<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]  Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the fiscal year ended December 31, 1998 or

[    ] Transition Report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the Transition period from ____________________ to
     ___________________________.

Commission file number:    0-23940
                           -------

                         ALTERNATIVE RESOURCES CORPORATION
                         ---------------------------------
               (Exact name of registrant as specified in its charter)

                    Delaware                             38-2791069
          ---------------------------             -------------------------
          (State or other jurisdiction of              (IRS Employer
           incorporation or organization)            Identification No.)

          100 Tri-State International, Suite 300
               Lincolnshire, Illinois                       60069
          ---------------------------             -------------------------
          (Address of principal executive offices)       (Zip Code)

        Registrant's telephone number, including area code: (847) 317-1000

         Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                            Common Stock, $.01 Par Value

    Rights to Purchase Shares of Junior Preferred Stock, Series A Par Value
                                 $.01 per share
                          ----------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /X/

The registrant estimates that the aggregate market value of the registrant's
Common Stock held by non-affiliates of A.R.C, March 22, 1999 (based upon an
estimate that 12.95% of the shares are so owned by non-affiliates and upon the
average of the closing bid and asked prices for the Common Stock on the Nasdaq
National Market) on that date was approximately $97,096,000. Determination of
stock ownership by non-affiliates was made solely for the purpose of responding
to these requirements and registrant is not bound by this determination for any
other purpose.

As of March 22, 1999, 16,015,841 shares of the registrant's Common Stock were
outstanding.

The following documents are incorporated into this Form 10-K by reference:

  Certain portions of the Annual Report to Stockholders for the fiscal year
     ended December 31, 1998 (Part II).
  Certain portions of the Proxy Statement for the Annual Meeting of Stockholders
     to be held on May 20, 1999 (Part III).



<PAGE>



                                     PART I
ITEM 1.  BUSINESS

OVERVIEW

     Alternative Resources Corporation-Registered Trademark- ("A.R.C" or the
Company"), through its subsidiaries, is a leading provider of information
technology (IT) management and staffing services. The Company's clients consist
principally of Fortune 1000 companies and mid-sized companies with sizable and
complex IT operations. The Company serves its clients through a network of 52
branch offices (as of December 31, 1998) located in the United States and
Canada. The Company has experienced substantial growth in revenue driven
primarily by industry trends toward component outsourcing of IT operations,
increased penetration of the Company's existing clients and markets, and the
introduction of new services.

     The Company was formed in March 1988 and began providing information
technology staffing services in April 1988. The Company's initial public
offering of securities was in May, 1994.


MAJOR DEVELOPMENTS IN 1998

During the third quarter of 1998, significant changes occurred in the management
structure of A.R.C as Larry Kane, the company's founder and Chief Executive
Officer, retired. Raymond Hipp, an A.R.C board member for five years, assumed
the role of Chief Executive Officer. Other changes in the management structure
included the replacement of several executive positions as well as the expansion
of the senior management team to include several key management positions.

Under the new management team, strategic changes were made to the company's
operating model. These changes were designed to eliminate unnecessary costs and
create a more efficient sales and delivery system for the company's services.
Programs and services that were not considered strategic to the company's core
business were terminated. In connection with these changes, the company incurred
a restructuring charge in the third quarter of 1998. The restructuring charge
consisted of costs associated with branch consolidations, staff reductions and
management changes. The Company also performed a goodwill impairment review in
the third quarter which resulted in a $25.7 million charge to properly reflect
the carrying value of goodwill. The restructuring and goodwill impairment
charges are more fully explained in "Management Discussion and Analysis of
Financial Condition and Results of Operations" and the "Notes to Consolidated
Financial Statements", incorporated by reference in this Form 10-K.

As mentioned above, the Company implemented changes to its operating model in
1998. This included changes to both the sales and recruiting portions of the
model as follows:

o    Sales Model - Under the historical A.R.C sales model, the Company's sales
     force was required to sell both the staffing and solutions products of the
     Company, which are now marketed as Staffing Management and Technology
     Management Services, respectively. Because these service lines require very
     different selling skills and knowledge, the Company has re-aligned the
     sales force. One sales group is focused on A.R.C's IT Staffing Management
     business and the other on the higher-end Technology Management Services.
     The new technology management sales people, are known as SOLUTIONS
     MARKETING MANAGERS and are skilled in selling solutions and dealing with
     senior IT management.

o    Recruiting Model - The Company added a national recruiting element to its
     business model. With this enhancement the Company now has national
     recruiters and also maintains a national database of technical
     professionals. The information in the 

<PAGE>

     national database is used by the Company's local offices as an additional
     resource to identify technical skills that will meet client needs. This
     expanded capability is particularly critical as the Company's business
     continues to shift toward higher-end Technology Management Services and
     increasing demand for hot IT skills. In addition to the national recruiting
     capability, the new recruiting model provides expanded reporting
     capabilities on key recruiting metrics such as skills requirements by
     geography, utilization rates, etc.

Finally, the Company is in the process of replacing its accounting and financial
reporting systems as well as the systems used by its branch offices to manage
recruiting and project fulfillment activities. These new systems will provide
better management information and enable management to streamline many of the
Company's support processes. Ultimately, this new IT infrastructure provides the
foundation for a more scaleable business, positioning A.R.C for future growth.
This initiative was started in 1997, continued through 1998 and will be
completed in 1999.


A.R.C SERVICES

     During the past three years, A.R.C has evolved from a pure IT staffing
company into a solutions-based provider of IT services. The Company's IT
staffing and solutions services are now sold under the names A.R.C Staffing
Management Services and A.R.C Technology Management Services, respectively.
A.R.C's service offerings are designed to provide its clients with flexibility
and expertise to address their IT execution needs whether for managed delivery
of a help desk, data center or network administration; developing applications
to support business processes; deploying technology across an enterprise; or
providing qualified, motivated technical employees for short or long term
engagements.

A.R.C Staffing Management Services, enable clients to adapt their organizations
to changing business or technology needs without adding to fixed costs or making
long term commitments to staff. Client staffing needs are fulfilled in two major
categories:

o    Operations - including help desk, desktop support, database administration,
     LAN/WAN/telecommunications, and data center operations.

o    Applications - including mainframe/midrange, client server desktop,
     Internet/Intranet, database/data warehousing and packaged applications; and

A.R.C Staffing Management Services have been offered since the Company's
inception in 1988.

A.R.C Technology Management Services, formerly called Smartsourcing Solutions,
provide management and delivery of infrastructure development and maintenance
expertise, offering managed solutions and best practices methodologies. A.R.C
Technology Management Services assist clients in integrating the resources,
processes and systems for the design, deployment, operation and support of the
clients key IT assets. Technology Management Services are delivered in three
primary functional areas:

     o    User Support Services
     o    Technology Deployment Services, and
     o    Infrastructure Management Services.


The vast majority of the traditional staffing business is invoiced on an hourly
basis. However, under A.R.C Technology Management Services arrangements, the
Company typically utilizes alternative invoicing arrangements. Such arrangements
may include fixed price arrangements or per unit billing. An example of a per
unit billing arrangement would be a price per call on a help desk operation.


<PAGE>

A.R.C APPROACH

     The Company has developed a customized approach to the project assignment
process that it believes results in a high degree of client and technical
employee satisfaction, repeat business from clients and a high level of
technical employee retention. The Company believes a superior project assignment
entails developing a comprehensive understanding of clients' needs, matching
clients' needs with requisite skills on a timely basis, and monitoring
performance throughout the project. However, the Company believes that the
professional and interpersonal skills required to interact with clients and
interpret and communicate their needs differ greatly from those required to
manage the recruitment and project assignment of technical employees. Under the
A.R.C approach, project responsibilities are shared between account managers and
resource managers. Account managers focus principally on building and fostering
relationships with clients, understanding the client's organization and
assessing the client's needs, and proposing tailored staffing solutions.
Resource managers focus principally on recruiting and establishing relationships
with technical personnel, assessing their technical and interpersonal skills,
selecting appropriate technical personnel for a project, and monitoring and
motivating technical employees on a project. This separation of responsibilities
allows account managers and resource managers to meet the needs of their
respective constituencies while working together to enhance the prospects of a
superior project assignment.

