THIRD AMENDMENT TO CREDIT AGREEMENT
AND ASSUMPTION AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND ASSUMPTION AGREEMENT (the
"AMENDMENT AND ASSUMPTION"), dated as of March 31, 1997, is entered into by
and among WESTERN STAFF SERVICES, INC. (the "PARENT"), WESTERN STAFF SERVICES
(USA), INC. ("USA"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as agent of itself and the Banks (the "AGENT"), and the several financial
institutions party to the Credit Agreement (collectively, the "BANKS").
RECITALS
A. The Parent, the Banks, and the Agent are parties to a Credit Agreement
dated as of February 21, 1996, and amendments thereto dated as of June 9,
1996, and September 30, 1996 (collectively, the "CREDIT AGREEMENT") pursuant
to which the Agent and the Banks have extended certain credit facilities to
the Parent.
B. Parent has transferred to USA certain of Parent's assets and
liabilities, as more fully set forth in that certain Assignment of Contracts,
Warranties, Contract Rights and Intangible Assets and Transfer of Liabilities
Agreement entered into on December 30, 1996, between the Parent and USA, as
well as in that certain Assignment of Contracts, Warranties, Contract Rights
and Intangible Assets and Transfer of Liabilities Agreement entered into on
March 28, 1997, between the Parent and USA (collectively, the "ASSIGNMENT
AGREEMENT").
C. The Parent and USA have requested that the Banks: (1) agree to such
transfer of assets and liabilities to USA; (2) permit USA to become a party to
the Credit Agreement and succeed to all rights of the Parent and assume all
obligations of the Parent under the Credit Agreement; (3) release the Parent
from all of its liabilities and obligations to the Banks arising under or in
connection with the Credit Agreement; and (4) further amend the Credit
Agreement to reflect the foregoing.
D. The Banks are willing to grant the requests of the Parent and USA,
subject to the terms and conditions of this Amendment and Assumption.
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. CONSENT TO TRANSFER. The Banks hereby consent to
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the transfer by the Parent to USA of the Parent's assets and liabilities, as
set forth in the Assignment Agreement, notwithstanding any violation that
might otherwise occur under Sections 8.02 or 8.03 or any other provision of
the Credit Agreement as a result of such transfer.
3. ASSUMPTION BY USA. USA hereby covenants, promises and agrees (a) to
pay when due all sums now or hereafter owing under the Credit Agreement, in
the manner and in all respects as therein provided, (b) to perform each and
all the obligations provided in the Credit Agreement to be performed by Parent
at the time, in the manner and in all respects as therein provided, and (c)
to be bound by each and all the terms and provisions of the Credit Agreement
as though it had originally been made, executed and delivered by USA. All
references in the Credit Agreement to "Borrower" shall be deemed to refer to
"USA" except as otherwise provided in Section 5 below.
4. RELEASE OF PARENT. Parent is hereby released from further obligation
or liability to the Banks under or on account of the Credit Agreement except
to the extent of liabilities arising pursuant to the Guaranty and the
Guarantor Security Agreement required under Section 7(e) below.
5. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 1.01 of the Credit Agreement is amended by the addition
thereto of a new definition as follows:
"PARENT" means Western Staff Services, Inc., a Delaware
corporation.
(b) The definitions of "Consolidated Current Assets", "Consolidated
Current Liabilities, "Consolidated Net Income", "Consolidated Tangible Net
Worth", "Consolidated Total Assets", "Consolidated Total Liabilities",
"Fixed Charge Coverage Ratio", and "Net Profit After Tax" in Section 1.01
of the Credit Agreement are amended by substituting "Parent" for "Borrower"
in each place where the latter term appears therein.
(c) The definitions of "ERISA Event", "Multiemployer Plan", and
"Pension Plan" in Section 1.01 are amended by adding the words "or the
Parent" immediately following "Borrower" in each place where the latter
term appears therein.
