EXHIBIT 10.35

 

FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT

 

This First Amendment and Waiver to Credit Agreement (the “Amendment”) is
effective as of November 14, 2003, among RemedyTemp, Inc. (the “Borrower”), each
lender party hereto (collectively, the “Lenders” and individually a “Lender”)
and Bank of America, N. A., as Administrative Agent, Swing Line Lender and L/C
Issuer. Capitalized terms used herein without definition shall have the same
meaning as set forth in the Credit Agreement (defined below).

 

RECITALS

 

A.    The Borrower, the Lenders and the Administrative Agent entered into that
certain Credit Agreement dated as of July 31, 2002 (the “Agreement”).

 

B.    The Borrower, the Lenders and the Administrative Agent desire to amend
certain terms and provisions of the Agreement.

 

C.    Borrower requests that the Administrative Agent and the Lenders
temporarily waive, and such parties are willing to waive until January 15, 2004,
the Borrower’s failure to comply with a certain provision of the Agreement for
the period specified herein on the terms herein provided.

 

AGREEMENT

 

1.    Amendments

 

To induce the Administrative Agent and the Lenders to waive the covenants
violations described in Section 2 below for the period specified therein, the
Borrower is willing to grant to the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders (including the Swing Line Lender and L/C
Issuer), a security interest in certain personal property of the Borrower. The
Agreement is hereby amended as follows:

 

1.1    Section 1.01 of the Agreement is amended to add as a defined term
“Security Agreement,” in the appropriate alphabetical order, to read as follows:

 

“Security Agreement” means the Security Agreement made by the Borrower in favor
of the Administrative Agent, on behalf of the Lenders and the Administrative
Agent, substantially in the form of Exhibit G.”

 

1.2    The definition of “Loan Documents” in Section 1.01 of the Agreement is
amended in its entirety to read as follows:

 

“Loan Documents” means this Agreement, each Note, the Fee Letter, the Security
Agreement and the Guaranty.”

 

1.3    Article II of the Agreement is amended to add a new Section 2.15 to read
as follows:

 

“2.15 Collateral. All obligations of the Borrower to the Lenders and the
Administrative Agent arising under the Loan Documents to which the Borrower is a
party shall be secured by personal property the Borrower now owns or will own in
the future as described in the Security Agreement.”

 

1.4    The Agreement is amended to add Exhibit G in the form attached to this
Amendment.

 

2.    Waivers.  The Administrative Agent and the Lenders (including the Swing
Line Lender and L/C Issuer) hereby waive until January 15, 2004, the failure of
the Borrower to comply with the provisions of Section 7.11(c) (Fixed Charge
Coverage Ratio) and Section 7.11(d) (Consolidated EBITDA) of the Agreement for
the fiscal periods ending June 30, 2003 and September 28, 2003. The waiver
granted herein is limited expressly as herein provided and shall not be deemed a
waiver of this provision for the same period after January 15, 2004, or for any
other period or a waiver of any other term, condition or provision of the
Agreement. This waiver shall expire on January 15, 2004 and be of no further
effect.

 

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3.    Waiver Fee.  The Borrower shall pay to the Administrative Agent for the
benefit of the Lenders a waiver fee in the amount of Eighty Thousand Dollars
($80,000.00) (“Waiver Fee”). The Waiver Fee shall be payable as follows: (i)
Twenty Thousand Dollars ($20,000.00) payable on the date of execution of this
Amendment and (ii) Sixty Thousand Dollars ($60,000.00) payable on the earlier of
the date of termination of the Agreement or January 15, 2004.

 

4.    Representations and Warranties.  When the Borrower signs this Amendment,
the Borrower hereby represents and warrants to the Administrative Agent and the
Lenders that: (i) except as herein provided, no default specified in the
Agreement and no event which with notice or lapse of time or both would become
such a default has occurred, (ii) the representations and warranties of Borrower
pursuant to the Agreement are true on and as of the date hereof as if made on
and as of said date, (iii) the making and performance by Borrower of this
Amendment have been duly authorized by all necessary action, and (iv) no
consent, approval, authorization, permit or license is required in connection
with the making or performance of the Agreement as amended hereby.

 

5.    Conditions.  This Amendment will be effective when the Administrative
Agent receives the following items, in form and content acceptable to the
Administrative Agent.

 

5.1    This Amendment duly executed by all parties hereto.

 

5.2    The Security Agreement duly executed by all parties thereto.

 

5.3    Payment of that portion of the Waiver Fee payable on execution of this
Amendment.

 

5.4    Payment of all out-of-pocket expenses, including attorneys’ fees,
incurred by the Administrative Agent in connection with the preparation of this
Amendment.

