**Exhibit4.2**

 

FIRST AMENDMENT TOGUARANTY AGREEMENT

 

This FIRST AMENDMENT TOGUARANTY AGREEMENT dated as of July 15, 2003 and effective as of June 1, 2003(this “Amendment”), is made by WYNNCHURCH CAPITAL PARTNERS, L.P., aDelaware limited partnership (“Wynnchurch USA”, and WYNNCHURCH CAPITALPARTNERS CANADA, L.P., an Alberta, Canada limited partnership (“WynnchurchCanada”, and collectively with Wynnchurch USA, the “Guarantors”),and FLEET CAPITAL CORPORATION (the “Lender”).

 

W I T N E S S E TH

 

WHEREAS, AlternativeResources Corporation (“ARC”), ARC Service, Inc., ARC Solutions, Inc.,ARC Midholding, Inc., Writers Inc., ARC Technology Management LLC, ARC StaffingManagement LLC, and ARC Shared Services LLC (collectively, the “Borrowers”)and the Lender are parties to a Credit and Security Agreement dated as ofJanuary 31, 2002 (as amended, supplemented or otherwise modified from time totime, 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 otherextensions of credit to the Borrowers;

 

WHEREAS, the CreditAgreement provides for the Lender to make overadvances (the “Overadances”)for the benefit of the Borrowers until December 31, 2003, or such later date asthe Lender may agree in writing, in an aggregate amount outstanding from timeto time of up to $2,000,000 (the “Overadvance Limit”), as reduced fromtime to time;

 

WHEREAS, Wynnchurch hasexecuted and delivered a Guaranty Agreement dated as of April 14 2003 (the “GuarantyAgreement”), pursuant to which Wynnchurch has guarantied to the Lender therepayment of the Overadvances up to the Overadvance Limit, as reduced from timeto time;

 

WHEREAS, the terms of theCredit Agreement and the Guaranty Agreement respectively provide that theOveradvance Limit and the amount of Overadvances guarantied by Wynnchurch shallrespectively be reduced from time to time upon the payment in cash byBluecurrent, Inc. (“Bluecurrent”) to the Borrowers of amounts due inrespect of accounts receivable owing by Bluecurrent to the Borrowers (the “BluecurrentReceivables”), on a dollar for dollar basis in an amount equal to suchpayments;

 

WHEREAS, the Borrowersreceived a payment on or about May 29, 2003 in the amount of approximately$850,000 in respect of the Bluecurrent Receivables (the “Initial BluecurrentPayment”) and have requested that the Lender enter into a Sixth Amendmentto Credit Agreement dated as of the date hereof (the “Sixth Amendment”)whereby the Credit Agreement would be amended to eliminate the reduction of theOveradvance Limit resulting from the payment of the Initial BluecurrentPayment, so that only payments received in respect of the Bluecurrent Receivablesafter the Initial Bluecurrent Payment shall result in a reduction of theOveradvance Limit, on a dollar for dollar basis in an amount equal to suchpayments;

 

----

 

WHEREAS, it is acondition to the Lender’s agreement to enter into the Sixth Amendment thatWynnchurch shall have agreed to amend the Guaranty Agreement to eliminate theautomatic reduction in the amount of Overadvances guarantied thereunderresulting from the Initial Bluecurrent Payment, so that only payments receivedin respect of the Bluecurrent Receivables after the Initial Bluecurrent Paymentshall result in a reduction of the amount of Overadvances guarantied under theGuaranty Agreement;

 

NOW, THEREFORE, in order to induce the Lender to enterinto the Sixth Amendment and to continue to make Loans and Overadvances to theBorrowers as provided in the Credit Agreement, and for other good and valuableconsideration, receipt of which is hereby acknowledged by the Guarantors, theGuarantors hereby agree as follows:

 

1.                                       CapitalizedTerms.

 

Capitalized terms usedherein which are defined in the Guaranty Agreement have the same meaningsherein as therein, except to the extent that such meanings are amended hereby.

