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EXHIBIT 4.5
The following information is provided pursuant to Treas. Reg. 1.1275-3.
This draft instrument is issued with original issue discount. Steven
Purcell as representative of the issuer will make available upon request
to the holder(s) of this debt instrument the following information:
issue price, amount of original issue discount, issue date, and yield to
maturity.
THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES
LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
This Note is subject to an Intercreditor and Subordination Agreement
dated as of January 31, 2002 among Wynnchurch Capital Partners, L.P.,
Wynnchurch Capital Partners Canada, L.P., Alternative Resources
Corporation, ARC Service, Inc., ARC Solutions, Inc., ARC Midholding,
Inc., Writers, Inc. and Fleet Capital Corporation (the "SUBORDINATION
AGREEMENT"), a copy of which is available from Alternative Resources
Corporation which, among other things, subordinates the makers's
obligations to the payee to the maker's obligations to the holders of
Senior Obligations as defined in said Agreement. By the receipt hereof,
the holder of this Note agrees to be bound by the terms of the
Subordination Agreement as if it were a party thereto.
SENIOR SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE
Chicago, Illinois
$5,079,792 January 31, 2002
FOR VALUE RECEIVED, Alternative Resources Corporation, a Delaware
corporation, (hereinafter called the "COMPANY"), hereby promises to pay in
lawful currency of the United States of America to the order of Wynnchurch
Capital Partners Canada, L.P. or its registered assigns or transferees of all or
any portion hereof (each a "HOLDER") at 150 Field Drive, Suite 165, Lake Forest,
Illinois, 60045, or at such other location as any Holder shall direct as to
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payment to be received by such Holder, the aggregate principal amount of Five
Million Seventy Nine Thousand Seven Hundred Ninety Two Dollars ($5,079,792.00)
on January 31, 2009 (the "SCHEDULED MATURITY DATE"). This Senior Subordinated
Secured Promissory Note ("NOTE") is issued and delivered by the Company pursuant
to a Securities Purchase Agreement of the Company of even date herewith (the
"SECURITIES PURCHASE AGREEMENT") and the Holder is subject to the terms of and
entitled to the benefits thereunder. Capitalized terms used but not defined
herein shall have the meanings set forth in the Securities Purchase Agreement.
This Note is one of several notes issued by the Company pursuant to the
Securities Purchase Agreement on substantially same terms and conditions set
forth herein (all such notes, including the Note, the "NOTES" and the holders of
the Notes from time to time, including the Holder, the "HOLDERS").
Subject to the following sentence and the following paragraph, the
unpaid principal amount from time to time outstanding (including any Deferred
Components (as defined herein)) shall bear interest from the date of this Note
at the annual rate of 15% per annum (the "INTEREST RATE"), payable in arrears on
each April 30, July 31, October 31 and January 30 (unless such day is not a
business day, in which event on the next succeeding business day) (each, an
"INTEREST PAYMENT DATE") until payment in full of the principal amount, interest
and all other payment obligations arising hereunder have been fully paid.
Notwithstanding the prior sentence, with respect to interest due on the Notes on
Interest Payment Dates occurring on or prior to January 30, 2006 (the "DEFERRED
INTEREST PAYMENT DATES") the Company may, through written notice delivered to
each of the Holders at least fifteen (15) days prior to such Deferred Interest
Payment Date (which shall set forth the amount of the Deferred Component) and
subject to the following sentence, elect to capitalize up to one-half (1/2) the
amount of any interest payment due on such Deferred Interest Payment Date (the
"DEFERRED COMPONENT") in lieu of payment of the Deferred Component on the
Interest Payment Date, and the Deferred Component shall be deemed additional
principal with respect to this Note. The Company may only elect to take a
Deferred Component so long as (x) there are no past due amounts owed under this
Note and (y) the Company timely pays the entire remaining amount of interest
owed on such Deferred Interest Payment Date.
Past due amounts (including interest, to the extent permitted by law),
as well as this Note, so long as an Event of Default, (as defined herein) is
continuing, will also accrue interest at the lesser of (a) the Interest Rate
plus 3% per annum and (b) the maximum rate permitted by applicable law ("DEFAULT
INTEREST"), and will be payable on demand. So long as a Directors Violation has
occurred and is continuing, this Note will accrue interest at the Default
Interest rate. Interest on this Note will be calculated on the basis of a
360-day year. All payments under this Note shall be made by wire transfer of
immediately available funds in currency of the United States of America to such
accounts as the Holder shall hereafter give to the Company by written notice
made in accordance with the provisions of this Note.
All payments hereunder shall, except as required by applicable law, be
made without setoff, deduction or counterclaim, free and clear of all taxes
(other than taxes imposed on the net income of Holder or Holders or franchise
taxes), levies, imports, duties, fees and charges, and without any withholding,
restriction or conditions imposed by any governmental authority. If the Company
is required by law to deduct any such amounts from or in respect of any sum
payable hereunder to Holder, then the sum payable hereunder shall be increased
as may be necessary so
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that, after making all required deductions, Holder receives an amount equal to
the sum it would have received had no such deductions been made.
The indebtedness due under the Note is guaranteed and secured by the
Security Agreements (as defined in the Securities Purchase Agreement), subject,
however, to the terms and provisions of the Subordination Agreement.
