EXHIBIT 4.1


 


FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT


 


THIS FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (this "Amendment") dated May 15, 2020, is entered into by and between BARRETT BUSINESS SERVICES,
INC., a Maryland corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").


 


RECITALS


 


WHEREAS, Borrower is currently indebted
to Bank pursuant to the terms and conditions of that certain Second Amended and Restated Credit Agreement between Borrower and
Bank dated August 5, 2019, as amended from time to time ("Credit Agreement").


 


WHEREAS, Bank and Borrower have agreed to
certain changes in the terms and conditions set forth in the Credit Agreement and have agreed to amend the Credit Agreement to
reflect said changes.


 


NOW, THEREFORE, for valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Credit Agreement shall be amended
as follows and to certain other matters as set forth below:


 


1.       Section 1.1(a)
is hereby deleted in its entirety, with the following substituted therefor:


 


“(a)       Line
of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time
to time up to and including July 1, 2022, not to exceed at any time the aggregate principal amount of "Fifty Million
Dollars ($50,000,000) (the “Line of Credit”), the proceeds of which shall be used for general corporate purposes. Borrower’s
obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated the date hereof, as modified
from time to time (the “Line of Credit Note”), all terms of which are incorporated herein by this reference. The maximum
aggregate principal amount of the Line of Credit shall be reduced automatically on July 1, 2021, without further notice or action
by Borrower or Bank, to Thirty Three Million Dollars ($33,000,000). The Line of Credit Note defined in and made pursuant to the
Credit Agreement shall include amendments to such note in any modification of promissory note delivered in connection with this
Amendment. Upon written request from Borrower to Bank, at any time prior to July 1, 2021, the maximum aggregate principal amount
of the Line of Credit may be earlier reduced to Thirty Three Million ($33,000,000), provided that (i) the outstanding principal
sum is then reduced by payment by Borrower to an amount less than or equal to such reduced maximum principal amount; and (ii) Borrower
shall pay to Bank an amendment fee of $17,000, plus Bank’s external legal fees and costs in connection with such amendment.
In the event of such an earlier requested reduction, the amended covenants set forth in Section 4.9 and Section 5.8 shall automatically
revert to the covenants in effect as of May 15, 2020. If such amendment is requested by Borrower prior to September 15, 2020, then
the interest rates set forth in the Line of Credit Note and the rate of fee set forth in Section 1.4(c) shall each revert
to the respective rates in effect as of May 15, 2020.”


 






     


     


    

 


2.       Section 1.4(c)
is hereby amended by deleting “three hundred seventy five thousandths of one percent (0.375%) per annum” as the rate
of fee payable on the daily unused amount of the Line of Credit, and by substituting for said amount “five tenths of one
percent (0.50%).”


 


3.       Section
4.9 is hereby deleted in its entirety, with the following substituted therefor:


 


SECTION 4.9. FINANCIAL CONDITION. Maintain
Borrower’s consolidated financial condition as follows using generally accepted accounting principles consistently applied
and used consistently with prior practices (except to the extent modified by the definitions herein):


 


“(a)       Total
Funded Debt, plus the unused principal amount of the Line of Credit, divided by EBITDA, not greater than 2.75 to 1.0 as of each
fiscal quarter end through June 30, 2021 and 1.75 to 1.0 thereafter, in each case determined on a rolling four-quarter basis, with
 “Total Funded Debt” defined as the sum of all obligations for borrowed money (including subordinated debt), plus all
capital lease obligations, and “EBITDA” defined as net profit before taxes plus interest expense (net of capitalized
interest expense), depreciation expense and amortization expense.


 


“(b)Liquid Assets to Worker’s
Compensation Claims not less than 1.15 to 1.0 at each fiscal quarter end, with (i) “Liquid Assets” defined as the sum
of (A) restricted and unrestricted cash and cash equivalents, plus (B) restricted and unrestricted marketable securities acceptable
to Bank in its sole discretion, plus (C) the unused amount of the Line of Credit, less (D) the difference of restricted cash and
restricted marketable securities less workers compensation claims, if positive, and (ii) “Workers Compensation Claims”
defined as Borrower’s obligations with respect to worker’s compensation claims liabilities, in each case as the assets
described in clauses (i)(A), (B), (C) and (D) and as the liabilities described in clauses (ii) are required to be reflected in
Borrower’s annual audited consolidated financial statements and quarterly unaudited consolidated financial statements, consistent
with past practices.”


 


4.       Section
5.8 is hereby deleted in its entirety, with the following substituted therefor:


 


“SECTION 5.8. DIVIDENDS, DISTRIBUTIONS.


 


(a) On or prior to June 30, 2021, declare
or pay any dividend or distribution either in cash, stock or any other property on Borrower’s stock, membership interests,
partnership interests or other ownership interests now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class Borrower’s stock, membership interests, partnership interests or other ownership interests now or
hereafter outstanding. Notwithstanding the foregoing, so long as, after giving effect to such dividend or distribution, no Event
of Default would exist, (i) Borrower may pay quarterly cash dividends or distributions to its holders of its common stock in an
amount not to exceed $0.30 per share in the aggregate in any fiscal quarter (the “Permitted Dividend Amount”); provided,
however, that in the event Borrower, after the date hereof, issues additional shares of its common stock, subdivides its common
stock, by split-up or otherwise, or combines its common stock, or issues additional common stock as a dividend, then the Permitted
Dividend Amount shall be subject to adjustment as determined by Bank, in its sole discretion, to give proportional effect to such
event; and (ii) Borrower may purchase, repurchase, redeem, acquire or retire for value any of its common stock in connection with
any employee equity compensation agreement, stock option agreement, incentive or benefit plan or similar agreement, in each case
entered into in the ordinary course of business and approved by Borrower’s board of directors, for consideration with an
aggregate fair market value not to exceed $3,500,000, provided such action is taken in connection with satisfying a tax obligation
incurred in connection therewith. For the avoidance of doubt, the covenants set forth in this Section 5.8(a) shall be of no further
force of effect on or after July 1, 2021.


