Execution Version
FIRST AMENDMENT TO
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED INTERCREDITOR AGREEMENT (this
"Agreement"), dated as of March 31, 2003, is among U.S. BANK NATIONAL
ASSOCIATION (as successor-in-interest to State Street Bank and Trust Company) as
collateral agent under the Existing Intercreditor Agreement referred to below
(the "Collateral Agent"), XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Xxxxx
Fargo"), as administrative agent under the Bank Credit Agreement (as defined in
the Existing Intercreditor Agreement referred to below) (in such capacity,
together with its successors and assigns in such capacity, the "Bank Agent"),
and EACH OF THE PERSONS ON ANNEX 1 ATTACHED HERETO (collectively, the
"Noteholders"), and is acknowledged and agreed by SOS STAFFING SERVICES, INC., a
Utah corporation (the "Company"), and EACH OF THE GUARANTORS (as defined in the
Existing Intercreditor Agreement referred to below).
R E C I T A L S
WHEREAS, unless otherwise provided herein, capitalized terms used herein
have the meaning ascribed to them in the Existing Intercreditor Agreement
referred to below;
WHEREAS, pursuant to that certain Amended and Restated Intercreditor
Agreement, dated as of April 15, 2002 (the "Existing Intercreditor Agreement"),
the Benefited Parties appointed U.S. Bank National Association (as
successor-in-interest to State Street Bank and Trust Company) to act as the
Collateral Agent; and
WHEREAS, the Bank Agent, the Banks and the Noteholders, being all of the
Benefited Parties under the Existing Intercreditor Agreement, have agreed to
amend the Existing Intercreditor Agreement as provided herein (the Existing
Intercreditor Agreement as amended is hereinafter referred to as the "Amended
Intercreditor Agreement");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the Bank Agent, for itself and on behalf of the Banks, the
Noteholders and the Collateral Agent agree as follows:
1. Amendments.
(a) The definitions of "Additional Commitment Reductions", "Additional
Required Payments" and specified in transaction in Section 1 of the Existing
Intercreditor Agreement are each amended and restated as follows:
Additional Commitment Reductions - means the reductions in the
Aggregate Commitment (as defined in the Bank Credit Agreement) or the
commitment of the Banks to make Loans thereunder which are due to take
effect, subject to Section 4(a)(ii), on the Restructuring Date,
September 15, 2002, and December 15, 2002, in the amounts of $313,000,
$469,500 and $558,928.57, respectively, and on September 1, 2003,
October 1, 2003, November 1, 2003 and December 1, 2003 each in the
amount of $156,500; provided, however, that no such reduction shall be
effective to the extent it would reduce the Aggregate Commitment below
$12,500,000 or the Loan Credit Sublimit below $2,500,000.
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Additional Required Payments - means: (a) the principal
payments due under the Note Purchase Agreements on each of the
Restructuring Date, September 15, 2002 and December 15, 2002 in the
amounts of $687,000, $1,030,500 and $1,226,785.72, respectively, and on
each of September 1, 2003, October 1, 2003, November 1, 2003 and
December 1, 2003 each in the amount of $343,500 and (b) any principal
payment due under the Bank Credit Agreement on each of the
Restructuring Date, September 15, 2002, December 15, 2002, September 1,
2003, October 1, 2003, November 1, 2003 and December 1, 2003, which
payment shall be in such amount that the dollar amount of Bank Credit
Obligations on such dates does not exceed the Aggregate Commitment (as
defined in the Bank Credit Agreement) or the commitment of the Banks to
make Loans thereunder after giving effect to the Additional Commitment
Reduction on such date.
Specified Transaction - means (a) any Asset Disposition the
total consideration of which, when taken together with the total
consideration received in respect of each other Asset Disposition
consummated during the period of 365 consecutive days ended on the date
of such Asset Disposition, is greater than $100,000 at such time, (b)
the distribution of amounts held by the Collateral Agent for
distribution to the Benefited Parties as of the Restructuring Date
pursuant to Section 4(i), (c) the consummation of the sale of any debt
or equity securities of the Company or any of its Subsidiaries (other
than by a Subsidiary to another Subsidiary), (d) any amounts
attributable to federal or state tax refunds or repayments, except that
if no Default or Event of Default shall at the receipt thereof, the
Company shall be permitted to retain an amount attributable to the
Federal Net Loss Carry Back Refund in an amount not to exceed
$3,800,000, (e) the sale or collection of receivables retained by any
Grantor in connection with the sale of any Subsidiary or business of
such Grantor and (f) the receipt by the Company or any Subsidiary of
any net proceeds arising from any source other than the sale of
inventory in the ordinary course of business and the transactions
identified in the foregoing clauses (a) through (d) above, such sources
to include, without limitation, the exercise or compromise of any
rights of the Company in respect of any insurance policy or the receipt
of any condemnation proceeds (except to the extent that the applicable
Collateral Document shall permit application of such net proceeds to
the repair of the affected property) and any litigation or litigation
proceeds (including, without limitation, any administrative proceeding
and any arbitration).