ARTICLE I
PREPAYMENT
1.1 PREPAYMENT.
(a) OPTIONAL PREPAYMENT. The Company may prepay ("PREPAY" or
"PREPAYMENT") all or any portion (so long as at least $1,000,000 of the Notes
are Prepaid and, if the Notes are not Prepaid in full, at least $2,500,000 in
principal amount of the Notes remain outstanding following such Prepayment) of
the principal amount of the Notes at a Prepayment Amount (as defined below) at
any time following the second anniversary of the date of this Note for any
reason or no reason, if a Prepayment Notice has been delivered in accordance
with Section 1.2 and all of the other terms of this Article I are satisfied
(such Prepayment to be deemed an "OPTIONAL PREPAYMENT").
(b) PREPAYMENT IN CONNECTION WITH A MAJOR TRANSACTION. The
Company may Prepay all (but not less than all) of the outstanding principal
amount of the Notes at a Prepayment Amount (as defined below) at any time prior
to the second anniversary of the date of this Note, but only in connection with
the consummation of a Major Transaction (as defined herein), if a Prepayment
Notice has been delivered in accordance with Section 1.2, the Prepayment occurs
at or immediately prior to the consummation of the Major Transaction, and all of
the other terms of this Article I are satisfied (such Prepayment to be deemed a
"TRANSACTION PREPAYMENT").
(c) CALCULATION OF PREPAYMENT AMOUNT.
(i) In the case of an Optional Prepayment, the "PREPAYMENT
AMOUNT" shall be (x) the outstanding principal amount of the Notes
being Prepaid by the Company, subject to the provisions of Section
1.2(a), plus (y) all accrued and unpaid interest on the outstanding
principal amount of the Notes being Prepaid by the Company through
the Effective Date of Prepayment, plus (z) all unpaid costs and
other obligations arising under the Notes and the Security
Agreements.
(ii) In the case of a Transaction Prepayment, the
"PREPAYMENT AMOUNT" shall equal (x) the Principal Repayment Price
(as defined herein), plus (y) all accrued and unpaid interest under
the Notes through the Effective Date of Prepayment, plus (z) all
unpaid costs and other obligations arising under the Notes and the
Security Agreements. The "PRINCIPAL REPAYMENT PRICE" for this Note
shall mean (x) if the Prepayment is made prior to the first
anniversary of the date hereof, One Hundred Fifteen Percent (115%)
of the then outstanding principal amount of this Note, and (y) if
the Prepayment is made on or after the first anniversary of the
date hereof, but prior to the second anniversary of the date
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hereof, One Hundred Twenty Percent (120%) of the then outstanding
principal amount of this Note.
1.2 PREPAYMENT NOTICE AND PAYMENT. The Company shall effect any
Prepayment under this Article I by (x) giving written notice (the "PREPAYMENT
NOTICE") of the aggregate Prepayment Amount as well as the Prepayment Amount
with respect to such Note, and specifying the Effective Date of Prepayment to
Holders at the address and facsimile number of such Holder appearing in the
Company's register for the Notes and (y) paying the entire Prepayment Amount
with respect to such Note, by wire transfer of immediately available funds to an
account or accounts designated by the Holders, on or before the Effective Date
of Prepayment. The Prepayment Notice must be delivered on a business day not
less than ten (10) days (or in the case of a Major Transaction, 30 days) prior
to the date on which such Prepayment is to become effective (the "EFFECTIVE DATE
OF PREPAYMENT") provided, however, that the Effective Date of Prepayment and the
Prepayment may be conditioned upon the closing of a financing transaction, the
closing of a Major Transaction or the approval of the Lender to the Credit
Agreement to the Prepayment (and any such conditions shall be set forth in the
Prepayment Notice) and the Company shall use all reasonable efforts to remove
such conditions by at least two (2) business days prior to the Effective Date of
Repayment and notify Holder as to the status of such conditions.
1.3 APPLICATION OF PREPAYMENT. Prepayment Amounts shall (i) first be
applied against accrued and unpaid interest (ii) second, applied against unpaid
costs and other obligations arising under this Note and the Security Agreements,
and (iii) third, applied to the principal amount of this Note. Neither the
issuance of a Prepayment Notice nor compliance with Section 1.4 hereof shall
affect a Holder's right to convert the Note in accordance with Article III
hereof.
1.4 EFFECTIVENESS OF PREPAYMENT. Until the entire outstanding principal
amount of the Notes and all accrued and unpaid interest under the Notes, are
paid with respect to the Notes, the Notes shall be deemed to remain outstanding,
and the Holders shall retain all rights under this Note and the Security
Agreements, including its rights with respect to conversion pursuant to Article
III hereunder.
1.5 CONVERSION FOLLOWING REPAYMENT. Notwithstanding any implication to
the contrary by section 1.4 hereof, a Holder may, at its option, by (x) notice
to the Company within forty-five (45) days following the date of the Effective
Date of Prepayment where all or a portion of this Note was Prepaid (other than
with respect to a Prepayment made in connection with a Major Transaction) and
(y) delivery of the Prepayment Amount received by it, have the Prepayment Amount
converted into Note Shares in accordance with Sections 3.3 through 3.7 of this
Note as if Holder had converted such Prepayment Amount of this Note on the
business day before the Effective Date of Prepayment, and the Company shall so
convert this Note, and such conversion shall be deemed to occur one day prior to
such Effective Date of Prepayment.
