Document:

Exhibit 10.2

 

TERMINATION AGREEMENT AND GENERAL RELEASE

 

THIS
TERMINATION AGREEMENT AND GENERAL RELEASE (the “Agreement”) is executed
on this 26th day of August, 2003 by and between INVESTools, Inc., a
Delaware corporation (the “Company”) and Ross Jardine (“Employee”).

 

WHEREAS, the
Company and Employee have entered into that certain Amended and Restated
Employment Agreement effective as of August 30, 2002 (the “Employment
Agreement”); and

 

WHEREAS,
Employee and the Company mutually desire to terminate their relationship on an
amicable basis; and

 

WHEREAS, to
accommodate this request, the Company and Employee now desire to terminate the
Employment Agreement in order that each of them can be released and forever
discharged from further performance thereunder.

 

NOW,
THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.                                       Termination
of Employment Agreement.  Except as
otherwise provided herein, the Company and Employee each hereby agree that the
Employment Agreement shall be terminated as of the date hereof and neither
shall thereafter have any liabilities, rights, duties or obligations to the
other party under or in connection with the Employment Agreement, including
with respect to any provisions of such Employment Agreement which purport to
survive such termination.  In connection
therewith, the Company and Employee hereby waive any rights to prior
notification of termination of the Employment Agreement as set forth in the
Employment Agreement or otherwise.  The
parties acknowledge and agree that, as of the date hereof, the Employment
Agreement shall be null and void and of no further force or effect.

 

2.                                       Resignation
of Offices.  Employee hereby resigns
from all positions he may hold as an officer, director or manager of the
Company and any subsidiaries of the Company.

 

3.                                       Severance
Benefits.

 

a.                                       Employee
has been offered and agrees to accept from the Company severance pay equal to
the total gross amount of $270,850, of which (i) $50,000 (representing the
quarterly bonus payments referenced in the Employment Agreement) and (ii)
$2,100 (representing unpaid club membership payments referenced in the
Employment Agreement) shall be payable on the date hereof, and the remaining
$218,750 less withholdings, representing 10.5 months salary, shall be paid in
accordance with the Company’s regular payroll schedule beginning August 1,
2003.  Employee understands and agrees
that this severance pay is not otherwise due Employee.

 

 

b.                                      Employee
will be given COBRA notification regarding insurance benefits provided to
employees of the Company.  The Company
will be responsible for the COBRA continuation coverage premium until June 15,
2004.

 

c.                                       From
September 1, 2003 until June 15, 2004, the Company shall pay Employee  $300 per month for social or country club
membership dues.

 

d.                                      All
stock options granted to Employee by the Company shall lapse on the date
hereof; provided, however, that the
Company shall pay to Employee, in immediately available funds, an amount equal
to the difference between (i) the exercise price of the stock options granted
to Employee by the Company which have vested and are in-the-money as of the
date hereof and (ii) the closing bid price per share of the Company’s common
stock on the date hereof, multiplied by the number of shares of such vested
stock options.

 

e.                                       From
the date hereof until June 15, 2004 (the “Severance Period”), Employee
shall have access to the InvestorToolbox website without payment.

 

f.                                         The
Company hereby agrees to sell for $1.00, and Employee hereby agrees to purchase
for $1.00, certain of the furniture and equipment, including certain video
backdrops and sets, of the Company pursuant to a Bill of Sale mutually
satisfactory to the parties thereto.

 

4.                                       Right
of First Refusal.  From the date
hereof until the earlier of (i) June 15, 2004 or (ii) a Change of Control (as
defined below), if Employee desires to sell more than 10,000 shares of Company
common stock in any one month, Employee shall irrevocably offer (in a written
instrument delivered to the Company) to sell such shares of his Company common
stock registered in Employee’s name to the Company for the price and on the
terms specified on Exhibit A attached hereto.  The Company shall accept such offer within 24 hours of the actual
receipt of such offer and consummate such transaction within 3 business days
after acceptance of such offer.  If the
Company does not so elect to purchase all, or any portion, of such shares of
stock, the right to purchase such stock pursuant to such offer shall terminate
and Employee may sell such shares in the open market.  Any sale pursuant to this Section 4 shall take place at
the principal corporate office of the Company. 
At the closing of such sale, Employee shall assign and deliver the
certificates representing such stock (duly endorsed for transfer and free of
any liens or encumbrances whatsoever) to the Company, and the Company shall
deliver to Employee in certified funds the full consideration therefor as
specified hereunder.  Any stock transfer
or similar taxes involved in such sale shall be paid by Employee, and Employee
shall provide the Company with such evidence of the Employee’s authority to
sell hereunder and such tax lien waivers and similar instruments as the Company
may reasonably request.  Notwithstanding
anything to the contrary herein, the Company’s right of first refusal set forth
in this Section 4 shall not apply to gifts or charitable donations of Employee’s
shares of Company common stock.  During
the period set forth in this Section 4, Employee agrees to provide
notice to the Company of a sale by Employee of 10,000 shares or less of Company
common stock within three business days of such sale.

