EXHIBIT T
FIFTH AMENDMENT TO SECURITIES PURCHASE AGREEMENT
AND WAIVER
This FIFTH AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND
WAIVER dated as of April 14, 2003 (this "Amendment"), among
Alternative Resources Corporation, a Delaware corporation (the
"Company"), with headquarters located at ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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, the Second Amendment
to Securities Purchase Agreement dated August 30, 2002, the Third
Amendment to Securities Purchase Agreement and Waiver dated as of
November 14, 2002, and the Fourth Amendment to Securities
Purchase Agreement and Consent dated as of December 27, 2002
(such Securities Purchase Agreement, as so amended, the
"Securities Purchase Agreement"), each among the Company and the
Purchasers.
WHEREAS, the Company has advised Purchasers that the Company
failed to satisfy various financial covenants set forth in the
Securities Purchase Agreement, which failures constitute Events
of Default under the Securities Purchase Agreement (the "December
31, 2002 Events of Default");
WHEREAS, the Company has further advised Purchasers that the
Company will not be able to satisfy the financial covenants set
forth in the Securities Purchase Agreement for the fiscal quarter
ending March 31, 2003;
WHEREAS, the Company and Fleet Capital Corporation, as
Lender pursuant to that certain Credit and Security Agreement
dated as of January 31, 2002 (the "Credit Agreement") have
requested that the Purchasers waive the December 31, 2002 Event
of Default and any other existing defaults by the Company as
provided herein, and amend certain provisions of the Securities
Purchase Agreement, among other things, to revise the financial
covenants contained therein; and
WHEREAS, the Purchasers have agreed to waive the December
31, 2002 Events of Default and to amend certain provisions of the
Securities Purchase Agreement, among other things, to revise the
financial covenants contained therein, 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 New Wynnchurch Subordinated Notes, the Warrants, the
Subordination Agreement, the Company Security Agreement, the
Guaranty executed and delivered by the subsidiaries of the
Company, the Guarantor Security Agreement executed and delivered
by the subsidiaries of the Company, the Pledge Agreement executed
by Services and any other related documents, in each case as the
same have been amended, modified or supplemented to date, are
referred to herein as the "Subordinated Debt Documents."
2. Waiver of Defaults.
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Subject to the satisfaction of the terms and conditions set
forth in Section 6 hereof, the Purchasers hereby waive the
December 31, 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)
or any failure of the Company to comply with any other provision,
term or condition of the Subordinated Debt Documents.
3. Amendments.
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Subject to the satisfaction of the terms and conditions set
forth in Section 6 hereof, the Company and the Purchasers agree
that the Securities Purchase Agreement is hereby amended,
effective as of the date hereof, as follows:
(a) Recital A to the Securities Purchase Agreement is
hereby amended by the insertion of the phrase ",as amended from
time to time" immediately following the phrase "15% Secured
Subordinated Convertible Promissory Notes" in clause (i) and also
immediately following the phrase "each of the B-1 Warrants and B-
2 Warrants" in clause (ii).
(b) The definition of "Interest Expense" in Section
7.2(p) of the Securities Purchase Agreement is hereby
deleted in its entirety and replaced with the following new
definition:
"(p) 'Interest Expense' means, for any
period, the sum, without duplication, for the
Company and all subsidiaries (determined on a
consolidated basis without duplication in
accordance with GAAP), of the following: (a) all
interest in respect of Indebtedness accrued or
paid during such period (whether or not actually
paid during such period), but excluding (i)
interest accrued in respect of the Notes and New
Wynnchurch Subordinated Notes that is capitalized
and not paid in cash, (ii) capitalized debt
acquisition costs (including capitalized fees and
expenses related to this Agreement), and (iii)
capitalized costs associated with the accounting
treatment of the sale of 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."
(c) The definition of "Fixed Charges" in Section
7.2(j1) of the Securities Purchase Agreement is amended by
inserting, after the term "September 30, 2002" contained in
clause (d) thereof, the term "and December 31, 2002".
(d) The following new definition of "New Wynnchurch
Subordinated Notes" is hereby inserted in Section 7.2 of the
Securities Purchase Agreement in appropriate alphabetical
order:
"(t1) 'New Wynnchurch Subordinated Notes'
means any Senior Subordinated Secured Convertible
Promissory Notes, substantially in the form of
the Wynnchurch Subordinated Notes, that may be
issued by ARC to Wynnchurch and/or Wynnchurch
Capital, Ltd. in consideration for payments made
by Wynnchurch to the Lender pursuant to the
Wynnchurch Guaranty, as such notes may be amended
from time to time."
(e) The definition of "Subordinated Indebtedness" in
Section 7.2(x) of the Securities Purchase Agreement is
hereby deleted in its entirety and replaced with the
following new definition:
"(x) 'Subordinated Indebtedness' means (a)
Indebtedness of the Company pursuant to the sale
of the Notes hereunder and the New Wynnchurch
Subordinated Notes, 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."