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ARTICLE II
CERTAIN DEFINITIONS
2.1 The following terms shall have the following meanings:
(a) "BANKRUPTCY EVENT" shall mean any one or more of the
following: (i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking liquidation, reorganization or other relief in
respect of any Credit Party (as defined in the Credit Agreement) or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect;
(ii) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Credit Party or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered; (iii) any Credit Party shall
(u) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(v) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (i) or (ii)
of this definition, (w) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Credit
Party or for a substantial part of its assets, (x) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (y)
make a general assignment for the benefit of creditors or (z) take any action
for the purpose of effecting any of the foregoing; (iv) any Credit Party shall
admit in writing that it is unable to pay its debts as they become due; or (v) a
final judgment or judgments for the payment of money (A) in excess of $500,000
in the aggregate (exclusive of judgment amounts fully covered by insurance where
the insurer has admitted liability in respect of such judgment) or (B) in excess
of $1,000,000 in the aggregate (regardless of insurance coverage), shall be
rendered by one or more courts, administrative tribunals or other bodies having
jurisdiction against any Credit Party and the same shall not be discharged (or
provision shall not be made for such discharge), bonded, or a stay of execution
thereof shall not be procured, within 60 days from the date of entry thereof and
the relevant Credit Party shall not, within said period of 60 days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
(b) "CHANGE OF CONTROL" have the meaning set forth in the
Securities Purchase Agreement.
(c) "CLOSING BID PRICE" means, for any security as of any date,
the closing bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to Holders of a majority of
the aggregate principal amount represented by the then outstanding Notes (with
the consent of the Initial Holder so long as the Initial Holder continues to own
Notes) ("MAJORITY HOLDERS") if Bloomberg Financial Markets is not then reporting
closing bid prices of such security (collectively, "BLOOMBERG"), or if the
foregoing does not apply, the last reported sale price of such security in the
over-the-counter market on the electronic bulletin board of such
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security as reported by Bloomberg, or, if no sale price is reported for such
security by Bloomberg, the average of the bid prices of any market makers for
such security as reported in the "pink sheets" by the National Quotation Bureau,
Inc. If the Closing Bid Price cannot be calculated for such security on such
date on any of the foregoing bases, the Closing Bid Price of such security on
such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Majority Holders and reasonably
acceptable to the Company, with the costs of such determination to be borne by
the Company.
(d) "CONVERSION" means conversion of all or a portion of the
obligation arising under this Note, including all unpaid principal, interest,
premiums, penalties (including Default Interest) or any other payment
obligations arising under this Note, into shares of Common Stock.
(e) "CONVERSION DATE" means, for any Conversion, the date
specified in the Notice of Conversion, or if no date is specified therein, the
date the Notice of Conversion is faxed or otherwise delivered to the Company;
PROVIDED, HOWEVER, that the Conversion Date shall not be prior to the date of
delivery of the Notice of Conversion and any Notice of Conversion delivered to
the Company on a day which is not a business day shall be deemed delivered as of
the next following business day.
(f) "CONVERSION PRICE" means $2.50, subject to adjustments as set
forth in Article VI hereof.
(g) "MARKET PRICE" means the average of the Closing Bid Prices
for the Common Stock during the 10 consecutive trading days preceding, but not
including the determination date; provided, however, that in the case of a
calculation of Market Price made in connection with a public offering of
securities for purposes of Section 6.3 hereof the Market Price shall be the
closing bid price of the Common Stock on the day of pricing of such public
offering.
ARTICLE III
CONVERSION
3.1 OPTIONAL CONVERSION. Each Holder may, at any time and from time to
time, so long as any principal amount is outstanding hereunder, elect to convert
all or any portion (so long as such portion is the lesser of (i) at least One
Million Dollars ($1,000,000) of the remaining outstanding principal amount of
this Note or (ii) the remaining outstanding principal amount of this Note) of
the obligations due under this Note (the "CONVERSION PORTION") into fully paid
and nonassessable shares of Common Stock that is equal to that portion of the
obligations to be converted divided by the Conversion Price in accordance with
this Article III (such shares of Common Stock, "NOTE SHARES").
3.2 MECHANICS OF CONVERSION. In order to effect a Conversion, the
Holder (the "CONVERTING HOLDER") shall fax (or otherwise deliver) a copy of the
fully executed Notice of Conversion substantially in the form of EXHIBIT A (the
"NOTICE OF CONVERSION") to the Company. Upon receipt by the Company of a
facsimile copy of a Notice of Conversion from a Converting Holder, the Company
shall immediately send, via facsimile, a confirmation to the Converting
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Holder stating that the Notice of Conversion has been received, the date upon
which the Company expects to deliver the Common Stock in compliance with Section
3.3 upon Conversion and the name and telephone number of a contact person at the
Company regarding the Conversion. Promptly following the faxing (or other
delivery) of the Notice of Conversion, the Holder shall surrender or cause to be
surrendered to the Company, this Note, duly endorsed, along with a copy of the
Notice of Conversion.
