EXHIBIT
10.8.29


 


FIRST AMENDMENT TO FINANCING AGREEMENT


 


THIS FIRST
AMENDMENT TO FINANCING AGREEMENT (“First Amendment”) is
made as of March 31, 2008 to amend and provide certain consents under that
certain Financing Agreement  (the “Agreement”), dated as of February 14,
2008, among Westaff (USA), Inc., a California corporation (“Borrower”), Westaff, Inc., a Delaware
corporation and the sole shareholder of Borrower, as parent guarantor (“Parent Guarantor”), each of the lenders
party thereto and defined therein as “Lenders”,
and U.S. Bank National Association in its separate capacities as the LC Issuer
thereunder and as Agent for the benefit of the Secured Parties. Capitalized
terms used herein and not otherwise defined herein having the respective
meanings ascribed thereto in the Agreement.


 


RECITALS


 


A.            Borrower has advised Agent that Westaff
Support, Inc., a California corporation and a wholly owned subsidiary of
Borrower (“Westaff Support”),
intends to sell each of the ordinary shares (as further defined in the Purchase
Agreement (as defined below), the “Sale
Shares”) of Westaff UK Limited, a corporation organized under the
laws of England and Wales (“Westaff
UK”) it owns to Fortis
Recruitment Group Limited (“Fortis”)
pursuant to that certain Share Purchase Agreement, dated on or about March 31,
2008, between Westaff Support and Fortis (the “Purchase
Agreement’), in consideration of a cash payment by Fortis to Westaff
Support of Three Million Two Hundred and Fifty Thousand Pounds Sterling
(£3,250,000) (the “Cash Purchase Price”)
(the forgoing transaction collectively referred to as the “Westaff UK Sale”).


 


B.            Borrower has requested that Lenders consent
to the consummation of the Westaff UK Sale, and Lenders have agreed to consent
thereto on the terms and subject to the conditions specified herein.


 


AGREEMENT


 


NOW,
THEREFORE, in
consideration of the foregoing recitals and the mutual covenants herein set
forth, and intending to be legally bound, the parties hereto agree as follows:


 


1.             Consent to Westaff UK Sale. 
Lenders hereby consent to the consummation of the Westaff UK Sale as
described in the Recitals hereto and prospectively waive any Event of Default
to the extent caused by, or to the extent otherwise directly resulting from,
the consummation of the Westaff UK Sale upon or concurrently with the Effective
Date (as defined in Section 6 below).  In furtherance of the foregoing consent, upon
the Effective Date, following satisfaction of each of the conditions set forth
in Section 6 below, (a) the U.K. Debenture (as defined in the
Agreement before giving effect to this First Amendment) will be automatically
terminated, (b) Agent’s charge on and security interest in all personal
property of Westaff UK granted by Westaff UK pursuant to the U.K. Debenture and
the other Security Documents will be automatically terminated and released, (c) Agent’s
charge on and security interest in the Sale Shares granted by Westaff Support
pursuant to the U.K. Debenture and the other Security Documents will be
automatically terminated and released, (d) Agent will deliver to Westaff
Support (or its designee) all deeds of release, Companies Form 403a (to be
filed with Companies House in the United Kingdom), UCC financing statement
terminations (to be filed in the UCC filing office in Washington D.C.) and such
other charge or security interest release documents or notices related thereto
as Borrower or Westaff Support may reasonably request in order to evidence or
otherwise give public notice to such collateral terminations and releases and
Westaff Support (or its designee) is authorized to file such; provided, however,
that any and all such charge and security interest release documents shall be
prepared 


 

















 


and recorded or filed at
Borrower’s expense, and (e) Agent shall deliver to Westaff Support (or its
(designee) the original stock certificates evidencing the Sale Shares held as
collateral by Agent. The Agent further consents to the exclusive license
granted by any Credit Party pursuant to the terms of the Purchase Agreement.


 


2.             Amendments.


 


(a)           Section 1.1 (Definitions).  Section 1.1
of the Agreement is hereby amended as follows:


 


(i)            The following definitions set forth in Section 1.1
of the Agreement are amended and restated in their entirety as follows:


 


“Advance Rate” means
a percentage, subject to change by Agent from time to time in accordance with Section 2.10,
which is applied to Borrower Eligible Billed Receivables (the “Eligible Billed
Receivables Advance Rate”) and to Borrower Eligible Unbilled Receivables (the “Eligible
Unbilled Receivables Advance Rate”) for the purpose of determining the
Borrowing Base.  The initial Advance
Rates are as follows:  the Eligible
Billed Receivables Advance Rate is 85%; and the Eligible Unbilled Receivables
Advance Rate is 75%.


