BARRETT BUSINESS SERVICES INC
10.1
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>bbs8-k603ex101.txt
<DESCRIPTION>10.1
<TEXT>
                                                                    Exhibit 10.1

            THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT


      THIS THIRD  AMENDMENT  TO AMENDED  AND  RESTATED  CREDIT  AGREEMENT  (this
"Amendment") is entered into as of May 22, 2003, by and between BARRETT BUSINESS
SERVICES,  INC.,  a Maryland  corporation  ("Borrower"),  and WELLS  FARGO BANK,
NATIONAL ASSOCIATION ("Bank").


                                    RECITALS

      A.  Borrower  is  currently  indebted  to Bank  pursuant  to the terms and
conditions  of that  certain  Amended  and  Restated  Credit  Agreement  between
Borrower  and Bank dated as of  September  2, 2002 as amended  from time to time
("Credit Agreement").

      B. Pursuant to the Credit  Agreement,  Borrower  remains  indebted to Bank
under a line of credit in the maximum  principal amount of Eight Million Dollars
($8,000,000.00) (the "Prior Line of Credit"), which is evidenced by that certain
Revolving  Line of Credit  Note dated  April 30, 2003 (the "Prior Line of Credit
Note"). The Prior Line of Credit Note shall mature and become due and payable in
full on March 31,  2004 and as of the date  hereof,  the  outstanding  principal
balance under the Prior Line of Credit is $2,828,646.97, plus accrued but unpaid
interest.

      C. Pursuant to the Credit  Agreement,  Borrower  remains  indebted to Bank
under a term loan in the original  principal amount of Six Hundred  Ninety-three
Thousand Seven Hundred Fifty Dollars  ($693,750.00) (the "Term Loan"),  which is
evidenced by that certain Term Note dated August 12, 1993 (the "Term Note"). The
Term Note shall  mature and become due and payable in full on August 1, 2003 and
as of the date hereof, the outstanding  principal balance under the Term Loan is
$325,304.32, plus accrued but unpaid interest.

      D. 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,  subject to the terms and  conditions  described
herein,  the parties hereto agree that the Credit  Agreement shall be amended as
follows; provided,  however, that nothing shall terminate any security interests
or other documents in favor of Bank, all of which shall remain in full force and
effect unless expressly amended hereby:

      1. Amendment to Section 1.1(a).  Section 1.1(a) of the Credit Agreement is
hereby deleted in its entirety, and 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  March 31, 2004,  not to exceed at
            any time the aggregate  principal  amount of Eleven Million  Dollars
            ($11,000,000.00) or such lesser amount as shall from time to time be
            available ("Line of Credit"), the proceeds of which shall be used to
            pay in full the  Prior  Line of  Credit  and to  finance  Borrower's
            working  capital   requirements.   Borrower's

                                      -1-

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            obligation  to repay  advances  under  the Line of  Credit  shall be
            evidenced by a promissory note  substantially in the form of Exhibit
            A attached  hereto ("Line of Credit  Note"),  all terms of which are
            incorporated herein by this reference."

      2. Amendment to Section 1.1(d).  Section 1.1(d) of the Credit Agreement is
hereby deleted in its entirety, and the following substituted therefor:

                  "(d) Borrowing and  Repayment.  Borrower may from time to time
            during the term of the Line of Credit  borrow,  partially  or wholly
            repay its outstanding  borrowings,  and reborrow,  subject to all of
            the  limitations,  terms and conditions  contained  herein or in the
            Line of Credit Note;  provided  however,  that the total outstanding
            borrowings under the Line of Credit shall not at any time exceed the
            maximum  principal amount available  thereunder,  as set forth above
            and as reduced from time to time in accordance with the terms of the
            Line of Credit Note."

      3.  Amendment  to Section 2.5.  Section 2.5 is hereby  amended by deleting
"January 31, 2003" as the date of Borrower's  most current  financial  statement
delivered to Bank, and by substituting "March 31, 2003" for said date.

      4. Restructuring Fee. In consideration of the changes set forth herein and
as a condition  to the  effectiveness  hereof,  immediately  upon  signing  this
Amendment  Borrower  shall pay to Bank a  non-refundable  fee of $3,750.00  (the
"Restructuring Fee").

      5.  Conditions  Precedent.  The  obligation of Bank to amend the terms and
conditions  of the  Credit  Agreement  as  provided  herein,  is  subject to the
fulfillment  to Bank's  satisfaction  of all of the  following  conditions by no
later than May 30, 2003:

      (a) Bank shall have received, in form and substance  satisfactory to Bank,
each of the following, duly executed:

          (i)   This Amendment.
          (ii)  The Line of Credit Note.
          (iii) (2) Modifications of Deed of Trust.
          (iv)  Security Agreement Equipment.
          (v)   Such other documents as Bank may require under any other section
                of this Amendment.

      (b)  Restructuring  Fee. Bank shall have received the Restructuring Fee in
immediately available funds.