     Each branch office typically has two to four account managers. Each account
manager typically focuses on up to 25 targeted organizations with substantial IT
operations. The Company also employs national account managers who establish and
manage national service arrangements with certain major clients and maintain
those relationships at the corporate office level. Account managers and national
account managers work together to serve the local and national needs of such
clients. As noted earlier, the Company has enhanced its sales model by
stratifying the account manager group into two categories, account managers that
are focused on selling A.R.C's IT staffing management business and account
managers that specialize in selling the Company's higher-end technology
management services. Members of the latter group are also known as SOLUTIONS
MARKETING MANAGERS.

     Each branch office typically has two to four resource managers. A resource
manager typically manages an aggregate of 30 to 50 technical employees assigned
to various projects. Recent changes to the recruiting model have added a
national recruiting capability to supplement the local office recruiting and
delivery model. These changes will provide the Company's resource managers with
a national recruiting "reach" and enable them to identify and deploy scarce IT
skill sets needed by their customers that may be available elsewhere in the
country.

     The Company operates within a decentralized management structure that gives
branch general managers significant discretion over the operations and
performance of their branch office. The Company believes that its management
structure provides a motivating environment for its staff, creates a responsive
and committed management team, and improves productivity. In addition, the
Company invests significant resources in ongoing training of its branch office
staff to promote consistent execution of the Company's strategy.

     Branch general managers are responsible for the overall performance of
their respective branch office and may oversee client support sites. Branch
general managers also assist account managers in developing and maintaining
client relationships and assist resource managers in interviewing and evaluating
technical personnel. Branch general managers typically have significant direct
selling experience with a Fortune 500 company, at least three years of
experience in sales management, and strong interpersonal skills. Each branch
general manager reports to an executive director.

<PAGE>

     The Company maintains a Technology Management support staff located at its
headquarters in Lincolnshire, Illinois. This staff of specialists supports
A.R.C's account managers in Technology Management Services offerings to clients.
The staff also provides management oversight and technical support to Technology
Management Services project teams.

RECRUITING OF TECHNICAL PERSONNEL

     As the leading edge of technology continues to outpace the availability of
leading edge skills, and as the Company introduces applications support services
to its clients, the recruitment and retention of technical personnel represents
an expanding challenge. To recruit qualified technical personnel, the Company
places newspaper advertisements, maintains a presence at local technical
college(s) and obtains referrals from its technical employees and clients. In
addition, the Company recruits technical personnel through its web site
(www.arcnow.com). As noted earlier, the company has enhanced its recruiting
model in 1998. The Company's new National Technical Recruiters outbound
telemarketing group undertook a broad-based effort to develop relationships with
technical professionals throughout the U.S. and Canada. These efforts were and
will continue to be further supported in individual markets with an expanded
group of local recruiting specialists.

     Prospective technical employees are required to complete an extensive
questionnaire regarding skill levels, experience, education and availability,
and to provide references. Resource managers regularly update each branch office
database to reflect changes in technical personnel skill levels and
availability.

     In order to retain a qualified workforce, the Company devotes considerable
time and resources towards serving the needs of its technical employees. All
technical employees receive a competitive hourly wage determined by the Company
and are eligible to participate in the Company's 401(k) plan and employee stock
purchase plan and earn bonuses based on referrals of technical personnel. In
addition, technical employees are eligible for educational reimbursement based
on length of service with the Company, which may be used in technical training
programs to improve and expand their technical skills. The Company also provides
technical employees access to computer-based training in its branch offices.
Technical employees also receive a benefits package that allows them to select
from a variety of benefit options, including comprehensive group medical
insurance, vision and dental insurance, long-term disability insurance and group
life insurance. The Company believes that its comprehensive benefits and
training programs encourage technical employees' loyalty and commitment.

OPERATIONS

     The Company operates through a network of 52 offices (including client
support sites) located in the United States and Canada. During 1998, the Company
opened four new offices and consolidated offices in several markets which
decreased the number of offices by ten resulting in a net decrease of six
offices for the year. In addition to the Company's principal executive offices
in Lincolnshire, Illinois, as of December 31, 1998, the Company had offices
located in the following metropolitan areas:


<PAGE>



<TABLE>
<CAPTION>

                                        YEAR                                                  YEAR
           LOCATION                    OPENED                    LOCATION                    OPENED
           --------                    ------                    --------                    ------
<S>                                    <C>           <C>                                     <C>
-    Detroit, Michigan                  1988         - New York, New York                     1994
-    Minneapolis, Minnesota             1988         - Rosemont, Illinois                     1994
-    Dallas, Texas                      1988         - Edison, New Jersey                     1994
                                                     - Charlotte, North Carolina              1994
-    Boston, Massachusetts              1989
-    Chicago, Illinois                  1989         - Rochester, New York                    1995
-    Cleveland, Ohio                    1989         - Raleigh-Durham, North Carolina         1995
-    Washington, D.C.                   1989         - Milwaukee, Wisconsin                   1995
                                                     - Woodland Hills, California             1995
-    San Francisco, California          1990         - Allentown, Pennsylvania                1995
-    Fort Worth, Texas                  1990         - Long Island, New York                  1995
-    Atlanta, Georgia                   1990
-    Houston, Texas                     1990         - Portland, Oregon                       1996
-    Los Angeles, California            1990         - Kansas City, Missouri                  1996
-    Anaheim, California                1990         - Pittsburgh, Pennsylvania               1996
                                                     - Boulder, Colorado                      1996
-    Cincinnati, Ohio                   1991         - Boise, Idaho                           1996
-    Silicon Valley, California         1991         - Hartford, Connecticut                  1996

-    Philadelphia, Pennsylvania         1992         - Indianapolis, Indiana                  1997
-    Orlando, Florida                   1992         - Austin, Texas                          1997
-    Baltimore, Maryland                1992         - Montreal, Quebec                       1997
-    Saddle Brook, New Jersey           1992         - Valley Forge, Pennsylvania             1997

-    Denver, Colorado                   1993         - Fort Collins, Colorado                 1998
-    Phoenix, Arizona                   1993         - Columbus, Ohio                         1998
-    Tampa, Florida                     1993         - Salt Lake City, Utah                   1998
-    Fort Lauderdale, Florida           1993         - Ottawa, Ontario                        1998
-    Seattle, Washington                1993

-    St. Louis, Missouri                1994
-    Toronto, Ontario                   1994
-    Stamford, Connecticut              1994
-    Sacramento, California             1994

</TABLE>

Because A.R.C has offices in all large metropolitan markets, future branch
openings will generally involve entry into mid-size markets or divisions of
larger markets. As such, new branches will not grow to be as large as some of
A.R.C's established branches in major markets. In selecting markets for new
branch offices, the Company considers many factors, including the presence of
organizations with substantial IT operations, the availability of internal
management resources, opportunities to expand geographically with existing
clients and overall demographics.

     From time to time, the Company opens client support sites in response to
specific client needs. Client support sites are similar to branch offices but
are staffed only by a resource manager and have no selling function. Many client
support sites evolve into full branches as other client opportunities arise
within the local market. The Company may establish additional client support
sites in markets where it does not have an established presence, especially as
national account relationships expand.

CLIENTS

     The Company's clients consist principally of Fortune 1000 companies and
mid-sized organizations with sizable and complex IT operations. The IT
requirements of these organizations often provide opportunities for major
projects that extend for multiple years or generate additional projects. During
1998, the Company provided technical staffing solutions to a wide variety of
entities including computer services companies, systems integrators,
telecommunications companies, banking and financial services entities,
manufacturers, distributors, health care providers and utilities. The Company's
computer services and systems integrator clients often subcontract A.R.C's
services to their own customers. In 1998, the Company's largest clients, IBM,
Hewlett Packard and Electronic 

<PAGE>

Data Systems Corporation, accounted for approximately 16%, 14% and 10% of the
Company's total revenue, respectively.

     A.R.C will typically provide discounts on staffing services to its largest
clients in exchange for the opportunity to sell more volume and the opportunity
to sell its higher margin, value added services, such as its Technology
Management Services . The Company believes that its relationships with these
large clients have contributed significantly to its revenue growth.

