SECOND AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Second Amendment") is made and dated as of the ____ day of December, 2000 by
and among SOS STAFFING SERVICES, INC., a Utah corporation (the "Borrower"), the
Lenders to the Credit Agreement described below, 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 informed the Administrative Agent, the
Documentation Agent and the Lenders (collectively, the "Credit Extending
Parties") that it intends to cause its Wholly-Owned Subsidiary, Inteliant
Corporation ("Inteliant") to sell substantially all of the assets of Inteliant's
consulting division (the "Inteliant Disposition") to Herrick Douglass, Inc. (the
"Acquiring Entity") pursuant to that certain Asset Purchase Agreement dated as
of December 29, 2000 among Inteliant, the Borrower and the Acquiring Entity (the
"Asset Purchase Agreement").
C. The Borrower has requested that the Credit Extending Parties consent
to the Inteliant Disposition and agree to modify one of the financial covenants
contained in the Credit Agreement to avoid the breach of such covenant by the
Borrower upon the consummation of the Inteliant Disposition.
D. The Credit Extending Parties have agreed to provide such consent and
to modify such financial covenant 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. Consent to Inteliant Disposition. Each of the Credit Extending
Parties hereby: (a) approves the Inteliant Disposition on the terms set forth in
the Asset Purchase Agreement, a copy of which, certified by the Borrower as
being accurate and complete, has been delivered to each of the Credit Extending
Parties, and (b) waives, on a one time basis, any Default or Unmatured Default
which might be deemed to exist under Section 6.13 of the Credit Agreement on the
Closing Date (as defined in Paragraph 5 below) after giving effect to the
consummation of the Inteliant Disposition.
2. Modification of Financial Covenant. Each of the Credit Extending
Parties and the Borrower hereby agree that effective as of the Closing Date,
Section 6.18 of the Credit Agreement is amended to read in its entirety as
follows:
"6.18. Net Worth. The Borrower will not permit the Net Worth
of the Borrower and its consolidated Subsidiaries at any date to be
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less than the sum of: (i) $82,000,000, plus (ii) fifty percent (50%) of
net income of the Borrower and its consolidated Subsidiaries (if
positive) earned at any time after December 31, 2000, determined in
accordance with Agreement Accounting Principles, plus (iii)
seventy-five percent (75%) of the net proceeds of any new equity
issuance of the Borrower and its consolidated Subsidiaries occurring at
any time after December 31, 2000."
Each of the Credit Extending Parties hereby waives, on a one time basis, any
Default or Unmatured Default which might be deemed to exist under Section 6.18
of the Credit Agreement solely as a result of the consummation of the Inteliant
Disposition on the Closing Date prior to the effectiveness of the modification
of Section 6.18 of the Credit Agreement set forth herein.
3. Allocation of Inteliant Disposition Proceeds; Other Payments to
Senior Noteholders. The Borrower hereby agrees to distribute, or to cause its
Subsidiary receiving the same, to distribute, in immediately available same day
funds, in the ratio of 50% to the Senior Noteholders (as defined in Paragraph 5
below), and 50% to the Administrative Agent for the benefit of the Lenders, the
Net Distributable Upfront Cash Proceeds, all Retained Receivable Collections and
the Inteliant Disposition Related Tax Refund (as those terms are defined in
Paragraph 5 below), as follows:
(1) On the Closing Date, 100% of Net Distributable Upfront
Cash Proceeds payable under the Asset Purchase Agreement on the Closing
Date;
(2) On the first and fifteenth Business Day of each calendar
month following the Closing Date, 100% of all Retained Receivable
Collections received by the Borrower or any of its Subsidiaries during
the immediately preceding semi-monthly period; and
(3) Immediately upon receipt, 100% of the Inteliant
Disposition Related Tax Refund.
Failure to distribute or cause the distribution and allocation of the Net
Distributable Upfront Cash Proceeds, the Retained Receivable Collections and the
Inteliant Disposition Related Tax Refund as provided herein or the making of any
other distribution to the Senior Noteholders, other than regularly scheduled
payments of principal and interest, including mandatory scheduled redemptions,
as provided in the Note Purchase Agreement, or any modification of such payment
terms without the prior written consent of the Required Lenders shall, at the
option of the Required Lenders, constitute a Default, without cure period, under
the Credit Agreement. It is further acknowledged and agreed by the Borrower that
the Borrower shall pay to the Administrative Agent for the benefit of the
Lenders such fees and other similar payments, in like amount, as may from time
to time be paid by the Borrower or any of its Subsidiaries to the Senior
Noteholders in connection with the Inteliant Disposition, whether prior to, at
or after the Closing Date. Failure to make any such payments shall also, at the
option of the Required Lenders, constitute a Default, without cure period, under
the Credit Agreement.
4. Reduction in Maximum Aggregate Commitment. In addition to the
voluntary reductions of the Aggregate Commitment permitted pursuant to Section
2.5 of the Credit Agreement, the Aggregate Commitment shall be subject to
mandatory permanent reduction as follows:
(a) On the Closing Date, the Aggregate Commitment shall
automatically be reduced to $30,000,000, and the Aggregate Commitment and each
Lender's Commitment shall be as set forth on the replacement commitment schedule
attached hereto as Exhibit A; and
(b) Following the Closing Date, at any date upon which the
outstanding principal balance of the Senior Notes shall be less than the then
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current Aggregate Commitment, the Aggregate Commitment shall be reduced (with an
automatic concomitant pro rata reduction in each Lender's Commitment) to an
amount equal to the then outstanding principal balance of the Senior Notes.