(d) The preamble to Article VI of the Credit Agreement is amended by
adding the following to the beginning thereof:
All representations and warranties set forth in this
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Article VI shall be understood to mean the Parent in addition to, or in
lieu of, the Borrower, as the context may require.
(e) Subsections 7.01(a) and 7.01(b) are amended by substituting
"Parent" for "Borrower" in each place where the latter term appears therein.
Subsection 7.01(b) is further amended by substituting the words "the first,
second and third fiscal quarters of each fiscal year" for the words "each
fiscal quarter".
(f) Subsections 7.02(c) and 7.02(e) are amended by substituting
"Parent" for "Borrower" and "Parent's" for "Borrower's" in each place where
the latter terms appear therein.
(g) Subsections 7.03(b), 7.03(c), 7.03(d), 7.03(e), 7.03(f), and
7.03(j) are amended by adding the words "or the Parent" immediately
following "Borrower" in each place where the latter term appears therein.
(h) Subsection 7.03(g) is amended by substituting "Parent" for
"Borrower".
(i) The penultimate sentence of Section 7.03 is amended by adding the
words "or the Parent, as applicable," immediately following the word
"Borrower" in each place where the latter term appears therein.
(j) The preamble to Section 7.04 is amended by adding the words "and
the Parent" immediately following the word "Subsidiaries".
(k) The preamble to Section 7.07 is amended by adding the words "and
the Parent" immediately following the word "Subsidiaries".
(l) Section 7.08 is amended by adding the words "and the Parent"
immediately following the word "Subsidiaries".
(m) Section 7.09 is amended by adding the words "and the Parent"
immediately following the word "Subsidiaries" in each place where the
latter term appears therein.
(n) Subsections 7.10(a) and 7.10(b) are amended by adding the words
"and the Parent" immediately following the word "Subsidiaries" in each
place where the latter term appears therein.
(o) Subsection 7.13(b) is amended by adding the word "domestic"
immediately following the word "active".
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(p) Subsections 7.15(a) and 7.15(b) are amended by adding the words
"and the Parent" immediately following the word "Subsidiaries" in each place
where the latter term appears therein.
(q) Section 7.16 is amended by adding the words "and the Parent"
immediately following the words "ERISA Affiliates".
(r) The preamble to Section 8.02 is amended by adding the words "or
the Parent" immediately following the word "Subsidiaries".
(s) The preamble to Section 8.03 is amended by adding the words "or
the Parent" immediately following the word "Subsidiaries".
(t) The preamble to Section 8.04 is amended by adding the words "or
the Parent" immediately following the word "Subsidiaries".
(u) The preamble to Section 8.05 is amended by adding the words "or
the Parent" immediately following the word "Subsidiaries".
(v) Section 8.06 is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries" or the word "Subsidiary" in
each place where such latter terms appear therein.
(w) Section 8.07 is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries".
(x) The preamble to Section 8.08 is amended by adding the words "or
the Parent" immediately following the word "Subsidiaries".
(y) Section 8.09 is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries" in each place where such latter
term appears therein.
(z) Section 8.10 is amended by adding the words "or the Parent"
immediately following the word "ERISA Affiliate".
(aa) The preamble to Section 8.11 is amended by adding the words "or
the Parent" immediately following the word "Subsidiaries".
(bb) Subsection 8.11(b) is amended to read as follows in its entirety:
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(b) Any Person or Business Unit so acquired (the "ACQUIREE")
shall have achieved a positive net pre-tax income (computed and
determined in accordance with GAAP, excluding, however, gains and
loss(es) attributable to extraordinary items and owner-related
compensation and other benefits) for the fiscal year preceding the date
of the Acquisition.
(cc) Subsection 8.11(c) is deleted in its entirety.