 COMPETITION

     The IT services industry is highly competitive and fragmented and has low
barriers to entry. The Company competes for potential clients with providers of
outsourcing services, systems integrators, computer systems consultants, other
providers of technical staffing services and, to a lesser extent, temporary
personnel agencies. The Company competes for technical personnel with private
and public companies, other providers of technical staffing services, systems
integrators, providers of outsourcing services, computer systems consultants,
clients and temporary personnel agencies.

     The Company believes that the principal competitive factors in obtaining
and retaining clients are accurate assessment of clients' requirements, timely
assignment of technical employees with appropriate skills and the price of
services. The Company is dependent upon its ability to continue to attract and
retain technical personnel who possess the technical skills and experience
necessary to meet the IT servicing requirements of its clients. The principal
competitive factors in attracting qualified technical personnel are schedule
flexibility, the availability of training, benefits and compensation, as well as
the availability, quality and variety of projects. The Company believes that
many of the technical personnel included in its branch office databases may also
be pursuing other employment opportunities. Therefore, the Company believes that
responsiveness to the needs of technical personnel is an important factor in the
Company's ability to fill projects.

SEASONALITY

     The Company's quarterly results are affected by such factors as employment
taxes and the timing, number and costs ssociated with new branch office
openings. In general, the first two quarters of the year carry a significant
portion of payroll tax expense. As employees reach annual payroll limits,
usually in the third and fourth quarters, the Company's payroll tax expense is
reduced. The timing of branch office openings is dependent upon such factors as
the availability of resources for recruiting and training branch staff, as well
as how quickly office space can be identified and the leases negotiated.

EMPLOYEES

     At December 31, 1998, the Company employed 650 staff employees and
approximately 4,100 technical employees. During all of 1998, the Company
employed more than 9,000 technical employees.



FORWARD-LOOKING STATEMENTS

The Company makes forward-looking statements from time to time and desires to
take advantage of the "safe harbor," which is afforded such statements under the
Private Securities Litigation Reform Act of 1995, when they are accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those in the forward-looking
statements.

<PAGE>

The statements contained in this Form 10-K, including those under "Management's
Discussion and Analysis of Financial condition and Results of Operations,"
statements contained in future filings with the Securities and Exchange
Commission and publicly disseminated press releases, and statements which may be
made from time to time in the future by management of the Company in
presentations to shareholders, prospective investors, and others interested in
the business and financial affairs of the Company, which are not historical
facts, are forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those set forth in the
forward-looking statements. Any projections of financial performance or
statements concerning expectations as to future developments should not be
construed in any manner as a guarantee that such results or developments will,
in fact, occur. There can be no assurance any forward-looking statement will be
realized or that actual results will not be significantly different from that
set forth in such forward-looking statement.

In addition to the risks and uncertainties of ordinary business operations, the
forward-looking statements of the Company referred to above are also subject to
the following risks and uncertainties:

-    The Company's ability to attract and retain qualified information
     technology professionals

-    The Company's ability to recruit, train, integrate and retain qualified
     branch general managers, account managers, and resource managers

-    Competition in the information technology services marketplace

-    The Company's continued ability to initiate and develop client
     relationships

-    The Company's ability to identify and respond to trends in information
     technology

-    Unforeseen business trends in the Company's national accounts or other
     large clients

-    Pricing pressures and/or wage inflation and the resulting impact on gross
     profit and net operating margins

-    The ability to successfully integrate acquisitions

-    The ability to successfully open new branch offices and to enter new
     geographic markets

-    The Company's overall ability to manage its growth

-    The effect of changes in general economic conditions


<PAGE>


EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company are as follows:

<TABLE>
<CAPTION>

NAME                       AGE        POSITION
----                       ---        --------
<S>                        <C>        <C>
Raymond R. Hipp            56         Chairman of the Board, President and
                                      Chief Executive Officer
Robert V. Carlson          42         Chief Operating Officer
Steven Purcell             48         Senior Vice President, Chief
                                      Financial Officer, Secretary
                                      and Treasurer
Bradley K. Lamers          41         Vice President - Finance

</TABLE>

Mr. Raymond R. Hipp has been Chairman of the Board, President and Chief
Executive Officer of the Company since July 1998. Previously he was Chief
Executive Officer of ITI Marketing Services, a provider of telemarketing
services, from August 1996 until May 1998 when the company was sold. He was a
self-employed management consultant from September 1994 to August 1996. Mr. Hipp
was President of Comdisco Disaster Recovery Services, a provider of business
continuity services for the information technology industry, from 1980 through
August 1994. Mr. Hipp previously held executive and management positions with
International Business Machines Corporation. He currently serves on the Board of
Directors of Gardner Denver Inc.

Mr. Robert V. Carlson has been Chief Operating Officer of the Company since
December 1997 and was named to the Company's Board of Directors in March 1998.
Previously he served as Executive Vice President responsible for the Company's
field operations since November 1996. Mr. Carlson joined the Company in April
1991 as a Branch General Manager, became an Executive Director in December 1993
and was named Vice President in July 1995. Prior to joining the Company, Mr.
Carlson held various sales and marketing positions with General Electric and
Automated Data Processing, Inc.

    Mr. Steven Purcell joined the Company in August 1998 as Senior Vice
President, Chief Financial Officer, Secretary and Treasurer. Prior to that he
was chief financial officer for American Business Information a provider of
business and consumer data and data processing services. From 1991 to 1996 he
served as vice president - finance, chief financial officer and treasurer, of
Micro Warehouse, a direct marketer of hardware, software and accessories. From
1985 to 1991, he worked for Electrocomponents, PLCa London-based distributor of
electrical products, serving as chief executive officer for its Misco, Inc.
subsidiary and, prior to that, as vice president - finance for
Electrocomponents, Inc., the U.S. holding company. From 1978 to 1985, he held
positions in finance and accounting with Hubbell Incorporated, a manufacturer of
electrical products, with the most recent being division controller at the
Hubbell Lighting Division. From 1975 to 1978, he was a senior accountant for
Price Waterhouse & Company.

Mr. Bradley K. Lamers joined the Company in March 1995 as Director of Finance
and Controller. He was promoted to Vice President in July 1995. From November
1988 to March 1995, Mr. Lamers served as a division controller for Rogers Foods,
Inc., a wholly owned subsidiary of Universal Foods Corporation.

OTHER SENIOR MANAGEMENT

Wayne D. Bock was named Vice President in charge of ARC's Smartsourcing(R)
Solutions delivery organization, which provides clients with managed IT
services, in January 1998.


<PAGE>

Mr. Bock joined ARC in August 1992 as an executive director. From 1989 to 1992
he was a director of TransUnion Corporation, responsible for IT operations.
Prior to 1989 he was a principal in a family-owned firm.

Robert P. Lane joined ARC as Vice President of Marketing in 1998. He brings 18
years of marketing and business development experience, 14 of which were in the
communications/information technology industry. From 1994 through 1998, Mr. Lane
was vice president of marketing and business programs at Cable & Wireless, Inc.,
a global provider of communications services. At GE Information Systems from
1989 through 1994, he was marketing manager for telecommunications and EDI. From
1984 through 1989, he held various marketing positions at Northern Telecom (now
Nortel).

Sharon A. McKinney was named Senior Vice President of Human Resources in January
1999. Ms. McKinney reports to ARC's chief executive officer and is responsible
for the human resources function within corporate headquarters and across the
entire 52-branch organization. She brings to this newly created position 18
years of domestic and international business and human resources management
experience. Ms. McKinney joined ARC from GE Capital Fleet Services where she
held the position of senior vice president, Global Human Resources. Previously,
Ms. McKinney spent nearly 10 years with Square D Company, which today is known
as Group Schneider, a French company. Following a series of increasingly
responsible human resources positions, Ms. McKinney spent her last three years
at Groupe Schneider as director of human resources based in Paris, France.

Kelly Egan was named Vice President of Workforce Solutions in June 1998. She is
responsible for all programs related to recruiting and retaining professional
technical employees across the company's 52- branch network. Ms. Egan joined ARC
in 1992 as a branch general manager and was promoted to executive director of
ARC's Pacific Northwest region in 1994. She was with Wright Line, a national
systems furniture manufacturer from 1982 to 1992, as an account manager, branch
manager, and region manager.