 


“Affiliate Guaranty
Agreements” means, individually and collectively, the Parent Guaranty
Agreement and the Subsidiary Guaranty Agreement.


 


“Available Cash”
means, as of any date of determination, all cash and other Cash
Equivalents of any Credit Party (and then available at the close of
business) maintained in a Controlled Deposit Account or carried in a
Controlled Securities Account and available to such Credit Party at the close
of business on such date.


 


“Borrowing Base”
means, as of any time, an amount in Dollars equal to the sum of:


 


(i)            the Eligible Billed Receivables Advance Rate applied
to the Net Amount of Eligible Billed Receivables then outstanding; plus


 


(ii)           the Eligible Unbilled Receivables Advance Rate applied to an amount
equal to the lesser of (a) the Net Amount of Eligible Unbilled Receivables
then outstanding and (b) an amount equal to 20% of the Net Amount of
Eligible Billed Receivables then outstanding; less


 


(iii)          the then Reserve Amount.


 


“Eligible Receivables”
means, collectively, the Borrower Eligible Billed Receivables and the Borrower
Eligible Unbilled Receivables


 


“Foreign Subsidiary”
means any Subsidiary that is not a Domestic Subsidiary and shall include
Westaff NZ Limited, Westaff (Australia) Pty Limited and Westaff (Singapore)
Limited.


 


“Security Documents”
means the Security Agreement, the Trademark Security Agreements, the Stock
Pledge Agreement and each other agreement, instrument and document executed and
delivered from time to time by, or on behalf of, Borrower, any other Credit
Party or any other Person as collateral security for the Obligations.


 


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“Subsidiary Guarantors”
means, collectively, Westaff Support and MediaWorld; provided, however, that upon a legal dissolution of
MediaWorld as permitted by Section 10.21, MediaWorld shall cease to
be a Subsidiary Guarantor under and for purposes of this Agreement and the
other Loan Documents.


 


“Subsidiary Guaranty
Agreement” means that Continuing Guaranty dated as of the as of the date of
this Agreement by each Subsidiary Guarantor in favor of Agent, for the benefit
of the Secured Parties.


 


(ii)           The following new definitions are inserted
into Section 1.1 of the Agreement in the applicable alphabetical order:


 


“Control Agreement”
means, with respect to any deposit account or securities account or
any securities entitlement, an agreement, in form and substance reasonably
satisfactory to Agent, among Agent, the bank or securities
intermediary at which such account is maintained or with which such entitlement
is carried, and the Credit Party maintaining such account, effective to
grant “control” (as defined under the applicable UCC) over such account
to Agent.


 


“Controlled Deposit
Account” means each deposit account (including all funds on deposit therein)
that is the subject of an effective Control Agreement and that is maintained by
any Credit Party with U.S. Bank or another bank approved
by Agent in its reasonable discretion.


 


“Controlled Securities
Account” means each securities account (including all financial assets held
therein and all certificates and instruments, if any, representing or
evidencing such financial assets) that is the subject of an effective Control
Agreement and that is maintained by any Credit Party with U.S. Bank or
another securities intermediary approved by Agent in its reasonable
discretion.


 


(iii)         The definition of “Borrower Eligible
Billed Receivables” set forth in Section 1.1 of the Agreement is
amended (a) by deleting the words “Eligible Billed Receivables” in the
second line of clause (i) thereof and inserting in their place the words “Borrower
Eligible Billed Receivables”; and (b) deleting the words “and of Westaff
UK” from the sixth and eleventh lines of clause (ii)(d) thereof.


 


(iv)          The definition of “Change of Control”
set forth in Section 1.1 of the Agreement is amended by deleting the words
“other than a single share of the Capital Stock of Westaff UK owned by Robert
Stover” from the parenthetical in clause (c) thereof.


 


(v)            The definition of “Net Amount of Eligible Billed
Receivables” set forth in Section 1.1 of the Agreement is amended by
deleting the words “Eligible Billed Receivables” in the second line thereof and
inserting in their place the words “Borrower Eligible Billed Receivables”.


 


(vi)          The definition of “Net Amount of Eligible
Unbilled Receivables” set forth in Section 1.1 of the Agreement is
amended by deleting the words “Eligible Unbilled Receivables” in the second
line thereof and inserting in their place the words “Borrower Eligible Unbilled
Receivables”.


