THIRD AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Third Amendment") is made and dated as of the 29th day of June, 2001 by and
among SOS STAFFING SERVICES, INC., a Utah corporation (the "Borrower"), the
Lenders to the Credit Agreement described below, XXXXX FARGO BANK NORTHWEST,
N.A. (formerly known as First Security Bank, N.A.), as administrative agent for
the Lenders (in such capacity, the "Administrative Agent"), and BANK ONE, NA, as
documentation agent for the Lenders (in such capacity, the "Documentation
Agent").
RECITALS
A. Pursuant to that certain Amended and Restated Credit Agreement
dated as of July 27, 1998 among the Lenders, the Borrower, the Documentation
Agent and the Administrative Agent (as amended, extended and replaced from time
to time, the "Credit Agreement"), the Lenders agreed to extend credit to the
Borrower on the terms and conditions set forth therein. All capitalized terms
not otherwise defined herein shall have the meanings given to such terms in the
Credit Agreement.
B. The Borrower has requested that the Lenders agree to amend the
Credit Agreement in certain respects and the Lenders have agreed to do so on the
terms and subject to the conditions set forth more particularly below.
NOW, THEREFORE, in consideration of the foregoing Recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. REDUCTION OF AGGREGATE COMMITMENT. To reflect the agreement of the
parties hereto to reduce the Aggregate Commitment and to create a sublimit for
the aggregate amount of Loans which may be outstanding under the Credit
Agreement at any date, effective as of the Effective Date (as defined in
Paragraph 11 below):
(a) The Aggregate Commitment shall automatically be reduced to
$18,000,000, and the Aggregate Commitment and each Lender's Commitment shall be
as set forth on the replacement commitment schedule attached hereto as Exhibit
A.
(b) Section 2.1 of the Credit Agreement shall be amended to read in
its entirety as follows:
"2.1. COMMITMENT. From and including the date of this
Agreement and prior to the Facility Termination Date, each Lender
severally agrees, on the terms and conditions set forth in this
Agreement, to make Loans to the Borrower from time to time in
amounts not to exceed in the aggregate at any one time
outstanding $8,000,000. Subject to the terms of this Agreement,
the Borrower may borrow, repay and reborrow at any time prior to
the Facility Termination Date. The Commitments to lend hereunder
shall expire on the Facility Termination Date."
(c) On the Effective Date the Borrower shall immediately pay to the
Administrative Agent for distribution to the Lenders ratably in proportion to
the ratio that their respective Commitments bear to the Aggregate Commitment the
dollar amount by which Loans outstanding on such date exceed $8,000,000.
2. EXTENSION OF FACILITY TERMINATION DATE. To reflect the agreement of
the parties hereto to extend the Facility Termination Date, effective as of the
Effective Date, the definition of the term "Facility Termination Date" set forth
in Article I of the Credit Agreement is hereby amended by deleting the date
"July 1, 2001" set forth therein and replacing the same with the date "June 30,
2002."
3. MODIFICATION OF LETTER OF CREDIT FACILITY. To reflect the agreement
of the parties hereto to extend the permitted outside expiration date of certain
Letters of Credit issued under the Credit Agreement, effective as of the
Effective Date, Section 2.19 of the Credit Agreement is hereby amended to delete
the last sentence thereof and to replace the same with the following:
"Each Letter of Credit shall be issued solely in support of
xxxxxxx'x compensation insurance providers and shall have a
stated expiration date no later than January 1, 2003."
4. CHANGES IN PRICING. To reflect the agreement of the parties hereto
to eliminate the Fixed Rate as a pricing option under the Credit Agreement and
to modify the spread applicable to Floating Rate Loans, effective as of the
Effective Date:
(a) All Loans funded under the Credit Agreement from and after the
Effective Date shall be funded as Floating Rate Loans;
(b) No Floating Rate Loans outstanding under the Credit Agreement on
the Effective Date may be continued as or converted into Fixed Rate Loans at the
end of their respective Interest Periods;
(c) All Loans outstanding as Fixed Rate Loans shall continue to bear
interest at the rate applicable thereto on the Effective Date to and including
the earlier to occur of: (1) the last day of the current Interest Period
therefor and (2) August 31, 2001, at which earlier date such Fixed Rate Loans
shall be converted to Floating Rate Loans; and
(d) The definition of the term "Applicable Margin" as set forth in
Article I of the Credit Agreement is hereby amended in its entirety as follows:
"`Applicable Margin' means 2.50%."