3.3 DELIVERY OF COMMON STOCK UPON CONVERSION. Upon the delivery of a
Notice of Conversion, the Company shall, as soon as practicable but in any event
no later than the later of (a) the day that is three business days following the
Conversion Date and (b) the day that is the first business day following the
date of surrender of this Note (or delivery of documentation in accordance with
Section 8.9 hereof) (the "DELIVERY PERIOD"), issue and deliver to the Converting
Holder (x) that number of shares of Common Stock issuable upon conversion of the
portion of the obligations under this Note being converted, together with any
other securities, cash or other property to which Holder is entitled upon
conversion of this Note, a new Note in the form hereof representing the balance
of the principal amount hereof not being converted, if any. Should the
Converting Holder elect to receive interest owed with respect to the Conversion
Portion in cash (as opposed to additional Note Shares), interest with respect to
the Conversion Portion shall be paid on the immediately following Interest
Payment Date. Delivery under this Section 3.4 may be made personally or by
reputable overnight courier. The person or persons entitled to receive shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such shares at the close of business on the Conversion Date
and such shares shall be issued and outstanding as of such date.
3.4 TAXES. The Company shall pay any and all taxes (other than transfer
taxes) which may be imposed with respect to the issuance and delivery of the
shares of Common Stock upon the conversion of this Note.
3.5 NO FRACTIONAL SHARES. No fractional shares of Common Stock are to
be issued upon the conversion of this Note, but the Company shall instead round
up to the next whole number the number of shares of Common Stock to be issued
upon such conversion.
3.6 ELECTRONIC TRANSMISSION. In lieu of delivering physical
certificates representing the Common Stock issuable upon conversion, at any time
after a registration statement covering sale of the Note Shares has been filed
provided the Company's transfer agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer program (the "FAST PROGRAM"),
upon request of a Holder, the Company shall use its reasonable best efforts to
cause its transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Holder by crediting the account of Holder's designated
broker with DTC through its Deposit Withdrawal Agent Commission system.
3.7 STATUS AS NOTE HOLDER. Upon submission of a Notice of Conversion by
Holder, the principal amount of this Note and the interest thereon covered
thereby shall be deemed converted into shares of Common Stock and the Holder's
rights as a Holder of such converted Note with respect thereto shall cease and
terminate, excepting only the right to receive certificates for such shares of
Common Stock and to any remedies provided herein or otherwise available at law
or in equity to Holder because of a failure by the Company to comply with the
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terms of this Note. Notwithstanding the foregoing, if Holder has not received
certificates for all shares of Common Stock prior to the fifth (5th) business
day after the expiration of the Delivery Period with respect to a conversion for
any reason, then (unless Holder otherwise elects to retain its status as a
Holder of Common Stock) the Holder shall regain the rights of a holder of a Note
with respect to such unconverted Notes and the Company shall, as soon as
practicable, return such unconverted Notes to the Holder. In all cases, the
Holder shall retain all of its rights and remedies for the Company's failure to
convert this Note.
ARTICLE IV
RESERVATION OF SHARES OF COMMON STOCK
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock a sufficient number of shares of
Common Stock to provide for the full conversion of all outstanding Notes and
issuance of the shares of Common Stock in connection therewith.
ARTICLE V
EVENTS OF DEFAULT
5.1 HOLDER'S OPTION TO DEMAND PREPAYMENT. Upon the occurrence of an
Event of Default, (a) at the option of the Majority Holders, the entire amount
of obligations due under this Note shall become immediately due and payable and
(b) at the option of the Majority Holders, the Holders may, subject to all
applicable laws, at their option, exercise their rights and remedies under law
or pursuant to the terms of the Security Agreements, subject to the terms of the
Subordination Agreement.
5.2 EVENTS OF DEFAULT. An "EVENT OF DEFAULT" means any one of the
following:
(a) the Company fails to pay any principal on this Note on the
Scheduled Maturity Date, or any interest due on an Interest Payment Date;
(b) the Company breaches any covenant or other material term or
condition of any of the Notes, the Securities Purchase Agreement, the
Registration Rights Agreement, the Warrants or any of the Security Agreements
(collectively, the "INVESTMENT AGREEMENTS"), and if such breach is reasonably
curable within thirty (30) days of notice of such breach from any Holder, such
breach is not cured by the Company within thirty (30) days of notice of such
breach from such Holder or, in the case of a breach of Section 7.4 hereof, such
breach is not cured by the Company within five (5) days of notice of such breach
from such Holder; PROVIDED, HOWEVER, that such cure period shall not apply to
breaches by the Company of any covenant or other material term or condition of
any of the Notes or Sections 7.3, 7.5(g) or 7.5(h) of the Securities Purchase
Agreement;
(c) any representation or warranty of the Company made herein or
in any agreement, statement or certificate given in writing pursuant hereto or
in connection herewith (including any of the Investment Agreements), shall be
false or misleading in any material respect when made and the survival period
with respect thereto has not expired;
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(d) a Bankruptcy Event occurs;
(e) the Company's execution or performance of its obligations
under any of the Investment Agreements constitutes a breach or is restricted
under any existing agreement of the Company (or would cause a default or
acceleration (or right of acceleration) under such existing material agreement),
or the Company enters into any new agreement under which performance of any
material obligation under any of the Investment Agreements would be a breach or
be restricted or cause a default or acceleration (or right of acceleration)
under such new agreement, which breach, restriction, default or acceleration
would have a Material Adverse Effect;
(f) the Company or any subsidiary breaches or defaults under any
agreement involving Indebtedness, other than Indebtedness to the Lenders under
the Credit Agreement, in an amount in excess of One Hundred Thousand Dollars
($100,000), the breach of or default under which results in the acceleration or
right of acceleration, whether or not exercised, (or any occurrence which with
the passage of time or the giving of notice would result in the acceleration or
right of acceleration of the maturity of such Indebtedness);
(g) an Event of Default has occurred under the Credit Agreement
and the obligation of the Company or any of its subsidiaries thereunder have
been accelerated by the Lender; or
(h) a Change of Control occurs.
