EXHIBIT CC
SEVENTH AMENDMENT TO SECURITIES PURCHASE AGREEMENT
AND WAIVER
This SEVENTH AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND WAIVER
dated as of November 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, the Fourth
Amendment to Securities Purchase Agreement and Consent dated as of December 27,
2002, the Fifth Amendment to Securities Purchase Agreement and Waiver dated as
of April 14, 2003 and the Sixth Amendment to Securities Purchase Agreement and
Waiver dated as of August 14, 2003 (such Securities Purchase Agreement, as so
amended, the "Securities Purchase Agreement"), each among the Company and the
Purchasers.
WHEREAS, the Company and its subsidiaries failed to satisfy (a) the
Tangible Capital Base covenant set forth in Section 7.5(h)(i) of the Securities
Purchase Agreement for the fiscal quarter ended September 30, 2003 and (b) the
Fixed Charge coverage shortfall covenant set forth in Section 7.5(h)(iii) for
the nine month fiscal period ended September 30, 2003, and each such failure
constitutes an Event of Default under Section 5.2 of the Notes (the "September
30 Events 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 Events 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 Events 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.
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, the Guaranty
(as herein defined) and any other related documents are referred to herein as
the "Subordinated Debt Documents."
2. Waiver of September 30 Events of Default.
Subject to the satisfaction of the terms and conditions set forth in
Section 5 hereof, the Purchasers hereby waive the September 30 Events 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.
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) 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 December 31, 2003, have a consolidated
Tangible Capital Base of less than ($8,925,000) or (y) as of the end of
any fiscal quarter commencing with the fiscal quarter ending March 31,
2004, have a consolidated Tangible Capital Base of less than the sum of
(A) ($8,925,000) plus (B) on a cumulative basis, 47.5% of positive
consolidated net income (without reduction for losses) for each fiscal
quarter ending after December 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 be less than the ratio set
opposite such period:
Minimum Fixed
Charge Coverage
Period Ratio
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July 1, 2004 through September 30, 2004 .95 to 1.00
July 1, 2004 through December 31, 2004 .95 to 1.00
Thereafter (on a rolling four quarters basis) .95 to 1.00
(iii) Fixed Charge Coverage Shortfall. The amount
by which (i) the aggregate Fixed Charges of the Company and its
Subsidiaries for each fiscal period set forth below, exceeds (ii) 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
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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 forth opposite such fiscal period:
Maximum
Fiscal Period Shortfall Amount
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October 1, 2003 through December 31, 2003 $1,050,000
October 1, 2003 through March 31, 2004 $1,851,000
October 1, 2003 through June 30, 2004 $1,917,000"
(b) Section 7.6(g) of the Securities Purchase Agreement
is hereby amended and restated in its entirety to read as follows:
"(g) Capital Expenditures. Company and each of
the Subsidiaries shall not make or incur any capital expenditures
(including, without limitation, incurring any Capital Lease
Obligations) which, in the aggregate exceed $52,500 at any time during
any fiscal quarter, commencing with the fiscal quarter ending December
31, 2003."
4. No Default; Representations and Warranties, etc.
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.
The effectiveness of this Amendment shall be subject to the
satisfaction of the following conditions precedent:
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(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;
(d) The Company, ARC Service, Inc., ARC Solutions, Inc., ARC
Midholding, Inc., Writers Inc., ARC Technology Management LLC, ARC Staffing
Management LLC, and ARC Shared Services LLC and Fleet Capital Corporation shall
have executed and delivered to the Purchasers an amendment to the Guaranty
Agreement dated as of April 14, 2003 made by Purchasers for the benefit of Fleet
Capital Corporation, as amended (the "Guaranty"), in form and substance
satisfactory 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 (i) this Amendment
and the transactions contemplated hereby and (ii) all previous amendments or
modifications to the Subordinated Debt Documents and the transactions
contemplated thereby.
6. Miscellaneous.
(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.
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IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to Securities Purchase Agreement and Waiver 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
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