 

For the
purposes of this Section 4, “Change of Control” means the
happening of any of the following events:

 

2

 

(i)                                     The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”),
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of either (A) the then outstanding
shares of common stock of the Company or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors; provided, however, that the following
acquisitions shall not constitute a Change of Control under this subsection
(i): (x) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (y) any
acquisition by the Company, or (z) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or

 

(ii)                                  Individuals who, as of the effective date
hereof, constitute the Board of Directors (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the effective
date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or

 

(iii)                               Approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company or the sale or
other disposition of all or substantially all of the assets of the Company.

 

5.                                       Release
by Employee.  In consideration for
the Company’s payment of the severance pay and the Company’s payments of the
COBRA continuation coverage premium on behalf of Employee, Employee voluntarily
and knowingly waives, releases, and discharges the Company, its parent,
predecessors, successors, subsidiaries, affiliates, employees, officers,
directors, owners, agents and assigns from all claims, liabilities, demands,
and causes of action, known or unknown, fixed or contingent, which Employee may
have or claim to have against any of them as a result of Employee’s employment and/or
termination from employment and/or as a result of any other matter arising
through the date of Employee’s signature on this Agreement.  Employee agrees not to file a lawsuit to
assert any such claims or to seek damages through an administrative claim for
any such claims.  This waiver, release and discharge includes,
but is not limited to: (1) claims arising under federal, state, or local laws
regarding employment or prohibiting employment discrimination such as, without
limitation, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the
Age Discrimination in Employment Act, the Older Workers’ Benefit Protection
Act, the National Labor Relations Act, Section 1981 of the Civil Rights Act of
1866, the Americans with Disabilities Act, the Fair Labor Standards Act, the
Family and Medical Leave Act, Utah Antidiscrimination Act; (2) claims for
breach of contract, including the 

 

3

 

Employment
Agreement; (3) claims for personal injury, harm, or other damages (whether
intentional or unintentional including, without limitation, negligence,
defamation, misrepresentation, fraud, intentional infliction of emotional
distress, assault, battery, invasion of privacy, and other such claims); (4)
claims growing out of any legal restrictions on the Company’s right to
terminate its employees; (5) claims for wages or any other compensation; or (6)
claims for benefits including, without limitation, those arising under the
Employee Retirement Income Security Act.

 

6.                                       Release
by the Company.  In consideration for Employee’s promises
herein, the Company, its parent, predecessors, successors, subsidiaries,
affiliates, employees, officers, directors, owners, agents and assigns voluntarily and knowingly waive, release,
and discharge the Employee, its agents, representatives, heirs, and assigns
from all claims, liabilities, demands, and causes of action, known or unknown,
fixed or contingent, which the Company may have or claim to have against
Employee as a result of the Company’s employment of Employee and/or as a result
of any other matter arising through the date of the Company’s signature on this
Agreement.  The Company agrees not to
file a lawsuit or an administrative claim to assert any such released
claims.  This waiver, release and
discharge includes, but is not limited to: (1) claims arising under federal,
state, or local laws regarding employment or termination of employment, (2)
claims for breach of contract, and (3) claims for personal injury, harm, or
other damages (whether intentional or unintentional including, without
limitation, negligence, defamation, misrepresentation, fraud, tortious
interference with contracts or business relationships, intentional infliction
of emotional distress, assault, battery, invasion of privacy, and other such
claims).  Notwithstanding anything to
the contrary in this Section 6, this Section 6 shall not apply to any claims, liabilities, demands, and causes of
action, known or unknown, fixed or contingent, which the Company may
have or claim to have against Employee as a result of Employee’s breach of his
obligations under this Agreement.

 

7.                                       Confidential
Information.

 

a.                                       Employee
acknowledges that the Company’s business is highly competitive and that the
Company’s books, records and documents, technical information concerning its
products, equipment, services and processes, procurement procedures and pricing
techniques and the names of and other information (e.g., credit and financial
data) concerning the Company’s customers and business associates all comprise
confidential business information and trade secrets of the Company
(collectively, “Confidential Information”) which are valuable,
special, and unique assets of the Company which the Company uses in its
business to obtain a competitive advantage over the Company’s competitors which
do not know or use this information. Employee further acknowledges that he has
had access to such Confidential Information and that protection of the
Confidential Information against unauthorized disclosure and use is of critical
importance to the Company in maintaining its competitive position. Accordingly,
Employee hereby agrees that in further consideration for the severance pay
disclosed above, he will not, at any time, make any unauthorized disclosure of
any Confidential Information or make any use thereof, except for the benefit
of, and on behalf of, the Company. For the purposes of this Section 7,
the term “Company” shall also include affiliates of the Company.