William T. Miralia was named Vice President of Field Operations in July 1998.
Mr. Miralia is responsible for overall productivity of the company's 52 branch
offices, from both sales and operational perspectives, including revenue and net
income performance. He brings to this newly created position nearly five years
of management experience in ARC's field organization and 10 years in the IT
services industry. Mr. Miralia joined ARC in 1994 as general manager of the
Cleveland, Ohio branch. He was promoted to executive director, Mid-east region
and Canadian operations in 1995. In this role, he was responsible for ARC's
overall sales and operations performance in six midwestern states and Canada.
William T. Miralia was named vice president of field operations for Alternative
Resources Corporation(R) (ARC) in July 1998. Mr. Miralia is responsible for
overall productivity of the company's 52 branch offices, from both sales and
operational perspectives, including revenue and net income performance. He
brings to this newly created position nearly five years of management experience
in ARC's field organization and 10 years in the IT services industry.

David Byrne was named Vice President of National Accounts in September 1998.
National accounts are Fortune 100 corporations that derive their revenue from
sales of information technology (IT) hardware, software and/or services. Mr.
Byrne is responsible for revenue generation for all national accounts as well as
strategic development of new accounts. He brings to his role 19 years of sales
management experience in technology products and services. Since October 1995,
Mr. Byrne had been executive director of ARC's Southern region. He joined ARC in
May 1995 as branch general manager of the Dallas office. Mr. Byrne has held
sales and management positions with a variety of Fortune 500 high technology
manufacturers, including IBM/Rolm, Nextel, and Wang Labs, with specific focus on
strategic account development.


<PAGE>

J. Lawrence Winkelman was named Vice President and Chief Information in January
1999. Mr. Winkelman is responsible for information technology planning,
development and delivery within corporate headquarters and across the entire
52-branch organization. Mr. Winkelman joined ARC from Sanwa Business Credit
Corporation, a subsidiary of Sanwa Bank, Ltd., where he had been senior vice
president and chief information officer for seven years. Prior to 1992, Mr.
Winkelman spent 17 years with GE Financial Services, a subsidiary of General
Electric Company, progressing through a series of information technology
positions with increasing management responsibility. From 1971 to 1975, Mr.
Winkelman worked for General Electric Company. Recruited into GE's Manufacturing
Management Training Program, he held engineering positions in four of GE's
manufacturing businesses.



<PAGE>


ITEM 2.  PROPERTIES

     The Company's principal executive office is currently located in
approximately 27,000 square feet of office space in Lincolnshire, Illinois,
pursuant to a lease agreement that expires October 31, 2006. The Company leases
office space for all of its branch offices and client support sites. Branch
offices occupy between 1,200 and 4,700 square feet. The lease terms for branch
offices are typically five years.

ITEM 3.  LEGAL PROCEEDINGS

     In the normal course of business, the Company is a party to various legal
proceedings. The Company does not expect that any currently pending proceedings
will have a material adverse effect on its business, results of operations or
financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.



<PAGE>




                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.

     The information required by this Item is included in the registrant's
Annual Report to Stockholders for the fiscal year ended December 31, 1998, under
the caption "Stockholder Information", which information is set forth in Exhibit
13 to this Form 10-K and is hereby incorporated herein by reference.

ITEM 6.  SELECTED FINANCIAL DATA.

     The information required by this Item is included in the registrant's
Annual Report to Stockholders for the fiscal year ended December 31, 1998, under
the caption "Five Year Summary of Selected Financial Data," which information is
set forth in Exhibit 13 to this Form 10-K and is hereby incorporated herein by
reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

     The information required by this Item is included in the registrant's
Annual Report to Stockholders for the fiscal year ended December 31, 1998, under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which information is set forth in Exhibit 13 to this
Form 10-K and is hereby incorporated herein by reference.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
          MARKET RISK

     The information required by this Item is included in the registrant's
Annual report to Stockholders for the fiscal year ended December 31, 1998, under
the caption "Quantitative and Qualitative Disclosures About Market Risk" which
information is set forth in Exhibit 13 to this Form 10-K and is hereby
incorporated herein by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this Item is included in the registrant's
Annual Report to Stockholders for the fiscal year ended December 31, 1998, under
the captions "Consolidated Balance Sheets," "Consolidated Statements of
Operations," "Consolidated Statements of Comprehensive Income," "Consolidated
Statements of Changes in Stockholders' Equity," "Consolidated Statements of Cash
Flows," "Notes to Consolidated Financial Statements" and "Independent Auditors'
Report," which information is set forth in Exhibit 13 to this Form 10-K and is
hereby incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

         None.



<PAGE>



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     a.   Directors of the Company

          The information required by this Item is set forth in the registrant's
          Proxy Statement for the Annual Meeting of Stockholders to be held on
          May 20, 1999, under the caption "Election of Directors," which
          information is hereby incorporated herein by reference.

     b.   Executive Officers of the Company

          Reference is made to "Executive Officers of the Registrant" in Part I
          of this Form 10-K.


ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item is set forth in the registrant's 
Proxy Statement for the Annual Meeting of Stockholders to be held on May 20, 
1999, under the captions "Executive Compensation," "Board of Directors," and 
"Compensation Committee Interlocks and Insider Participation," which 
information is hereby incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

     The information required by this Item is set forth in the registrant's 
Proxy Statement for the Annual Meeting of Stockholders to be held on May 20, 
1999, under the caption "Securities Beneficially Owned by Principal 
Stockholders and Management," which information is hereby incorporated herein 
by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.



<PAGE>



                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

(a)  (1) FINANCIAL STATEMENTS

     The following financial statements of Alternative Resources Corporation,
     included in the registrant's Annual Report to Stockholders for the fiscal
     year ended December 31, 1998 are included in Part II, Item 8:

          (i)  Consolidated Balance Sheets - as of December 31, 1998 and 1997;

          (ii) Consolidated Statements of Operations - years ended December 31,
               1998, 1997, and 1996;

          (iii) Consolidated Statements of Comprehensive Income - years ended
                December 31, 1998, 1997, and 1996;

          (iv) Consolidated Statements of Changes in Stockholders' Equity years
               ended December 31, 1998, 1997, and 1996;

          (v)  Consolidated Statements of Cash Flows - years ended December 31,
               1998, 1997, and 1996;

          (vi) Notes to Consolidated Financial Statements; and

          (vii) Independent Auditors' Report from KPMG LLP.

     (2)  FINANCIAL STATEMENT SCHEDULES

          (i)  Independent Auditors' Report from KPMG LLP.

          (ii) Schedule II - valuation and qualifying accounts.

     (3)  EXHIBITS

          2.1  Stock Purchase and Sale Agreement dated as of October 6, 1997
               among Alternative Resources Corporation, Compagnie Generale
               d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan and
               International Business Machines Corporation. Incorporated by
               reference herein to exhibit 2 to the Company's form 8-K dated
               November 7, 1997. (File No. 0-23940)

          2.2  Amendment Number One dated as of November 7, 1997 to Stock
               Purchase and Sale Agreement dated as of October 6, 1997 among
               Alternative Resources Corporation, Compagnie Generale
               d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan and
               International Business Machines Corporation. Incorporated by
               reference herein to exhibit 2a to the Company's form 8-K dated
               November 7, 1997. (File No. 0-23940)

          2.3  I/T Staffing Revenue Escrow Agreement by and among Compagnie
               Generale d'Informatique, Joseph R. Ferrandino, Thomas K.
               Sheridan, Alternative Resources Corporation and Harris Trust and
               Savings Bank dated November 7, 1997. Incorporated by reference
               herein to exhibit 2b to the Company's form 8-K dated November 7,
               1997. (File No. 0-23940)

          3.1  Amended and Restated Certificate of Incorporation, as amended.

          3.2  Amended and Restated By-Laws. Incorporated herein by reference to
               Exhibit 3.2 to the Company's Form 10-K for the year ended
               December 31, 1996. (File No. 0-23940)

<PAGE>

          4.1  Rights Agreement dated October 15, 1998 between the Company and
               Harris Trust and Savings Bank, incorporated herein by reference
               to exhibit 1 to the Company's Form 8-A dated October 20, 1998.

