain insurance on its
properties and business with reputable insurance companies in amounts and
against risks s are customarily maintained by similar businesses.
(e) EMPLOYEE PLANS. The Company and each of its subsidiaries 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 the Company and each of its
subsidiaries; (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 the Purchaser immediately upon
receipt by the Company or any of its subsidiaries 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
or 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.
(f) ENVIRONMENTAL MATTERS - INDEMNIFICATION. The Company and each of
its subsidiaries 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. The Company hereby agrees to
indemnify, hold harmless and reimburse the Purchaser for any and all loss,
damage, expenses or costs of any kind or nature arising out of or incurred in
connection with any prior, existing or future violations by the Company and each
of its subsidiaries of any Environmental Laws.
(g) DIRECTORS OF THE COMPANY.
(i) Within five (5) days following the Closing Date, the Board
shall appoint Xxxx X. Xxxxxxxx (as the designee of Wynnchurch Capital
Partners, L.P.) and Xxxxx X. Xxxxx (as the designee of Wynnchurch
Capital Partners Canada, L.P.) to fill each of the vacancies currently
on the Board and name one of such persons, as indicated by Purchasers,
as a member of the Audit Committee and Compensation Committee of the
Board.
(ii) At any time following the date hereof (so long as either (x)
$2,500,000 in aggregate principal amount of Notes are held by Purchasers
or (y) Warrants or Warrant Shares representing at least twenty percent
(20%) of the outstanding shares of Common Stock (assuming exercise of
the Warrants in full) are held by Purchasers, Purchasers shall have the
right to designate up to two additional members (for a total of up to
four (4) members) for appointment to the Board, exercisable through
written notice delivered to the Company (a "Director Request"). The
Director Request shall set forth the number of additional directors to
be appointed to the Board (one or two) and the name or names of
25
the persons to serve as such directors, who shall meet the requirements
of a Qualified Replacement (as defined herein). Upon receipt of a
Director Request, the Company shall use its best efforts to cause the
Board to increase the size of the Board by the number of members set
forth in the Director Request, and to cause the Board to name the person
or persons set forth in the Directors Request as members of the Board,
within ten (10) days of the Company's receipt of a Directors Request.
The persons named by Purchasers in clauses (i) or (ii) above are hereby
referred to as, the "WYNNCHURCH DIRECTORS".
(iii) So long as either (x) $2,500,000 in aggregate principal
amount of Notes are held by Purchasers or (y) Warrants or Warrant Shares
representing at least twenty percent (20%) of the outstanding shares of
Common Stock (assuming exercise of the Warrants in full) are held by
Purchasers, the Company shall (i) cause the number of members of the
Board to equal the sum of (5) plus the number of Wynnchurch Directors
and (ii) use its best efforts to ensure that the Wynnchurch Directors
continue to serve as members of the Board. Such efforts shall include
(x) nominating the Wynnchurch Directors, as nominees for the Board for
election at each election of director where a Wynnchurch Director would
stand for election or reelection (it being understood that the
designation of the Wynnchurch Director who shall stand for such election
or reelection shall be made on a timely basis, taking into account the
dates of preparation and mailing of the Company's proxy statement with
respect thereto); (y) recommending each Wynnchurch Director for election
to the Board; and (z) using its best efforts to cause to be appointed a
Qualified Replacement for a Wynnchurch Director selected by the
Purchaser or Purchasers (or their designees) if such Wynnchurch Director
resigns or otherwise ceases to serve on the Board (but these efforts
shall not require the Company to hire a proxy solicitor). For avoidance
of doubt, a Qualified Replacement for a Wynnchurch Director shall be
deemed to be a Wynnchurch Director. The Company agrees that the right of
either Purchaser or Purchasers (or their designees) to designate a
director includes the right to appoint a Qualified Replacement for a
Wynnchurch Director if such Wynnchurch Director ceases to be a member of
the Board for any reason.
