Exhibit R
THIRD AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND WAIVER
This THIRD AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND
WAIVER dated as of November 14, 2002 (this "Amendment"), among
Alternative Resources Corporation, a Delaware corporation (the
"Company"), with headquarters located at 000 Xxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000, 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"), amends
the Securities Purchase Agreement dated as of January 31, 2002,
as amended by the First Amendment to Securities Purchase
Agreement and Waiver dated August 8, 2002 and the Second
Amendment to Securities Purchase Agreement dated August 30, 2002
(the "Securities Purchase Agreement"), between the Company and
the Purchasers.
WHEREAS, the Company failed to have the minimum Tangible
Capital Base required by Section 7.5(h)(i) of the Securities
Purchase Agreement for the fiscal quarter ended September 30,
2002 and such failure constitutes an Event of Default under
Section 5.2 of the Notes (the "September 30, 2002 Event of
Default");
WHEREAS, the Company and Fleet Capital Corporation, as
Lender pursuant to that certain Credit and Security Agreement
dated as of January 31, 2002, as amended (the "Credit Agreement")
have requested that the Purchasers waive the September 30, 2002
Event of Default and any other existing defaults by the Company
as provided herein, and amend certain provisions of the
Securities Purchase Agreement; and
WHEREAS, the Purchasers have agreed to waive the September
30, 2002 Event of Default and any other existing defaults under
the Securities Purchase Agreement and to amend certain provisions
of the Securities Purchase Agreement, all subject to the terms,
conditions and limitations set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
agreements contained herein, the parties hereby agree as follows:
1. Capitalized Terms.
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Capitalized terms used herein which are defined in the
Securities Purchase Agreement have the same meanings herein as
therein, except to the extent that such meanings are amended
hereby. The Securities Purchase Agreement, together with the
Notes, the Warrants, the Subordination Agreement and any other
related documents are referred to herein as the "Subordinated
Debt Documents."
2. Waiver of September 30, 2002 Event of Default.
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Subject to the satisfaction of the terms and conditions set
forth in Section 5 hereof, the Purchasers hereby waive the
September 30, 2002 Event of Default and any other existing
defaults by the Company pursuant to the Securities Purchase
Agreement and the other Subordinated Debt Documents. The parties
agree that nothing herein shall be construed as a waiver of any
future Event of Default (including without limitation, any Event
of Default caused by reason of the failure of the Company to
comply with Section 7.5(h) of the Securities Purchase Agreement,
as amended hereby, on any other occasion or for any other
period).
3. Amendments.
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Subject to the satisfaction of the terms and conditions set
forth in Section 5 hereof, the Company and the Purchasers agree
that the Securities Purchase Agreement is hereby amended,
effective as of the date hereof, as follows:
(a) Amendments to Section 7.2 of the Securities Purchase
Agreement. Section 7.2 of the Securities Purchase Agreement is
hereby amended as follows:
(i) The definition of the term "Fixed Charges" set
forth in Section 7.2(j1) of the Securities Purchase Agreement is
hereby amended and restated in its entirety to read as follows
"(j1) 'Fixed Charges' means, for any period, the
sum for the Company and all subsidiaries
(determined on a consolidated basis without
duplication in accordance with GAAP), of (a) the
aggregate amount of Interest Expense for such
period (excluding, for the purpose of computing
Fixed Charges, that certain amendment fee
required to be paid by the Company and its
subsidiaries to the Lender in connection with
that certain First Amendment to Credit Agreement
and Waiver dated as of August 8, 2002 among the
Company and its subsidiaries and the Lender and
that certain amendment fee required to be paid by
the Company and its subsidiaries to the Lender in
connection with that certain Third Amendment to
Credit Agreement and Waiver dated as of November
14, 2002 among the Company and its subsidiaries
and the Lender), plus (b) the aggregate amount of
regularly scheduled payments of principal in
respect of Indebtedness for borrowed money
(including the principal component of any
payments in respect of Capital Lease Obligations)
paid or required to be paid during such period,
plus (c) the aggregate amount of cash
disbursements made by the Company after June 30,
2002, pursuant to that certain severance
agreement between the Company and its former
Chief Executive Officer, plus (d) the aggregate
amount of cash disbursements made by the Company
and all subsidiaries to reduce the accrued
restructuring liability created as of September
30, 2002 in connection with the relocation of the
Company's and its subsidiaries' Client Services
Management."