 

6.    Effect of Amendment.  Except as provided in this Amendment, the Agreement
shall remain in full force and effect and shall be performed by the parties
hereto according to its terms and provisions.

 

IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto
effective as of the date first above written.

 

REMEDYTEMP, INC.

By:

     

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Name:

     

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Title:

     

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BANK OF AMERICA, N.A., as Administrative Agent

By:

     

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Name:

     

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Title:

     

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BANK OF AMERICA, N.A., as Lender, L/C Issuer and Swing Line Lender

By:

     

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Name:

     

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Title:

     

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UNION BANK OF CALIFORNIA, N. A., as a Lender

By:

     

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Name:

     

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Title:

     

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EXHIBIT G

 

SECURITY AGREEMENT (RECEIVABLES)

 

1.    BACKGROUND.  Reference is made to that certain Credit Agreement dated as
of July 31, 2002, as amended from time to time (the “Credit Agreement”) among
RemedyTemp, Inc. (the “Borrower”), certain lenders party thereto (collectively,
the “Lenders” and individually a “Lender”) and Bank of America, N. A., in its
capacity as administrative agent (the “Administrative Agent”). Capitalized terms
used herein without definition shall have the same meaning as set forth in the
Credit Agreement.

 

2.    THE SECURITY.  The Borrower hereby assigns and grants to Bank of America,
N.A., as Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, a security interest in the following described property
(“Collateral”):

 

A.    All of the following, whether now owned or hereafter acquired by Borrower:
accounts, contract rights, chattel paper and instruments.

 

B.    All negotiable and nonnegotiable documents of title now owned or hereafter
acquired by Borrower covering any of the above described property.

 

C.    All rights under contracts of insurance now owned or hereafter acquired by
Borrower covering any of the above described property.

 

D.    All proceeds, product, rents and profits now owned or hereafter acquired
by Borrower of any of the above described property.

 

E.    All books and records now owned or hereafter acquired by Borrower
pertaining to any of the above-described property, including but not limited to
any computer readable memory and any computer hardware or software necessary to
process such memory (“Books and Records”).

 

3.    THE INDEBTEDNESS.  The Collateral secures and will secure all Indebtedness
of Borrower to the Administrative Agent and the Lenders (including the Swing
Line Lender and the L/C Issuer). For the purposes of this Agreement,
“Indebtedness” means all loans, advances and other extensions of credit made by
the Lenders (including the Swing Line Lender and L/C Issuer) and the
Administrative Agent to Borrower and all other obligations and liabilities of
Borrower to the Lenders (including the Swing Line Lender and L/C Issuer) and the
Administrative Agent arising under the Credit Agreement whether now existing or
hereafter incurred or created, whether voluntary or involuntary, whether due or
not due, whether absolute or contingent, or whether incurred directly or
acquired by any Lender by assignment or otherwise.

 

4.    BORROWER’S COVENANTS.  Borrower covenants and warrants that unless
compliance is waived by the Administrative Agent and the Lenders in writing:

 

A.    Borrower will properly preserve the Collateral; defend the Collateral
against any adverse claims and demands; and keep accurate Books and Records.

 

B.    Borrower has notified the Administrative Agent in writing of, and will
notify the Administrative Agent in writing prior to any change in the locations
of (i) Borrower’s place of business or Borrower’s chief executive office if
Borrower has more than one place of business and (ii) any Collateral, including
the Books and Records.

 

C.    Borrower will notify the Administrative Agent in writing prior to any
change in Borrower’s name, identity or business structure.

 

D.    Borrower will maintain and keep in force insurance covering Collateral
designated by the Administrative Agent against fire and extended coverages.

 

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E.    Borrower has not granted and will not grant any security interest in any
of the Collateral except to the Administrative Agent and except for Permitted
Encumbrances, and will keep the Collateral free of all liens, claims, security
interests and encumbrances of any kind or nature, except the security interest
of the Administrative Agency and except for Permitted Encumbrances.

 

F.    Borrower will promptly notify the Administrative Agent in writing of any
event which affects the value of any Collateral by more than five percent (5%),
the ability of Borrower or the Administrative Agent to dispose of any
Collateral, or the rights and remedies of the Administrative Agent in relation
thereto, including, but not limited to, the levy of any legal process against
any Collateral and the adoption of any marketing order, arrangement or procedure
affecting the Collateral, whether governmental or otherwise.

 

G.    Until the Administrative Agent exercises its rights to make collection,
Borrower will diligently collect all Collateral.

 

5.    ADDITIONAL OPTIONAL REQUIREMENTS.  Borrower agrees that the Administrative
Agent may at its option at any time, whether or not Borrower is in default:

 

A.    Require Borrower to segregate all collections and proceeds of the
Collateral so that they are capable of identification and deliver daily such
collections and proceeds to the Administrative Agent in kind.