          4.2  Credit agreement dated November 7, 1997, incorporated by
               reference herein to exhibit 4 to the Company's Form 8-K dated
               November 7, 1997. (File No. 0-23940)

          Exhibits 10.1 through 10.9 are management contracts or compensatory
          plans or arrangements

          10.1 Amended and Restated Stock Option Plan. Incorporated herein by
               reference to exhibit 10 to the Company's form 10-Q for the period
               ended June 30, 1997. (File No. 0-23940)

          10.2 Executive Employment Agreement between Alternative Resources
               Corporation and Bradley K. Lamers dated July 21, 1995.
               Incorporated herein by reference to exhibit 10.9 to the Company's
               Form 10-K for the period ended December 31, 1995. (File No.
               0-23940)

          10.3 Form of Indemnity Agreement between Alternative Resources
               Corporation and its directors and officers. Incorporated herein
               by reference to exhibit 10.10 to the Company's Registration
               Statement on Form S-1, as amended, Registration No. 33-76584.

          10.4 Alternative Resources Corporation Employee Stock Purchase Plan.
               Incorporated herein by reference to the exhibit 10.12 to the
               Company's Registration Statement on Form S-8, Registration No.
               33-88918.

          10.5 Executive Employment Agreement between Alternative Resources
               Corporation and Raymond R. Hipp dated July 23, 1998. Incorporated
               herein by reference to the exhibit 10.1 to the Company's Form
               10-Q for the period ended September 30, 1998. (File No. 0-23940).

          10.6 Executive Employment Agreement between Alternative Resources
               Corporation and Steven Purcell dated August 1, 1998. Incorporated
               herein by reference to the exhibit 10.2 to the Company's Form
               10-Q for the period ended September 30, 1998. (File No. 0-23940).

          10.7 Retirement Agreement between Alternative Resources Corporation
               and Larry I. Kane dated July 23, 1998. Incorporated herein by
               reference to the exhibit 10.3 to the Company's Form 10-Q for the
               period ended September 30, 1998. (File No. 0-23940).

          10.8 Stock Option Agreement between Alternative Resources Corporation
               and Raymond R. Hipp dated July 23, 1998.

          10.9 Stock Option Agreement between Alternative Resources Corporation
               and Steven Purcell dated August 3, 1998.


          13   Certain portions of the 1998 Annual Report to Stockholders

          21   Subsidiaries of Alternative Resources Corporation

          23   Consent of KPMG LLP

          27   Financial Data Schedule


<PAGE>

(b) REPORTS ON FORM 8-K

     A Form 8-K dated October 15, 1998 was filed during the fourth quarter of
     1998, reporting under Item 5 that the Board of Directors of Alternative
     Resources Corporation adopted a Stockholder Rights Agreement.

     A Form 8-K dated October 26, 1998 was filed during the fourth quarter of
     1998, reporting under Items 5 and 7 the filing of a Certificate of
     Designations of Preferred Stock.

(c)  EXHIBITS

     The exhibits filed as part of this Annual Report on Form 10-K are as
     specified in Item 14(a)(3) herein.

(d)  FINANCIAL STATEMENT SCHEDULES

     The financial statement schedule filed as part of this Annual Report on
     Form 10-K is as specified in item 14(a)(2) herein.



<PAGE>



                                   SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on A.R.C

                         ALTERNATIVE RESOURCES CORPORATION

                         By  /s/ Raymond R. Hipp
                             ------------------------
                         Raymond R. Hipp, Chairman of the Board, President
                                          and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on A.R.C :

     SIGNATURE                               TITLE
     ---------                               -----

/s/ Raymond R. Hipp             Chairman of the Board, President and Chief
-----------------------         Executive Officer (Principle Executive
 Raymond R. Hipp                Officer)


/s/ Robert V. Carlson           Chief Operating Officer and Director
-----------------------
    Robert V. Carlson

/s/ Steven Purcell              Senior Vice President, Chief Financial
-----------------------         Officer, Secretary and Treasurer
    Steven Purcell              (Principal Financial Officer)

/s/ Bradley K. Lamers           Vice President - Finance
-----------------------
    Bradley K. Lamers

/s/ Joanne Brandes              Director
-----------------------
    Joanne Brandes

/s/ George B. Cobbe             Director
-----------------------
    George B. Cobbe

/s/ Michael E. Harris           Director
-----------------------
    Michael E. Harris

/s/ Syd N. Heaton               Director
-----------------------
    Syd N. Heaton

                                Director
-----------------------
    Larry I. Kane

/s/ A. Donald Rully             Director
-----------------------
    A. Donald Rully

/s/ Bruce R. Smith              Director
-----------------------
    Bruce R. Smith



<PAGE>



                         ALTERNATIVE RESOURCES CORPORATION

                                    SCHEDULE II
                         VALUATION AND QUALIFYING ACCOUNTS
                    YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>

                                                         Additions
                                                  -------------------------

                                   Balance at     Charged to     Charged to                    Balance at
                                   Beginning      Costs and      Other                         End of
Description                        of Year        Expenses       Accounts       Deductions     Year
-----------                        ---------      --------       --------       ----------     ------
<S>                                <C>            <C>            <C>            <C>            <C>   
1998
Allowance for doubtful accounts       $662          $1,426             -             $384      $1,704

1997
Allowance for doubtful accounts        528             318             -              184         662

1996
Allowance for doubtful accounts        579             278             -              329         528

</TABLE>


<PAGE>



                            INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Alternative Resources Corporation:


Under date of February 8, 1999, we reported on the consolidated balance sheets
of Alternative Resources Corporation and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of operations, comprehensive
income, changes in stockholders' equity and cash flows for each of the years in
the three-year period ended December 31, 1998, as contained in the 1998 annual
report to stockholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year ended December 31, 1998. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
consolidated financial statement schedule listed in Item 14(a)(2)(ii). The
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on the consolidated
financial statement schedule based on our audits.

In our opinion, such consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.


/s/ KPMG LLP


Chicago, Illinois
February 8, 1999



<PAGE>




                                  EXHIBIT INDEX


Exhibit
Number                      Description
------                      -----------

2.1       Stock Purchase and Sale Agreement dated as of October 6, 1997 among
          Alternative Resources Corporation, Compagnie Generale d'Informatique,
          Joseph R. Ferrandino, Thomas K. Sheridan and International Business
          Machines Corporation. Incorporated by reference herein to exhibit 2 to
          the Company's form 8-K dated November 7, 1997. (File No. 0-23940)

2.2       Amendment Number One dated as of November 7, 1997 to Stock Purchase
          and Sale Agreement dated as of October 6, 1997 among Alternative
          Resources Corporation, Compagnie Generale d'Informatique, Joseph R.
          Ferrandino, Thomas K. Sheridan and International Business Machines
          Corporation. Incorporated by reference herein to exhibit 2a to the
          Company's form 8-K dated November 7, 1997. (File No. 0-23940)

2.3       I/T Staffing Revenue Escrow Agreement by and among Compagnie Generale
          d'Informatique, Joseph R. Ferrandino, Thomas K. Sheridan, Alternative
          Resources Corporation and Harris Trust and Savings Bank dated November
          7, 1997. Incorporated by reference herein to exhibit 2b to the
          Company's form 8-K dated November 7, 1997. (File No. 0-23940)

3.1       Amended and Restated Certificate of Incorporation, as amended.

3.2       Amended and Restated By-Laws. Incorporated herein by reference to
          Exhibit 3.2 to the Company's Form 10-K for the year ended December 31,
          1996. (File No. 0-23940)

4.1       Rights Agreement dated October 15, 1998 between the Company and Harris
          Trust and Savings Bank, incorporated herein by reference to exhibit 1
          to the Company's Form 8-A dated October 20, 1998.

4.2       Credit agreement dated November 7, 1997, incorporated by reference
          herein to exhibit 4 to the Company's Form 8-K dated November 7, 1997.
          (File No. 0-23940)

Exhibits 10.1 through 10.9 are management contracts or compensatory plans or
arrangements

10.1      Amended and Restated Stock Option Plan. Incorporated herein by
          reference to exhibit 10 to the Company's form 10-Q for the period
          ended June 30, 1997. (File No. 0-23940)

10.2      Executive Employment Agreement between Alternative Resources
          Corporation and Bradley K. Lamers dated July 21, 1995. Incorporated
          herein by reference to exhibit 10.9 to the Company's Form 10-K for the
          period ended December 31, 1995. (File No. 0-23940)

10.3      Form of Indemnity Agreement between Alternative Resources Corporation
          and its directors and officers. Incorporated herein by reference to
          Exhibit 10.10 to the Company's Registration Statement on Form S-1, as
          amended, Registration No. 33-76584.


