WAIVER AND FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS WAIVER AND FIFTH AMENDMENT TO CREDIT AGREEMENT (the "WAIVER AND
AMENDMENT"), dated as of September 30, 1997, is entered into by and among
WESTERN STAFF SERVICES (USA), INC. (the "BORROWER"), WESTERN MEDICAL SERVICES,
INC. ("WMS"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent
for itself and the Banks (the "AGENT"), and the several financial institutions
party to the Credit Agreement (collectively, the "BANKS").
RECITALS
A. The Borrower, WMS, Banks, and Agent are parties to a Credit
Agreement dated as of February 21, 1996, and amendments thereto dated as of June
9, 1996, September 30, 1996, March 31, 1997, and August 22, 1997 (collectively,
the "CREDIT AGREEMENT") pursuant to which the Agent and the Banks have extended
certain credit facilities to the Borrower and WMS.
B. The Borrower and WMS have reported to the Agent and the Banks the
existence of a certain event of default under the Credit Agreement. The
Borrower and WMS have requested that the Banks waive that certain event of
default and agree to certain amendments of the Credit Agreement.
C. The Banks are willing to waive a certain default under the Credit
Agreement and to amend the Credit Agreement, subject to the terms and conditions
of this Waiver and Amendment.
AGREEMENT
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to them in the
Credit Agreement.
2. DEFAULT AND WAIVER.
(a) For purposes of this Waiver and Amendment, the "EXISTING DEFAULT"
shall mean the default existing on this date under Section 8.02 of the
Credit Agreement solely as a consequence of the sale by the Borrower of its
operating division known as Western Photo Service.
(b) Subject to and upon the terms and conditions hereof, the Banks
hereby waive the Existing Default.
(c) Nothing contained herein shall be deemed a waiver of (or
otherwise affect the Agent's or the Banks'
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ability to enforce) any other default or Event of Default, including
without limitation (i) any default or Event of Default as may now or
hereafter exist and arise from or otherwise be related to the Existing
Default (including without limitation any cross-default arising under the
Credit Agreement by virtue of any matters resulting from the Existing
Default), and (ii) any default or Event of Default arising at any time
after the Effective Date and which is the same as the Existing Default.
3. AMENDMENTS TO CREDIT AGREEMENT.
(a) The definition of "Applicable Margin" in Section 1.01 of the
Credit Agreement is hereby amended to read as follows in its entirety:
"APPLICABLE MARGIN" means
(i) with respect to Revolving Loans which are represented by
Base Rate Loans, zero percent (0)%;
(ii) with respect to Term Loans which are represented by Base
Rate Loans, zero percent (0)%;
(iii) with respect to Revolving Loans which are represented by
Offshore Rate Loans, one percent (1%);
(iv) with respect to Term Loans which are represented by Offshore
Rate Loans, one and three-quarters percent (1-3/4%) (as the same may
be adjusted pursuant to the provisions of subsection 2.09(b)); and
(v) with respect to L/C Advances which are represented by Base
Rate Loans, two percent (2%).
(b) The definition of "Term Maturity Date" in Section 1.01 of the
Credit Agreement is hereby amended by substituting the date "March 31,
2004" for the date "September 30, 2003."
(c) Subsection 2.01(a) of the Credit Agreement is hereby amended by
substituting the date "March 31, 1998" for the date "September 30, 1997."
(d) Subsections 2.07(b) and 2.07(c) of the Credit Agreement are
hereby amended by substituting the date "March 31, 1998" for the date
"September 30, 1997" in each place where the latter date appears therein.
(e) Subsection 2.08(a) of the Credit Agreement is hereby amended by
substituting the date "March 31, 1998" for
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the date "September 30, 1997" and the date "April 30, 1998" for the date
"October 31, 1997."