5. Prepayments. To reflect the agreement of the parties hereto to
provide for certain additional mandatory prepayment requirements, effective as
of the Effective Date
(a) Section 2.18 of the Credit Agreement is hereby amended to number
the existing provision set forth therein as subsection (i) and to add new
subsections (ii) and (ii) to read in their entirety as follows:
"(ii) Upon the sale, transfer or other disposition of any
Property of the Borrower or any of its Subsidiaries on or after
June 30, 2001 for total consideration in excess of $100,000
during any consecutive 12-month period (excluding sales of
inventory of the Borrower and its Subsidiaries in the ordinary
course of business) remit to the Administrative Agent as
prepayment of the Loans (with a concurrent dollar for dollar
permanent reduction of the Aggregate Commitment), the Lenders'
Allocated Share of 100% of the Net Cash Proceeds thereof;
provided, however, that following the consummation of the
Collateralization Transaction, each such mandatory prepayment
shall be delivered to the Collateral Agent for distribution in
accordance with the provisions of the Intercreditor Agreement.
(iii) Upon the issuance on or after June 30, 2001 of equity
securities of the Borrower or any of its Subsidiaries (other than
securities issued as payment in kind for cash amounts otherwise
payable on account of outstanding debt or equity securities),
remit to the Administrative Agent as prepayment of the Loans
(with a concurrent dollar for dollar permanent reduction of the
Aggregate Commitment), the Lenders' Allocated Share of 100% of
the Net Cash Proceeds thereof; provided, however, that following
the consummation of the Collateralization Transaction, each such
mandatory prepayment shall be delivered to the Collateral Agent
for distribution in accordance with the provisions of the
Intercreditor Agreement."
(b) The following new definitions are hereby added to Article I in
correct alphabetical order to read in their entirety as follows:
"`Collateral Agent' means that Person mutually acceptable to the
Lenders and the Noteholders which has agreed to act in such capacity for the
benefit of the Lenders and the Noteholders in connection with the
Collateralization Transaction."
"`Collateralization Transaction' means: (i) the pledge and grant by
the Borrower of a security interest in and lien upon all of its personal
property assets, including, without limitation, all accounts receivable and
intellectual property rights, to the Collateral Agent for the benefit of the
Lenders and the Noteholders as collateral security for the Senior Creditor
Obligations, and (ii) the guaranty of the Senior Creditor Obligations by each
Subsidiary of the Borrower and the pledge and grant by each such Subsidiary of a
first priority security interest in and lien upon all of its personal property
assets, including, without limitation, all accounts receivable and intellectual
property rights, to the Collateral Agent for the benefit of the Lenders and the
Noteholders as collateral security for such guaranty, such security interests in
the case of the Borrower and each of the Guarantors to be first priority
security interests to the extent such security interests cover accounts
receivable of such Persons and to have a priority subject only to other security
interests and liens mutually agreed by the Lenders and the Noteholders to the
extent such security interests cover other items of personal property
collateral."
"`Intercreditor Agreement' means an intercreditor agreement in form
and substance mutually acceptable to the Lenders and the Noteholders entered
into by such parties with the Collateral Agent in connection with the
Collateralization Transaction and providing, among other things, for the
allocation as between the Lenders and the Noteholders of the proceeds of the
sale or other disposition of Property of the Borrower and its Subsidiaries, such
allocation to be established by mutual agreement of the Lenders and the
Noteholders, with the allocation to which the Lenders will agree not necessarily
being the `Lenders' Allocated Share' as such term is utilized herein."
"'Lenders' Allocated Share' means on any date the ratio, expressed as
a percentage, which: (i) the Aggregate Commitment bears to the sum of (ii) the
Aggregate Commitment plus the aggregate principal amount of promissory notes
outstanding under the Note Purchase Agreement."