<PAGE>

10.4      Alternative Resources Corporation Employee Stock Purchase Plan.
          Incorporated herein by reference to the exhibit 10.12 to the Company's
          Registration Statement on Form S-8, Registration No. 33-88918.

10.5      Executive Employment Agreement between Alternative Resources
          Corporation and Raymond R. Hipp dated July 23, 1998. Incorporated
          herein by reference to the exhibit 10.1 to the Company's Form 10-Q for
          the period ended September 30, 1998. (File No. 0-23940).

10.6      Executive Employment Agreement between Alternative Resources
          Corporation and Steven Purcell dated August 1, 1998. Incorporated
          herein by reference to the exhibit 10.2 to the Company's Form 10-Q for
          the period ended September 30, 1998. (File No. 0-23940).

10.7      Retirement Agreement between Alternative Resources Corporation and
          Larry I. Kane dated July 23, 1998. Incorporated herein by reference to
          the exhibit 10.3 to the Company's Form 10-Q for the period ended
          September 30, 1998. (File No. 0-23940).

10.8      Stock Option Agreement between Alternative Resources Corporation and
          Raymond R. Hipp dated July 23, 1998.

10.9      Stock Option Agreement between Alternative Resources Corporation and
          Steven Purcell dated August 3, 1998.

13        Certain portions of 1998 Annual Report to Stockholders

21        Subsidiaries of Alternative Resources Corporation

23        Consent of KPMG LLP

27        Financial Data Schedule


<PAGE>



EXHIBIT 3.1 - AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED

                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                           ALTERNATIVE RESOURCES CORP.

     The original Certificate of Incorporation of the corporation was filed with
the Secretary of State of Delaware on March 7, 1988. The name of the corporation
under which it was originally incorporated was Alternative Resources Corp. This
Amended and Restated Certificate of Incorporation not only restates and
integrates the original Certificate of Incorporation and all amendments thereto,
but also includes amendments adopted by the stockholders of the corporation on
the date hereof. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the applicable provisions of Sections 228, 242 and
245 of the General Corporation Law of Delaware and shall become effective upon
filing with the Secretary of State of the State of Delaware.

     FIRST: The name of the corporation is ALTERNATIVE RESOURCES CORPORATION.

     SECOND: The corporation's registered office in the State of Delaware is
located at 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of the corporation's registered agent at such address is The
Corporation Trust Company.

     THIRD: The nature of the business and the objects and purposes to be
transacted, promoted and carried on are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.

     FOURTH: The total number of shares of all classes of stock which the
corporation shall have the authority to issue is 21,000,000 shares, consisting
of (i) 20,000,000 shares of common stock, $0.01 par value per share ("Common
Stock"), and (ii) 1,000,000 shares of preferred stock, $0.01 par value per share
("Preferred Stock").

     The designations, powers, preferences and relative participating, optional
or other special rights and the qualifications, limitations and restrictions
thereof in respect of each class of capital stock of the corporation are as
follows:

A.   COMMON STOCK

     1. VOTING. Except as otherwise provided by law, each share of Common Stock
shall entitle the holder thereof to one vote in any matter which is submitted to
a vote of stockholders of the corporation.

     2. DIVIDENDS. Subject to the express terms of the Preferred Stock
outstanding from time to time, such dividend or distribution as may be
determined by the Board of Directors of the corporation may from time to time be
declared and paid or made upon the Common Stock out of any source at the time
lawfully available for the payment of dividends.

     3. LIQUIDATION. The holders of Common Stock shall be entitled to share
ratably upon any liquidation, dissolution or winding up of the affairs of the
corporation (voluntary of involuntary) of all assets of the corporation which
are legally available for distribution, if any, remaining after payment of all
debts and other liabilities and subject to the prior rights of any holders of
Preferred Stock of the preferential amounts, if any, to which they are entitled.

     4. PURCHASES. Subject to any applicable provisions of this Article Fourth,
the corporation may at any time or from time to time purchase or otherwise
acquire shares of its Common Stock in any manner now or hereafter permitted by
law, publicly or privately, or pursuant to any agreement.


B.   PREFERRED STOCK

     Subject to the terms contained in any designation of a series of Preferred
Stock, the Board of Directors is expressly authorized, at any time and from time
to time, to fix, by resolution or resolutions, the following provisions for
shares of any class or classes of Preferred Stock of the 

<PAGE>

corporation or any series of any class of Preferred Stock:

     1. the designation of such class or series, the number of shares to
constitute such class or series which may be increased or decreased (but not
below the number of shares of that class or series then outstanding) by
resolution of the Board of Directors, and the stated value thereof if different
from the par value thereof;

     2. whether the shares of such class or series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights;

     3. the dividends, if any, payable on such class or series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, and the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of the same class;

     4. whether the shares of such class or series shall be subject to
redemption by the corporation, and, if so, the times, prices and other
conditions of such redemption;

     5. the amount or amounts payable upon shares of such series upon, and the
rights of the holders of such class or series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the corporation;

     6. whether the shares of such class or series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such class or series for retirement or other
corporate purposes and the terms and provisions relative to the operation
thereof;

     7. whether the shares of such class or series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of the
same class or any other securities and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of conversion or exchange;

     8. the limitations and restrictions, if any, to be effective while any
shares of such class or series are outstanding upon the payment of dividends or
the making of other distributions on, and upon the purchase, redemption or other
acquisition by the corporation of the Common Stock or shares of stock of any
other class or any other series of the same class;

     9. the conditions or restrictions, if any, upon the creation of
indebtedness of the corporation or upon the issue of any additional stock,
including additional shares of such class or series or of any other series of
the same class or of any other class;

     10. the ranking (be it PARI PASSU, junior or senior) of each class or
series vis-a-vis any other class or series of any class of Preferred Stock as to
the payment of dividends, the distribution of assets and all other matters; and

     11. any other powers, preferences and relative, participating, optional and
other special rights, and any qualifications, limitations and restrictions
thereof, insofar as they are not inconsistent with the provisions of this
Amended and Restated Certificate of Incorporation, to the full extent permitted
in accordance with the laws of the State of Delaware.

     The powers, preferences and relative, participating, optional and other
special rights of each class or series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding.


C.   MISCELLANEOUS

     1. PREEMPTIVE RIGHTS. No holder of any share of any class of stock of the
corporation shall have any preemptive right to subscribe for or acquire
additional shares of stock of any class of the corporation or warrants or
options to purchase, or securities convertible into, shares of any class of
stock of the corporation.

<PAGE>

     2. ISSUANCE OF STOCK. Shares of capital stock of the corporation may be
issued by the corporation from time to time in such amounts and proportions and
for such consideration (not less than the par value thereof in the case of
capital stock having par value) as may be fixed and determined from time to time
by the Board of Directors and as shall be permitted by law.

     3. UNCLAIMED DIVIDENDS. Any and all right, title, interest and claim in or
to any dividends declared by the corporation, whether in cash, stock or
otherwise, which are unclaimed by the stockholder entitled thereto for a period
of six years after the close of business on the payment date, shall be and shall
be deemed to be extinguished and abandoned; and such unclaimed dividends in the
possession of the corporation, its transfer agents or other agents or
depositories, shall at such time become the absolute property of the
corporation, free and clear of any and all claims of any persons whatsoever.


D.   STOCK SPLIT

     Notwithstanding anything in this Amended and Restated Certificate of
Incorporation to the contrary, each share of Common Stock of the corporation
issued and outstanding immediately prior to the effective date of this Amended
and Restated Certificate of Incorporation shall be automatically converted,
without further action, into seven (7) shares of the Common Stock authorized
herein. On such effective date, outstanding certificates representing shares of
Common Stock shall thereafter automatically be deemed to represent certificates
for the number of shares of Common Stock determined as set forth in the
preceding sentence; provided, however, that the holders thereof shall be
entitled to present such certificates to the corporation for replacement with
certificates reflecting such number of shares of Common Stock.