 


(vii)         The following definitions are deleted from Section 1.1
of the Agreement in their entirety:


 


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“Charged Assets”


 


“Eligible Billed
Receivables”


 


“Eligible Unbilled
Receivables”


 


“U.K. Debenture”


 


“Westaff UK”


 


“Westaff UK Eligible
Billed Receivables”


 


“Westaff UK Eligible
Unbilled Receivables”


 


(b)           Section 2.10.1 (Changes).  Section 2.10.1
of the Agreement is hereby amended by deleting the words “or Westaff UK’s” from
clause (ii)(3) thereof.


 


(c)           Section 6.1 (Security Documents).  Section 6.1
of the Agreement is hereby amended by amending and restating clause (i) thereof
as follows:


 


(i)            a first priority security interest in all of
the Collateral pursuant to the Security Agreement dated as of the date of this
Agreement between each Credit Party and Agent, for the benefit of the Secured
Parties (the “Security Agreement”), and accompanying financing
statements;


 


(d)           Section 6.1 (Security Documents).  Section 6.1
of the Agreement is hereby further amended by amending and restating clause (iii) thereof
as follows:


 


(iii)          a first priority pledge of, and security interest in, all of the voting
and non-voting issued and outstanding Capital Stock of Borrower and each of the
other direct and indirect Domestic Subsidiaries of Parent Guarantor and a first
priority pledge of, and security interest in, 66% of all of the issued and
outstanding voting Capital Stock and 100% of the non-voting issued and
outstanding first tier Foreign Subsidiaries of any Credit Party (other than
Westaff Australia so long as the Australian Subordination Deed remains in
effect and prohibits Westaff Support from pledging any of the Capital Stock of
Westaff Australia), and all of the other Pledged Collateral as defined in the
Stock Pledge Agreement dated as of the date of this Agreement between the
Credit Parties and Agent (the “Stock Pledge Agreement”).


 


(e)           Section 8.3 (Reporting regarding
Receivables and Notes Payable).  Section 8.3 of the Agreement is hereby
amended and restated as follows:


 


8.3 Reporting Regarding
Receivables and Notes Receivable. 
Not less frequently than weekly, Borrower shall deliver to Agent a
borrowing base certificate in the form of Exhibit D (a “Borrowing
Base Certificate”) by no later than Tuesday of each week (which is based on
values as of the end of the immediately preceding Saturday), which Borrowing
Base Certificate shall update the aging of the Borrower Eligible Billed
Receivables and the Borrower Eligible Unbilled Receivables described in the
immediately prior delivered Borrowing Base Certificate.  By no later than the 21st day 


 


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after the end of each Fiscal Period, or sooner if
available, Borrower shall deliver to Agent a report (the “Fiscal Period
Report”) of Borrower’s sales, credits to sales or credit memoranda
applicable to sales, collections and non-cash charges (from whatever source,
including sales and noncash journals or other credits to Receivables) for the
applicable period, and acceptable supporting documentation thereto (including,
a report indicating the Dollar value of the Eligible Receivables, and all other
information reasonably deemed necessary by Agent to determine levels of that
which is and is not Eligible Receivables), and monthly agings of Receivables
listed by invoice date, in each case reconciled to the Borrowing Base
Certificate for the end of such month and each to Borrower’s general ledger,
and setting forth any changes in the reserves made for bad accounts or any
extensions of the maturity of, any refinancing of, or any other material
changes in the terms of any Receivables in such format as is specified by Agent
from time to time, together with such further information with respect thereto
in such format as Agent may then reasonably require.


 


(f)            Section 8.5 (Interim Financial
Statements; Payable Information).  Section 8.5 of the
Agreement is hereby amended by deleting from the last sentence thereof the
words “each of Borrower’s and Westaff UK’s” and inserting in their place the
word “Borrower’s”.


 


(g)           Section 10.10 (Indebtedness; Guaranties).  Section 10.10(h) of
the Agreement is hereby amended by deleting clause (v) thereof and
inserting the word “and” before clause (iv) thereof.


 


(h)           Section 10.17 (Investments).  Section 10.17
of the Agreement is hereby amended by deleting clause (v)(d) thereof and
inserting its place “Reserved,”.


 


(i)            Section 10.17 (Investments).  Section 10.17
of the Agreement is hereby further amended by deleting from clause (v)(e) thereof
the parenthetical “(other than Westaff UK)” as it appears in both the second
line thereof and in the third to last line thereof.


 


(j)            Section 10.24 (Sale of Assets).  Section 10.24
of the Agreement is hereby amended by deleting the parenthetical “(other than
Westaff UK)” from the end of the first sentence thereof.