 

4

 

b.                                      Employee
acknowledges that, as a result of his employment by the Company, he has had
access to, or knowledge of, confidential business information or trade secrets
of third parties, such as customers, suppliers, partners, joint venturers, and
the like, of the Company. Employee agrees to preserve and protect the
confidentiality of such third-party confidential information and trade secrets
to the same extent, and on the same basis, as the Confidential Information.

 

c.                                       All
written materials, records and other documents that were made by, or came into
the possession of, Employee during the period of his employment by the Company
which contain or disclose the Confidential Information are and remain the
property of the Company.  Employee
agrees that he will immediately return to the Company the same, and all copies,
derivatives and extracts thereof.

 

None of the
foregoing in this Section 7 shall prohibit Employee’s continued
participation in those activities specifically described on Exhibit B
attached hereto; provided, however, that Employee shall not target directly the
customer list of the Company or make use of the Company’s business trade
secrets.  The Company’s business trade
secrets shall not include the Company’s processes and systems, logistics
planning and scheduling, sales processes, lead generation activities,
fulfillment processes and vendors.

 

8.                                       Inventions and Discoveries.  Employee hereby assigns to the Company all
of his interest in any and ideas, conceptions, inventions, improvements, and
discoveries, whether patentable or not, which were conceived or made by
Employee, solely or jointly with another, during the period of his employment
by the Company and which are related to the business or activities of the
Company.  Employee acknowledges that all
such ideas, conceptions, inventions improvements and discoveries are the sole
property of the Company and that Employee has no rights in the same.  Employee agrees that, whenever requested to
do so by the Company, he shall assist in the preparation of any document that
the Company shall deem necessary and shall execute any and all applications,
assignments or other instruments that the Company shall deem necessary, in its
sole discretion, to apply for and obtain protection, including patent protection,
for such ideas, conceptions, inventions, improvements and discoveries in all
countries of the world.

 

9.                                       Copyrights. 
Employee acknowledges that any original work of authorship (each, a “Work”)
fixed in any tangible medium of expression which was the subject matter of
copyright (e.g., written presentations, computer
programs, videotapes, drawings, maps, models, manuals or brochures) relating to
the Company’s business, products, or services, whether a Work was created
solely by Employee or jointly with others, the Company shall be deemed the
author of a Work if the Work was prepared by Employee in the scope of his
employment; or, if the Work was not prepared by Employee within the scope of
his employment but was specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation or as an instructional
text, then the Work shall be considered to be a work made for hire and the Company
shall be deemed the author of the Work. 
In the event a Work was not prepared by Employee within the scope of his
employment or was not a Work specially ordered and deemed to be a work made for
hire, then Employee hereby assigns to the Company all of Employee’s worldwide
right, title and interest in and to such Work and all rights of copyright
therein.  

 

5

 

Employee
acknowledges that all Work is the property of the Company and Employee has no
rights in the same.  Employee agrees to
assist the Company and its nominee, at any time, in the protection of the
Company’s worldwide right, title and interest in and to the Work and all rights
of copyright therein, including but not limited to, the execution of all formal
assignment documents requested by the Company or its nominee and the execution
of all lawful oaths and applications for registration of copyright in the
United States and foreign countries.

 

10.                                 Confidentiality.  Employee understands and agrees not to
discuss any of the terms of this Agreement with any person or entity except for
Employee’s spouse, attorney, tax advisor, and government tax authorities or
except as required by law. 
Notwithstanding anything set forth in this Agreement to the contrary or
any other agreement to which Employee or the Company is bound, Employee and the
Company are expressly authorized to disclose the “tax treatment” and “tax
structure” (as those terms are defined in Treasury Regulations Sections
1.6011-4(c)(8) and (9), respectively) of the transactions contemplated by this
Agreement; provided, however,
that the foregoing authorization shall apply only to the extent necessary such
that the transactions contemplated by this Agreement will not constitute a
“confidential transaction” within the meaning of Treasury Regulations Sections
1.6011-4(b)(3).

 

11.                                 Non-Competition.

 

During the
Severance Period, Employee will not directly or indirectly, for himself or for
others, in any state of the United States, or in any foreign country where the
Company or any of its affiliates is then conducting any business:

 

a.                                       engage
in any business that is directly competitive with activities conducted by the
Company (or any of the Company’s subsidiaries or divisions), which activities
conducted by the Company (or any of the Company’s subsidiaries or divisions)
represent in the aggregate greater than 25% of the Company’s proforma
consolidated revenues in 2001;

 

b.                                      render
advice or services to, or otherwise assist, any other person or entity who is engaged,
directly or indirectly, in any business that is directly competitive with
activities conducted by the Company (or any of the Company’s subsidiaries or
divisions), which activities conducted by the Company (or any of the Company’s
subsidiaries or divisions) represent in the aggregate greater than 25% of the
Company’s proforma consolidated revenues in 2001; or

 

c.                                       transact any business in any manner
pertaining to suppliers or customers of the Company or any affiliate which, in
any manner, would have, or is likely to have, an adverse effect upon the
Company or any affiliate.