     SIXTH: A. NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of Directors
shall be fixed from time to time exclusively by the Board of Directors pursuant
to a resolution adopted by the Board of Directors. The Directors of the
corporation shall be divided into three classes: Class I, Class II and Class
III. Each class shall consist, as nearly as may be possible, of one-third of the
whole number of the Board of Directors. If the Board of Directors is not evenly
divisible by three, the Board of Directors shall determine the number of
Directors to be elected to each class. The initial member of Class I shall be
Christopher R. Joseph and he shall hold office for a term to expire at the
annual meeting of the stockholders to be held in 1995; the initial members of
Class II shall be Larry I. Kane and Bruce R. Smith and they shall hold office
for a term to expire at the annual meeting of the stockholders to be held in
1996; and the initial member of Class III shall be Robert L. Cummings and he
shall hold office for a term to expire at the annual meeting of the stockholders
to be held in 1997, and in the case of each class, until their respective
successors are duly elected and qualified. At each annual election held
commencing with the annual election in 1994, the Directors elected to succeed
those whose terms expire shall be identified as being of the same class as the
Directors they succeed and shall be elected to hold office for a term to expire
at the third annual meeting of the stockholders after their election and until
their respective successors are duly elected and qualified. Any vacancy on the
Board of Directors that results from an increase in the number of directors may
be filled by a majority of the Board of Directors then in office, provided that
a quorum is present, and any other vacancy occurring in the Board of Directors
may be filled by a majority of the directors then in office, even if less than a
quorum, or by the sole remaining director. If the number of Directors changes,
any increase or decrease in Directors shall be apportioned among the classes so
as to maintain all classes as equal in number as possible, and any additional
Director elected to any class shall hold office for a term which shall coincide
with the terms of the other Directors in such class and until his successor is
duly elected and qualified.

     B. STOCKHOLDER NOMINATION OF A DIRECTOR CANDIDATE AND INTRODUCTION OF NEW
BUSINESS. Advance notice of stockholder nominations for the election of
Directors and of new business to be brought by stockholders before any meeting
of the stockholders of the corporation shall be given in a manner provided by
the By-laws of the corporation.

     C. REMOVAL. Any Director may be removed from office as a Director at any
time, but only for cause, and only by the affirmative vote of stockholders of
record holding not less than two-thirds (66 2/3%) of the total outstanding
voting stock of the corporation given at a meeting of the stockholders called
for that purpose.

     SEVENTH: A. SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of 

<PAGE>

the stockholders, for any purpose or purposes (except to the extent otherwise
provided by law or this Amended and Restated Certificate of Incorporation), may
only be called by the Chairman of the Board, the President or a majority of the
Board of Directors then in office.

     B. WRITTEN CONSENT BY STOCKHOLDERS WITHOUT A MEETING. No action required or
permitted to be taken at any annual meeting or special meeting of stockholders
of the corporation may be taken by written consent without a meeting of such
stockholders.

     EIGHTH: A. AMENDMENT OF BY-LAWS. The Board of Directors of the corporation
is authorized to adopt, amend or repeal the By-laws of the corporation, subject
to applicable law and any applicable provisions in any resolution of the Board
of Directors, except that any By-law provision adopted by the stockholders
amending the By-laws after their initial adoption may be amended or repealed
only by the holders of not less than two-thirds (66 2/3%) of the total
outstanding voting stock of the corporation.

     B. ELECTION OF DIRECTORS. Elections of Directors need not be by written
ballot unless the By-laws of the corporation shall so provide.

     C. MEETINGS OF STOCKHOLDERS. Meetings of stockholders may be held within or
without the State of Delaware, as the by-laws of the corporation may provide.

     D. BOOKS OF CORPORATION. The books of the corporation may be kept at such
place within or without the State of Delaware as the By-laws of the corporation
may provide or as may be designated from time to time by the Board of Directors
of the corporation.

     NINTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or the stockholders or class of stockholders of the corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.

     TENTH: No Director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, provided that this Article TENTH shall not eliminate or
limit the liability of a Director: (i) for any breach of the Director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the General Corporation Law of the State of
Delaware (or the corresponding provision of any successor act or law); or (iv)
for any transaction from which the Director derived an improper personal
benefit. This Article TENTH shall not eliminate or limit the liability of a
Director for any act or omission occurring prior to the date this Article TENTH
becomes effective. Neither the amendment nor repeal of this Article TENTH, nor
the adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article TENTH, shall eliminate or reduce
the effect of this Article TENTH in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article TENTH, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
If the Delaware General Corporation Law is amended after the effective date of
this Article to further eliminate or limit, or to authorize further elimination
or limitation of, the personal liability of directors for breach of fiduciary
duty as a director, then the personal liability of a director to the corporation
or its stockholders shall be eliminated or limited to the full extent permitted
by the Delaware General Corporation Law, as amended. For purposes of this

<PAGE>

Article, "fiduciary duty as a director" shall include any fiduciary duty arising
out of serving at the request of the corporation as a director of another
corporation, partnership, joint venture, trust or other enterprise, and
"personally liable to the corporation" shall include any liability to such other
corporation, partnership, joint venture, trust or other enterprise, and any
liability to the corporation in its capacity as security holder, joint venturer,
partner, beneficiary, creditor or investor of or in any such other corporation,
partnership, joint venture, trust or other enterprise. Any repeal or
modification of the foregoing paragraph by the stockholders of the corporation
shall not adversely affect the elimination or limitation of the personal
liability of a director for any act or omission occurring prior to the effective
date of such repeal or modification. This provision shall not eliminate or limit
the liability of a director for any act or omission occurring prior to the
effective date of this Article.

     ELEVENTH: The corporation is to have perpetual existence.

     TWELFTH: Article Ten of the corporation's original Certificate of
Incorporation is hereby deleted in its entirety and the corporation expressly
elects to be governed by Section 203 of the Delaware General Corporation Law.

     THIRTEENTH: Notwithstanding any other provisions of this Amended and
Restated Certificate of Incorporation or the By-laws of the corporation or the
fact that a lesser percentage may be specified by law, this Amended and Restated
Certificate of Incorporation or the By-laws of the corporation, the affirmative
vote of the holders of not less than two-thirds (66 2/3%) of the total voting
power of the outstanding stock of the corporation entitled to vote generally in
the election of Directors, voting together as a single class, shall be required
to amend, alter, adopt any provision inconsistent with or to repeal Article
SIXTH or Article SEVENTH of this Amended and Restated Certificate of
Incorporation. Furthermore, the corporation reserves the right to amend or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon a stockholder herein are granted subject to this
reservation.

     IN WITNESS WHEREOF, the corporation has caused this Amended and Restated
Certificate to be signed by its duly authorized officers this 25th day of April,
1994.

                                       ALTERNATIVE RESOURCES
                                         CORPORATION


                                       By:  /s/ Larry Kane
                                            ------------------------------------
                                       Its: President
                                            ------------------------------------
Attest:

 /s/ Michael E. Harris
----------------------------------------
Secretary




<PAGE>




                            CERTIFICATE OF AMENDMENT
                                       TO
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                        ALTERNATIVE RESOURCES CORPORATION

                                    *  *  *  *  *

     ALTERNATIVE RESOURCES CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY THAT:

          FIRST: The Board of Directors of the Company approved and adopted the
     following resolution to amend its Amended and Restated Certificate of
     Incorporation declaring it advisable and recommended that the amendment be
     submitted to the stockholders for their consideration:

               RESOLVED, that the first paragraph of ARTICLE FOURTH of the
          Company's Amended and Restated Certificate of Incorporation be and
          hereby is amended to read in its entirety as follows:

                    FOURTH: The total number of shares of all classes of stock
               which the corporation shall have the authority to issue is
               51,000,000 shares, consisting of (i) 50,000,000 shares of common
               stock, $0.01 par value per share ("Common Stock"), and (ii)
               1,000,000 shares of preferred stock, $0.01 par value per share
               ("Preferred Stock").

     SECOND: The amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of a majority of the outstanding shares of stock
entitled to vote at a meeting of stockholders.