"`Net Cash Proceeds' means with respect to the sale or other
disposition of any Property or the issuance of any debt or equity securities,
the gross cash proceeds received less reasonable and customary transaction costs
(including any taxes due as a result of any gain on the sale or other
disposition of such Property) and less cash amounts actually paid by the
Borrower or its Subsidiary to the holders of Liens upon such Property as the
release price thereof in connection with such sale or other disposition."
"`Noteholders' means the holders from time to time of the promissory
notes of the Borrower issued pursuant to the Note Purchase Agreement."
"`Note Purchase Agreement' means that certain Note Purchase Agreement
dated September 1, 1998 providing for the issuance by the Borrower of its
$5,000,000 - 6.72% Senior Notes, Series A, due September 1, 2003 and its
$30,000,000 - 6.95% Senior Notes, Series B, due September 1, 2008, as amended
from time to time."
"`Senior Creditor Obligations' means: (i) the Obligations, and (ii)
all obligations of the Borrower to the Noteholders under the Note Purchase
Agreement."
6. MODIFICATION OF FINANCIAL COVENANTS. To reflect the agreement of
the parties hereto to modify certain of the financial covenants set forth in the
Credit Agreement, effective as of the Effective Date:
(a) The existing financial covenant set forth in Section 6.16 of the
Credit Agreement is hereby deleted in its entirety and replaced by the following
new financial covenant:
"6.16. MINIMUM EBITDA. The Borrower will not permit its
EBITDA, determined as of the last day of each fiscal quarter for
the 3-month period ending on such date, to be less than:
For Fiscal Quarters Ending During the Period: Minimum EBITDA
--------------------------------------------- --------------
To and including June 30, 2001 $1,750,000
June 30, 2001 to and including December 31, 2001 $2,000,000
After December 31, 2001 $2,200,000
(b) The existing financial covenant set forth in Section 6.18 of the
Credit Agreement is hereby deleted in its entirety and replaced by the following
new financial covenant:
"6.18. FIXED CHARGE COVERAGE RATIO. The Borrower will not
permit the Fixed Charge Coverage Ratio of the Borrower and its
consolidated Subsidiaries, determined as of the last day of each
fiscal quarter for the 12-month period ending on such date, to be
less than:
For Fiscal Quarters Ending During the Period: Minimum Required Ratio
--------------------------------------------- -----------------------
To and including June 30, 2001 1.75:1.00
June 30, 2001 to and including December 31, 2001 1.50:1.00
After December 31, 2001 1.60:1.00
(c) Section 6.19 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"6.19. TOTAL INDEBTEDNESS / ADJUSTED EBITDA RATIO. The
Borrower will not permit the Total Indebtedness / Adjusted EBITDA
Ratio of the Borrower and its consolidated Subsidiaries,
determined as of the last day of each fiscal quarter for the
12-month period ending on such date, to exceed:
For Fiscal Quarters Ending During the Period: Maximum Permitted Ratio
--------------------------------------------- -----------------------
To and including June 30, 2001 3.60:1.00
June 30, 2001 to and including September 30, 2001 4.50:1.00
September 30, 2001 to and including December 31, 2001 4.75:1.00
After December 31, 2001 4.50:1.00
(d) Section 6.20 of the Credit Agreement is hereby amended in its
entirety as follows:
"6.20. INTEREST COVERAGE RATIO. The Borrower will not permit
the Interest Coverage Ratio of the Borrower and its consolidated
Subsidiaries, determined as of the last day of each fiscal
quarter for the 12-month period ending on such date to be less
than 2.25:1.00."
(e) Article I of the Credit Agreement is hereby amended by inserting
the following new definition in the correct alphabetical order:
"`Fixed Charge Coverage Ratio' means, as of any date of
determination, the quotient of the EBITDA of the Borrower for
such period plus the rent expense of the Borrower and its
Subsidiaries on a consolidated basis for such period divided by
the sum of rent expense and interest expense of the Borrower and
its Subsidiaries on a consolidated basis for such period."