 

None of the
foregoing in this Section 11 shall prohibit Employee’s continued
participation in those activities specifically described on Exhibit B
attached hereto.

 

12.                                 Non-Solicitation
and Non-Disparagement.  Employee
agrees that in further consideration for the severance pay described above,
during the Severance Period, Employee shall not, on his own behalf or on behalf
of any other person, partnership, entity, association, or corporation, hire or
seek to hire any non-clerical or non-secretarial employee of the Company or in
any other manner attempt directly or indirectly to influence, induce, or
encourage any non-clerical 

 

6

 

or non-secretarial employee of
the Company to leave the employment of the Company, nor shall he use or
disclose to any person, partnership, entity, association, or corporation any
information concerning the names, addresses or personal telephone numbers of any
employees of the Company.  Employee
further agrees that he will not, at any time, disparage the Company or
interfere with the Company’s operations, products, employees, officers or
directors.  For the purposes of this Section
12, the term “Company” shall also include affiliates of the Company.

 

13.                                 Use
of Name and Image.  After the
Severance Period, the Company agrees that it shall not use in any manner
whatsoever Employee’s name or image in any of its marketing, sales, educational
or instructional materials, or in any other manner to benefit the Company.   After the Severance Period, Employee agrees
that he shall not use in any manner whatsoever the Company’s name or image
(except to the extent reflected in biographical information) in any of his
marketing, sales, educational or instructional materials, or in any other
manner to benefit Employee.

 

14.                                 Remedies
and Notice of Legal Action.

 

a.                                       Employee
and Company acknowledge that damages are an inadequate remedy of law for the
breach of certain terms hereof and, accordingly, Company and Employee are
hereby granted and shall have the right of injunction (any requirements for
posting of bonds for injunction being hereby expressly waived) and such other
and further relief, both in law and in equity, that Company or Employee may be
entitled to receive under the laws of the State of Utah, in the event Employee
or Company breaches or threatens to breach any of the covenants or agreements
contained herein.

 

b.                                      Employee
and Company agree that prior to instituting any legal action to enforce or
obtain relief for the breach of this Agreement, each of them will provide to
the other party notice of any breach of this Agreement.  So long as following receipt of any such
notice the breaching party immediately ceases any ongoing breach of this
Agreement and immediately commences its efforts to cure any past breach, the
aggrieved party shall refrain from instituting legal action to enforce or
obtain relief for the breach of this Agreement until the expiration of a
reasonable cure period (as determined in good faith by the aggrieved party but
in no event in excess of 10 days) within which the breaching party may attempt
to cure any breach.

 

15.                                 Indemnification.

 

a.                                       The
Company shall indemnify and hold harmless the Employee in respect of acts or
omissions occurring prior to the date hereof to the extent provided under the
Company’s restated certificate of incorporation and bylaws in effect on the
date hereof, including the prompt payment of expenses incurred by Employee.  The Company shall provide officers’ and
directors’ liability insurance in respect of acts or omissions occurring prior
to the date hereof covering Employee on terms and with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof.

 

b.                                      Any
indemnification under Section 15(a) (unless ordered by a court) shall be
made by the Company only as authorized in the specific case upon a
determination that 

 

7

 

indemnification of Employee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Article VIII of the Company’s restated certificate of
incorporation.  Such determination shall
be made by independent legal counsel as directed by the Board of Directors in a
written opinion.

 

16.                                 Acknowledgement.

 

Employee
acknowledges the following:  that this
Agreement is written in a manner calculated to be understood by Employee and
that Employee in fact understands the terms, conditions and effect of this
Agreement; this Agreement refers to rights or claims arising under the Age
Discrimination in Employment Act and Older Workers Benefit Protection Act;
Employee does not waive rights or claims that may arise after the date this
Agreement is executed; Employee waives rights or claims only in exchange for
consideration in addition to anything of value to which Employee is already
entitled; Employee is advised in writing to consult with an attorney prior to
executing the Agreement;  Employee has
twenty-one (21) days in which to consider this Agreement before accepting it,
but need not take that long if the Employee does not wish; this Agreement
allows a period of at least seven (7) days following execution of the Agreement
in which Employee may revoke the Agreement by giving the Company written notice
and returning any and all payments made by the Company to Employee pursuant to
this Agreement; and Employee fully understands all of the terms of this waiver
agreement and knowingly and voluntarily enters into this Agreement.