(iv) In the event that (A) the persons described in clause (g)(i)
in this section are not members of the Board or the Committees discussed
in such clause within five days following the Closing Date; (B) a person
designated in a Directors Request to become a Wynnchurch Director fails
to become a member of the Board within ten (10) days following the
making of such Directors Request; (C) if a person who is designated to
be a Wynnchurch Director who is to be elected by a vote of the Company's
shareholders fails to be so elected; or (D) the Company fails to
recommend a Wynnchurch Director described in clause (C) above for
election to the Board; or (E) a Qualified Replacement is not named to
replace a Wynnchurch Director who resigns or otherwise ceases to serve
on the Board within ten (10) days following the selection of such
Qualified Replacement, it shall be considered a "DIRECTORS VIOLATION,"
and a number of persons equal to the number of persons designated to be
Wynnchurch Directors who fail to be members of the Board, and who shall
be designated by the Purchasers (the "OBSERVERS") shall have the right
to attend and observe all meetings of the Board and its Audit and
Compensation Committees (which shall include the right to reasonably ask
questions, comment and participate at such meetings). The Company shall
notify the Observers of each meeting of the Board or the audit or
compensation committees of the
26
Board at the same time and in the same manner notice is given to other
Board or committee members and the Company shall send to each Observer
all notices and other correspondence and communications sent by the
Company to members of the Board or such committees and notices of all
action taken by the Board, or such committees.
(v) As used herein, "QUALIFIED REPLACEMENT" means (A) a person
designated by the Purchaser who designated the person to be replaced (or
by such Purchaser's designee) for which disclosures under Item 401(f) of
Regulation S-K promulgated under the Securities Act (or any successor
provision) for such person would not be required in the Company's SEC
Documents, and who is consented to by the Company (which consent is not
to be unreasonably withheld, delayed or conditioned) or (B) a person
designated by the Purchaser who designated the person to be replaced who
is reasonably agreed to by the Company.
(vi) The Wynnchurch Directors and Observers shall be reimbursed by
the Company for all out-of-pocket expenses incurred in connection with
attendance of meetings of the Board or such committees.
(h) CERTAIN FINANCIAL COVENANTS.
(i) TANGIBLE CAPITAL BASE. The Company and its subsidiaries shall
(x) as of March 31, 2002, have a consolidated Tangible Capital Base of
at least than $9,500,000 or (y) as of the end of any fiscal quarter
commencing with the fiscal quarter ending June 30, 2002, have a
consolidated Tangible Capital Base at least the sum of (A) $9,500,000
PLUS (B) on a cumulative basis, 47.5% of positive consolidated net
income (without reduction for losses) in each fiscal quarter ending
after March 31, 2002.
(ii) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio
of the Company and its subsidiaries shall at any time during any period
set forth below be at least the ratio set opposite such period:
MINIMUM FIXED CHARGE
PERIOD COVERAGE RATIO
January 1, 2002 through June 30, 2002 .95x
January 1, 2002 through September 30, 2002 1.1875x
January 1, 2002 through December 31, 2002 1.1875x
Thereafter (on a rolling four quarters basis) 1.1875x
(iii) EBITDA. The consolidated EBITDA of ARC and its Subsidiaries
shall be at least $475,000 for the fiscal quarter ending March 31, 2002.
(i) COMPLIANCE CERTIFICATION. At the end of each quarter of the
Company's fiscal year, the Company shall deliver to each Purchaser a certificate
of the chief financial officer of the Company regarding compliance by the
Company with the covenants set forth herein and certifying that no default or
Event of Default under this Agreement, or default or Event of Default under the
Credit Agreement.
27
(j) NOTICES. As promptly as practicable, and in any event not later
than five business days after senior management of the Company becomes aware
thereof, the Company shall provide each Purchaser with written notice of any
breach by the Company of any provision of this Agreement, including this Article
VII or the Credit Agreement, any note representing Indebtedness or any of its
subsidiaries or the Notes or Warrants specifying the nature of such breach and
any actions proposed to be taken by the Company to cure such breach. The Company
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.