(ii) The definition of "Tangible Net Worth" set forth
in Section 7.2(z) of the Securities Purchase Agreement is hereby
amended and restated in its entirety to read as follows:
"(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 Company and all
subsidiaries on a consolidated basis, minus (b)
the total book value of all assets of the Company
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, minus (c) the aggregate amount of
liabilities which are or would be accounted for as
"Loan Origination Fees" on the Company's balance
sheet based on the application of GAAP used in
connection with the preparation of the Company's
balance sheet dated September 30, 2002
(notwithstanding any term contained in this
Agreement to the contrary)."
(b) Amendment to Section 7.5(h)(i) of the Securities
Purchase Agreement. Section 7.5(h)(i) of the Securities Purchase
Agreement is hereby amended and restated in its entirety to read
as follows:
"(i) Tangible Capital Base. The Company shall not
(x) as of September 30, 2002, have a consolidated
Tangible Capital Base of less than $2,612,500 or
(y) as of the end of any fiscal quarter commencing
with the fiscal quarter ending December 31, 2002,
have a consolidated Tangible Capital Base of less
than the sum of (A) $2,612,500 plus (B) on a
cumulative basis, 45% of positive consolidated net
income (without reduction for losses) for each
fiscal quarter ending after September 30, 2002."
4. No Default; Representations and Warranties, etc.
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The Company hereby represents, warrants and confirms that:
(a) the representations and warranties of the Company contained
in Article 3 of the Securities Purchase Agreement are true and
correct on and as of the date hereof as if made on such date
(except to the extent that such representations and warranties
expressly relate to an earlier date); (b) after giving effect to
this Amendment, the Company is in compliance with all of the
terms and provisions set forth in the Securities Purchase
Agreement and the other Subordinated Debt Documents; (c) after
giving effect to this Amendment, no Event of Default (as defined
in the Notes) has occurred and is continuing; and (d) the
execution, delivery and performance by the Company of this
Amendment (i) have been duly authorized by all necessary action
on the part of the Company, (ii) will not violate any applicable
law or regulation or the organizational documents of the Company
or any of its subsidiaries, (iii) will not violate or result in a
default under any indenture, agreement or other instrument
binding on the Company or any of its assets, including without
limitation, the Credit Agreement or any other Loan Document (as
defined in the Credit Agreement), and (iv) do not require any
consent, waiver or approval of or by any person (other than the
Purchasers) which has not been obtained.
5. Conditions to Effectiveness.
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The effectiveness of this Amendment shall be subject to the
satisfaction of the following conditions precedent:
(a) The Purchasers shall have received counterparts of this
Amendment duly executed by the Company;
(b) The Purchasers shall have received a Certificate of the
Secretary of the Company, certifying that this Amendment has been
duly authorized by the Board of Directors of the Company;
(c) The Company shall have delivered to the Purchasers evidence
that Lender has executed and delivered to the Company a written
amendment and waiver with respect to the Loan Documents (as
defined in the Credit Agreement), in form and substance
reasonably acceptable to the Purchasers; and
(d) The Company shall have reimbursed the Purchasers for all
reasonable costs and expenses, including reasonable legal fees
and disbursements, incurred by the Purchasers in connection with
this Amendment and the transactions contemplated hereby.
6. Miscellaneous.
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(a) Except as specifically amended hereby, all of the terms and
provisions of the Securities Purchase Agreement, the other
Subordinated Debt Documents and all related documents, shall
remain in full force and effect.
(b) This Amendment may be executed in any number of
counterparts, each of which, when executed and delivered, shall
be an original, but all counterparts shall together constitute
one instrument. Delivery of an executed signature page hereto by
facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
(c) This Amendment shall be governed by the laws of the State of
Illinois and shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their respective authorized officers as of
the day and year first above written.
COMPANY:
ALTERNATIVE RESOURCES CORPORATION
By:/s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
PURCHASERS:
WYNNCHURCH CAPITAL PARTNERS, L.P.
By: Wynnchurch Partners, L.P., its general partner
By: Wynnchurch Management Inc., its general partner
By:/s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: President
WYNNCHURCH CAPITAL PARTNERS CANADA, L.P.
By: Wynnchurch Partners Canada, L.P., its general partner
By: Wynnchurch GP Canada, Inc., its general partner
By:/s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: President