 

Employee
understands this Agreement is not and shall not be deemed or construed to be an
admission by the Company of any wrongdoing of any kind or of any breach of any
contract, obligation, policy, or procedure of any kind or nature.

 

17.                                 Entire
Agreement and Modification. 
Employee has carefully read and fully understands all of the terms of
this Agreement.  Employee agrees that
this Agreement sets forth the entire agreement between the Company and
Employee.  Employee acknowledges that Employee
has not relied upon any representations or statements, written or oral, not set
forth in this Agreement.  This Agreement
cannot be modified except in writing and signed by both parties.

 

18.                                 Severability. 
If a court of competent jurisdiction determines that any provision of
this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.

 

19.                                 Applicable Law, Jurisdiction and Venue.  This Agreement is entered into under, and
shall be governed for all purposes by, the laws of the State of Utah. Any suit
by the Company to enforce any right hereunder or to obtain a declaration of any
right or obligation hereunder may, at the sole option of the Company, be
brought (i) in any court of competent jurisdiction in the State of Utah or
(ii) in any court of competent jurisdiction where jurisdiction may be had
over Employee. Employee hereby expressly consents to the jurisdiction of the
foregoing courts for such purposes and to the appointment of the Secretary of
State for the State of Utah as his agent for service of process.

 

8

 

20.                                 Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.

 

21.                                 Withholding of
Taxes.  The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

 

22.                                 Headings. 
The paragraph headings have been inserted for purposes of convenience
and shall not be used for interpretive purposes.

 

23.                                 Affiliate. 
As used in this Agreement, “affiliate” shall mean any person or entity
which directly or indirectly through one or more intermediaries owns or
controls, is owned or controlled by, or is under common ownership or control
with, the Company.

 

24.                                 Assignment. 
This Agreement, and the rights and obligations of the parties hereunder,
are personal and neither this Agreement, nor any right, benefit or obligation
of either party hereto, shall be subject to voluntary or involuntary
assignment, alienation or transfer, whether by operation of law or otherwise,
without the prior written consent of the other party except that vested rights
to payment shall be subject to devise, and shall descend in accordance with applicable
laws of inheritance.

 

9

 

AGREED AND
ACCEPTED on this 26th day of August, 2003.

 

 

	
   

  	
  /s/ Ross
  Jardine

  	
   

  
	
   

  	
  Ross Jardine

  

 

 

AGREED AND
ACCEPTED on this 26th day of August, 2003.

 

	
   

  	
  INVESTools,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lee K.
  Barba

  	
   

  
	
   

  	
  Name:

  	
  Lee K. Barba

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
						

 

10

 

EXHIBIT A

 

Shares of Company common stock
sold by Employee to the Company in accordance with the terms of the Termination
Agreement and General Release shall be sold for a purchase price to be
determined as follows:

 

a.                                       In
the event of a sale of 10,001 to 99,999 shares of Company common stock, the
price per share shall be the closing sale price of Company common stock as reported
by the OTC Bulletin Board on the date such offer is made.

 

b.                                      In
the event of a sale of 100,000 or more shares of Company common stock, the
price per share shall be $.03 below the closing sale price of Company common
stock as reported by the OTC Bulletin Board on the date such offer is made.

 

11

 

EXHIBIT B

 

Auctionadvisor will be a seminar, workshop,
and self-directed learning education provider whose purpose will be to teach
people how to make money by participating in and/or operating online auctions,
either part time or full time, with the end goal of the customer turning the
skills learned in the education process into a part time or full time business.

 

Auctionadvisor will not, directly or
indirectly, provide seminars, workshops or self directed learning for stock
market investor education or stock market investment education.

 

Auctionadvisor will not maintain hot links on
its website to INVESTools’ website or the websites of INVESTools’ investment partners.

 

12Exhibit
4.1

 

EIGHTH AMENDMENT
TO CREDIT AGREEMENT AND WAIVER

 

This EIGHTH AMENDMENT TO
CREDIT AGREEMENT AND WAIVER dated as of November  14, 2003 (this “Amendment”),
is made by and among Alternative Resources Corporation (“ARC”), ARC
Service, Inc., ARC Solutions, Inc., ARC Midholding, Inc., Writers Inc., ARC
Technology Management LLC, ARC Staffing Management LLC, and ARC Shared Services
LLC (collectively, the “Borrowers”), and Fleet Capital Corporation (the
“Lender”).