(f) Subsection (v) of the definition of "EBITDA" set forth in Article
I of the Credit Agreement is hereby amended to read in its entirety as follows:
"(v) extraordinary, unusual or non-recurring losses and
non-cash charges for any disposition of businesses or early
extinguishment of Indebtedness for such period and restructuring
charges including, but not limited to, severance costs and
expenses associated with office closures including remaining
lease obligations,"
7. MODIFICATION OF FINANCIAL REPORTING REQUIREMENTS. To reflect the
agreement of the parties hereto to modify certain of the Borrower's financial
reporting requirements, as of the Effective Date, Sections 6.1(ii) and (iii) of
the Credit Agreement are hereby amended in their entirety as follows:
"(ii) Within 45 days after the last day of each calendar
month, for itself and the Subsidiaries, consolidated
and consolidating unaudited balance sheets as at the
close of each such month and consolidated and
consolidating profit and loss and reconciliation of
surplus statements and a statement of cash flows for
the period from the beginning of such fiscal year to
the end of such month, all certified by its chief
financial officer.
(iii) Together with the financial statements required under
Section 6.1(i) above and with the financial statements
delivered pursuant to Section 6.1(ii) for the third
month in each calendar quarter, a compliance
certificate in substantially the form of Exhibit "C"
hereto signed by an Authorized Officer showing the
calculations necessary to determine compliance with
this Agreement and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof."
8. MODIFICATION OF RESTRICTIONS ON ACQUISITIONS. To reflect the
agreement of the parties hereto to modify thecovenant regarding Acquisitions, as
of the Effective Date, Section 6.14(viii) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(viii) Acquisitions approved by the Lenders in their sole
and absolute discretion."
9. SUPPLEMENTAL FACILITY FEE. In addition to the amendment fee to be
paid to the Administrative Agent for the benefit of the Lenders as described in
Paragraph 11(c) below, in consideration of the extension of the Facility
Termination Date as provided for herein, the Borrower hereby agrees to pay to
the Administrative Agent for the pro-rata benefit of the Lenders, a supplemental
facility fee in the amount of $250,000 (the "Supplemental Facility Fee"), which
Supplemental Facility Fee shall be irrevocably be deemed fully earned by the
Lenders who are Lenders as of the Effective Date and shall be due and payable in
full by the Borrower to such Lenders (or their successors or assigns) on June
15, 2002; provided, however, that if the Borrower shall have repaid the
Obligations in full and the Lenders' Commitments shall have terminated or
expired on or before such date, the obligation of the Borrower to pay the
Supplemental Facility Fee shall automatically be deemed cancelled by the
Lenders.
10. COLLATERALIZATION. The Borrower and the Lenders have agreed that
as a condition to the agreement of the Lenders to enter into this Third
Amendment and to extend the current Facility Maturity Date as provided herein
the Borrower and its Subsidiaries will consummate the Collateralization
Transaction and execute and delivery to the Collateral Agent for the benefit of
the Lenders and the Noteholders such documents, instruments and agreements,
including, without limitation, security agreements, financing statements,
acknowledgements and consents of third parties, corporate authorizations and
opinions of counsel and the Lenders, the Noteholders and the Collateral Agent
may reasonably require in connection therewith. The Borrower acknowledges and
agrees that in the event the Collateralization Transaction shall not have been
consummated to the satisfaction of the Lenders on or before July 30, 2001, then,
at the option of the Lenders, such failure shall constitute an Event of Default
under the Credit Agreement and the Lenders may exercise all rights, powers and
remedies available to them under the Credit Agreement and the other Loan
Documents, including the right to terminate their respective Commitments under
the Credit Agreement and to accelerate all Obligations outstanding.