(b) Clause (i) of Section 4(a) of the Existing Intercreditor Agreement
is hereby amended and restated as follows:
(i) Prior to the occurrence of a True-Up Event, the
Grantors may pay, and the applicable Benefited Parties may
receive, (i) Permitted Interest Payments, (ii) principal
payments in respect of the Bank Credit Obligations which do
not result in the permanent reduction of the Aggregate
Commitment under (and as defined in) the Bank Credit
Agreements, (iii) the Additional Required Payments and (iv)
reimbursements for reasonable costs and expenses incurred by
any Benefited Party and payable to such Benefited Party in
accordance with its respective Financing Agreements (as in
effect on March 31, 2003), except that the Net Cash Proceeds
from, and all other amounts in respect of, Specified
Transactions shall be applied as provided in Section 4(b).
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(c) Clause (ii) of Section 4(a) of the Existing Intercreditor Agreement
is hereby amended and restated as follows:
(ii) On each of the Restructuring Date, September 15,
2002, December 15, 2002, September 1, 2003, October 1, 2003,
November 1, 2003 and December 1, 2003, so long as the
Noteholders shall have received the required principal
payments of the Notes due them on such date, the Aggregate
Commitment and the Loan Credit Sublimit shall be reduced by
the amount of the Additional Commitment Reduction applicable
for such date (such reduction to take effect on such date or
such other date as the Noteholders shall have actually
received such required principal payment).
(d) Clause (ii) of Section 4(b) of the Existing Intercreditor Agreement
is hereby amended and restated as follows:
(ii) by the Banks, first to repay the principal
portion of Loans outstanding under the Bank Credit Agreement
(if any), such payments up to an amount such that the Loan
Credit Sublimit shall be reduced to (but not below)
$2,500,000, and second with the balance, if any, remitted to
the Bank Agent to be held in a cash collateral account (as
provided in the Existing Bank Credit Facility as in effect on
March 31, 2003, the "Cash Collateral Account") until the
amount in the Cash Collateral Account reaches $2,500,000 and
then third to the Collateral Agent for application on the
terms and subject to the conditions set forth in Section 4(d),
it being acknowledged and agreed by the Company that upon
delivery of such payment or Net Cash Proceeds to the
Collateral Agent as provided in this Section 4(b): (1) the
Aggregate Commitment under the Bank Credit Agreement will be
automatically and permanently reduced, dollar for dollar, in
an amount equal to the Banks' Sharing Percentage of such
payment or Net Cash Proceeds but only to the extent that such
payment does not reduce the Aggregate Commitment below
$12,500,000, and (2) the Loan Credit Sublimit will be
concurrently automatically and permanently reduced dollar for
dollar by the Bank's Sharing Percentage of such payment or Net
Cash Proceeds but only to the extent that such payment does
not reduce the Loan Credit Sublimit below $2,500,000 (or, if
the amount of the availability under the Loan Credit Sublimit
above $2,500,000 is then less than the full amount of the
Bank's Sharing Percentage of such payment or Net Cash
Proceeds, then by such amount as shall be required to reduce
the Loan Credit Sublimit to (but not below) $2,500,000). For
greater certainty, the parties acknowledge that the loan
facility provided pursuant to the Bank Credit Documents is
revolving in nature, and nothing in this Section is intended
to restrict the revolving nature of such loan facility
(subject to the reduction of the commitment of the Banks to
extend loans thereunder as provided in this Agreement and the
Bank Credit Agreement).
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(e) Section 4(b) of the Existing Intercreditor Agreement is hereby
amended to add the following new paragraph immediately following existing
subsection (ii) thereto:
"Should the Banks become Below-Formula Benefited Parties by
virtue of applying the cash held in the Cash Collateral
Account, they shall promptly, upon the occurrence of a True-Up
Event, remit to the Collateral Agent, for distribution
pursuant to Section 4(c) hereof, cash in an amount sufficient
to cause the Banks' Actual Principal Percentage at such time
to be increased to equal the Banks' Sharing Percentage at such
time. The Benefited Parties and the Grantors agree that any
funds held as cash collateral with respect to any Letter of
Credit will, upon the release thereof (as provided in the Bank
Credit Agreement as in effect on March 31, 2003) be paid to
the Collateral Agent and distributed to the Benefited Parties
in accordance with this Section 4(b). In the event for
whatever reason funds drawn under any Letter of Credit are
returned to any Grantor or are legally required to be returned
to any Grantor, such Grantor shall or, to the extent such
funds have not yet been returned to such Grantor, shall direct
the holder of such funds to, deliver such funds to the
Collateral Agent to be applied as provided in this Section
4(b). In connection with the renegotiation or extension of any
Letter of Credit, the Grantors shall use their best efforts to
cause the beneficiary thereunder to agree in writing to
deliver such funds directly to the Collateral Agent."
