EXHIBIT DD
WYNNCHURCH CAPITAL PARTNERS, L.P.
WYNNCHURCH CAPITAL PARTNERS CANADA, L.P.
Two Xxxxxx Park
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
November 14, 2003
Fleet Capital Corporation
Xxx Xxxxxxx Xxxxxx
Xxxx Xxxx XX XX 00000X
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxxxx Xxxxxxx
Ladies and Gentlemen:
Reference is made to (i) the Credit and Security Agreement dated as of January
31, 2002 (as heretofore amended, supplemented or otherwise modified, the "Credit
Agreement") among Alternative Resources Corporation, ARC Service, Inc., ARC
Solutions, Inc., ARC Midholding, Inc., Writers Inc., ARC Technology Management
LLC, ARC Staffing Management LLC, and ARC Shared Services LLC, as co-borrowers
(the "Borrowers") and Fleet Capital Corporation, as lender (the "Lender"), (ii)
the Subordination and Intercreditor Agreement dated as of January 31, 2002 (as
heretofore amended, supplemented or otherwise modified, the "Subordination and
Intercreditor Agreement") among Wynnchurch Capital Partners, L.P. ("Wynnchurch
USA"), Wynnchurch Capital Partners Canada, L.P. ("Wynnchurch Canada", and
collectively with Wynnchurch USA, "Wynnchurch"), the Borrowers and the Lender,
(iii) the Guaranty Agreement dated as of July 15, 2003, made by Wynnchurch to
the Lender (as heretofore amended, supplemented or otherwise modified, the
"Guaranty"), and (iv) the Eighth Amendment to Credit Agreement and Waiver dated
as of the date hereof among the Borrowers and the Lender (the "Eighth
Amendment"). Unless otherwise defined herein, capitalized terms used herein as
defined terms have the meanings ascribed thereto in the Credit Agreement.
Wynnchurch acknowledges that (i) an Event of Default has occurred and is
continuing under the Credit Agreement as a result of the Borrower's failure 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 (collectively, the "September
30, 2003 Events of Default"), and (ii) pursuant to the Eighth Amendment, the
Lender has agreed to waive the September 30, 2003 Events of Default and to amend
certain provisions of the Credit Agreement as more fully set forth in the Eight
Amendment. Wynnchurch further acknowledges that the execution and delivery by
Wynnchurch of (A) a written waiver with respect to the existing defaults of the
Borrowers under the Subordinated Debt Documents and the amendment of the
financial covenants set forth in the Subordinated Debt Documents, and (B) this
acknowledgement letter, are conditions precedent to the effectiveness of the
Eighth Amendment.
Accordingly, to induce the Lender to enter into the Eighth Amendment and to
enable the Borrowers to satisfy the conditions precedent to the effectiveness of
the Eighth Amendment, Wynnchurch hereby (i) confirms that Wynnchurch has
executed and delivered to the Borrowers a written amendment and waiver with
respect to the existing defaults under and financial covenant provisions
contained in the
Subordinated Debt Documents, (ii) executes and delivers to the Lender this
acknowledgement letter, (iii) covenants and agrees that notwithstanding anything
to contrary contained in the Wynnchurch Subordinated Notes, any other
Subordinated Debt Document, the Credit Agreement, the Subordination and
Intercreditor Agreement or any other Loan Document, the Borrowers shall not be
required to pay to Wynnchurch, and Wynnchurch shall not accept from the
Borrowers, any cash payments of interest owed with respect to the Wynnchurch
Subordinated Notes for any period from and after June 1, 2003 unless and until
such time as the Lender receives from the Borrowers a Compliance Certificate for
the fiscal quarter of the Borrowers ending December 31, 2003 or any subsequent
quarterly period, demonstrating that immediately prior to and after giving
effect to each contemplated cash payment of interest in respect of the
Wynnchurch Subordinated Notes, no Event of Default shall have occurred and be
continuing under the Credit Agreement and the Borrowers shall be in full
compliance with the financial covenants set forth in the Credit Agreement, as
amended by the Eighth Amendment, and (iv) acknowledges that the Guaranty remains
in full force and effect and hereby ratifies and confirms the Guaranty in all
respects except that, upon and after the effectiveness of the Eighth Amendment,
each reference in the Guaranty to the "Credit Agreement" shall mean and be a
reference to the Credit Agreement as amended by the Eighth Amendment. For
purposes of clarification, notwithstanding Wynnchurch's covenant and agreement
contained in clause (iii) above, interest shall continue to accrue on the
Wynnchurch Subordinated Notes.
Wynnchurch hereby further represents, warrants and confirms to the Lender that
(i) as of September 30, 2003, (A) the Capital Commitments (as defined in the
Guaranty) of Wynnchurch USA aggregate $80,250,000; (B) the Capital Commitments
of Wynnchurch Canada aggregate $82,852,885; (C) Capital Calls (as defined in the
Guaranty) aggregating $39,872,915 have been made by Wynnchurch USA; (D) Capital
Calls aggregating $41,238,630 have been made by Wynnchurch Canada; and (E) no
Investor (as defined in the Guaranty) has failed to fund all of the amounts
required to be paid by such Investor pursuant to Capital Calls heretofore made
or is otherwise in default under any subscription agreement relating to its
investment in Wynnchurch USA or Wynnchurch Canada, as applicable; (ii) the
representations and warranties of Wynnchurch contained in the Guaranty 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); (iii) the aggregate amount of Uncalled Capital Commitments (as defined in
the Guaranty) in respect of Wynnchurch equals or exceeds three times the
aggregate Guarantor Indebtedness (as defined in the Guaranty).
The New Wynnchurch Subordinated Notes (as defined in the Guaranty), if issued,
will contain the terms applicable to the Wynnchurch Subordinated Notes (as
amended from time to time, including pursuant to the Second Amendment to Notes
dated as of August 14, 2003 between Wynnchurch and the Company), subject to the
terms of the Guaranty.
The parties acknowledge and agree that upon payment in full of the Obligations
and termination of the Revolving Credit Commitment (each as defined in the
Credit Agreement), the obligations and agreements set forth in this
acknowledgement letter shall terminate and this acknowledgement letter shall be
of no further force and effect.
[Signature pages follow.]
Very truly yours,
WYNNCHURCH CAPITAL PARTNERS, L.P.
By: Wynnchurch Partners, L.P., it general partner
By: Wynnchurch Management Inc., its general partner
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------------------
Name: Xxxx x. Xxxxxxxx
Title: President
WYNNCHURCH CAPITAL PARTNERS
CANADA, L.P.
By: Wynnchurch Partners Canada, L.P., its general
partner
By: Wynnchurch GP Canada, Inc., its general partner
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
ACKNOWLEDGED AND AGREED:
ALTERNATIVE RESOURCES CORPORATION,
individually and on behalf of the other Borrowers
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