(f) Subsection 7.11(b) of the Credit Agreement is hereby amended to
read as follows in its entirety:
(b) Term Loans shall be used to finance Acquisitions in
compliance with the provisions of Section 8.11 (including the
refinance of the cash portion of Non-Stock Consideration paid for
Acquisitions made after September 15, 1995), to repay Acquisition
Financing (including Acquisition Financing existing on the Closing
Date), and to repay the principal balance of the term loan outstanding
under the Existing Credit Agreement;
(g) Subsection 8.11(h) of the Credit Agreement is hereby amended to
read as follows in its entirety:
(h) Immediately prior to, and immediately after, the
consummation of the Acquisition, no Default or Event of Default shall
have occurred and be continuing and the Borrower shall be in
compliance with the financial covenants set forth in Sections
8.13 - 8.18. If the aggregate Non-Stock Consideration and Stock
Consideration paid for any single Acquisition exceeds Ten Million
Dollars ($10,000,000), the Borrower shall provide each Bank, upon
consummation of the Acquisition, a Compliance Certificate, duly
completed and signed.
(h) Section 8.18 of the Credit Agreement is hereby amended to read as
follows in its entirety:
8.18 PROFITABILITY. The Borrower on a consolidated basis
with the Parent shall maintain Consolidated Net Income of not less
than zero on a cumulative basis as of the end of the first, second and
third quarters of each fiscal year, not less than Eight Million
Dollars ($8,000,000) for the 1997 fiscal year, and not less than Nine
Million Dollars ($9,000,000) for each fiscal year thereafter.
"CONSOLIDATED NET INCOME" means, as determined on the last day of any
fiscal quarter, net after-tax income of Borrower on a consolidated
basis with the Parent and its consolidated Subsidiaries determined
and computed in accordance with GAAP, excluding, however, gain(s)
attributable to extraordinary items and including, however, loss(es)
attributable to extraordinary items.
(i) Section 8.13 of the Credit Agreement is amended to read as
follows in its entirety:
8.13 CAPITAL EXPENDITURES. The Borrower or the
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Parent and its consolidated Subsidiaries shall not make or commit to make
Capital Expenditures in excess of an aggregate of Seven Million Dollars
($7,000,000) in the 1997 and 1998 fiscal years and Five Million Dollars
($5,000,000) in each fiscal year thereafter. For purposes of computing
compliance with this section, (a) the unused portion of permitted Capital
Expenditures shall not be carried forward from one fiscal year to a
succeeding fiscal year, and (b) fixed or capital assets acquired through
Acquisitions completed on or before March 31, 1998, shall not be included
in the foregoing limitations.
4. REPRESENTATIONS AND WARRANTIES. The Borrower and WMS each hereby
represents and warrants to the Agent and the Banks as follows:
(a) Other than the Existing Default, no Event of Default has
occurred and is continuing.
(b) The execution, delivery and performance by the Borrower and WMS
of this Waiver and Amendment have been duly authorized by all necessary
corporate and other action and do not and will not require any registration
with, consent or approval of, notice to or action by, any Person (including
any Governmental Authority) in order to be effective and enforceable. The
Credit Agreement as amended by this Waiver and Amendment constitutes the
legal, valid and binding obligations of the Borrower and WMS, enforceable
against each of them in accordance with its respective terms, without
defense, counterclaim or offset.
(c) Subject to the Existing Default, all representations and
warranties of the Borrower and WMS contained in the Credit Agreement are
true and correct.
(d) Each of the Borrower and WMS is entering into this Waiver and
Amendment on the basis of its own investigation and for its own reasons,
without reliance upon the Agent and the Banks or any other Person.
5. EFFECTIVE DATE. This Waiver and Amendment will become effective as of
September 30, 1997 (the "EFFECTIVE DATE"), PROVIDED that each of the following
conditions precedent is satisfied:
(a) The Agent has received from the Borrower, WMS, and each of the
Banks a duly executed original (or, if elected by the Agent, an executed
facsimile copy) of this Waiver and Amendment, together with a duly executed
Guarantor Acknowledgment and Consent in the form attached hereto (the
"GUARANTOR CONSENT"); and
(b) The Agent has received from Alternative
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Billing Services, Inc. ("ABS"), a copy of the resolutions of the board of
directors of ABS authorizing the present corporate officers of ABS to
execute, deliver, and perform the Guarantor Consent and all other Loan
Documents related thereto, certified by the Secretary or an Assistant
Secretary of ABS, together with a certificate of the Secretary or Assistant
Secretary of ABS certifying the names and true signatures of the officers
of ABS authorized to execute, deliver, and perform the Guarantor Consent
and all other Loan Documents related thereto.