ARTICLE VI
ADJUSTMENTS TO THE CONVERSION PRICE
The Conversion Price shall be subject to adjustment from time to time as
follows:
6.1 STOCK SPLITS, STOCK DIVIDENDS, ETC. If at any time on or after the
date of issuance of this Note, the number of outstanding shares of Common Stock
is increased by a stock split, stock dividend, combination, reclassification or
other similar event, the Conversion Price shall be proportionately reduced, or
if the number of outstanding shares of Common Stock is decreased by a reverse
stock split, combination or reclassification of shares, or other similar event,
the Conversion Price shall be proportionately increased. In such event, the
Company shall notify the Holder of such change on or before the effective date
thereof.
6.2 ADJUSTMENT DUE TO DISTRIBUTION. If the Company shall declare or
make any distribution of its assets (or rights to acquire its assets) to holders
of any class of Common Stock as a partial liquidating dividend, by way of return
of capital or otherwise (including any dividend or distribution to the Company's
shareholders in cash or shares (or rights to acquire shares) of capital stock of
a subsidiary) (a "DISTRIBUTION") at any time after the date hereof and such
distribution shall be made before the conversion rights of the Holders, and the
Holders will not otherwise be entitled to receive, upon the terms applicable to
such Distribution, the amount of such assets (or rights) which each Holder could
have acquired if such Holder had held the number of shares of Common Stock
acquirable upon complete conversion of this Note immediately before the date on
which a record is taken for determining shareholders entitled to
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such Distribution, or if no such record is taken, the date as of which the
record holders of Common Stock are to be determined to be entitled to such
Distribution then the Holders shall be entitled, upon the terms applicable to
such Distribution to the amount of such assets or rights upon conversion of this
Note.
6.3 ANTIDILUTION PROVISIONS. At any time, any amount is outstanding
under this Note, the Conversion Price and the number of Conversion Shares shall
be subject to adjustment from time to time as provided in this Section 6.3. In
the event that any adjustment of the Conversion Price as required herein results
in a fraction of a cent, such Conversion Price shall be rounded up or down to
the nearest cent.
(a) ADJUSTMENT OF CONVERSION PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Section 6.3(c) and
6.3(e) hereof, if and whenever after the initial issuance of this Note, the
Company issues or sells, or in accordance with Section 6.3(b) hereof is deemed
to have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less than the Market Price on the date of issuance of
such shares of Common Stock (a "DILUTIVE ISSUANCE"), then effective immediately
upon the Dilutive Issuance, the Conversion Price will be adjusted in accordance
with the following formula:
E' = (E)(O + (P/M)) / (CSDO)
where:
E' = the adjusted Conversion Price
E = the then current Conversion Price;
M = the then current Market Price;
O = the number of shares of Common Stock on a fully diluted
basis (not including shares of Common Stock held in
Treasury of the Company), including shares of Common Stock
issuable upon exercise of the Warrants, but excluding
Common Stock issuable upon conversion of the Notes,
outstanding immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 8.3(b) hereof, received by the Company upon such
Dilutive Issuance; and
CSDO = the total number of shares of Common Stock
Deemed Outstanding (as herein defined)
immediately after the Dilutive Issuance.