(dd) Section 8.12 is amended to read as follows in its entirety:
8.12 RESTRICTED PAYMENTS. The Borrower shall not, and shall not suffer
or permit any of its Subsidiaries or the Parent to, declare or make any
dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any class
of its capital stock, or purchase, redeem or otherwise acquire for value
any shares of its capital stock or any warrants, rights or options to
acquire such shares, now or hereafter outstanding; except that:
(a) the Borrower, its Subsidiaries, and the Parent may declare
and make dividend payments or other distributions payable solely in their
common stock, and purchase, redeem or otherwise acquire shares of their
common stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new shares of
their common stock;
(b) the Borrower may declare and make cash dividend payments to
the Parent; and
(c) any wholly-owned Subsidiary of the Borrower may declare and
make dividend payments to the Borrower, whether in cash or in the form of
other Property of the Subsidiary.
(ee) Section 8.13 is amended by adding the words "and the Parent"
immediately following the word "Borrower".
(ff) Sections 8.14, 8.15, 8.16, 8.17 and 8.18 are amended by adding
the words "on a consolidated basis with the Parent" immediately following
the word "Borrower" in each place where such latter term appears therein.
(gg) Section 8.19 is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries".
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(hh) Section 8.20 is amended to read as follows in its entirety:
8.20 CHANGE IN STRUCTURE. Except as expressly permitted under Section
8.03, the Borrower shall not and shall not permit any of its Subsidiaries
or the Parent to, make any changes in its equity capital structure
(including in the terms of its outstanding stock), or amend its
certificate of incorporation or by-laws in any material respect.
(ii) Section 8.21 is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries" in each place where such latter
terms appears therein.
(jj) Subsection 9.01(b) is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries" in each place where such
latter term appears therein.
(kk) Subsection 9.01(c) is amended by deleting the clause beginning
with the words "PROVIDED, HOWEVER," and continuing through and including
the semicolon immediately preceding the word "or".
(ll) Subsection 9.01(e) is amended by adding the words "or the Parent"
immediately following the word "Subsidiaries".
(mm) Subsection 9.01(f) is amended by adding the words "or the Parent"
immediately following the words "Material Subsidiaries".
(nn) Subsection 9.01(g) is amended to read as follows in its entirety:
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or the Parent or any
Material Subsidiary of the Borrower, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of the Borrower's or the Parent's or any such Material
Subsidiary's Properties, and any such proceeding or petition shall not be
stayed or dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within sixty (60) days after commencement, filing or levy; (ii) the Borrower
or any of its Subsidiaries or the Parent admits the material allegations of
a petition against it in any Insolvency Proceeding, or an order for relief
(or similar order
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under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii)
the Borrower or any of its Subsidiaries or the Parent acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its Property or business;
(oo) Subsection 9.01(h) is amended by adding the words "or the Parent"
immediately following the word "Borrower".
(pp) Subsections 9.01(i) 9.01(j), and 9.01(k) are amended by adding the
words "or the Parent" immediately following the word "Subsidiaries" in each
place where such latter term appears therein.
(qq) Subsection 9.01(l) is amended by adding the words "or the Parent"
immediately following the word "Borrower" in each place where such latter
term appears therein.
(rr) Subsection 9.01(m) is amended to read as follows in its entirety:
(m) OWNERSHIP. (i) The Parent ceases to own one hundred percent
(100%) of the issued and outstanding capital stock of the Borrower, or
(ii) any Person (other than W. Xxxxxx Xxxxxx or any trust or foundation
established by or controlled by W. Xxxxxx Xxxxxx) acquires in excess of
thirty percent (30%) of the issued and outstanding capital stock of the
Parent entitled to vote for the election of members of the Board of
Directors of the Parent, or the composition of the Board of Directors of
the Parent changes by more than thirty-three percent (33%) from the
composition existing as of the Closing Date; or
(ss) Schedule 6.19 to the Credit Agreement is replaced in its entirety
with Revised Schedule 6.19 attached hereto.
6. REPRESENTATIONS AND WARRANTIES. The Parent and USA hereby represent and
warrant to the Agent and the Banks as follows:
(a) No Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Parent and USA of
this Amendment and Assumption have been duly authorized by all necessary
corporate and other action and do not and will not require any registration
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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 Amendment and Assumption constitutes
the legal, valid and binding obligations of USA, enforceable against it in
accordance with its respective terms, without defense, counterclaim or offset.
