**EXHIBIT 4.2**

 

**FIRST AMENDMENT TO SECURITIESPURCHASE AGREEMENT AND WAIVER**

 

This FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENTAND WAIVER dated as of August 7, 2002 (this “Amendment”), amongAlternative Resources Corporation, a Delaware corporation  (the “Company”), with headquarterslocated at 600 Hart Road, Suite 300, Barrington, Illinois 60010,  Wynnchurch Capital Partners, L.P., aDelaware limited partnership and Wynnchurch Capital Partners Canada, L.P., anAlberta, Canada limited partnership (each a “Purchaser,” andcollectively, the “Purchasers”), amends the Securities PurchaseAgreement dated as of January 31, 2002 (the “Securities Purchase Agreement”),between the Company and the Purchasers.

 

WHEREAS, the Company failed to satisfy the FixedCharge Coverage Ratio set forth in Section 7.5(h)(ii) of the SecuritiesPurchase Agreement for the period of two fiscal quarters ended June 30, 2002and such failure constitutes an Event of Default under the Section 5.2 of theNotes (the “June 30, 2002 Event of Default”);

 

WHEREAS, the Company and Fleet Capital Corporation, asLender pursuant to that certain Credit and Security Agreement dated as ofJanuary 31, 2002 (the “Credit Agreement”) have requested that thePurchasers waive the June 30, 2002 Event of Default  and any other existing defaults by the Company as providedherein, and amend certain provisions of the Securities Purchase Agreement; and

 

WHEREAS, the Purchasers has agreed to waive the June30, 2002 Event of Default and any other existing defaults under the SecuritiesPurchase Agreement and to amend certain provisions of the Securities PurchaseAgreement, all subject to the terms, conditions and limitations set forthherein;

 

NOW, THEREFORE, in consideration of the foregoing andthe agreements contained herein, the parties hereby agree as follows:

 

1.             Capitalized Terms.

 

Capitalized terms used herein which are defined in theSecurities Purchase Agreement have the same meanings herein as therein, exceptto the extent that such meanings are amended hereby.  The Securities Purchase Agreement, together with the Notes, theWarrants, the Subordination Agreement and any other related documents arereferred to herein as the “Subordinated Debt Documents.”

 

2.             Waiver of June 30,2002 Event of Default.

 

Subject to the satisfaction of the terms andconditions set forth in Section 5 hereof, the Purchasers hereby waive the June30, 2002 Event of Default and any other existing defaults by the Companypursuant to the Securities Purchase Agreement and the other Subordinated DebtDocuments.  The parties agree thatnothing herein shall be construed as a waiver of any future Event of Default(including without limitation, any Event of Default caused by reason of thefailure of the Company to comply with Section 7.5(h) of the Securities PurchaseAgreement, as amended hereby, on any other occasion or for any other period).

 

3.             Amendments.

 

Subject to the satisfaction of the terms andconditions set forth in Section 5 hereof, the Company and the Purchasers agreethat the Securities Purchase Agreement is hereby amended, effective as of thedate hereof, as follows:

 

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(a)*           Amendmentsto Section 7.2 of the Securities Purchase Agreement. *Section 7.2(j) of the Securities Purchase Agreement ishereby amended as follows:

 

(i)            Thefollowing new defined term *“Fixed Charges”* shall be added to Section7.2 of the Securities Purchase Agreement immediately preceding the definitionof *“FixedCharge Coverage Ratio”*:

 

“(j1)        ‘Fixed Charges’means, for any period, the sum for the Company and all subsidiaries (determinedon a consolidated basis without duplication in accordance with GAAP), of (i)the aggregate amount of Interest Expense for such period (excluding, for thepurpose of computing Fixed Charges, that certain amendment fee required to be paidby the Company and its subsidiaries to the Lender in connection with thatcertain First Amendment to Credit Agreement and Waiver dated as of August 7,2002 among the Company and its subsidiaries and the Lender) plus (ii)the aggregate amount of regularly scheduled payments of principal in respect ofIndebtedness for borrowed money (including the principal component of anypayments in respect of Capital Lease Obligations) paid or required to be paidduring such period, plus (c) the aggregate amount of cash disbursementsmade by the Company after June 30, 2002, pursuant to that certain severanceagreement between the Company and its former Chief Executive Officer.”