(b) EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under Section 6.3(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or other
securities directly or indirectly exercisable, convertible into or exchangeable
for Common Stock including, without limitation, shares of
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Common Stock ("CONVERTIBLE SECURITIES") (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter referred to as
"OPTIONS"), and the price per share for which Common Stock is issuable upon the
exercise of such Options is less than the Market Price on the date of issuance
("BELOW MARKET OPTIONS"), then the maximum total number of shares of Common
Stock issuable upon the exercise of all such Below Market Options (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will,
as of the date of the issuance or grant of such Below Market Options, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the price per share for which
Common Stock is issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or granting of such Below Market
Options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Below Market Options, plus,
in the case of Convertible Securities issuable upon the exercise of such Below
Market Options, the minimum aggregate amount of additional consideration payable
upon the exercise, conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of all
such Below Market Options (assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Conversion Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Below Market
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 6.3(b)(ii)(B) if applicable) is less than the
Market Price on the date of issuance, then the maximum total number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all such
Convertible Securities will, as of the date of the issuance of such Convertible
Securities, be deemed to be outstanding and to have been issued and sold by the
Company for such price per share. For the purposes of the preceding sentence,
the price per share for which Common Stock is issuable upon such exercise,
conversion or exchange is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the issuance or sale
of all such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of all such Convertible Securities. No further adjustment to the
Conversion Price will be made upon the actual issuances of such Common Stock
upon exercise, conversion or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or Conversion Price or
exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then the price per
share for which Common Stock is
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issuable upon such exercise, conversion or exchange for purposes of the
calculation contemplated by Section 6.3(b)(ii)(A) shall be deemed to be the
lowest price per share which would be applicable assuming that all holding
periods and other conditions to any discounts contained in such Convertible
Security have been satisfied.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is
a change at any time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange or any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Conversion Price in effect at the time of such change will be
readjusted to the Conversion Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Options or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights to
exercise such option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Conversion Price then in effect
will be readjusted to the Conversion Price which would have been in effect at
the time of such expiration or termination had such Options or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination (other than in respect of the actual number of shares of Common
Stock issued upon exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Note will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise, conversion or exchange of all such Options or
Convertible Securities at the time such Options or Convertible Securities first
become exercisable, convertible or exchangeable. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration part or
all of which shall be other than cash, the amount of the consideration other
than cash received by the Company will be the fair market value of such
consideration except where such consideration consists of freely-tradeable
securities, in which case the amount of consideration received by the Company
will be the Market Price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued in connection with any
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair market value of any consideration other than cash or
securities will be determined in the good faith reasonable business judgment of
the Board of Directors, provided, however, that in any case where the
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aggregate value of such consideration exceeds Five Million Dollars ($5,000,000)
such valuation is subject to the reasonable approval of the Majority Holders. If
the Company and the Majority Holders are unable to agree upon the valuation set
forth in the prior sentence, the valuation will be determined by an independent,
nationally recognized accounting form selected by the Company and reasonably
acceptable to the Majority Holders, the costs of which will be borne by the
Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF CONVERSION PRICE. No
adjustment to the Conversion Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the date
hereof in accordance with the terms of such securities as of such date; (ii)
upon the issuance of Notes in accordance with terms of the Securities Purchase
Agreement; or (iii) upon the exercise of the Notes.
(c) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Conversion Price pursuant to the provisions of this Section 6.3, the number of
shares of Common Stock issuable upon exercise of this Note shall be adjusted by
multiplying a number equal to the Conversion Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Note immediately prior to such adjustment and dividing the
product so obtained by the adjusted Conversion Price.
(d) MAJOR TRANSACTIONS. If the Company shall consolidate or merge
with any other corporation or entity (other than a merger in which the Company
is the surviving or continuing entity and its capital stock is unchanged and
unissued in such transaction and which does not result in a Change of Control
(as defined in this Note)) or there shall occur any share exchange pursuant to
which all of the outstanding shares of Common Stock are converted into other
securities or property or any reclassification or change of the outstanding
shares of Common Stock or the Company shall sell all or substantially all of its
assets (each of the foregoing being a "MAJOR TRANSACTION"), then the holder of
this Note may, at its option, either (a) in the event that the Common Stock
remains outstanding or holders of Common Stock receive any common stock or a
substantially similar equity interest, retain this Note and this Note shall
continue to apply to such Common Stock or shall apply, as nearly as practicable,
to such other common stock or equity interest, as the case may be (with such
equitable adjustments to the Conversion Price as may be required), or (b)
regardless of whether (a) applies, receive consideration, in exchange for this
Note, the number of shares of stock or securities or property of the Company, or
of the entity resulting from such Major Transaction (the "MAJOR TRANSACTION
CONSIDERATION"), to which a holder of the number of shares of Common Stock
delivered upon the conversion of this Note would have been entitled upon such
Major Transaction had such holder so exercised this Note (without regard to any
limitations on exercise herein or elsewhere contained) on the trading date
immediately preceding the public announcement of the transaction resulting in
such Major Transaction and had such Common Stock been issued and outstanding and
had such Holder been the holder of record of such Common Stock at the time of
the consummation of such Major Transaction, and the Company shall make lawful
provision for the foregoing as a part of such Major Transaction and, to the
extent the replacements for the Note Shares are not able to be sold immediately
and in full by Holder without registration of such shares under the Securities
Act, shall cause the issuer of any security in such transaction which
constitutes "Registrable Securities" under the Registration Rights Agreement to
assume all of the Company's obligations under the Registration Rights Agreement.
No later than ten (10) days
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prior to the consummation of the Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver written notice
("NOTICE OF TRANSACTION") to each holder of a Note, which Notice of Transaction
shall be deemed to have been delivered one (1) business day after the Company's
sending such notice by telecopy (provided that the Company sends a confirming
copy of such notice on the same day by overnight courier) of such Notice of
Transaction. Such Notice of Transaction shall indicate the amount and type of
the transaction consideration which such holder of a Note would receive under
this section ("TRANSACTION CONSIDERATION"). If the Transaction Consideration is
cash and does not consist entirely of United States currency, such holder may
elect to receive United States currency in an amount equal to the value of the
Transaction Consideration in lieu of the Transaction Consideration by delivering
notice of such election to the Company within ten (10) days of such holder's
receipt of the Notice of Transaction which notice shall also set forth whether
Holder chooses to avail itself of any of the options under this Section 6.3(d)
(and, if so, which section).