(c) All representations and warranties contained in the Credit
Agreement as modified by this Amendment and Assumption are true and correct.
(d) Each of the Parent and USA is entering into this Amendment and
Assumption on the basis of its own investigation and for its own reasons,
without reliance upon the Agent and the Banks or any other Person.
7. EFFECTIVE DATE. This Amendment and Assumption will become effective as
of March 31, 1997 (the "EFFECTIVE DATE"), PROVIDED that the Agent shall have
received all of the following, in form and substance satisfactory to the
Agent and each Bank and in sufficient copies for each Bank:
(a) This Amendment and Assumption duly executed by the Parent, USA,
the Agent, the Issuing Bank and each of the Banks, together with a duly
executed Guarantor Acknowledgment and Consent in the form attached hereto.
(b) A Borrower Security Agreement duly executed by USA and including,
without limitation, a complete listing of all servicemarks, trademarks and
copyrights owned by USA.
(c) A copy of the recordation request submitted to the United States
Patent and Trademark Office with respect to each servicemark and trademark
assigned by the Parent to USA pursuant to the Assignment Agreement, and a
copy of the recordation request submitted to the United States Copyright
Office with respect to each copyright assigned by the Parent to USA pursuant
to the Assignment Agreement.
(d) Certified copies of the resolutions of the board of directors of
USA approving and authorizing the execution, delivery and performance by USA
of this Amendment and Assumption and the other Loan Documents to be delivered
hereunder.
(e) A Guaranty and a Guarantor Security Agreement duly executed by the
Parent and including, without limitation, a complete listing of all
servicemarks, trademarks and copyrights owned by the Parent.
(f) A Guaranty and a Guarantor Security Agreement
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duly executed by Western Staff Services (Guam), Inc. ("WSS (GUAM)") and
Alternative Billing Services, Inc. ("ABS"), together with a UCC-1 financing
statement executed by WSS (Guam) and ABS to perfect the security interests
of the Agent for the benefit of the Banks, together with such evidence that
Agent may request to confirm that the Collateral owned by WSS (Guam) and ABS
is subject to no other Liens in favor of any Persons (other than Permitted
Liens).
(g) The articles or certificate of incorporation of WSS (Guam) and
ABS, certified by the Secretary of State (or similar, applicable Governmental
Authority) of the state of its incorporation, and the bylaws of WSS (Guam)
and ABS as in effect on the Effective Date, certified by its Secretary or
Assistant Secretary.
(h) Certified copies of the resolutions of the board of directors of
the Parent, WSS (Guam), and ABS approving the Guaranty and the Guarantor
Security Agreement to be delivered by each of them hereunder.
(i) A certificate of the Secretary or Assistant Secretary of USA, the
Parent, WSS (Guam), and ABS certifying the names and true signatures of the
officers of each entity authorized to execute, deliver and perform, as
applicable, this Amendment and Assumption, the Guaranty, and all other Loan
Documents to be delivered hereunder.
8. CONDITION SUBSEQUENT. By September 30, 1997, USA shall deliver to the
Agent the following:
(a) A copy of the United States Patent and Trademark Office Notice of
Recordation of Assignment with respect to each servicemark and trademark
assigned by the Parent to USA pursuant to the Assignment Agreement,
evidencing date, reel and frame number of recordation;
(b) A copy of the United States Patent and Trademark Office Notice of
Recordation of Assignment with respect to the re-assignment by USA to Parent
of servicemark nos. 1,009,578 and 1,942,774 (which were erroneously assigned
by the Parent to USA), evidencing date, reel and frame number of recordation;
(c) A copy of the United States Copyright Office Certificate of
Recordation with respect to each copyright assigned by the Parent to USA
pursuant to the Assignment Agreement, evidencing date, volume, and page of
recordation.