 

WHEREAS, the Borrowers
and the Lender are parties to a Credit and Security Agreement dated as of
January 31, 2002, as amended by a First Amendment to Credit Agreement and
Waiver dated as of August 8, 2001, a Second Amendment to Credit Agreement dated
as of August 30, 2002, a Third Amendment to Credit Agreement dated as of
November 14, 2002, a Waiver, Joinder and Fourth Amendment to Credit Agreement
dated as of December 27, 2002, a Fifth Amendment to Credit Agreement and Waiver
dated as of April 14, 2003, a Sixth Amendment to Credit Agreement dated as of
July 15, 2003, and a Seventh Amendment to Credit Agreement and Waiver dated as
of August 14, 2003 (as so amended, the “Credit Agreement”);

 

WHEREAS, ARC and its
Subsidiaries failed to satisfy (a) the Tangible Capital Base covenant set forth
in Section 8.10(a) of the Credit Agreement for the fiscal quarter ended
September 30, 2003 and (b) the Fixed Charge coverage shortfall covenant set
forth in Section 8.10(c) for the nine month fiscal period ended September 30,
2003, and each such failure constitutes an Event of Default under Section
9.1(c) of the Credit Agreement (collectively, the “September 30, 2003 Events
of Default”);

 

WHEREAS, the Credit
Parties have requested that the Lender waive the September 30, 2003 Events of
Default as provided herein, and amend certain provisions of the Credit
Agreement; and

 

WHEREAS, the Lender has
agreed to waive the September 30, 2003 Events of Default and to amend certain
provisions of the Credit Agreement, all subject to the terms, conditions and
limitations set forth herein;

 

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

 

1.             Capitalized Terms.

 

Capitalized terms used
herein which are defined in the Credit Agreement have the same meanings herein
as therein, except to the extent that such meanings are amended hereby.

 

2.             Waiver of
September 30, 2003 Events of Default.

 

Subject to the
satisfaction of the terms and conditions set forth in Section 5 hereof, the
Lender hereby waives the September 30, 2003 Events of Default.  The parties agree that the foregoing waiver
is limited solely to the Events of Default arising out of the failure of ARC
and its Subsidiaries to satisfy (a) the Tangible Capital Base covenant set
forth in Section 8.10(a) of the Credit Agreement for the fiscal quarter ended
September 30, 2003 and (b) the Fixed Charge coverage shortfall covenant set
forth in Section 8.10(c) for the nine month fiscal period ending September 30,
2003, and nothing herein shall be construed as a waiver of any other presently
existing or future Event of Default (including without limitation, any Event of
Default caused by reason of the failure of the Borrowers to comply with Section
8.10(a) or Section 8.10(c) of the Credit Agreement, as amended hereby, on any
other occasion or for any

 

 

other period) or any
failure of the Borrowers to comply with any other provision, term or condition
of the Loan Documents.

 

3.             Amendments.

 

Subject to the
satisfaction of the terms and conditions set forth in Section 5 hereof, the
Borrowers and the Lender agree that the Credit Agreement is hereby amended,
effective as of the date hereof, as follows:

 

(a)           Amendments
to Section 1.1 of the Credit Agreement.  Section 1.1 of the Credit Agreement is hereby amended as follows:

 

(i)            The definition of “Borrowing Base” set forth in
Section 1.1 of the Credit Agreement is hereby amended by replacing clause (c)
contained therein in its entirety with the following new clause (c):

 

“(c)         the lesser of:

 

(i)            70% of the aggregate
of (x) Billed Restricted Product   Line
Accounts and (y) Unbilled Restricted Product Line      Accounts, and

 

(ii)           $3,000,000, minus”

 

(ii)           The definition of “Initial Overadvance Limit” set
forth in Section 1.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

 

“‘Initial Overadvance
Limit’ means $2,000,000.”

 

(iii)          The definition of “LC Sublimit” set
forth in Section 1.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

 

“LC Sublimit” means
a sublimit of Revolving Credit Commitment available for the issuance of Letters
of Credit for the account of the Borrowers in an aggregate maximum amount
available to be drawn equal to (a) $2,100,000, during the period from November
14, 2003 through January 15, 2004, and (b) $2,000,000 at all other times.

 

(iv)          The definition of “Overadvance Termination Date” set
forth in Section 1.1 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:

 

“‘Overadvance
Termination Date’ means March 31, 2004, or such later date as the Lender
may agree in writing.”

 

(b)           Amendment to
Section 8.10 of the Credit Agreement.  Section 8.10 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

“8.10       Certain Financial Covenants.

 

(a)           Tangible Capital
Base.  ARC and its Subsidiaries
shall not (i) as of December 31, 2003, have a consolidated Tangible Capital
Base of less than ($8,500,000) or (ii) as of the end of any fiscal quarter
commencing with the fiscal quarter ending March 31, 2004, have a consolidated
Tangible Capital Base of less than the sum of (x) ($8,500,000) plus (y)
on a cumulative basis, 50% of positive consolidated net income (without
reduction for losses) for each fiscal quarter ending after December 31, 2003.