 


(k)           Section 11.1 (Events of Default).  Section 11.1(i)(f) of
the Agreement is hereby amended and restated as follows:


 


(f)            (1) There is filed by any Credit Party
(other than MediaWorld) any case, petition, proceeding or other action (“Bankruptcy
Case”) under any existing or future bankruptcy, insolvency, reorganization,
liquidation or arrangement or readjustment of debt law or any similar existing
or future law of any applicable jurisdiction (“Insolvency Law”), (2) an
involuntary Bankruptcy Case (“Involuntary Proceeding”) is commenced
against Credit Party (other than MediaWorld) under any Insolvency Law and the
Involuntary Proceeding is not controverted within 10 days, or is not dismissed
within 60 days, after the commencement of the Bankruptcy Case, or (3) a
custodian, receiver, trustee, sequestrator, or agent is appointed or authorized
to take charge of any properties of any Credit Party (other than MediaWorld);


 


(l)            Exhibit D (Form of Borrowing Base
Certificate).  Exhibit D is hereby amended to replace
Attachment A to the Borrowing Base Certificate with the attachment to Exhibit A
hereto.


 


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3.             Limited Consent, Waiver and
Amendment; Full Force and Effect.  The consents, waivers and amendments set
forth herein shall be limited precisely as written and shall not be deemed (a) to
be a consent, waiver or amendment of any other term or condition of the
Agreement or any of the other Loan Documents or to prejudice any right or remedy
which Agent, LC Issuer or Lenders may now have or may have in the future under
or in connection with the Agreement or any of the other Loan Documents or (b) to
be a consent to any future consent, waiver or amendment or to any departure
from the terms and conditions of the Agreement or any of the other Loan
Documents.  This First Amendment shall be
construed in connection with and as part of the Loan Documents, and all terms,
conditions, representations, warranties, covenants and agreements set forth in
the Loan Documents, except as herein waived or amended, are hereby ratified and
confirmed and shall remain in full force and effect.


 


4.             Representations and
Warranties.  In order to induce Agent, LC Issuer and
Lenders to enter into this First Amendment, Borrower and Westaff Support hereby
represent and warrant to Agent, LC Issuer and Lenders as follows:


 


(a)           Corporate Power and
Authority.  Each Credit Party has all requisite corporate
power and authority to enter into this First Amendment and to carry out the
transactions contemplated hereby, including the consummation of the Westaff UK
Sale.


 


(b)           Authorization of Agreements.  The
execution and delivery of this First Amendment by each of the Credit Parties
and the performance of the Agreement, as amended by this First Amendment, as
applicable, and each of the other Loan Documents to which any Credit Party is a
party have been duly authorized by all necessary corporate action on the part
of such Credit Party.


 


(c)           No Conflict.  The
execution and delivery by each of the Credit Parties of this First Amendment
and the performance by each of the Credit Parties of the Agreement, as amended
by this First Amendment, and each of the other Loan Documents to which such
Credit Party is a party do not and will not contravene (i) any law or
regulation binding on or affecting any of the Credit Parties, (ii) the
certificate of incorporation, bylaws or other charter documents of any of the
Credit Parties, (iii) any order, judgment or decree of any court or other
agency of government binding on any of the Credit Parties or (iv) any
contractual restriction binding on or affecting any of the Credit Parties.


 


(d)           Governmental Consents,
Filings.  The consummation of the Westaff UK Sale and
the execution, delivery and performance by each of the Credit Parties of this
First Amendment and the performance by each of the Credit Parties of the
Agreement, as amended by this First Amendment, and each of the other Loan
Documents to which such Credit Party is a party do not and will not require any
authorization or approval of, or other action by, or notice to or filing with
any Governmental Authority or regulatory body or the consent of any third party
which has not yet been made, taken or obtained, as applicable.


 


(e)           Binding Obligation.  This First
Amendment has been duly executed and delivered by each of the Credit Parties
and is the binding obligation of each of the Credit Parties, enforceable
against each in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights generally.


 


(f)            Absence of Default.  After
giving effect to this First Amendment and the consummation of the Westaff UK
Sale, no event has occurred and is continuing that would constitute a Default
or an Event of Default under and as defined in the Agreement.


 


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(g)           Restatement of Representations
and Warranties in Agreement.  Borrower and Parent Guarantor, with respect
to the representations and warranties set forth in  Section 9 of the Agreement, represent and warrant that
each of such representations and warranties (after giving effect to this Amendment)
is true, correct and complete in all material respects as of the date hereof,
except to the extent such representations and warranties expressly relate to
another date or as specifically described therein in which case such
representations and warranties are true, correct and complete as of such other
date.