 

(ii)           Thedefinition of *“Fixed Charge Coverage Ratio”* set forth in Section 7.2 ofthe Securities Purchase Agreement is hereby amended and restated in itsentirety to read as follows:

 

“(j2)        ‘Fixed Charge Coverage Ratio’means, for any period, the ratio of (a) (i) EBITDA of the Borrowers (as definedin the Credit Agreement) and all subsidiaries for such period (determined on aconsolidated basis without duplication in accordance with GAAP) minus(ii) the aggregate amount of all Non-Financed Capital Expenditures during suchperiod minus (iii) the aggregate amount paid, or required to be paid(without duplication), in cash in respect of the current portion of all incometaxes for such period minus (iv) the aggregate amount of dividends anddistributions permitted to be paid under Section 8.6 of the Credit Agreementand actually paid in cash during such period to (b) the aggregate amount ofFixed Charges for such period.”

 

(b)           *Amendment toSection 7.5(h) of the Securities Purchase Agreement*.  Section 7.5(h) of the Securities PurchaseAgreement is hereby amended and restated in its entirety to read as follows:

 

“(h)         CertainFinancial Covenants.

 

(i)            *Tangible Capital Base*.  The Company shall not (i) as ofJune 30, 2002, have a consolidated Tangible Capital Base of less than$7,600,000 or (ii) as of the end of any fiscal quarter commencing with thefiscal quarter ending September 30, 2002, have a consolidated Tangible CapitalBase of less than the sum of (x) $7,600,000 plus (y) on a cumulativebasis, 45% of positive consolidated net income (without reduction for losses)for each fiscal quarter ending after June 30, 2002.

 

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(ii)           *Fixed Charge Coverage Ratio*.  The Fixed Charge Coverage Ratio of theCompany shall not at any time during any period set forth below to be less thanthe ratio set opposite such period:

 
| **Period**                                     |   | **Minimum Fixed Charge  Coverage Ratio** |   |
|------------------------------------------------|--------|------------------------------------------|--------|
|                                           |   |                                     |   |
| October 1, 2002 through December 31, 2002      |   | .95x                                     |   |
|                                           |   |                                     |   |
| October 1, 2002 through  March 31, 2003        |   | .95x                                     |   |
|                                           |   |                                     |   |
| October 1, 2002 through  June 30, 2003         |   | .95x                                     |   |
|                                           |   |                                     |   |
| October 1, 2002 through  September 30, 2003    |   | .95x                                     |   |
|                                           |   |                                     |   |
| Thereafter (on a  rolling four quarters basis) |   | .95x                                     |   |

 

(iii)          *Fixed ChargeCoverage Shortfall*.  Theamount by which (i) the aggregate Fixed Charges of the Company and itssubsidiaries, exceeds (ii) the consolidated EBITDA of the Company itssubsidiaries, for each fiscal period set forth below shall not be greater thanthe maximum shortfall amount set opposite such fiscal period:

 
| **Fiscal  Period**                 |   | **Maximum Shortfall  Amount** |    |
|------------------------------------|--------|-------------------------------|---------|
|                               |   |                          |    |   |
| July 1 through July 31, 2002       |   | $                             | 262,500 |   |
|                               |   |                          |    |   |
| July 1 through August  31, 2002    |   | $                             | 157,500 |   |
|                               |   |                          |    |   |
| July 1 through  September 30, 2002 |   | $                             | 262,500 | ” |

 

4.             NoDefault; Representations and Warranties, etc.

 