9. RESERVATION OF RIGHTS. USA acknowledges and agrees that the execution
and delivery by the Agent and the Banks of this Amendment and Assumption
shall not be deemed to create a
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course of dealing or otherwise obligate the Agent or the Banks to forbear or
execute similar amendments under the same or similar circumstances in the
future.
10. 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 Amendment and Assumption.
This Amendment and Assumption shall be deemed incorporated into, and a part
of, the Credit Agreement.
(b) This Amendment and Assumption 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 Amendment and Assumption.
(c) This Amendment and Assumption shall be governed by and construed
in accordance with the law of the State of California.
(d) This Amendment and Assumption 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 document
purportedly bearing the signature of a Bank or the Borrower shall bind such
Bank or the Borrower, 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 Amendment and Assumption, 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 Amendment and
Assumption supersedes all prior drafts and communications with respect
thereto. This Amendment and Assumption 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 Amendment
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and Assumption shall be deemed prohibited by or invalid under any
applicable law, such provision shall be invalidated without affecting the
remaining provisions of this Amendment and Assumption or the Credit
Agreement, respectively.
(g) USA 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 Amendment and Assumption and the
Loan Documents required hereunder, including without limitation appraisal,
audit, search and filing fees incurred in connection therewith.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment and Assumption as of the date first above written.
WESTERN STAFF SERVICES, INC.
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 (USA),
INC.
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
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By /s/
---------------------------------------
Xxxxxxx Xxxxxxx
Vice President
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XXXX XX XXXXXXX NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Bank and as Issuing Bank
By /s/
---------------------------------------
Xxxx Xxxxxxx
Vice President
SANWA BANK CALIFORNIA, as a
Bank and as Co-Agent
By /s/
---------------------------------------
Xxxxx X. Xxxxxxx
Vice President
COMERICA BANK-CALIFORNIA, as a
Bank
By /s/
---------------------------------------
Xxxx X. Xxxxxxx
First Vice President and
Group Manager
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GUARANTOR ACKNOWLEDGMENT
AND CONSENT
------------------------
The undersigned, each a guarantor or third party pledgor with respect to
the Parent'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 Parent and USA of the foregoing Third
Amendment to Credit Agreement and Assumption Agreement ("the AMENDMENT AND
ASSUMPTION"), 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 Amendment and Assumption.)
WESTERN STAFF SERVICES (NY), INC.
Dated: March 31, 1997 By /s/ Xxxx X. Xxxxxxx
--------------- ------------------------------------
as of Xxxx X. Xxxxxxx
Executive Vice President and
Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx x. Xxxxxxxx
Vice President and Treasurer
WESTERN TECHNICAL SERVICES, INC.
Dated: March 31, 1997 By /s/ Xxxx X. Xxxxxxx
--------------- ------------------------------------
as of 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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MEDIAWORLD INTERNATIONAL
Dated: March 31, 1997 By /s/ Xxxx X. Xxxxxxx
--------------- ------------------------------------
as of 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: March 31, 1997 By /s/ Xxxx X. Xxxxxxx
--------------- ------------------------------------
as of 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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REVISED SCHEDULE 6.19
SUBSIDIARIES AND
EQUITY INVESTMENTS
ACTIVE DOMESTIC SUBSIDIARIES
Western Staff Services (USA), Inc.
Western Staff Services (NY), Inc.
Western Technical Services, Inc.
Western Permanent Services Agency, Inc.
MediaWorld International
Western Staff Services (Guam), Inc.
Alternative Billing Services, Inc.
INACTIVE DOMESTIC SUBSIDIARIES
Western Legal Services, Inc.
Western Television News, Inc.
FOREIGN SUBSIDIARIES
Australia:
Western Staff Services Pty. Ltd.
Western Personnel Services Pty. Ltd.
Western Temporary Services Pty. Ltd.
Denmark:
Western Service A/S
Aksten's Kontorservice "Vikar" ApS
New Zealand:
Western Staff Services (N.Z.) Limited
Norway:
Western Staff Services A/S
Kontorservice A/S
United Kingdom:
Western Staff Services (U.K.) Limited
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