(k) RIGHT OF FIRST REFUSAL. If the Company intends at any time to raise
debt or equity capital through a private offering or bank financing, or acquire
any business or entity (other than a publicly-traded company and other than in a
transaction where the consideration will include shares issued pursuant to a
registration statement) or dispose of any significant part of its business (a
"TRANSACTION"), the Company will give Capital a reasonable opportunity to make a
proposal to the Company to act as its financial advisor in connection with the
Transaction and in the case of a private offering of debt or equity a right of
first refusal on any proposal made by a placement agent or an investment banking
firm for which Capital is reasonably qualified. The Company will consider such
proposal in good faith, taking into account among all relevant matters, the
capabilities of Capital as described in its proposal. In any event, the Company
will consult with representatives of Purchasers in connection with the
exploration, consideration, analysis and execution of a Transaction.
7.6 NEGATIVE COVENANTS. The Company shall not do the following unless
it receives the written consent of the Required Note Holders as to a waiver of
the covenant:
(a) 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, the Company shall not (a) liquidate, wind up or dissolve the
Company or any subsidiary, (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 a wholly-owned subsidiary corporation or the merger
of a subsidiary of the Company into the Company or another subsidiary of the
Company) or (d) enter into or effect any transaction or series of related
transactions in which more than forty percent (40%) of the voting power or
equity economic interest of the Company is disposed of other than the voting
power represented by the Securities, or otherwise suffer a Change of Control (as
defined in the Credit Agreement) (a "CHANGE OF CONTROL").
(b) INVESTMENTS AND LOANS. The Company shall not make any loans to or
investments in any person or entity, including any officer, director or
employee, except that the Company may make a loan to or invest in a wholly-owned
subsidiary of the Company.
(c) PREPAYMENT OR MODIFICATION OF INDEBTEDNESS; NEW INDEBTEDNESS. The
Company and each of its subsidiaries will not (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 (iii) enter into any
note or other arrangement which would result in, or otherwise
28
incur, 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, (y)
Indebtedness permitted by Section 8.1(e) and (f) of the Credit Agreement, and
(z) Indebtedness used to prepay the Notes in full pursuant to Section 1.1 of the
Notes.
(d) TRANSACTIONS WITH AFFILIATES. The Company and each of its
subsidiaries will not 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 (v) the Company may enter into a
loan agreement with its wholly owned subsidiaries, (w) upon terms determined by
the Board to be fair and reasonable and no less favorable to the Company and
each of its subsidiaries 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 the Company or any of its Subsidiaries, 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) the Company or any of its Subsidiaries may engage in
and continue the transactions with or for the benefit of Affiliates which are
described in Schedule 8.7 of the Credit Agreement (as of the date hereof) or are
referred to in Section 8.6 of the Credit Agreement (as of the date hereof) (but
only to the extent specified in such section) and (z) transactions to which a
Purchaser is a party.
(e) GUARANTEES. Except as permitted under the Credit Agreement, the
Company and each of its subsidiaries shall not 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.
(f) CHANGE IN BUSINESS. The Company and each of its subsidiaries shall
not 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.
(g) CAPITAL EXPENDITURES. The Company and each of its subsidiaries
shall not make or incur any capital expenditures (including incurring any
Capital Lease Obligations) in excess of (x) $600,000 at any time during the
fiscal quarter ending March 31, 2002, and (y) $2,500,000 at any time during any
fiscal year, commencing with the fiscal year ending December 31, 2002.
(h) LIMITATION OF AGREEMENTS. Except for the Subordination Agreement,
the Company will not, and will not permit any subsidiary to, enter into any
contract, or any amendment, modification, extension or supplement to any
existing contract, which contractually
29
prohibits the Company from paying interest on, or principal of, the Notes or
effecting the conversion of the Notes or exercise of the warrants.
(i) LIENS. The Company shall not 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.
(j) AMENDMENT OF CONSTITUENT DOCUMENTS. The Company shall not amend its
Certificate of Incorporation or By-laws, and will cause its subsidiaries to not
amend their constituent documents.
(k) REDEMPTION OF EQUITY SECURITIES. The Company and its subsidiaries
shall not, nor shall they subject themselves to any obligation to, redeem,
repurchase or otherwise acquire any of the Company's or its subsidiaries' equity
interests or any securities convertible into or exchangeable for any of the
Company's equity interests, including the Common Stock ("EQUITY SECURITIES")
except as otherwise permitted in this Article VII.