6. RESERVATION OF RIGHTS. The Borrower and WMS each acknowledges and
agrees that neither the Agent's nor the Banks' forbearance in exercising their
rights and remedies in connection with the Existing Default, nor the execution
and delivery by the Agent and the Banks of this Waiver and Amendment, shall be
deemed (i) to create a course of dealing or otherwise obligate the Agent or the
Banks to forbear or execute similar waivers under the same or similar
circumstances in the future, or (ii) to waive, relinquish or impair any right of
the Agent or the Banks to receive any indemnity or similar payment from any
Person or entity as a result of any matter arising from or relating to the
Existing Default.
7. MISCELLANEOUS.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein to such Credit Agreement shall henceforth
refer to the Credit Agreement as amended by this Waiver and Amendment.
This Waiver and Amendment shall be deemed incorporated into, and a part of,
the Credit Agreement.
(b) This Waiver and Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors
and assigns. No third party beneficiaries are intended in connection with
this Waiver and Amendment.
(c) This Waiver and Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Waiver and Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
Each of the parties hereto understands and agrees that this document (and
any other document required herein) may be delivered by any party thereto
either in the form of an executed original or an executed original sent by
facsimile transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Agent of a facsimile transmitted
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document purportedly bearing the signature of a Bank or the Borrower or WMS
shall bind such Bank or the Borrower or WMS, respectively, with the same
force and effect as the delivery of a hard copy original. Any failure by
the Agent to receive the hard copy executed original of such document shall
not diminish the binding effect of receipt of the facsimile transmitted
executed original of such document of the party whose hard copy page was
not received by the Agent.
(e) This Waiver and Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Waiver and
Amendment supersedes all prior drafts and communications with respect
thereto. This Waiver and Amendment may not be amended except in accordance
with the provisions of Section 11.01 of the Credit Agreement.
(f) If any term or provision of this Waiver and Amendment shall be
deemed prohibited by or invalid under any applicable law, such provision
shall be invalidated without affecting the remaining provisions of this
Waiver and Amendment or the Credit Agreement, respectively.
(g) The Borrower and WMS each covenants to pay to or reimburse the
Agent and the Banks, upon demand, for all costs and expenses (including
allocated costs of in-house counsel) incurred in connection with the
development, preparation, negotiation, execution and delivery of this
Waiver and Amendment and the administration of the Existing Default,
including without limitation appraisal, audit, search and filing fees
incurred in connection therewith.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Waiver and Amendment as of the date first above written.
WESTERN STAFF SERVICES (USA),
INC.
By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
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WESTERN MEDICAL SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and
Controller
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
Secretary
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Bank and as Issuing Bank
By /s/ Xxxx Xxxxxxx
-----------------------------------
Xxxx Xxxxxxx
Vice President
SANWA BANK CALIFORNIA, as a
Bank and as Co-Agent
By /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Vice President
COMERICA BANK-CALIFORNIA, as a
Bank
By /s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx
Vice President
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GUARANTOR ACKNOWLEDGMENT
AND CONSENT
------------------------
The undersigned, each a guarantor or third party pledgor with respect to
the Borrower's and WMS's obligations to the Agent and the Banks under the Credit
Agreement, each hereby (i) acknowledges and consents to the execution, delivery
and performance by the Borrower and WMS of the foregoing Waiver and Fifth
Amendment to Credit Agreement (the "WAIVER AND AMENDMENT"), and (ii) reaffirms
and agrees that the respective guaranty, third party pledge or security
agreement to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Agent and the Banks
in connection with the Credit Agreement are in full force and effect, without
defense, offset or counterclaim. (Capitalized terms used herein have the
meanings specified in the Waiver and Amendment.)
WESTERN STAFF SERVICES, INC.
Dated: as of September 30, 1997 By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President
and Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
WESTERN STAFF SERVICES (NY), INC.
Dated: as of September 30, 1997 By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
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WESTERN TECHNICAL SERVICES, INC.
Dated: as of September 30, 1997 By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
MEDIAWORLD INTERNATIONAL
Dated: as of September 30, 1997 By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
WESTERN PERMANENT SERVICES
AGENCY, INC.
Dated: as of September 30, 1997 By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
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WESTERN STAFF SERVICES (GUAM),
INC.
Dated: as of September 30, 1997 By /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
ALTERNATIVE BILLING SERVICES,
INC.
Dated: as of September 30, 1997 By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and
Controller
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
Secretary
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