The Company hereby represents, warrants and confirmsthat: (a) the representations and warranties of the Company contained inArticle 3 of the Securities Purchase Agreement are true and correct on and asof the date hereof as if made on such date (except to the extent that suchrepresentations and warranties expressly relate to an earlier date); (b) aftergiving effect to this Amendment, the Company is in compliance with all of theterms and provisions set forth in the Securities Purchase Agreement and theother Subordinated Debt Documents; (c) after giving effect to this Amendment,no Event of Default (as defined in the Notes) has occurred and is continuing;and (d) the execution, delivery and performance by the Company of thisAmendment (i) have been duly authorized by all necessary action on the part ofthe Company, (ii) will not violate any applicable law or regulation or theorganizational documents of the Company or any of its subsidiaries, (iii) willnot violate or result in a default under any indenture, agreement or otherinstrument binding on the Company or any of its assets, including withoutlimitation, the Credit Agreement or any other Loan Document (as defined in theCredit Agreement), and (iv) do not

 

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requireany consent, waiver or approval of or by any person (other than the Purchasers)which has not been obtained.

 

5.             Conditionsto Effectiveness.

 

Theeffectiveness of this Amendment shall be subject to the satisfaction of thefollowing conditions precedent:

 

(a)           The Purchasers shall have receivedcounterparts of this Amendment duly executed by the Company;

 

(b)           The Purchasers shall have received aCertificate of the Secretary of the Company, certifying that this Amendment hasbeen duly authorized by the Boards of Directors of the Company;

 

(c)           The Company shall have delivered tothe Purchasers evidence that Lender has executed and delivered to the Company awritten amendment and waiver with respect to the Loan Documents (as defined inthe Credit Agreement, in form and substance reasonably acceptable to thePurchasers; and

 

(d)           The Company shall have reimbursed thePurchasers for all reasonable costs and expenses, including reasonable legalfees and disbursements, incurred by the Purchasers in connection with thisAmendment and the issuance by Purchasers of that certain Warrant to RobertStanojev dated August 5, 2002 and the transactions contemplated hereby.

 

6.             Miscellaneous.

 

(a)           Except as specifically amendedhereby, all of the terms and provisions of the Securities Purchase Agreement,the other Subordinated Debt Documents and all related documents, shall remain infull force and effect.

 

(b)           This Amendment may be executed in anynumber of counterparts, each of which, when executed and delivered, shall be anoriginal, but all counterparts shall together constitute one instrument.  Delivery of an executed signature pagehereto by facsimile transmission shall be effective as delivery of a manuallyexecuted counterpart hereof.

 

(c)           This Amendment shall be governed bythe laws of the State of Illinois and shall be binding upon and inure to thebenefit of the parties hereto and their respective successors and assigns.

 

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Amendment to be duly executed by their respective authorized officers asof the day and year first above written.

 

 
| **COMPANY:**                              |
|-------------------------------------------|
|                                      |
| ALTERNATIVE  RESOURCES CORPORATION        |
|                                      |   |
|                                      |   |
| By:                                       |   |   |
|                                      | Name: |   |   |
|                                      | Title: |   |   |
|                                      |   |
|                                      |   |
| **PURCHASERS:**                           |
|                                      |
| WYNNCHURCH  CAPITAL PARTNERS, L.P.        |
|                                      |   |
| By:                                       | Wynnchurch  Management Inc., its general partner |
|                                      |   |
| By:                                       |   |   |
|                                      | Name: |   |   |
|                                      | Title: |   |   |
|                                      |   |
|                                      |   |
| WYNNCHURCH  CAPITAL PARTNERS CANADA, L.P. |
|                                      |   |
| By:                                       | Wynnchurch GP  Canada, Inc., its general partner |
|                                      |   |
| By:                                       |   |   |
|                                      | Name: |   |   |
|                                      | Title: |   |   |
|                                           |  |  |  |  |

 

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