If upon the date of any permanent reduction in the Aggregate Commitment as
provided herein the aggregate principal balance of Loans outstanding shall
exceed the limitation of Section 2.1 of the Credit Agreement, the Borrower shall
immediately pay to the Agent for the benefit of the Lenders as a mandatory
prepayment of Loans outstanding, the full dollar amount of such excess.
5. Definitions. For the purposes of the Second Amendment, the
following terms shall be given the following meanings when used herein:
"Acquiring Entity" has the meaning given such term in Recital B
above.
"Asset Purchase Agreement" has the meaning given such term in
Recital B above.
"Closing Date" has the meaning given such term in the Asset
Purchase Agreement
"Inteliant Disposition" has the meaning given such term in Recital
B above.
"Inteliant Disposition Related Tax Refund" means the federal tax
refund that the Borrower has informed the Credit Extending Parties will be
payable to the Borrower on or before June 30, 2001 on account of the Borrower's
consolidated federal taxes for fiscal years 1998, 1999 and forward after giving
effect to the Inteliant Disposition.
"Loan and Stock Pledge Agreement" has the meaning given such term
in the Asset Purchase Agreement.
"Net Distributable Upfront Cash Proceeds" means: (a) all cash
proceeds paid or payable by the Acquiring Entity on the Closing Date on account
of the Inteliant Disposition, minus (b) customary and reasonable closing costs,
and minus (c) the maximum amount committed to be lent by [the Borrower] to [the
Acquiring Entity] under the Loan and Stock Pledge Agreement.
"Note Purchase Agreement" means that certain Note Purchase
Agreement dated as of _______, 1998 by and among the Borrower and
______________________. [NOTE: If the Senior Notes were issued under multiple
Note Purchase Agreements, all such agreements need to be included in the
definition.}
"Retained Receivable Collections" means, all cash proceeds received
on account of accounts receivable of Inteliant existing on the Closing Date and
not sold to the Acquiring Entity in connection with the Inteliant Disposition
and all accounts receivable generated following the Closing Date on account of
Work in Process.
"Senior Note Holders" means the holders of the Senior Notes.
"Senior Notes" means those certain promissory notes, in the
aggregate original principal amount of $35,000,000, issued by the Borrower
pursuant to the Note Purchase Agreement.
"Work in Process" has the meaning given such term in the Asset
Purchase Agreement.
6. Second Amendment Effective Date. This Second Amendment shall be
effective as of the date first written above upon the date that the
Administrative Agent shall have received:
(a) This Second Amendment duly executed by all parties signatory
hereto;
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(b) Such corporate resolutions, incumbency certificates and other
authorizing documentation the Administrative Agent shall require;
(c) For distribution to the Lenders, the mandatory prepayment, if
any, required pursuant to Paragraph 4(a) above;
(d) For distribution to the Lenders, any fee that is paid to the
Senior Noteholders on or immediately following the Closing Date in connection
with the consummation of the Inteliant Disposition; and
(e) All 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 the Second
Amendment which are set forth in a billing statement or statements delivered to
the Borrower prior to the closing of the Inteliant Disposition (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).
7. Reaffirmation of the Loan Documents. The Borrower hereby affirms
and agrees that: (a) the execution and delivery by it of and the performance of
its obligations under this Second Amendment shall not in any way amend, impair,
invalidate or otherwise affect any of its obligations under the Loan Documents,
(b) the term "Obligations" as used in the Loan Documents includes, without
limitation, the Obligations of Borrower under the Credit Agreement as amended by
this Second Amendment (including, without limitation, the obligations of the
borrower hereunder), and (c) except as expressly amended hereby, the Loan
Documents remain in full force and effect as written.
8. Representations and Warranties. The Borrower 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 Second Amendment and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Second Amendment.
(b) This Second 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 Second Amendment.
(c) On the date of this Second Amendment and both before and
following the consummation of the Inteliant Acquisition, there does not exist a
Default or Unmatured Default which has not been waived hereby.
9. No Other Amendment. Except as expressly amended hereby, the Credit
Agreement and Other Loan Documents shall remain in full force and effect as
written.
10. Counterparts. This Second 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]
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed as of the day and year first above written.
SOS STAFFING SERVICES, INC., as the Borrower
By:______________________________________________________
Name:____________________________________________________
Title:___________________________________________________
BANK ONE, NA, as the Documentation Agent and a Lender
By:______________________________________________________
Name:____________________________________________________
Title:___________________________________________________
FIRST SECURITY BANK, N.A., as the Administrative Agent and a Lender
By:______________________________________________________
Name:____________________________________________________
Title:___________________________________________________
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EXHIBIT A
REPLACEMENT
COMMITMENT SCHEDULE
(as of the Second Amendment Effective Date)
LENDER COMMITMENT PERCENTAGE
------ ---------- ----------
Bank One, NA $18,750,000 62.50%
First Security Bank, N.A. $11,250,000 37.50%
TOTAL: $30,000,000 100.00%
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