Exhibit
10.8.20.11


 


FORBEARANCE AGREEMENT, LIMITED
WAIVER


AND CONSENT OF GUARANTORS


 


 


 


                This FORBEARANCE AGREEMENT, LIMITED WAIVER AND CONSENT OF GUARANTORS (this
“Forbearance”) is dated as of October 18, 2007 and entered into by and
among WESTAFF, INC., a Delaware
corporation (“Parent”), WESTAFF (USA),
INC., a California corporation (“US Borrower”), WESTAFF (U.K.) LIMITED, a limited liability
company incorporated under the laws of England and Wales (“UK Borrower”)
WESTAFF SUPPORT, INC., a California
corporation (“Term Borrower”, and together with US Borrower and UK
Borrower, the “Borrowers”), the financial institutions signatory hereto
that are parties as Lenders to the Credit Agreement referred to below (the “Lenders”),
and GENERAL ELECTRIC CAPITAL CORPORATION,  as agent (in such capacity, the “Agent”)
for the US Revolving Lenders, the Term Lenders and the UK Revolving Lenders (as
defined in the Credit Agreement referred to below) and as a US Revolving
Lender, a UK Revolving Lender and a Term Lender, and BANK OF
AMERICA, N.A., as a US Revolving Lender, a UK Revolving Lender and a
Term Lender, is made with respect to the subject matter contained herein.


 


Recitals


 


                Whereas,
the Parent, the Borrowers, the Lenders and Agent have entered into that certain
Multicurrency Credit Agreement dated as of May 17, 2002 as amended by that
certain First Amendment to Multicurrency Credit Agreement, Limited Waivers and
Consent of Guarantors, dated as of October 31, 2002, as further amended by that
certain Second Amendment to Multicurrency Credit Agreement, Limited Waivers and
Consent of Guarantors, dated as of June 13, 2003, that certain Third Amendment
to Multicurrency Credit Agreement, Limited Waivers and Consent of Guarantors,
dated as of September 25, 2003, that certain Fourth Amendment to Multicurrency
Credit Agreement, Limited Waivers and Consent of Guarantors, dated as of
February 20, 2004, that certain Fifth Amendment to Multicurrency Credit
Agreement and Consent of Guarantors, dated as of July 31, 2004, that certain Sixth
Amendment to Multicurrency Credit Agreement and Consent of Guarantors, dated as
of January 5, 2004, that certain Seventh Amendment to Multicurrency Credit
Agreement, Limited Waiver and Consent of Guarantors, dated as of August 19,
2005, that certain Eighth Amendment to Multicurrency Credit Agreement, Limited
Waiver and Consent of Guarantors dated as of March 1, 2006, that certain Ninth Amendment To Multicurrency Credit
Agreement And Consent Of Guarantors. dated as of July 25, 2006, that certain
Tenth Amendment To Multicurrency
Credit Agreement and Consent of Guarantors dated as of January 2, 2007, and
that certain Eleventh Amendment
To Multicurrency Credit Agreement and Consent of Guarantors dated as of May 24,
2007  and as further modified by certain
consents and waivers of the Lenders prior to the date hereof (as so amended and
modified, the “Credit Agreement”; capitalized terms used in this
Forbearance without definition shall have the meanings given such terms in the
Credit Agreement); and


                Whereas, certain
Events of Default described in Annex I attached hereto (the “Specified
Events of Default” have occurred and are continuing and the Agent and
Lenders have


 

















 


the right to enforce their
rights and remedies with respect to the Obligations under the Loan Documents;
and


                Whereas,
Borrowers have asked that the Agent and the Lenders waive the Waived Event of
Default (as defined herein) described in Section 6.1 hereof, and the Agent and
the Lenders have agreed to waive the Waived Event of Default; and


                Whereas, the Borrowers have requested
that the Agent and each Lender agree to forbear, and Agent and each Lender are
willing to forbear to the extent provided herein and subject to the terms and
conditions contained herein, from enforcing any remedies available to them
under the Loan Documents that arise as a result of the Specified Events of
Default for a limited period of time, and to continue advancing Loans under the
Credit Agreement, provided that the Credit Parties meet the conditions set
forth here in and otherwise comply with this Forbearance.