 

(b)           Fixed Charge
Coverage Ratio.  The Fixed Charge
Coverage Ratio of ARC and its Subsidiaries shall not at any time during any
period set forth below be less than the ratio set opposite such period:

 

2

 

	
  Period

  	
   

  	
  Minimum
  Fixed

  Charge Coverage

  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July
  1, 2004 through September 30, 2004

  	
   

  	
  1.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July
  1, 2004 through December 31, 2004

  	
   

  	
  1.00 to 1.00

  	
   

  

 

(c)           Fixed Charge
Coverage Shortfall.  The amount by
which (i) the aggregate Fixed Charges of ARC and its Subsidiaries for each
fiscal period set forth below, exceeds (ii) the total of (A) consolidated
EBITDA of ARC and its Subsidiaries for such period (determined on a
consolidated basis without duplication in accordance with GAAP) minus
(B) the aggregate amount of all Non-Financed Capital Expenditures during such
period minus (C) the aggregate amount paid, or required to be paid
(without duplication), in cash in respect of the current portion of all income
taxes for such period minus (D) the aggregate amount of dividends and
distributions permitted to be paid under Section 8.6 and actually paid in cash
during such period, shall not be greater than the maximum shortfall amount set
opposite such fiscal period:

 

	
  Fiscal Period

  	
   

  	
  Maximum
  Shortfall

  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  October
  1, 2003 through December 31, 2003

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  October
  1, 2003 through March 31, 2004

  	
   

  	
  $

  	
  1,801,000

  	
   

  
	
  October
  1, 2003 through June 30, 2004

  	
   

  	
  $

  	
  1,867,000

  	
   

  

 

(d)           Capital Expenditures.  The Credit Parties shall not make any
Capital Expenditures (including, without limitation, incurring any Capital
Lease Obligations) which, in the aggregate exceed $50,000 at any time during
any fiscal quarter, commencing with the fiscal quarter ending December 31,
2003.”

 

(c)           Amendment of
Exhibit D to the Credit Agreement. 
Exhibit D to the Credit Agreement is hereby replaced with the new form
of Exhibit D attached thereto.

 

4.             No Default;
Representations and Warranties, etc.

 

The
Borrowers hereby represent, warrant and confirm that: (a) the representations
and warranties of the Credit Parties contained in Article 5 of the Credit
Agreement are true and correct on and as of the date hereof as if made on such
date (except to the extent that such representations and warranties expressly
relate to an earlier date); (b) after giving effect to this Amendment, the
Borrowers are in compliance with all of the terms and provisions set forth in
the Credit Agreement and the other Loan Documents; (c) after giving effect to
this Amendment, no Default has occurred and is continuing; and (d) the
execution, delivery and performance by the Borrowers of this Amendment (i) have
been duly authorized by all necessary action on the part of the Borrowers, (ii)
will not violate any applicable law or regulation or the organizational
documents of any Borrower, (iii) will not violate or result in a default

 

3

 

under any indenture,
agreement or other instrument binding on any Borrower or any of its assets,
including without limitation, any Subordinated Debt Document, and (iv) do not
require any consent, waiver or approval of or by any Person (other than the
Lender) which has not been obtained. 
The Borrowers hereby acknowledge that pursuant to the terms of the Fifth
Amendment to the Credit Agreement, and notwithstanding anything to the contrary
set forth in the Credit Agreement, the Borrowers have no right to request or
continue Loans as Eurodollar Loans.

 

5.             Conditions to
Effectiveness.

 

The effectiveness of this Amendment shall be subject
to the satisfaction of the following conditions precedent:

 

(a)           The
Lender shall have received counterparts of this Amendment duly executed by each
of the Borrowers;

 

(b)           The
Lender shall have received a Certificate of the Secretary of ARC, certifying
that this Amendment has been duly authorized by the Boards of Directors of ARC
and each of its Subsidiaries;

 

(c)           The
Borrowers shall have delivered to the Lender evidence that Wynnchurch has
executed and delivered to the Borrowers a written amendment and waiver with
respect to the Subordinated Debt Documents in form and substance reasonably
acceptable to the Lender, pursuant to which Wynnchurch shall have waived all
existing defaults of the Borrowers under the Subordinated Debt Documents and amended
the financial covenant provisions of the Subordinated Debt Documents in a
manner consistent with the financial covenant amendments set forth in this
Amendment;

 

(d)           The
Borrowers and Wynnchurch shall have executed and delivered to the Lender an amendment
to the Wynnchurch Guaranty, in form and substance satisfactory to the Lender,
eliminating the automatic reduction of the amount of Overadvances guarantied
thereunder resulting from payments made in respect of accounts receivable owing
by Bluecurrent, and extending the term of the Wynnchurch Guaranty.

