Exhibit X
FIRST AMENDMENT TO GUARANTY AGREEMENT
This FIRST AMENDMENT TO GUARANTY AGREEMENT dated as of July
15, 2003 and effective as of June 1, 2003 (this "Amendment"), is
made by WYNNCHURCH CAPITAL PARTNERS, L.P., a Delaware limited
partnership ("Wynnchurch USA", and WYNNCHURCH CAPITAL PARTNERS
CANADA, L.P., an Alberta, Canada limited partnership ("Wynnchurch
Canada", and collectively with Wynnchurch USA, the "Guarantors"),
and FLEET CAPITAL CORPORATION (the "Lender").
W I T N E S S E T H
WHEREAS, 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
the Lender are parties to a Credit and Security Agreement dated
as of January 31, 2002 (as amended, supplemented or otherwise
modified from time to time, including, without limitation, by the
Sixth Amendment described below, the "Credit Agreement"),
pursuant to which the Lender has agreed, subject to the terms and
conditions set forth therein, to make loans and other extensions
of credit to the Borrowers;
WHEREAS, the Credit Agreement provides for the Lender to
make overadvances (the "Overadvances") for the benefit of the
Borrowers until December 31, 2003, or such later date as the
Lender may agree in writing, in an aggregate amount outstanding
from time to time of up to $2,000,000 (the "Overadvance Limit"),
as reduced from time to time;
WHEREAS, Wynnchurch has executed and delivered a Guaranty
Agreement dated as of April 14, 2003 (the "Guaranty Agreement"),
pursuant to which Wynnchurch has guarantied to the Lender the
repayment of the Overadvances up to the Overadvance Limit, as
reduced from time to time;
WHEREAS, the terms of the Credit Agreement and the Guaranty
Agreement respectively provide that the Overadvance Limit and the
amount of Overadvances guarantied by Wynnchurch shall
respectively be reduced from time to time upon the payment in
cash by Bluecurrent, Inc. ("Bluecurrent") to the Borrowers of
amounts due in respect of accounts receivable owing by
Bluecurrent to the Borrowers (the "Bluecurrent Receivables"), on
a dollar for dollar basis in an amount equal to such payments;
WHEREAS, the Borrowers received a payment on or about May
29, 2003 in the amount of approximately $850,000 in respect of
the Bluecurrent Receivables (the "Initial Bluecurrent Payment")
and have requested that the Lender enter into a Sixth Amendment
to Credit Agreement dated as of the date hereof (the "Sixth
Amendment") whereby the Credit Agreement would be amended to
eliminate the reduction of the Overadvance Limit resulting from
the payment of the Initial Bluecurrent Payment, so that only
payments received in respect of the Bluecurrent Receivables after
the Initial Bluecurrent Payment shall result in a reduction of
the Overadvance Limit, on a dollar for dollar basis in an amount
equal to such payments;
WHEREAS, it is a condition to the Lender's agreement to
enter into the Sixth Amendment that Wynnchurch shall have agreed
to amend the Guaranty Agreement to eliminate the automatic
reduction in the amount of Overadvances guarantied thereunder
resulting from the Initial Bluecurrent Payment, so that only
payments received in respect of the Bluecurrent Receivables after
the Initial Bluecurrent Payment shall result in a reduction of
the amount of Overadvances guarantied under the Guaranty
Agreement;
NOW, THEREFORE, in order to induce the Lender to enter into
the Sixth Amendment and to continue to make Loans and
Overadvances to the Borrowers as provided in the Credit
Agreement, and for other good and valuable consideration, receipt
of which is hereby acknowledged by the Guarantors, the Guarantors
hereby agree as follows:
1. Capitalized Terms.
Capitalized terms used herein which are defined in the
Guaranty Agreement have the same meanings herein as therein,
except to the extent that such meanings are amended hereby.
2. Amendments to Guaranty Agreement.
The Guarantors and the Lender hereby agree that the Guaranty
Agreement is amended, effective as of June 1, 2003, as follows:
(a) Amendment to Section 1 of the Guaranty Agreement. The
following new definition of "Initial Bluecurrent Payment" is
hereby inserted in Section 1 of the Guaranty Agreement in
appropriate alphabetical order:
"Initial Bluecurrent Payment" means an initial
payment, in the amount of approximately $850,000, paid on or
about May 29, 2003 by Bluecurrent to the Borrowers in
respect of certain disputed accounts receivable owing by
Bluecurrent to the Borrowers.
(b) Amendment to Section 2(b) of the Guaranty Agreement.