                Now, therefore, in consideration of the
premises and the mutual agreements set forth herein and for other consideration
the receipt of and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:


1.             RECITALS.  The
recitals set forth above are true and correct and are hereby incorporated into
the body of this Forbearance by reference.


2.             DEFINED TERMS.  The
following terms shall have the meanings set forth below:


2.1        “Effective
Date”  means the date on which all conditions to the effectiveness of this
Forbearance set forth in Section 8 shall have been satisfied.


2.2        “Forbearance
Default” means:


(a)                   After
giving effect to the agreements of the parties set forth herein, the occurrence
of any Default or Event of Default other than the Specified Events of Default;
or


(b)                   the
failure of any representation or warranty made by any Borrower or any other
Credit Party under or in connection with this Forbearance (including any
representation or warranty required to be made from time to time pursuant to
Section 5.5 of this Forbearance) to be true and complete in all material
respects as of the date when made; or


(c)                   at
any time during the first sixty (60) days of the Forbearance Period (such
period, the “Initial Forbearance Period”), the US Borrower shall have
Borrowing Availability of less than U.S. $1,000,000 for more than any two (2)
consecutive Business Days; or


(d)                   the
failure, as of the tenth (10th) Business Day after the expiration of
the Initial Forbearance Period and as of the end of each seven (7) day period
thereafter, of the US Borrower to have an average daily Borrowing Availability
for the immediately preceding ten (10) Business Days of at least U.S. $8,000,000;
or


 


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(e)                   any
default (other than any other Forbearance Default) by Borrowers or any other
Credit Party under this Forbearance, including, without limitation, a breach by
such Borrower or Credit Party of any covenant or obligation specified below or
the failure of any Borrower or any other Credit Party to perform any of its
obligations hereunder, and, except with respect to a breach of this Forbearance
that cannot be cured (including, without limitation, a breach of Section 5.2),
such default continues for five (5) Business Days; or


(f)                    the
commencement of a receivership, insolvency proceeding under any of the
Insolvency Laws, assignment for the benefit of creditors or other action with respect to any Borrower or
any other Credit Party seeking the issuance of a
warrant of attachment, execution, distraint or similar process resulting in
control or possession against any material part of such Borrower’s or Credit
Party’s assets.


2.3        “Forbearance
Period” means the period of time from the Effective Date to and including
the Forbearance Termination Date


2.4        “Specified
Events of Default” means those Events of Default described on Annex I to
this Forbearance.


2.5        “Forbearance
Termination Date” means the earlier to occur of (a) 5:00 p.m., Los Angeles
time, on February 15, 2008, or (b) the date upon which a Forbearance Default
occurs.


2.6        “Waived
Event of Default” means that Event of Default described in Section 6.1 of
this Forbearance.


3.             FORBEARANCE.  Subject to the conditions and upon the terms
set forth in this Forbearance:


3.1        Each of the Borrowers and the other Credit Parties
agrees and acknowledges that (i) each of the Specified Events of Default has
occurred and is continuing, (ii) each of the Specified Events of Defaults is
incurable and is not subject to any grace or cure period, (iii) except for the
Specified Events of Default and the Waived Event of Default, no other Defaults
or Events of Default have occurred and are continuing as of the date hereof, and
(iv) but for this Forbearance Agreement, each Specified Event of Default would
relieve Agent and Lenders from any obligation to make any Loans or provide
other financial accommodations under the Credit Agreement and other Loan
Documents, and in accordance with the terms of the Loan Documents would entitle
Agent, Lenders and/or the Requisite Lenders, as applicable, to, among other
things, (A) suspend or terminate any commitment to provide Swing Line Loans,
Revolving Loans, Term Loans or UK Revolving Loans or provide other financial
accommodations, including Letters of Credit, 
under any or all of the Credit Agreement and the other Loan Documents,
(B) declare all Obligations to be immediately due and payable and without notice
or demand, and/or (C) take any and all enforcement actions (including, without
limitation, the enforcement of liens and security interests in the Collateral)
or otherwise exercise any or all rights and remedies provided for by any or all
of the Credit Agreement or other Loan Documents or applicable law.