 

(e)           The
Lender shall have received from Wynnchurch a certificate pursuant to which
Wynnchurch shall have (i) ratified and confirmed its obligations under the
Wynnchurch Guaranty, (ii) made the representations and warranties contained in
the first sentence of Section 9(e) of the Wynnchurch Guaranty as of September
30, 2003, (iii) certified as to the continued veracity of the representations
and warranties contained in Section 9 of the Wynnchurch Guaranty, other than
those representations and warranties contained in the first sentence of Section
9(e) of the Wynnchurch Guaranty, and (iv) shall have confirmed Wynnchurch’s
compliance with Section 11 of the Wynnchurch Guaranty;

 

(f)            The
Lender shall have received a written acknowledgement from Wynnchurch with
respect to the existence of the September 30, 2003 Events of Default and the
modifications to the Credit Agreement contemplated by this Amendment; and

 

(g)           The
Lender shall have received from the Borrowers, an amendment fee in an amount
equal to $50,000.

 

6.             Miscellaneous.

 

(a)           Except
as specifically amended hereby, all of the terms and provisions of the Credit
Agreement, the other Loan Documents and all related documents, shall remain in
full force and effect.  Nothing
contained herein shall constitute a waiver of any provision of the Credit
Agreement or the other

 

4

 

Loan Documents,
except for the waiver of the September 30, 2003 Events of Default expressly set
forth herein.

 

(b)           This
Amendment may be executed in any number of counterparts, each of which, when
executed and delivered, shall be an original, but all counterparts shall
together constitute one instrument. 
Delivery of an executed signature page hereto by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.

 

(c)           This
Amendment shall be governed by the laws of The Commonwealth of Massachusetts
and shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.

 

(d)           The
Borrowers shall reimburse the Lender for all reasonable costs and expenses,
including reasonable legal fees and disbursements, incurred by the Lender in
connection with this Amendment and the transactions contemplated hereby.

 

[Remainder of Page
Left Intentionally Blank]

 

5

 

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

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  ALTERNATIVE RESOURCES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Steven Purcell

  	
   

  
	
   

  	
  Name: Steven Purcell

  
	
   

  	
  Title: CFO

  
	
   

  	
   

  
	
   

  	
  ARC SERVICE, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Steven Purcell

  	
   

  
	
   

  	
  Name: Steven
  Purcell

  
	
   

  	
  Title:CFO

  
	
   

  	
   

  
	
   

  	
  ARC SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Steven Purcell

  	
   

  
	
   

  	
  Name: Steven
  Purcell

  
	
   

  	
  Title: CFO

  
	
   

  	
   

  
	
   

  	
  ARC MIDHOLDING, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Steven Purcell

  	
   

  
	
   

  	
  Name: Steven
  Purcell

  
	
   

  	
  Title: CFO

  
	
   

  	
   

  
	
   

  	
  WRITERS INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Steven Purcell

  	
   

  
	
   

  	
  Name: Steven
  Purcell

  
	
   

  	
  Title:CFO

  
					

 

 

	
   

  	
  ARC TECHNOLOGY
  MANAGEMENT LLC

  
	
   

  	
   

  
	
   

  	
  By:  ARC SERVICE, INC., its Manager and sole
  member

  
	
   

  	
   

  
	
   

  	
  By:  

  	
   /s/ Marino Petropaulos

  	
   

  
	
   

  	
  Name: Marino
  Petropaulos

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
  ARC STAFFING MANAGEMENT
  LLC

  
	
   

  	
   

  
	
   

  	
  By:  ARC SERVICE, INC., its Manager and sole
  member

  
	
   

  	
   

  
	
   

  	
  By:  

  	
   /s/ Marino Petropaulos

  	
   

  
	
   

  	
  Name: Marino
  Petropaulos

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
  ARC SHARED SERVICES LLC

  
	
   

  	
   

  
	
   

  	
  By:  ARC SERVICE, INC., its Manager and sole
  member

  
	
   

  	
   

  
	
   

  	
  By:  

  	
   /s/ Marino Petropaulos

  	
   

  
	
   

  	
  Name: Marino
  Petropaulos

  
	
   

  	
  Title: Treasurer

  

 

 

	
   

  	
  LENDER

  
	
   

  	
   

  
	
   

  	
  FLEET CAPITAL
  CORPORATION, as Lender

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Christopher Godfrey

  	
   

  
	
   

  	
  Name: Christopher
  Godfrey

  
	
   

  	
  Title: Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ISSUING LENDER

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK, as
  Issuing Lender

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Christopher Godfrey

  	
   

  
	
   

  	
  Name: Christopher
  Godfrey

  
	
   

  	
  Title: Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CASH MANAGEMENT BANK

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK, as
  Cash Management Bank

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Christopher Godfrey

  	
   

  
	
   

  	
  Name: Christopher
  Godfrey

  
	
   

  	
  Title: Senior Vice
  President

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