      (c) Other Fees and Costs. In addition to Borrower's  obligations under the
Credit Agreement and the other Loan Documents,  Borrower shall have paid to Bank
the full amount of all costs and expenses,  including reasonable attorneys' fees
(including the allocated costs of Bank's in-house  counsel) expended or incurred
by Bank in connection  with the  negotiation  and preparation of this Amendment,
for which Bank has made demand.

      (d) Title.  Bank  shall have  received  modification  endorsements  to its
original   policies  of  title   insurance,   insuring  that  the  priority  and
enforceability of each of Bank's Mortgage

                                      -2-

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or Deed of Trust is unaffected by this  Amendment and shall remain in full force
and  effect,  subject  only to such  exceptions  as Bank  shall  approve  in its
discretion, with all costs to be paid by Borrower.

      (e) Interest. Interest under the Prior Line of Credit Note shall have been
paid current.

      (f) Interest and  Principal.  Interest and  principal  under the Term Note
shall have been paid current.

      6. General Release.  In consideration of the benefits provided to Borrower
under  the  terms and  provisions  hereof,  Borrower  hereby  agrees as  follows
("General Release"):

      (a) Borrower, for itself and on behalf of its successors and assigns, does
hereby release, acquit and forever discharge Bank, all of Bank's predecessors in
interest,  and all of Bank's past and present  officers,  directors,  attorneys,
affiliates,  employees  and  agents,  of and from any and all  claims,  demands,
obligations,  liabilities,  indebtedness, breaches of contract, breaches of duty
or of any relationship,  acts, omissions,  misfeasance,  malfeasance,  causes of
action,  defenses,  offsets,  debts,  sums  of  money,  accounts,  compensation,
contracts,  controversies,  promises,  damages,  costs, losses and expenses,  of
every type, kind,  nature,  description or character,  whether known or unknown,
suspected or unsuspected,  liquidated or unliquidated,  each as though fully set
forth herein at length (each, a "Released Claim" and collectively, the "Released
Claims"),  that Borrower now has or may acquire as of the later of: (i) the date
this Amendment becomes effective through the satisfaction (or waiver by Bank) of
all  conditions  hereto;  (ii) the date that Borrower has executed and delivered
this  Amendment to Bank  (hereafter,  the  "Release  Date"),  including  without
limitation,  those Released Claims in any way arising out of,  connected with or
related to any and all prior credit accommodations, if any, provided by Bank, or
any of Bank's predecessors in interest, to Borrower,  and any agreements,  notes
or  documents  of any kind  related  thereto  or the  transactions  contemplated
thereby or hereby,  or any other  agreement  or  document  referred to herein or
therein.

      (b) Borrower hereby acknowledges,  represents and warrants to Bank that it
agrees to assume the risk of any and all unknown, unanticipated or misunderstood
defenses  and  Released  Claims  which are  released by the  provisions  of this
General  Release in favor of Bank,  and Borrower  hereby waives and releases all
rights and benefits which it might  otherwise have under any state or local laws
or  statutes  with  regard to the  release  of such  unknown,  unanticipated  or
misunderstood defenses and Released Claims.

      (c) Each person signing below on behalf of Borrower  acknowledges  that he
or she has read each of the provisions of this General Release. Each such person
fully  understands  that this General Release has important legal  consequences,
and each such  person  realizes  that they are  releasing  any and all  Released
Claims  that  Borrower  may  have  as  of  the  Release  Date.  Borrower  hereby
acknowledges  that  it has  had an  opportunity  to  obtain  a  lawyer's  advice
concerning  the legal  consequences  of each of the  provisions  of this General
Release.

      (d) Borrower hereby specifically acknowledges and agrees that: (i) none of
the  provisions  of this General  Release shall be construed as or constitute an
admission of any  liability  on the part of Bank;  (ii) the  provisions  of this
General  Release shall  constitute an absolute bar to any Released  Claim of any
kind,  whether any such  Released  Claim is based on contract,  tort,  warranty,
mistake or any other theory,  whether legal,  statutory or equitable;  and (iii)
any attempt to assert a Released  Claim barred by the provisions of this General
Release

                                      -3-

<PAGE>

shall subject Borrower to the provisions of applicable law setting forth
the remedies for the bringing of groundless, frivolous or baseless claims or
causes of action.

      7.  Miscellaneous.  Except as specifically  provided herein, all terms and
conditions  of the  Credit  Agreement  shall  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.  This  Amendment  may be
executed  in any  number  of  counterparts,  each of  which  when  executed  and
delivered  shall  be  deemed  to be an  original,  and all of which  when  taken
together shall constitute one and the same Amendment.

      8.   Reaffirmation;    Certification.    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 an Event of Default.

UNDER OREGON LAW, MOST  AGREEMENTS,  PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 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 have caused this Amendment to be
executed as of the day and year first written above.

                                              WELLS FARGO BANK,
BARRETT BUSINES SERVICES, INC.                    NATIONAL ASSOCIATION


By: /s/ Michael D. Mulholland                 By: /s/ Stephen J. Day
    -------------------------                     ------------------
    Michael D. Mulholland                         Stephen J. Day
    Vice President-Finance                        Vice President

Exhibit A Revolving Promissory Note (Omitted)



                                      -4-



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