(l) DIVIDENDS. Neither the Company nor any of its subsidiaries shall
declare or pay any dividend or other distribution on or in respect of any Equity
Security, other than dividends payable on Common Stock solely in shares of
Common Stock and dividends by a wholly owned direct or indirect subsidiary of
the Company which are ultimately paid to the Company.
(m) ISSUANCES. Neither the Company nor any of its subsidiaries shall
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 Equity
Securities, provided, that the Company may issue Common Stock, so long as a
result of such issuance no person or group (as defined under the Exchange Act)
becomes the owner of in excess of 25% of the outstanding Common Stock.
(n) ACQUISITIONS. Neither the Company nor any of its subsidiaries shall
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.
(o) MANAGEMENT EMPLOYMENT ARRANGEMENTS. Neither the Company nor any
subsidiary shall create any option or other plan, amend, or enter into any
arrangements regarding the employment of the Company's Key Employees, other than
the entry into arrangements or benefits generally available to all Company
employees.
(p) CERTAIN AMENDMENTS OF CREDIT AGREEMENT. Neither the Company nor any
of the other Credit Parties will 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.
7.7 PREEMPTIVE RIGHTS.
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(a) If the Company proposes to offer New Securities (as herein defined)
to any person at any time, the Company shall, before such offer, deliver to the
Purchasers an offer (the "NEW SECURITIES OFFER") to issue the New Securities to
them to the extent necessary to maintain such Purchaser's ownership percentage
of the Company on a fully-diluted basis, taking into account the Warrant Shares,
but excluding the Note Shares, upon the terms set forth in this Section 7.7, on
the same price and terms as to the third party. The New Securities Offer shall
state that the Company proposes to issue New Securities and specify their number
and terms (including purchase price); provided, however, Purchasers shall have
the rights to purchase New Securities for cash regardless of the proposed
consideration to be issued to such third party. The New Securities Offer shall
remain open and irrevocable for a period of thirty (30) business days from the
date of its delivery or five (5) business days if the New Securities are being
sold in a public offering (the "PREEMPTIVE PERIOD"). As used herein: (A) "NEW
SECURITIES" means all Equity Securities (as herein defined) other than (i)
shares of Common Stock, and options therefor, reserved for issuance or grant
under the Company's Stock Option Plan; (ii) the shares of Common Stock issuable
upon conversion of any shares of capital stock or equity outstanding on the date
of this Agreement; (iii) shares of any class of capital stock issued on a pro
rata basis to all holders of such class as a stock dividend or upon any stock
split or other subdivision of shares of capital stock; (iv) any shares of Common
Stock issued as consideration in any acquisition, approved by the Board, of all
or substantially all of the capital stock or assets of any other entity; and (v)
any shares of Common Stock issued as consideration in connection with a
Board-approved borrowing from an unaffiliated financial institution upon
customary terms; and (B) "EQUITY SECURITIES" means all shares of capital stock
of the Company, all securities convertible into or exchangeable for shares of
capital stock of the Company, and all options, warrants, and other rights to
purchase or otherwise acquire from the Company shares of such capital stock, or
securities convertible into or exchangeable for shares of such capital stock.
(b) Each Purchaser may accept the New Securities Offer by delivering to
the Company a notice (the "PURCHASE NOTICE") within the Preemptive Period. The
Purchase Notice shall state the number (the "PREEMPTIVE NUMBER") of New
Securities such Purchaser desires to purchase.
(c) The issuance of New Securities to the Purchaser(s) who delivered a
Purchase Notice shall be made on a business day, as designated by the Company,
not less than fifteen (15) and not more than forty (40) days after expiration of
the Preemptive Period on those terms and conditions of the New Securities Offer
not inconsistent with this Section provided, however, that if the New Securities
are issued in a public offering, the New Securities will be issued within three
(3) business days of the expiration of the Preemptive Period.