 

2.                                       Amendmentsto Guaranty Agreement.

 

The Guarantors and theLender hereby agree that the Guaranty Agreement is amended, effective as ofJune 1, 2003, as follows:

 

(a)*                                  Amendmentto Section 1 of the Guaranty Agreement. *The following new definition of “Initial Bluecurrent Payment” ishereby inserted in Section 1 of the Guaranty Agreement in appropriatealphabetical order:

 

“Initial Bluecurrent Payment” means an initial payment, in theamount of approximately $850,000, paid on or about May 29, 2003 by Bluecurrentto the Borrowers in respect of certain disputed accounts receivable owing by Bluecurrentto the Borrowers.

 

(b)                                 *Amendment toSection 2(b) of the Guaranty Agreeent*.  Section 2(b) of the Guaranty Agreement is hereby amended andrestated in its entirety as follows:

 

(b)                                 Notwithstandingany provision of this Agreement to the contrary, the obligations of theGuarantors under this Agreement shall not exceed the sum of (i) $2,000,000 (the“Initial Guaranty Amount”), plus (ii) in the event any payment tobe made by the Guarantors hereunder is not made when due, interest at thePost-Default Rate accruing on such unpaid amount from the date such amountbecame due hereunder, plus (iii) the reasonable expenses (including feesand expenses of counsel), if any, incurred by the Lender in enforcement of andcollection under this Agreement. The parties hereto agree that the InitialGuaranty Amount shall be reduced from time to time, upon the payment in cash byBluecurrent to the Borrowers of amounts due in respect of the BluecurrentReceivables, on a dollar for dollar basis in an amount equal to such cashpayments; provided that no such reduction in the Initial Guaranty Amountshall become effective until three days after (a) the Lender has received

 

2

----

 

written noticefrom the Borrowers of the receipt of the applicable cash payment and (b) theapplication of such cash payment to the outstanding Loans; and providedfurtherthat the Initial Guaranty Amount shall not be reduced as a result of theInitial Bluecurrent Payment.

 

3.                                       Ratification.

 

The Guaranty Agreement,as modified and amended by this Amendment, remains in full force and effect andis hereby ratified and confirmed in all respects except that, upon and afterthe effectiveness of the Sixth Amendment, each reference in the GuarantyAgreement to the Credit Agreement shall mean and be a reference to the CreditAgreement as amended by the Sixth Amendment. This amendment shall be deemed effective as of June 1, 2003.

 

4.                                       Representationsand Warranties.

 

The Guarantors herebyrepresent, warrant and confirm that: (a) the representations and warranties ofthe Guarantors contained in the Guaranty Agreement are true and correct on andas of the date hereof as if made on such date (except to the extent that suchrepresentations and warranties expressly relate to an earlier date); (b) theGuarantors are in compliance with all of the covenants, terms and provisionsset forth in the Guaranty Agreement; and (c) the execution, delivery andperformance by the Guarantors of this Amendment (i) have been duly authorized byall necessary action on the part of the Guarantors, (ii) will not violate anyapplicable law or regulation or the organizational documents of any Guarantor,(iii) will not violate or result in a default under any indenture, agreement orother instrument binding on any Guarantor or any of its assets, and (iv) do notrequire any consent, waiver or approval of or by any Person which has not beenobtained.

 

5.                                       Successorsand Assigns.

 

This Amendment shall bebinding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns

 

6.                                       Counterparts;Governing Law.

 

This Amendment may beexecuted in any number of counterparts which together shall constitute oneagreement and delivery of an executed signature page by facsimile transmissionshall be effective as delivery of a manually executed counterpart.  This Amendment shall be governed andconstrued in accordance with the laws (other than the conflict of laws rules)of the Commonwealth of Massachusetts.