(e) MINIMUM ADJUSTMENT OF CONVERSION PRICE. No adjustment of the
Conversion Price shall be made in an amount of less than 1% of the Conversion
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Conversion Price. Other than pursuant to Sections 6(b)(iii) and 6(b)(iv) hereof,
no adjustment under 6.3(a) shall have the effect of increasing the Conversion
Price.
(f) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other
distribution to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all
of its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (x) notice of the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the holders of
Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (y) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or
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subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto, but in no event earlier than public announcement of such
proposed transaction or event.
(g) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number
of shares of Common Stock on a fully diluted basis (not including shares
of Common Stock held in Treasury of the Company), including shares of
Common Stock issuable upon exercise of the Warrants, but excluding
Common Stock issuable upon conversion of the Notes, plus (x) in case of
any adjustment required by Section 6.3(a) resulting from the issuance of
any Options, the maximum total number of shares of Common Stock issuable
upon the exercise of the Options for which the adjustment is required
(including any Common Stock issuable upon the conversion of Convertible
Securities issuable upon the exercise of such Options), and (y) in the
case of any adjustment required by Section 6.3(a) resulting from the
issuance of any Convertible Securities, the maximum total number of
shares of Common Stock issuable upon the exercise, conversion or
exchange of the Convertible Securities for which the adjustment is
required, as of the date of issuance of such Convertible Securities, if
any.
(ii) "COMMON STOCK," for purposes of this Article VI,
includes the Common Stock and any additional class of stock of the
Company having no preference as to dividends or distributions on
liquidation, provided that the shares purchasable pursuant to this Note
shall include only Common Stock in respect of which this Note is
convertible, or shares resulting from any subdivision or combination of
such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character
referred to in Section 8.3(e) hereof, the stock or other securities or
property provided for in such Section.
6.4 PURCHASE RIGHTS. If the Company issues any other rights to purchase
stock, warrants, securities or other property (the "PURCHASE RIGHTS") pro rata
to the record holders of any class of Common Stock, then the Holders will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which each Holder could have acquired if such Holder
had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (subject to any limitation on conversion immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grants, issue or
sale of such Purchase Rights.
6.5 CERTAIN ACTIONS PROHIBITED. Without consent of the Required
Holders, the Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Note and in the taking of all such actions as may
reasonably be requested by the Holder of
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this Note in order to protect the conversion privilege of the Holder of this
Note, consistent with the tenor and purpose of this Note. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock receivable upon the exercise of this Note above the
Conversion Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the conversion of this
Note.
6.6 NOTICES OF ADJUSTMENT. Upon the occurrence of each adjustment or
readjustment pursuant to this Article VI, the Company, at its expense, shall
promptly compute such adjustment or readjustment and prepare and furnish to each
Holder a certificate, certified by the chief financial officer of the Company,
setting forth such adjustment or readjustment and showing in reasonable detail
the facts upon which such adjustment or readjustment is based, the Conversion
Price resulting from the adjustment, and the revised number of Conversion Shares
resulting from the adjustment. The Company shall, upon the written request at
any time of any Holder, furnish to such Holder a like certificate setting forth
(i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of
other securities or property which at the time would be received upon conversion
of a Note.
ARTICLE VII
AMENDMENTS AND WAIVERS
AMENDMENT AND WAIVER. Except as otherwise expressly provided
herein, the provisions of the Notes may be amended, and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, if the Company has obtained the written consent of the Majority
Holders; PROVIDED that without the written consent of the Holders of all of the
outstanding principal amount of the Notes, the Company shall take no such action
which shall (i) reduce the rate at which or change the manner in which interest
accrues on the Notes or the times at which such interest becomes payable or is
paid, (ii) change any provision relating to the payments or prepayments of
principal on the Notes, (iii) change the provisions of Article III hereof or
(iv) change the requisite percentage of Holders required for the taking of any
such action described in this proviso.
ARTICLE VIII
MISCELLANEOUS
8.1 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of a Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
8.2 NOTICE. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
telecopy (confirmed by sending a copy by first class mail or courier within one
(1) day of sending by telecopy) and shall be deemed to have been given at the
time and date of receipt (which shall include telephone line facsimile
transmission). The addresses for such communications shall be:
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If to the Company:
Alternative Resources Corporation
600 Hart Road, Suite 300
Barrington, Illinois 60010
Telecopy: (847) 381-6604
Attention: Steven Purcell, Chief Financial Officer
with a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Telecopy: (312) 984-7700
Attention: Neal J. White
If to either Purchaser:
c/o Wynnchurch Capital Ltd.
Two Conway Park
150 Field Drive, Suite 165
Lake Forest, Illinois 60045
Telecopy: (847) 604-6105
Attention: John A. Hatherly
With a copy to:
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Telecopy: (312) 715-4800
Attention: Mark T. Kindelin
If to any other Holder, to such address as is provided by such Holder
in accordance with this Section 8.2.
8.3 AMENDMENT PROVISION. This Note and any provision hereof may only
be amended or waived by an instrument in writing signed by the Company and the
Holder. Following the transfer of any portion of this Note (including any
subsequent transfer) to any third party, Holder shall, at its option, be
entitled to the benefit of any amendments to the transferred portion of this
Note. The term "NOTE" and all references thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented.