 


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3.2        Provided that no Forbearance Default occurs, each
of the Agent and the Lenders agrees that, (a) until the expiration of the
Forbearance Period and except as set forth in this Forbearance, it will forbear
from the exercise of default-related remedies with respect to the Obligations
against Borrowers or any other Credit Party under the Credit Agreement or any
other Loan Document (“Default-related Remedies”) solely with respect to
the Specified Events of Default; and (b) during the Forbearance Period, the
Lenders agree to continue to advance Loans subject to the terms and conditions
set forth herein and the terms and conditions of the Credit Agreement and the
other Loan Documents; provided, however, from and after the date
of this Forbearance, the Lenders shall have no obligation to make LIBOR Loans
or convert any US Index Rate Loans into LIBOR Loans.


3.3        On
the Forbearance Termination Date, Agent’s and any Lenders’ agreement hereunder
to forbear from exercising their Default-related Remedies with respect to the
Specified Events of Default shall immediately and automatically terminate
without the requirement of any demand, presentment, protest, or notice of any
kind, all of which each of the Borrowers and the other Credit Parties
waives.  Each of the Borrowers and the
other Credit Parties agrees that Agent and Lenders may at any time thereafter
proceed to exercise any and all of their respective rights and remedies under
any or all of the Credit Agreement and other Loan Documents and/or applicable
law or equity, including, without limitation, their respective Default-related
Remedies in connection with the Specified Events of Default.


3.4        The
Borrowers and the other Credit Parties further acknowledge and agree that
neither any action taken or not taken by Agent or any Lender prior to the date
hereof nor the execution and delivery of this Forbearance (i) other than as
expressly set forth in Section 6.1 with respect to the waiver of the Waived Event
of Default constitutes a waiver of any Default or Event of Default, including
the Specified Events of Default, or (ii) prejudices any rights or remedies
which the any Agent or any Lender may have, now or in the future, under any of
the Loan Documents or in law or equity, including any rights or remedies with
respect to the Specified Events of Default except solely to the extent that the
Agent and Lenders have agreed, subject to the terms and conditions of this
Forbearance, to forbear during the Forbearance Period from exercising their
rights and remedies with respect to the Specified Events of Default.


3.5        Any
agreement by Agent and Lenders to extend the Forbearance Period must be set
forth in writing and signed by the respective officers of Agent and the
Requisite Lenders.  Each of the Borrower
and the other Credit Parties acknowledges that Agent and Lenders have not made
any assurances concerning any possibility of an extension of the Forbearance
Period and are under no obligation whatsoever to consider or enter into such an
extension.


4.             ACKNOWLEDGMENT OF DEFAULT RATE.  Each
of the Borrowers and the other Credit Parties agree and acknowledge that,
pursuant to section 1.5(d) of the Credit Agreement and notwithstanding this
Forbearance, from and after July 7, 2007 the interest rate applicable to the
Loans (including any Loans advanced during the Forbearance Period) and the
Letter of Credit Fees (but not the Unused Line Fee), shall be increased by two
percentage points (2%) per annum above the rates of interest or the rate of
such Letter of Credit Fees otherwise applicable under the Credit Agreement.


 


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5.             ADDITIONAL AGREEMENTS OF THE PARTIES.


5.1        Notwithstanding paragraph b of Annex G
of the Credit Agreement, the parties hereto agree that the Borrowers and other
Credit Parties shall not, during the Forbearance Period, be required to satisfy
the Fixed Charge Coverage Ratio if the US Borrower has Borrowing Availability
of less than U.S. $7,500,000 on any date of determination specified in the
Credit Agreement, and such failure to so comply during the Forbearance Period
shall not constitute a Default or an Event of Default under the Credit
Agreement.