(f) Article 4 of the Existing Intercreditor Agreement is hereby amended
to add the following new subsection (j) immediately following existing
subsection (i) thereto:
"(j) Should the Collateral Agent receive any payments from the
Company with respect to the Recapitalization Fee (as such term
is defined in Section 8 of Amendment No. 4 to Note Purchase
Agreement dated as of March 31, 2003 between the Company and
the Noteholders and in Section 6 of that Sixth Amendment
Agreement to Amended and Restated Credit Agreement dated as of
March 31, 2003 between the Company and the Banks) or the
letter of credit fee required pursuant to Section 2.25(2) of
the Bank Credit Agreement and Section 8.8 of the Note Purchase
Agreements, it shall distribute the proceeds of such
Recapitalization Fee or letter of credit fee, as applicable,
when received to the Bank Agent and he Noteholders in
accordance with their respective Sharing Percentage."
2. EFFECT OF AMENDMENT.
Except as expressly provided in this Agreement, the Existing
Intercreditor Agreement shall remain in full force and effect, without
modification or amendment. This Agreement shall be binding upon, and shall inure
to the benefit of, the successors and assigns of each of the parties hereto and
the holders from time to time of the Benefited Obligations.
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3. DUPLICATE ORIGINALS; EXECUTION IN COUNTERPART.
Two or more duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed in one or
more counterparts and shall be effective when at least one counterpart shall
have been executed by each party to this Agreement, and each set of counterparts
which, collectively, show execution by each such party to this Agreement shall
constitute one duplicate original.
4. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE
LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
[Remainder of page intentionally left blank. Next page is signature page.]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
By ____________________________
Name:
Title:
XXXXX FARGO, NATIONAL ASSOCIATION,
as Administrative Agent and a Lender
By ____________________________
Name:
Title:
XXXXXXX NATIONAL LIFE INSURANCE COMPANY
By: PPM America, Inc., as attorney in fact, on behalf
of Xxxxxxx National Life Insurance Company
By ____________________________
Name:
Title:
FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN
By ____________________________
Name:
Title:
FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN
By ____________________________
Name:
Title:
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[Signature Page to First Amendment to Amended and
Restated Intercreditor Agreement]
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By ____________________________
Name:
Title:
By ____________________________
Name:
Title:
THE CANADA LIFE ASSURANCE COMPANY,
as beneficial owner
By ____________________________
Name:
Title:
CANADA LIFE INSURANCE COMPANY OF AMERICA, as beneficial owner
By ____________________________
Name:
Title:
CANADA LIFE INSURANCE COMPANY OF NEW YORK, as beneficial owner
By ____________________________
Name:
Title:
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[Acknowledgment of and Consent and Agreement to
First Amendment to Amended and Restated Intercreditor Agreement]
ACKNOWLEDGMENT OF AND CONSENT AND AGREEMENT TO
FIRST AMENDMENT TO
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
The undersigned, the Company and the other Grantors described in the
First Amendment to Amended and Restated Intercreditor Agreement set forth above,
acknowledge and to the extent required agree and consent to the terms and
conditions thereof. Each of the undersigned hereby acknowledges and agrees to
perform its obligations under the First Amendment to Amended and Restated
Intercreditor Agreement (as amended thereby) and acknowledges and agrees that it
is not a third-party beneficiary of, and has no rights under, the Intercreditor
Agreement (except as otherwise specifically provided therein).
IN WITNESS WHEREOF, each of the undersigned has caused this
Acknowledgment of and Consent and Agreement to First Amendment to Amended and
Restated Intercreditor Agreement to be executed by its duly authorized officer.
SOS STAFFING SERVICES, INC.
By ____________________________
Name:
Title:
SERVCOM STAFF MANAGEMENT, INC.
By ____________________________
Name:
Title:
INTELIANT CORPORATION
By ____________________________
Name:
Title:
SOS COLLECTION SERVICES, INC.
By ____________________________
Name:
Title:
DEVON & DEVON PERSONNEL SERVICES, INC.
By ____________________________
Name:
Title:
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EXHIBIT A
RESTRUCTURING DATE DISTRIBUTION
===========================================================================================
Beneficiary Distribution Amount
===========================================================================================
Xxxxx Fargo Bank, National Association, as Administrative Agent $300,951.50
-------------------------------------------------------------------------------------------
The Canada Life Assurance Company $37,746.00
-------------------------------------------------------------------------------------------
Canada Life Insurance Company of America $37,746.00
-------------------------------------------------------------------------------------------
Canada Life Insurance Company of New York $18,873.00
-------------------------------------------------------------------------------------------
Xxxxxxx National Life Insurance Company $283,094.97
-------------------------------------------------------------------------------------------
Great-West Life & Annuity Insurance Company $188,729.97
-------------------------------------------------------------------------------------------
Farm Bureau Life Insurance Company of Michigan $56,618.99
-------------------------------------------------------------------------------------------
Farm Bureau Mutual Insurance Company of Michigan $37,746.00
===========================================================================================
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