(d) If the number of New Securities exceeds the sum of all Preemptive
Numbers, the Company may issue such excess or any portion thereof on the terms
and conditions of the New Securities Offer to any person within ninety (90) days
after expiration of the Preemptive Period. If such issuance is not made within
such ninety (90) day period, the restrictions provided for in this Section shall
again become effective.
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ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
8.1 GOVERNING LAW; JURISDICTION. This Agreement 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
Agreement or the transactions contemplated hereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
The Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company further agrees that service
of process upon the Company mailed by the first class mail shall be deemed in
every respect effective service of process upon the Company in any suit or
proceeding arising hereunder. Nothing herein shall affect the 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.
8.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be promptly delivered to the other parties.
8.3 CONSTRUCTION. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. When used in this Agreement, the word "INCLUDING" means "including,
without limitation, and the word "PERSON" means any natural person, corporation,
limited liability company, trust, joint venture, association, company,
governmental authority, or other entity.
8.4 SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 SCOPE OF AGREEMENT; AMENDMENTS. This Agreement and the documents
and instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and supercedes
any prior oral or written understandings with respect thereto (including that
certain Commitment Letter between the parties hereto dated December 24, 2001)
and, except as specifically set forth herein, the parties make no
representation, warranty, covenant or undertaking with respect to the
transactions contemplated hereby. No provision of this Agreement may be waived
other than by an instrument in writing signed by the party to be charged with
enforcement and no provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Note Holders.
32
8.6 NOTICE. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
Alternative Resources Corporation
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Chief Financial Officer
a copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxx
If to either Purchaser:
c/o Wynnchurch Capital Ltd.
Two Xxxxxx Park
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
With a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
Each party shall provide notice to the other party of any change in address.
8.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor either Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other, which, in
the case of any consent required of the Company, shall not be unreasonably
withheld. Notwithstanding the foregoing, either Purchaser may assign its rights
and obligations hereunder and may transfer any or all of its Securities to any
of its "affiliates", as that term is defined under the Exchange Act, without the
consent of the Company so long as such affiliate is an accredited investor. This
provision shall not limit a Purchaser's right to transfer the Securities
pursuant to the terms of this Agreement.
33
8.8 THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
or relied upon by any other person.
8.9 SURVIVAL. The representations, warranties, agreements and covenants
of the Company in this Agreement shall survive until the fifth (5th) anniversary
of the Closing hereunder notwithstanding any due diligence investigation
conducted by or on behalf of the Purchaser. The Company agrees to indemnify and
hold harmless the Purchasers and each of their officers, directors,
shareholders, members, employees, partners, agents and affiliates and any direct
or indirect investors, shareholders, officers, directors, agents, partners,
employees, members, agents or affiliates of any of the foregoing for loss or
damage arising as a result of or related to (a) any breach by the Company of any
of its representations or covenants set forth herein or the unenforceability or
invalidity of any provision of any of the Investment Agreements, or (b) any
cause of action, suit or claim brought or made against such indemnitee (other
than directly by the Company solely for breach of this Agreement, the Warrants,
the Notes or the Registration Rights Agreement by the indemnitee or by
governmental or regulatory authorities), and arising out of or resulting from
(whether in whole or in part) the execution, delivery, performance or
enforcement of this Agreement or any other Investment Agreements or any other
instrument, document or agreement executed pursuant hereto or thereto or
contemplated hereby or thereby (including the acquisition of the Convertible
Securities, the Warrants, the Convertible Shares, and/or the Warrant Shares),
any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or the status of
the Purchaser as an investor in the Company, except to the extent that such
actual loss or damage directly results from a breach by such indemnitee of this
Agreement, the Warrants, the Notes or the Registration Rights Agreement or from
a violation of law. The right to indemnification shall include the right to
advancement of expenses as they are incurred.