     IN WITNESS WHEREOF, ALTERNATIVE RESOURCES CORPORATION has caused this
certificate to be signed by its Vice President, Chief Financial Officer,
Secretary and Treasurer this 9th day of May, 1996.


                                       ALTERNATIVE RESOURCES CORPORATION


                                       By:  /s/ Bradley K. Lamers
                                          -------------------------------------
                                       Name:    Bradley K. Lamers
                                       Title:   Vice President, Chief Financial
                                                Officer, Secretary and
                                                Treasurer



<PAGE>



                           CERTIFICATE OF DESIGNATIONS
                               OF PREFERRED STOCK

                                       of

                        ALTERNATIVE RESOURCES CORPORATION


     We, Raymond R. Hipp, Chairman of the Board of Directors and Steven Purcell,
Secretary, of Alternative Resources Corporation, a corporation organized and
existing under the Delaware General Corporation Law, in accordance with the
provisions of Section 151(g) thereof, DO HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, the Board of Directors on October 15, 1998,
adopted, ratified and approved this Certificate of Designations the series of
preferred stock designated herein.

     Section 1. Designation and Amount. The shares of the series of preferred
stock shall be designated as "Junior Preferred Stock, Series A" (the "Preferred
Stock") and the number of shares constituting the series shall be 200,000.

          Section 2.  Dividends and Distributions.

     (A) Subject to the prior and superior rights of the holders of any shares
     of any series of preferred stock ranking prior and superior to the shares
     of Preferred Stock with respect to dividends, the holders of shares of
     Preferred Stock, in preference to the holders of common stock, $.01 par
     value per share, of the Corporation (the "Common Stock") and of any other
     junior stock, shall be entitled to receive, when, as and if declared by the
     Board of Directors out of funds legally available for the purpose,
     quarterly dividends payable in cash on the 15th day of March, June,
     September and December in each year (each such date being a "Quarterly
     Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
     Date after the first issuance of a share or fraction of a share of
     Preferred Stock, in an amount per share (rounded to the nearest cent) equal
     to the greater of (a) $25.00 or (b) subject to the provision for adjustment
     hereinafter set forth, 100 times the aggregate per share amount of all cash
     dividends, and 100 times the aggregate per share amount (payable in kind)
     of all non-cash dividends or other distributions other than a dividend
     payable in shares of Common Stock or a subdivision of the outstanding
     shares of Common Stock (by reclassification or otherwise), declared on the
     Common Stock since the immediately preceding Quarterly Dividend Payment
     Date or, with respect to the first Quarterly Dividend Payment Date, since
     the first issue of any share or fraction of a share of Preferred Stock. If
     the Corporation shall at any time on or after October 28, 1998 declare or
     pay any dividend on Common Stock payable in shares of Common Stock, or
     effect a subdivision of combination or consolidation of the outstanding
     shares of Common Stock (by reclassification or otherwise than by payment of
     a dividend in shares of Common Stock) into a greater or lesser number of
     shares of Common Stock, then in each case the amount to which holders of
     shares of Preferred Stock were entitled immediately prior to such event
     under clause (b) of the preceding sentence shall be adjusted by multiplying
     such amount by a fraction the numerator of which is the number of shares of
     Common Stock outstanding immediately after such event and the denominator
     of which is the number of shares of Common Stock that were outstanding
     immediately prior to such event.

     (B) The Corporation shall declare a dividend or distribution on the
     Preferred Stock as provided in paragraph (A) of this Section immediately
     after it declares a dividend or distribution on the Common Stock (other
     than a dividend payable in shares of Common Stock); provided that, in the
     event no dividend or distribution shall have been declared on the Common
     Stock during the period between any Quarterly Dividend Payment Date and the
     next subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per
     share on the Preferred Stock shall nevertheless be payable on such
     subsequent Quarterly Dividend Payment Date.

     (C) Dividends shall begin to accrue and be cumulative on outstanding shares
     of Preferred Stock from the Quarterly Dividend Payment Date next preceding
     the date of issue of such shares of Preferred Stock, unless the date of
     issue of such shares is prior to the record date for the first Quarterly
     Dividend Payment Date, in which case dividends on such shares shall begin
     to accrue from the date of issue of such shares, or unless the date of

<PAGE>

     issue is a Quarterly Dividend Payment Date or is a date after the record
     date for the determination of holders of shares of Preferred Stock entitled
     to receive a quarterly dividend and before such Quarterly Dividend Payment
     Date, in either of which events such dividends shall begin to accrue and be
     cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
     dividends shall not bear interest. Dividends paid on the shares of
     Preferred Stock in an amount less than the total amount of such dividends
     at the time accrued and payable on such shares shall be allocated pro rata
     on a share-by-share basis among all such shares at the time outstanding.
     The Board of Directors may fix a record date for the determination of
     holders of shares of Preferred Stock entitled to receive payment of a
     dividend or distribution declared thereon, which record date shall be not
     more than 60 days prior to the date fixed for the payment thereof.

          Section 3. Voting Rights. The holders of shares of Preferred Stock
shall have the following voting rights:

     (A) Subject to the provision for adjustment hereinafter set forth, each
     share of Preferred Stock shall entitle the holder thereof to 100 votes on
     all matters submitted to a vote of the stockholders of the Corporation. In
     the event the Corporation shall at any time on or after October 28, 1998
     declare or pay any dividend on Common Stock payable in shares of Common
     Stock, or effect a subdivision or combination or consolidation of the
     outstanding shares of Common Stock (by reclassification or otherwise than
     by payment of a dividend in shares of Common Stock) into a greater or
     lesser number of shares of Common Stock, then in each such case the number
     of votes per share to which holders of shares of Preferred Stock were
     entitled immediately prior to such event shall be adjusted by multiplying
     such number by a fraction, the numerator of which is the number of shares
     of Common Stock outstanding immediately after such event, and the
     denominator of which is the number of shares of Common Stock that were
     outstanding immediately prior to such event.

     (B) Except as otherwise provided herein or by law, the holders of shares of
     Preferred Stock and the holders of shares of Common Stock shall vote
     together as one class on all matters submitted to a vote of stockholders of
     the Corporation.

     (C) Except as set forth herein, holders of Preferred Stock shall have no
     special voting rights and their consent shall not be required (except to
     the extent they are entitled to vote with holders of Common Stock as set
     forth herein) for taking any corporate action.

          Section 4. Certain Restrictions.

     (A) Whenever quarterly dividends or other dividends or distributions
     payable on the Preferred Stock as provided in Section 2 are in arrears,
     thereafter and until all accrued and unpaid dividends and distributions,
     whether or not declared, on shares of Preferred Stock outstanding shall
     have been paid in full, the Corporation shall not:

               (i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock;

               (ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Stock, except
dividends paid ratably on the Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;

               (iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Preferred Stock; or

               (iv) purchase or otherwise acquire for consideration any shares
of Preferred Stock, or any shares of stock ranking on a parity with the
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of

<PAGE>

the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.

     (B) The Corporation shall not permit any subsidiary of the Corporation to
     purchase or otherwise acquire for consideration any shares of stock of the
     Corporation unless the Corporation could, under paragraph (A) of this
     Section 4, purchase or otherwise acquire such shares at such time and in
     such manner.

          Section 5. Reacquired Shares. Any shares of Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of preferred
stock and may be reissued as part of a new series of preferred stock to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.

          Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Preferred Stock
unless, prior thereto, the holders of shares of Preferred Stock shall have
received $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock, or (2) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Preferred Stock, except distributions made ratably on the Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time on or
after October 28, 1998 declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

          Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Preferred Stock then outstanding shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time on or after October 28, 1998
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Preferred Stock shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

          Section 8. No Redemption. The shares of Preferred Stock shall not be
redeemable.

          Section 9. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Preferred Stock, voting together as a
single class.

          IN WITNESS WHEREOF, we have executed and subscribed this Certificate

<PAGE>

and do affirm the foregoing as true under the penalties of perjury as of this
15th day of October, 1998.


                              /s/ Raymond R. Hipp
                              Raymond R. Hipp
                              Chairman of the Board of
                              Directors


 ATTEST:


 /s/ Steven Purcell
 Steven Purcell, Secretary