 


5.             Reaffirmation.  Each Credit Party hereby reaffirms its obligations under each Loan
Document to which it is a party.   Each
Credit Party hereby further ratifies and reaffirms the validity and
enforceability of all of the Agent’s Liens heretofore granted to Agent pursuant
to and in connection with the Loan Documents as collateral security for the
obligations under the Loan Documents in accordance with their respective terms,
and acknowledges that all of such liens and security interests, and all
collateral heretofore pledged as security for such obligations, continues to be
and remain Collateral for such obligations from and after the date hereof.


 


6.             Conditions Precedent to
Effectiveness.  This First Amendment shall be deemed
effective as of the date (the “Effective
Date”) Agent shall have confirmed satisfaction of each of the
following conditions precedent:


 


(a)           Agent shall have received a copy of this
First Amendment executed by each Credit Party (other than Westaff UK) and each
Lender;


 


(b)           Agent shall have received a certificate of
the secretary or assistant secretary of Borrower and Westaff Support certifying
that attached thereto are (i) resolutions adopted by the board of
directors of such Person authorizing the Westaff UK Sale and the due execution,
delivery and performance of the Purchase Agreement and this First Amendment and
(ii) a true and complete copy of the fully executed Purchase Agreement;
and


 


(c)           Agent, or its counsel, shall have (i) confirmed
receipt of the Cash Purchase Price in a Controlled Deposit Account or (ii) received
a solicitor’s undertaking, in form and substance acceptable to Agent in
its sole discretion, from Cobbetts LLP to, as promptly as possible, wire
the Cash Purchase Price to a Controlled Deposit  Account.


 


7.             Expenses.  Borrower agrees to pay promptly upon receipt of an invoice therefor the
expenses and costs of Agent (including reasonable attorneys fees and costs of
Agent’s outside counsel) accrued and incurred in connection with the
transactions contemplated by this Amendment and all other expenses and costs of
Agent (including reasonable attorneys fees and costs of Agent’s outside
counsel) payable pursuant to Section 15.6 of the Agreement.


 


8.             Miscellaneous.


 


(a)           Reference to and Effect on
the Agreement and the Other Loan Documents.  On and after the Effective
Date, each reference in the Agreement or the other Loan Documents to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean
and be a reference to such agreement after giving effect hereto.


 


(b)           Headings.  Section and
subsection headings in this First Amendment are included herein for convenience
of reference only and shall not constitute a part hereof for any other purpose
or be given any substantive effect.


 


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(c)           Applicable Law.  Except as otherwise expressly provided in any of the Loan Documents, in
all respects, including all matters of construction, validity and performance,
this First Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of California applicable to contracts
made and performed in such state without regard to the principles thereof
regarding conflict of laws, and any applicable laws of the United States of
America.


 


(d)           Counterparts.  This
First Amendment may be executed in counterparts, each of which when so executed
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the
same document.


 


[SIGNATURE PAGES TO FOLLOW]


 


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WITNESS, this First Amendment to Financing Agreement is duly executed by the
respective duly authorized officers of the undersigned as of the date first
written above.


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  WESTAFF (USA), INC., a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawn M. Jaffray

  
	
   

  	
   

  	
  Dawn M. Jaffray

  
	
   

  	
   

  	
  Senior Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARENT GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  WESTAFF, INC., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawn M. Jaffray

  
	
   

  	
   

  	
  Dawn M. Jaffray

  
	
   

  	
   

  	
  Senior Vice President and Chief Financial

  Officer

  



 

















 


	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as a

  Lender and as LC Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan V. Freed

  
	
   

  	
   

  	
  Susan V. Freed

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
  NATIONAL ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Suprema M. Thurmond

  
	
   

  	
   

  	
  Suprema M. Thurmond

  
	
   

  	
   

  	
  Relationship Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan V. Freed

  
	
   

  	
   

  	
  Susan V. Freed

  
	
   

  	
   

  	
  Vice President

  



 


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  ACKOWLEDGED AND AGREED TO BY

  THE SUBSIDIARY GUARANTORS:

  	
   

  
	
   

  	
   

  
	
   

  	
  WESTAFF SUPPORT, INC., a California

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawn M. Jaffray

  
	
   

  	
   

  	
  Dawn M. Jaffray

  
	
   

  	
   

  	
  Senior Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDIAWORLD INTERNATIONAL, a

  California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawn M. Jaffray

  
	
   

  	
   

  	
  Dawn M. Jaffray

  
	
   

  	
   

  	
  Senior Vice President and Chief Financial

  Officer

  



 


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