11. THIRD AMENDMENT EFFECTIVE DATE. This Third Amendment shall be
effective as of the date first written above upon the date (the "Effective
Date") that the Administrative Agent shall have received:
(a) This Third Amendment, duly executed by all parties signatory
hereto;
(b) Such corporate resolutions, incumbency certificates and other
authorizing documentation the Lenders shall require;
(c) An amendment fee in the amount of $200,000 to be distributed to
the Lenders in accordance with the percentage each Lender's Commitment bears to
the Aggregate Commitment as of the Effective Date; and
(d) Such other fees and expenses (including attorneys' fees and time
charges of attorneys for the Administrative Agent, the Documentation Agent and
the Lenders) paid or incurred by the Administrative Agent, the Documentation
Agent or any Lender in connection with the preparation, negotiation, execution,
delivery, review, amendment, modification, and administration of this Third
Amendment (nothing contained herein shall in any manner or to any extent release
the Borrower from its obligations under Section 9.7 of the Credit Agreement to
pay such other fees and expenses as may be required to be paid by the Borrower
thereunder).
12. REAFFIRMATION OF THE LOAN DOCUMENTS. The Borrower and each of the
Guarantors by executing this Third Amendment as provided below, hereby affirms
and agrees that: (a) the execution and delivery by it of and the performance of
its obligations under this Third Amendment shall not in any way amend, impair,
invalidate or otherwise affect any of its obligations under the Loan Documents
to which it is party except to the extent expressly amended hereby, (b) the
terms "Obligations," "Guaranteed Obligations" and "Senior Obligations" as used
in the Loan Documents include, without limitation, the Obligations of Borrower
under the Credit Agreement as amended by this Third Amendment (and including,
without limitation, the obligations of the Borrower hereunder), (c) except as
expressly amended hereby, the Loan Documents remain in full force and effect as
written and constitute valid, enforceable obligations of such Persons, as
applicable, and (d) each of such Persons expressly waives, releases and
absolutely and forever discharges the Administrative Agent, the Documentation
Agent and the Lenders and their respective shareholders, directors, officers,
employees and agents, and their heirs, personal representatives, successors and
assigns, from any and all liability, claims, demands, damages, actions and
causes of action that any of such Persons may now have, or have had prior to the
date hereof arising out of or relating to the Loan Documents, the transactions
contemplated thereby and any action or inaction of any of the above-named
Persons with respect thereto.
13. REPRESENTATIONS AND WARRANTIES. The Borrower and each of the
Guarantors by executing this Third Amendment as provided below, hereby
represents and warrants to the Lenders that:
(a) It has the corporate power and authority and the legal right to
execute, deliver and perform this Third Amendment and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Third Amendment.
(b) This Third Amendment has been duly executed and delivered on its
behalf and constitutes its legal, valid and binding obligation enforceable
against it in accordance with the terms of this Third Amendment.
(c) On the date of this Third Amendment, there does not exist a
Default or Unmatured Default which has not been waived hereby.
(d) None of such Persons has any existing claims, defenses, personal
or otherwise, or rights of setoff whatsoever with respect to any of the Loan
Documents.
14. NO OTHER AMENDMENT. Except as expressly amended hereby, the Credit
Agreement and other Loan Documents shall remain in full force and effect as
written.
15. COUNTERPARTS. This Third Amendment may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
[Signature Page Following]
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be executed as of the day and year first above written.
SOS STAFFING SERVICES, INC., as the Borrower
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
BANK ONE, NA, as the Documentation Agent and
a Lender
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: First Vice President
XXXXX FARGO BANK NORTHWEST, N.A., as the
Administrative Agent and a Lender
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED
as of the 29th day of June, 2001:
BEDFORD CONSULTANTS, INC. [MERGED WITH INTELIANT]
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
INTELIANT CORPORATION
By: /s/ XxXxx X. Xxxxxx
----------------------------
Name: XxXxx X. Xxxxxx
Title: CEO
SERVCOM STAFF MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SOS COLLECTION SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
DEVON & DEVON PERSONNEL SERVICES, INC.
By: /s/ XxXxx X. Xxxxxx
----------------------------
Name: XxXxx X. Xxxxxx
Title: President
EXHIBIT A
---------
REPLACEMENT
COMMITMENT SCHEDULE
(as of the Third Amendment Effective Date)
LENDER COMMITMENT PERCENTAGE
------ ---------- ----------
Bank One, NA $11,250,000 62.50%
Xxxxx Fargo Bank Northwest, N.A. $ 6,250,000 37.50%
TOTAL: $18,000,000 100.00%