8.4 ASSIGNABILITY. This Note shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of each Holder and its
successors and assigns. The Holder shall notify the Company upon the assignment
of this Note.
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8.5 COST OF COLLECTION. If default or failure is made in any manner
with respect to this Note, the Company shall pay the Holder hereof costs of
collection, including reasonable attorneys' fees.
8.6 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to contracts made
and to be performed in the State of Illinois. The Company irrevocably consents
to the jurisdiction of the United States federal courts located in the State of
Illinois and the State courts located in the County of Cook in the State of
Illinois in any suit or proceeding based on or arising under this Agreement and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company, mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect each
Holder's right to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
8.7 DENOMINATIONS. At the request of a Holder, upon surrender of this
Note, the Company shall promptly issue new Notes in the aggregate outstanding
principal amount hereof, in the form hereof, in such denominations as such
Holder shall request.
8.8 LOST OR STOLEN NOTES. Upon receipt by the Company of (i) evidence
of the loss, theft, destruction or mutilation of this Note and (ii) (y) in the
case of loss, theft or destruction, an indemnity reasonably satisfactory to the
Company, or (z) in the case of mutilation, upon surrender and cancellation of
this Note, the Company shall execute and deliver new Notes, in the form hereof,
in such denominations as a Holder may request.
8.9 RATABLE PREPAYMENTS AND DEFERRED COMPONENTS. All Prepayments or
options to elect a Deferred Component made by the Company with respect to the
Notes shall be made ratably among all Holders of Notes in accordance with the
principal amount of such Notes.
8.10 REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a Holder's
right to actual damages for any failure by the Company to comply with the terms
of this Note. The Company covenants to each Holder that there shall be no
characterization concerning this instrument of any other Investment Agreement
other than as expressly provided herein or therein, as the case may be. Amounts
set forth or provided for herein or therein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received
by the Holder hereof and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance thereof). The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of the Notes and that the remedy at law for any
such breach or threatened breach, the Holders shall be entitled, in addition to
all other available remedies, to specific performance or an injunction
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restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE COMPANY AND HOLDER HEREBY
WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS NOTE
OR THE SUBJECT MATTER HEREOF OR ANY OBLIGATION HEREUNDER OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE HOLDERS OR THE COMPANY OR
ANY OF THEM IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. EACH OF HOLDER AND THE COMPANY ACKNOWLEDGES THAT THE PROVISIONS OF
THIS SECTION 8.10 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH EACH OF HOLDER AND
THE COMPANY HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT, AND EACH OF THE RELATED AGREEMENTS. Holder or the Company may file an
original counterpart or a copy of this Section 8.10 with any court as written
evidence of the consent of the parties hereto to the waiver of their respective
right to trial by jury.
8.11 WAIVER OF PRESENTMENT, ETC. The Company waives presentment, demand,
notice of dishonor, protest and all other notices and demands in connection with
the enforcement of the Holders' rights under this Note, and hereby consents to,
and waives notice of the release with or without consideration of any of the
collateral.
8.12 SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION. No specific
provision contained in this Note shall limit or modify any more general
provision contained herein. As used herein, the word "including" shall be deemed
to mean "including, without limitation." This Note shall be deemed to be jointly
drafted by the Company and all Holders and shall not be construed against any
person as the drafter hereof.
* * *
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IN WITNESS WHEREOF, Company has caused this Note to be signed in its
name by its duly authorized officer as of the date first written above.
ALTERNATIVE RESOURCES CORPORATION
By: /s/ Steven Purcell
------------------
Name: Steven Purcell
Title: Senior Vice President and Chief
Financial Officer
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EXHIBIT A TO NOTE
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert (the "CONVERSION")
$__________ principal amount ("CONVERSION AMOUNT") of the Note dated January 31,
2002 (the "NOTE")), into shares of common stock ("COMMON STOCK") of Alternative
Resources Corporation, a Delaware corporation (the "COMPANY") according to the
conditions of the Note, as of the date written below. If securities are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. No fee will be charged to
the Holder for any conversion except as provided herein.
[PLEASE PAY ALL INTEREST DUE WITH RESPECT TO THE CONVERSION AMOUNT IN ACCORDANCE
WITH THE TERMS OF THE NOTE] OR [PLEASE CONVERT ALL INTEREST DUE WITH RESPECT TO
THE CONVERSION AMOUNT INTO COMMON STOCK ACCORDING TO THE TERMS OF THE NOTE].
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of
this Note shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "ACT"), or pursuant to an exemption from
registration under the Act.
In the event of partial exercise, please reissue an appropriate Note(s) for the
principal balance which shall not have been converted.
Date of Conversion:
-------------------------------
Conversion Amount:
--------------------------------
Applicable Market Price:
--------------------------
Number of Shares of Common Stock
to be Issued:
-------------------------------------
Signature:
----------------------------------------
Name:
---------------------------------------------
Address:
------------------------------------------
ACKNOWLEDGED AND AGREED:
ALTERNATIVE RESOURCES CORPORATION
BY:
-------------------------------------------------
NAME:
------------------------------------------------
TITLE:
-----------------------------------------------
DATE:
------------------------------------------------
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