EXHIBIT P
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FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND WAIVER
This FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND
WAIVER dated as of August 8, 2002 (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
(the "Securities Purchase Agreement"), between the Company and
the Purchasers.
WHEREAS, the Company failed to satisfy the Fixed Charge
Coverage Ratio set forth in Section 7.5(h)(ii) of the Securities
Purchase Agreement for the period of two fiscal quarters ended
June 30, 2002 and such failure constitutes an Event of Default
under the Section 5.2 of the Notes (the "June 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 (the "Credit Agreement") have
requested that the Purchasers waive the June 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 has agreed to waive the June 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 June 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 June
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:
Exhibits: Page 2
(a) Amendments to Section 7.2 of the Securities Purchase
Agreement. Section 7.2(j) of the Securities Purchase Agreement
is hereby amended as follows:
(i) The following new defined term "Fixed Charges"
shall be added to Section 7.2 of the Securities Purchase
Agreement immediately preceding the definition of "Fixed Charge
Coverage Ratio":
"(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 (i) 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) plus
(ii) 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."
(ii) The definition of "Fixed Charge Coverage
Ratio" set forth in Section 7.2 of the Securities Purchase
Agreement is hereby amended and restated in its entirety to
read as follows:
"(j2) '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 aggregate
amount of Fixed Charges for such period."
(b) Amendment to Section 7.5(h) of the Securities Purchase
Agreement. 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
shall not (i) as of June 30, 2002, have a
consolidated Tangible Capital Base of less than
$7,600,000 or (ii) as of the end of any fiscal
quarter commencing with the fiscal quarter ending
September 30, 2002, have a consolidated Tangible
Capital Base of less than the sum of (x)
$7,600,000 plus (y) on a cumulative basis, 45% of
positive consolidated net income (without
reduction for losses) for each fiscal quarter
ending after June 30, 2002.
Exhibits: Page 3
(ii) Fixed Charge Coverage Ratio. The Fixed
Charge Coverage Ratio of the Company shall not at
any time during any period set forth below to be
less than the ratio set opposite such period:
Minimum Fixed Charge
Period Coverage Ratio
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October 1, 2002 through December 31, 2002 .95x
October 1, 2002 through March 31, 2003 .95x
October 1, 2002 through June 30, 2003 .95x
October 1, 2002 through September 30, 2003 .95x
Thereafter (on a rolling four quarters basis) .95x
(iii) Fixed Charge Coverage Shortfall. The
amount by which (i) the aggregate Fixed Charges of
the Company and its subsidiaries, exceeds (ii) the
consolidated EBITDA of the Company its
subsidiaries, for each fiscal period set forth
below shall not be greater than the maximum
shortfall amount set opposite such fiscal period:
Maximum Shortfall
Fiscal Period Amount
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July 1 through July 31, 2002 $ 262,500
July 1 through August 31, 2002 $ 157,500
July 1 through September 30, 2002 $ 262,500"
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
Exhibits: Page 4
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 Boards 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 issuance by Purchasers of that certain
Warrant to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated August 5, 2002 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]
Exhibits: Page 5
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
Exhibits: Page 6