(f) The definition of "Tangible Capital Base" in
Section 7.2(y) of the Securities Purchase Agreement is
hereby deleted in its entirety and replaced with the
following new definition:
"(y) 'Tangible Capital Base' means, at any
time, (a) Tangible Net Worth plus (b) the
outstanding principal balance of the Notes and the
New Wynnchurch Subordinated Notes (including
interest accrued in respect of the Notes and the
New Wynnchurch Subordinated Notes that has been
capitalized and not paid in cash)."
(g) The following new definition of "Wynnchurch
Guaranty" is hereby inserted in Section 7.2 of the
Securities Purchase Agreement in the appropriate
alphabetical order:
"(aa) 'Wynnchurch Guaranty' means the
Guaranty Agreement dated as of April 14, 2003,
made by Purchasers for the benefit of the Lender,
as the same may be amended, supplemented or
otherwise modified from time to time."
(h) Section 7.5(h) of the Securities Purchase
Agreement is hereby amended and restated in its entirety to
read as follows:
"(h) Certain Financial Covenants.
(i) Tangible Capital Base. The Company and
its subsidiaries shall not (x) as of March 31,
2003, have a consolidated Tangible Capital Base of
less than ($1,050,000) or (y) as of the end of any
fiscal quarter commencing with the fiscal quarter
ending June 30, 2003, have a consolidated Tangible
Capital Base of less than the sum of (A)
($1,050,000) plus (B) on a cumulative basis, 45%
of positive consolidated net income (without
reduction for losses) for each fiscal quarter
ending after March 31, 2003.
(ii) Fixed Charge Coverage Ratio. The Fixed
Charge Coverage Ratio of the Company and its
subsidiaries shall not at any time during any
period set forth below to be less than the ratio
set opposite such period:
Period Minimum Fixed
------ Charge Coverage
Ratio
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July 1, 2003 through September 30, 2003 0.95 to 1.0
July 1, 2003 through December 31, 2003 0.95 to 1.0
July 1, 2003 through March 31, 2004 0.95 to 1.0
July 1, 2003 through June 30, 2004 0.95 to 1.0
Thereafter (on a rolling four quarters 0.95 to 1.0
basis)
(iii) Fixed Charge Coverage Shortfall.
The amount by which (a) the aggregate Fixed
Charges of the Company and its subsidiaries for
each fiscal period set forth below, exceeds (b)
the total of (w) consolidated EBITDA of the
Company and its Subsidiaries for such period
(determined on a consolidated basis without
duplication in accordance with GAAP) minus (x) the
aggregate amount of all Non-Financed Capital
Expenditures during such period minus (y) 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 (z) 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, shall not be
greater than the maximum shortfall amount set
opposite such fiscal period:
Fiscal Period Maximum Shortfall
------------- Amount
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January 1 through March 31, 2003 $1,050,000
January 1 through June 30, 2003 $1,470,000
4. Acknowledgments.
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The parties hereby acknowledge and agree that the New
Wynnchurch Subordinated Notes shall be deemed "Notes" pursuant to
the Registration Rights Agreement, and accordingly, that any
shares of Common Stock of the Company into which such New
Wynnchurch Subordinated Notes are converted shall be deemed
"Registrable Securities" under the Registration Rights Agreement.
The parties hereby further acknowledge and agree that the New
Wynnchurch Subordinated Notes shall be deemed "Notes" pursuant to
the Security Agreements.
5. 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, as amended by
this Amendment, 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.
6. 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 counterparts of
the Amendment to Notes and the Amendment to Warrants duly
executed by the Company;
(c) 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;
(d) 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
(e) 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, the Wynnchurch Guaranty
(including, without limitation, all documents and opinions
to be issued thereunder), the Amendment to Notes, the
Amendment to Warrants, the First Amendment to the
Subordination Agreement and the transactions contemplated
hereby and thereby, including any purchases by Purchasers
pursuant to the Wynnchurch Guaranty.
7. Miscellaneous.
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(a) Except as specifically amended hereby or by the
Amendment to Notes and the Amendment to Warrants, 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. The
parties hereby acknowledge and agree that the New Wynnchurch
Subordinated Notes shall be deemed "Notes" pursuant to that
certain Registration Rights Agreement between the Company
and Purchasers, dated as of January 31, 2002 (the
"Registration Rights Agreement"), and accordingly, that any
shares of Common Stock of the Company into which such New
Wynnchurch Subordinated Notes are converted shall be deemed
"Registrable Securities" under the Registration Rights
Agreement.
(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/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
ACKNOWLEDGED AND AGREED TO BY THE UNDERSIGNED SOLELY WITH RESPECT
TO SECTION 4 OF THIS AMENDMENT:
ARC SERVICE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
ARC SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
ARC MIDHOLDING, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
WRITERS INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
ARC TECHNOLOGY MANAGEMENT LLC
By: ARC SERVICE, INC., its Manager and sole member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Treasurer
ARC STAFFING MANAGEMENT LLC
By: ARC SERVICE, INC., its Manager and sole member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Treasurer
ARC SHARED SERVICES LLC
By: ARC SERVICE, INC., its Manager and sole member
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Treasurer