8.10 PUBLIC FILINGS; PUBLICITY. Immediately following execution of this
Agreement, the Company shall issue a press release with respect to the
transactions contemplated hereby. The Company and the Purchaser shall have the
right to approve before issuance any press releases (including the foregoing
press release), SEC or other filings, or any other public statements, with
respect to the transactions contemplated hereby; provided, however, that either
Purchaser, on the one hand, or the Company, on the other hand, shall be
entitled, without the prior approval of the other party, to make any press
release or SEC or exchange filings with respect to such transactions as is
required by applicable law and regulations (although such party making such
release or filing shall (to the extent time permits) consult with the other
party in connection with any such press release or filing prior to its release
and shall be provided with a copy thereof).
8.11 FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.12 REMEDIES. No provision of this Agreement providing for any remedy
to the Purchaser shall limit any remedy which would otherwise be available to
the Purchaser at law or
34
in equity. Nothing in this Agreement shall limit any rights the Purchaser may
have with any applicable federal or state securities laws with respect to the
investment contemplated hereby.
8.13 SPECIFIC PERFORMANCE. The Company agrees and acknowledges that any
violation or breach of its covenants, agreements and undertakings contained in
this Agreement or in the other Investment Documents shall cause Purchasers'
irreversible injury and, in addition to any other right or remedy available to a
party at law or in equity, a Purchaser shall be entitled to enforcement by court
injunction for specific performance of the obligations of the other party
hereunder. Notwithstanding the foregoing sentence, nothing herein shall be
construed as prohibiting a party from also pursuing any other rights, remedies
or defenses, for such breach or threatened breach, including receiving damages
and attorneys' fees. The election of any remedy shall not be construed as a
waiver on the part of any party of any rights such party might otherwise have at
law or in equity. Said rights and remedies shall be cumulative.
8.14 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE COMPANY AND PURCHASERS HEREBY WAIVES AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR ANY OTHER INVESTMENT AGREEMENT OR THE SUBJECT MATTER HEREOF OR
THEREOF OR ANY OBLIGATION HEREUNDER OR THEREUNDER OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE HOLDERS OF SECURITIES OR THE
COMPANY 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 PURCHASERS AND THE COMPANY ACKNOWLEDGES THAT THE PROVISIONS
OF THIS SECTION 8.14 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH EACH OF
PURCHASERS AND THE COMPANY HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING
INTO THIS AGREEMENT, AND EACH OF THE RELATED AGREEMENTS. Purchasers or the
Company may file an original counterpart or a copy of this Section 8.14 with any
court as written evidence of the consent of the parties hereto to the waiver of
their respective right to trial by jury.
8.15 WAIVER OF USURY DEFENSE. To the extent permitted by applicable law,
the Company agrees that it will not assert, plead (as a defense or otherwise) or
in any manner whatsoever claim (and will actively resist any attempt to compel
it to assert, plead or claim) in any action, suit or proceeding that the
effective interest rate on the Notes violates present or future usury or other
laws relating to the interest payable on any indebtedness and will not otherwise
avail itself (and will actively resist any attempt to compel it to avail itself)
of the benefits or advantages of any such laws.
8.16 DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any person, or which such person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such person.
# # #
35
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this
Securities Purchase Agreement to be duly executed as of the date
first above written.
COMPANY:
ALTERNATIVE RESOURCES CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
PURCHASERS:
WYNNCHURCH CAPITAL PARTNERS, L.P.
By: Wynnchurch Management Inc., its general partner
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: President
WYNNCHURCH CAPITAL PARTNERS CANADA, L.P.
By: Wynnchurch GP Canada, Inc., its general partner
By:/s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: President
36
SECURITIES PURCHASE AGREEMENT
SCHEDULE OF EXHIBITS AND SCHEDULES
EXHIBITS [Exhibits that constitute material agreements have been filed
as separate exhibits to
Alternative Resources Corporation's
current report on Form 8-K. Other exhibits have been omitted.]
SCHEDULES [Omitted]
37
ANNEX A
Principal Amount of Notes # B-1 Warrant Shares # B-2 Warrant Shares
Wynnchurch Capital $4,920,208 4,920,208 492,021
Partners, L.P.
Wynnchurch Capital $5,079,792 5,079,792 507,979
Partners Canada, L.P. ---------- --------- -------
$10,000,000 10,000,000 1,000,000
38