 

B.    Require Borrower to deliver to the Administrative Agent (i) copies of or
extracts from the Books and Records, and (ii) information on any contracts or
other matters affecting the Collateral.

 

C.    Examine the Collateral, including the Books and Records, and make copies
of or extracts from the Books and Records, and for such purposes enter at any
reasonable time upon the property where any Collateral or any Books and Records
are located.

 

D.    Require Borrower to deliver to the Administrative Agent any instruments or
chattel paper.

 

E.    Notify any account debtors, any buyers of the Collateral, or any other
persons of the Administrative Agent’s interest in the Collateral.

 

F.    Require Borrower to direct all account debtors to forward all payments and
proceeds of the Collateral to a post office box under the Administrative Agent’s
exclusive control.

 

G.    Demand and collect any payments and proceeds of the Collateral. In
connection therewith Borrower irrevocably authorizes the Administrative Agent to
endorse or sign Borrower’s name on all checks, drafts, collections, receipts and
other documents, and to take possession of and open the mail addressed to
Borrower and remove therefrom any payments and proceeds of the Collateral.

 

6.    DEFAULTS.  Any one or more of the following shall be a default hereunder:

 

A.    The occurrence of any Event of Default under the Credit Agreement.

 

B.    Borrower breaches any term, provision, warranty or representation under
this Agreement.

 

C.    Any involuntary lien of any kind or character attaches to any Collateral.

 

D.    Any financial statements, certificates, schedules or other information now
or hereafter furnished by Borrower to the Administrative Agent proves false or
incorrect in any material respect.

 

7.    ADMINISTRATIVE AGENT REMEDIES AFTER DEFAULT.  In the event of any default
the Administrative Agent may do any one or more of the following:

 

A.    Declare any Indebtedness immediately due and payable, without notice or
demand.

 

B.    Enforce the security interest given hereunder pursuant to the Uniform
Commercial Code and any other applicable law.

 

 

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C.    Enforce the security interest of the Administrative Agent in any deposit
account of Borrower maintained with the Administrative Agent or any Lender by
applying such account to the Indebtedness.

 

D.    Require Borrower to assemble the Collateral, including the Books and
Records, and make them available to the Administrative Agent at a place
designated by the Administrative Agent.

 

E.    Enter upon the property where any Collateral, including any Books and
Records are located and take possession of such Collateral and such Books and
Records, and use such property (including any buildings and facilities) and any
of Borrower’s equipment, if the Administrative Agent deems such use necessary or
advisable in order to take possession of, hold, preserve, process, assemble,
prepare for sale or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral.

 

F.    Grant extensions and compromise or settle claims with respect to the
Collateral for less than face value, all without prior notice to Borrower.

 

G.    Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral.

 

H.    Take such measures as the Administrative Agent may deem necessary or
advisable to take possession of, hold, preserve, process, assemble, insure,
prepare for sale or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral, and Borrower hereby irrevocably constitutes and
appoints the Administrative Agent as Borrower’s attorney in fact to perform all
acts and execute all documents in connection therewith.

 

8.    MISCELLANEOUS.

 

A.    Any waiver, express or implied, of any provision hereunder and any delay
or failure by the Administrative Agent to enforce any provision shall not
preclude the Administrative Agent from enforcing any such provision thereafter.

 

B.    Borrower shall, at the request of the Administrative Agent, execute such
other agreements, documents, instruments, or financing statements in connection
with this Agreement as the Administrative Agent may reasonably deem necessary.

 

C.    All notes, security agreements, subordination agreements and other
documents executed by Borrower or furnished to the Administrative Agent in
connection with this Agreement must be in form and substance satisfactory to the
Administrative Agent and the Lenders.

 

D.    This Agreement shall be governed by and construed according to the laws of
the State of California, to the jurisdiction of which the parties hereto submit.

 

E.    All rights and remedies herein provided are cumulative and not exclusive
of any rights or remedies otherwise provided by law. Any single or partial
exercise of any right or remedy shall not preclude the further exercise thereof
or the exercise of any other right or remedy.

 

F.    All terms not defined herein are used as set forth in the Uniform
Commercial Code.

 

G.    In the event of any action by the Administrative Agent to enforce this
Agreement or to protect the security interest of the Administrative Agent in the
Collateral, or to take possession of, hold, preserve, process, assemble, insure,
prepare for sale or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral, Borrower agrees to pay immediately the costs and
expenses thereof, together with reasonable attorney’s fees and allocated costs
for in-house legal services.

 

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This Security Agreement is effective as of November 14, 2003.

 

Bank of America, N.A., as Administrative Agent

      

RemedyTemp, Inc.

By:

           By:       

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Name:

           Name:       

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Title:

           Title:       

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