 






     


     


    

 


(b) On or after July 1, 2021, if an Event
of Default has occurred or would occur on a pro forma basis (i) declare or pay any dividend or distribution either in cash or any
other property on Borrower’s stock, membership interest, partnership interest or other ownership interest now or hereafter
outstanding; or (ii) redeem, retire, repurchase or otherwise acquire any class or type of ownership interest now or hereafter outstanding
except any of the foregoing in this subsection (b)(ii) in amounts not to exceed an aggregate of $15,000,000 in any rolling 12-month
period. For the avoidance of doubt, the covenants set forth in this Section 5.8(b) shall not be effective prior to July 1, 2021.”


 


5.       The
effective date of this Amendment shall be the date that all of the following conditions set forth in this Section have been satisfied,
as determined by Bank and evidenced by Bank’s system of record. Notwithstanding the occurrence of the effective date of this
Amendment, Bank shall not be obligated to extend credit under this Amendment or any other Loan Document until all conditions to
each extension of credit set forth in the Credit Agreement have been fulfilled to Bank's satisfaction.


 


(a)       Approval
of Bank Counsel. All legal matters incidental to the effectiveness of this Amendment shall be satisfactory to Bank's counsel.


 


(b)       Documentation.
Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed by all parties:


 


		(i)	This Amendment and each promissory note, or other instrument or document required hereby.



		(ii)	First Modification of Third Amended and Restated Revolving Line of Credit Note.



		(iii)	Third Party Pledgor’s Consent and Reaffirmation.



		(iv)	Such other documents as Bank may require under any other Section of this Amendment or the Agreement.



 


(c)       Regulatory
and Compliance Requirements. All regulatory and compliance requirements, standards and processes shall be completed to the satisfaction
of Bank.


 


(d)       Interest
and Principal. Interest and principal under the notes contemplated by the Credit Agreement and this Amendment have been paid current.


 


(e)       Amendment
Fee. Immediately upon signing this Amendment, Borrower shall pay to Bank a non-refundable amendment fee of $17,000.


 


(f)   
     Fees and expenses. Borrower shall pay all fees, costs and expenses of Bank (including fees paid by
Bank to third parties and allocated costs of Bank personnel) in connection with loan documentation, negotiation, preparation
and related diligence with respect to this Amendment, including without limitation attorneys’ fees, filing and
recording fees, and the cost of any environmental reviews, property condition reports, flood insurance searches, appraisals
and title insurance.


 






     


     


    

 


6.       Except
as specifically provided herein, all terms and conditions of the Credit Agreement remain in full force and effect, without waiver
or modification. All terms defined in the Credit Agreement shall have the same meaning when used in this Amendment. This Amendment
and the Credit Agreement shall be read together, as one document.


 


7.       Borrower
hereby remakes all representations and warranties contained in the Credit Agreement and reaffirms all covenants set forth therein.
Borrower further certifies that as of the date of this Amendment there exists no Event of Default as defined in the Credit Agreement,
nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event
of Default.


 


8.       Borrower
hereby covenants that Borrower shall provide to Bank from time to time such other information as Bank may request for the purpose
of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes. Borrower hereby represents and
warrants to Bank that all information provided from time to time by Borrower or any Third Party Obligor to Bank for the purpose
of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes was complete and correct at the
time such information was provided and, except as specifically identified to Bank in a subsequent writing, remains complete and
correct today, and shall be complete and correct at each time Borrower is required to reaffirm the representations and warranties
set forth in the Credit Agreement.]


 


9.       THIS
AGREEMENT AMENDS THE CREDIT AGREEMENT. THE EXECUTION OF THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH
DOES NOT EXTINGUISH THE INDEBTEDNESS OUTSTANDING IN CONNECTION THEREWITH NOR DOES IT CONSTITUTE A NOVATION WITH RESPECT TO THE
INDEBTEDNESS OUTSTANDING IN CONNECTION WITH THE PRIOR CREDIT AGREEMENT. NOTHING CONTAINED HEREIN SHALL TERMINATE ANY SECURITY INTERESTS,
GUARANTIES, SUBORDINATIONS OR OTHER DOCUMENTS IN FAVOR OF BANK EXECUTED IN CONNECTION WITH THE PRIOR CREDIT AGREEMENT OR THE INDEBTEDNESS
DESCRIBED THEREIN, ALL OF WHICH SHALL REMAIN IN FULL FORCE AND EFFECT UNLESS EXPRESSLY AMENDED HEREBY.


 


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UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS
MADE BY BANK CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY
BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE ENFORCEABLE.


 


IN WITNESS WHEREOF, the parties hereto,
intending to be legally bound hereby, have caused this Amendment to be effective as of the effective date set forth above.


 


 


	BORROWER	 	BANK	 
	 	 	 	 
	 	 	WELLS FARGO BANK,	 
	BARRETT BUSINESS SERVICES, INC.	 	NATIONAL ASSOCIATION	 
	 	 	 	 
	 	 	 	 
	By: 	/s/ Anthony Harris	 	By: 	/s/ Julie R. Wilson	 
	Name: Anthony Harris	 	Name: Julie R. Wilson	 
	Title: Chief Financial Officer	 	Title: Senior Vice President