 

7.                                       Fee.

 

Inconsideration for the Guarantors’ entry into this Amendment, ARC agrees to payWynnchurch Capital, Ltd., the amount of One Hundred Twenty Five ThousandDollars ($125,000) (the “Amendment Payment”), payable in the manner setforth in this Section 7, and Lender hereby consents to such payment.  The Amendment Payment shall be treated as ifit is an additional $125,000 of interest payable pursuant to that certain Notedated as of January 31,

 

3

----

 

2002,as amended, of ARC to Wynnchurch Canada, and that certain Note dated as ofJanuary 31, 2002, as amended, of ARC to Wynnchurch USA (such notescollectively, the “Notes”), in each case accrued as of the datehereof.  The Amendment Payment shallaccrue interest as if it were interest accrued pursuant to the Notes.  Upon any payment of interest to WynnchurchCanada and Wynnchurch USA pursuant to the Notes, ARC shall also pay WynnchurchCapital, Ltd. its pro rata share of the Amendment Payment (as well as anyinterest accrued thereon), in cash. Notwithstanding the foregoing, theAmendment Payment shall be deemed to be a “Subordinated Obligation” pursuant tothe Subordination and Intercreditor Agreement dated as of January 31, 2002,among the Guarantors, the Lender and the Borrowers (as amended, the “SubordinationAgreement”) and shall be deferred and not be paid, except as permittedunder the terms of the Credit Agreement and the Subordination Agreement,treating the payment of the Amendment Payment as the payment of additionalinterest pursuant to the Notes.

 

4

----

 

IN WITNESS WHEREOF, the parties have executed thisAmendment 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:                                            |   |   |
|   | Name:                                          |   |
|   | Title:                                         |   |
|   |                                           |   |
|   |                                           |   |
|   | WYNNCHURCH CAPITAL  PARTNERS CANADA, L.P. |
|   |                                           |   |
|   | By:                                            | Wynnchurch Partners  Canada, L.P., |
|   |                                           | its General Partner |
|   |                                           |   |
|   | By:                                            | Wynnchurch GP Canada,  Inc., |
|   |                                           | its General Partner |
|   |                                           |   |
|   |                                           |   |
|   | By:                                            |   |   |
|   | Name:                                          |   |
|   | Title:                                         |   |
|   |                                           |   |
|   |                                           |   |
|   | **LENDER:**                                    |
|   |                                           |
|   | FLEET CAPITAL  CORPORATION                     |
|   |                                           |   |
|   |                                           |   |
|   | By:                                            |   |   |
|   |                                           | Name: |
|   |                                           | Title: |
|        |                                                |  |  |  |  |  |  |

 

5

----

 

The undersigned acknowledgethe foregoing Amendment and agree to be bound by the terms of Section 7thereof.

 
| ALTERNATIVE RESOURCES  CORPORATION |
|------------------------------------|
|                               |
|                               |
| By:                                |   |   |
| Name:                              |
| Title:                             |
|                               |
|                               |
| ARC SERVICE, INC.                  |
|                               |
|                               |
| By:                                |   |   |
| Name:                              |
| Title:                             |
|                               |
|                               |
| ARC SOLUTIONS, INC.                |
|                               |
|                               |
| By:                                |   |   |
| Name:                              |
| Title:                             |
|                               |
|                               |
| ARC MIDHOLDING, INC.               |
|                               |
|                               |
| By:                                |   |   |
| Name:                              |
| Title:                             |
|                               |
|                               |
| WRITERS INC.                       |
|                               |
|                               |
| By:                                |   |   |
| Name:                              |
| Title:                             |

 

6

----

 
| ARC TECHNOLOGY  MANAGEMENT LLC                            |
|-----------------------------------------------------------|
|                                                      |
| By:  ARC SERVICE, INC., its Manager and sole  member |
|                                                      |
|                                                      |
| By:                                                       |   |   |
| Name:                                                     |
| Title:                                                    |
|                                                      |
| ARC STAFFING MANAGEMENT  LLC                              |
|                                                      |
| By:  ARC SERVICE, INC., its Manager and sole  member |
|                                                      |
| By:                                                       |   |   |
| Name:                                                     |
| Title:                                                    |
|                                                      |
| ARC SHARED SERVICES LLC                                   |
|                                                      |
| By:  ARC SERVICE, INC., its Manager and sole  member |
|                                                      |
| By:                                                       |   |   |
| Name:                                                     |
| Title:                                                    |

 

7

----