Section 2(b) of the Guaranty Agreement is hereby amended and
restated in its entirety as follows:
(b) Notwithstanding any provision of this
Agreement to the contrary, the obligations of the
Guarantors under this Agreement shall not exceed
the sum of (i) $2,000,000 (the "Initial Guaranty
Amount"), plus (ii) in the event any payment to be
made by the Guarantors hereunder is not made when
due, interest at the Post-Default Rate accruing on
such unpaid amount from the date such amount
became due hereunder, plus (iii) the reasonable
expenses (including fees and expenses of counsel),
if any, incurred by the Lender in enforcement of
and collection under this Agreement. The parties
hereto agree that the Initial Guaranty Amount
shall be reduced from time to time, upon the
payment in cash by Bluecurrent to the Borrowers of
amounts due in respect of the Bluecurrent
Receivables, on a dollar for dollar basis in an
amount equal to such cash payments; provided that
no such reduction in the Initial Guaranty Amount
shall become effective until three days after (a)
the Lender has received written notice from the
Borrowers of the receipt of the applicable cash
payment and (b) the application of such cash
payment to the outstanding Loans; and provided
further that the Initial Guaranty Amount shall not
be reduced as a result of the Initial Bluecurrent
Payment.
3. Ratification.
The Guaranty Agreement, as modified and amended by this
Amendment, remains in full force and effect and is hereby
ratified and confirmed in all respects except that, upon and
after the effectiveness of the Sixth Amendment, each reference in
the Guaranty Agreement to the Credit Agreement shall mean and be
a reference to the Credit Agreement as amended by the Sixth
Amendment. This amendment shall be deemed effective as of June
1, 2003.
4. Representations and Warranties.
The Guarantors hereby represent, warrant and confirm that:
(a) the representations and warranties of the Guarantors
contained in the Guaranty 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) the Guarantors are in compliance with
all of the covenants, terms and provisions set forth in the
Guaranty Agreement; and (c) the execution, delivery and
performance by the Guarantors of this Amendment (i) have been
duly authorized by all necessary action on the part of the
Guarantors, (ii) will not violate any applicable law or
regulation or the organizational documents of any Guarantor,
(iii) will not violate or result in a default under any
indenture, agreement or other instrument binding on any Guarantor
or any of its assets, and (iv) do not require any consent, waiver
or approval of or by any Person which has not been obtained.
5. Successors and Assigns.
This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns
6. Counterparts; Governing Law.
This Amendment may be executed in any number of counterparts
which together shall constitute one agreement and delivery of an
executed signature page by facsimile transmission shall be
effective as delivery of a manually executed counterpart. This
Amendment shall be governed and construed in accordance with the
laws (other than the conflict of laws rules) of the Commonwealth
of Massachusetts.
7. Fee.
In consideration for the Guarantors' entry into this
Amendment, ARC agrees to pay Wynnchurch Capital, Ltd., the amount
of One Hundred Twenty Five Thousand Dollars ($125,000) (the
"Amendment Payment"), payable in the manner set forth in this
Section 7, and Lender hereby consents to such payment. The
Amendment Payment shall be treated as if it is an additional
$125,000 of interest payable pursuant to that certain Note dated
as of January 31, 2002, as amended, of ARC to Wynnchurch Canada,
and that certain Note dated as of January 31, 2002, as amended,
of ARC to Wynnchurch USA (such notes collectively, the "Notes"),
in each case accrued as of the date hereof. The Amendment
Payment shall accrue interest as if it were interest accrued
pursuant to the Notes. Upon any payment of interest to
Wynnchurch Canada and Wynnchurch USA pursuant to the Notes, ARC
shall also pay Wynnchurch Capital, Ltd. its pro rata share of the
Amendment Payment (as well as any interest accrued thereon), in
cash. Notwithstanding the foregoing, the Amendment Payment shall
be deemed to be a "Subordinated Obligation" pursuant to the
Subordination and Intercreditor Agreement dated as of January 31,
2002, among the Guarantors, the Lender and the Borrowers (as
amended, the "Subordination Agreement") and shall be deferred and
not be paid, except as permitted under the terms of the Credit
Agreement and the Subordination Agreement, treating the payment
of the Amendment Payment as the payment of additional interest
pursuant to the Notes.
IN WITNESS WHEREOF, the parties have executed this Amendment
as a sealed instrument as of the date first above written.
GUARANTORS:
WYNNCHURCH CAPITAL PARTNERS, L.P.
By: Wynnchurch Partners, L.P., its
General Partner
By: Wynnchurch Management Inc.,
its General Partner
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx 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 Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: President
LENDER:
FLEET CAPITAL CORPORATION
By: /s/ Xxxxxxxxxxx Xxxxxxx
-----------------------
Name: Xxxxxxxxxxx Xxxxxxx
Title: Senior Vice President
The undersigned acknowledge the foregoing Amendment and agree to
be bound by the terms of Section 7 thereof.
ALTERNATIVE RESOURCES CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
ARC SERVICE, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
ARC SOLUTIONS, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
ARC MIDHOLDING, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
WRITERS INC.
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
ARC TECHNOLOGY MANAGEMENT LLC
By: ARC SERVICE, INC., its Manager and sole member
By: /s/ Xxxxxx Xxxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxxx
Title: Treasurer
ARC STAFFING MANAGEMENT LLC
By: ARC SERVICE, INC., its Manager and sole member
By: /s/ Xxxxxx Xxxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxxx
Title: Treasurer
ARC SHARED SERVICES LLC
By: ARC SERVICE, INC., its Manager and sole member
By: /s/ Xxxxxx Xxxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxxx
Title: Treasurer