5.2        Notwithstanding
paragraph (c)(ii) of Annex G of the Credit Agreement, the parties
hereto agree that the Borrowers and other Credit Parties shall not be required
to satisfy the minimum EBITDA requirement specified therein for the quarter
ending November 3, 2007, provided  however, the Parent and its
Subsidiaries shall have a minimum EBITDA for the 13 Fiscal Periods ended
November 3, 2007 of at least $1,000,000, and any such failure shall not
constitute a Default or an Event of Default under the Credit Agreement unless
the minimum EBITDA requirement set forth in the proviso above is not then
satisfied.


5.3        The
US Borrower agrees that it shall provide to the US Agent consolidated and
consolidating projections for Parent and its Subsidiaries for each Fiscal
Period through the end of Fiscal Year 2008. 
Such projections shall include consolidated and consolidating income
statements, balance sheets and statements of cash flows for Parent and its
Subsidiaries.  The US Borrower will
deliver such projections no later than November 15, 2007.


5.4        In consideration of this
Forbearance and the other agreements set forth herein, the Borrowers hereby
agree to pay to US Agent for the benefit of US Agent and the Lenders an
aggregate fee of $183,333 (the “Forbearance Fee”), which fee shall be payable
in four installments of $45,833.25, (i) the first installment of which shall be
paid by Borrowers no later than the Effective Date, (ii) the second installment
of which shall be paid by Borrowers no later than the 30th day following the
Effective Date, (iii) the third installment of which shall be paid by Borrowers
no later than the 60th day following the Effective Date, and (iv) the fourth
installment of which shall be paid by Borrowers no later than the 90th day
following the Effective Date, provided however, that the US Agent and Lenders hereby
agree that if this Forbearance Letter is terminated by written mutual agreement
of the parties hereto (which agreement shall be conditioned upon (a) the US
Borrower having achieved Borrowing Availability acceptable to the Agent and
Lenders, (b) the US Borrower having successfully negotiated a reduction of its
outstanding letter of credit in favor of [Travelers] on terms acceptable to
Agent and the Lenders, (c) the Borrowers having met (in the determination of
the Agent and Lenders) the projections delivered pursuant to Section 5.3 of
this Forbearance (which projections shall be satisfactory to Agent and
Lenders), and (d) successful negotiation of a mutually acceptable credit
agreement or amendment to the existing Credit Agreement (it being understood that
any such credit agreement or amendment shall be subject to the credit approval
of the Lenders)), any installment due on a date after such termination date
shall no longer be payable by the Borrowers. 
Except as set forth in the proviso of the immediately preceding
sentence, the entire Forbearance Fee shall be payable irrespective of whether
the Forbearance Termination Date occurs on or before the date upon which any
installment of the Forbearance Fee is payable in accordance with the
immediately preceding sentence, and the Forbearance Fee (or any portion
thereof) shall not be refundable to the Borrowers under any circumstances,
including, without limitation the


 


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occurrence of the Forbearance Termination Date
before February 15, 2008.  This provision
shall survive any termination of this Forbearance.


5.5        The
Borrowers hereby agree that in addition to any requirements set forth in the
Credit Agreement, at any time the representations and warranties in the Credit
Agreement are required to be made or are deemed to be made in the Credit
Agreement or under any other Loan Document (including, without limitation, in
connection with an Advance), the Parent and the US Borrower, jointly and
severally, and the UK Borrower only in respect of itself, severally, will be
deemed to represent and warrant that no event has occurred and is continuing
that would constitute a Forbearance Default (without giving effect to any grace
period set forth in clause (f) of such definition).


 


6.             LIMITED WAIVER OF EVENT OF DEFAULT.  Subject to the satisfaction of the conditions
set forth herein, the Agent and the Lenders hereby agree as follows:


6.1        The
Agents and the Lenders hereby waive the Event of Default under the Credit
Agreement that occurred due to the failure of the US Borrower to pay on August
18, 2007, or at any time thereafter, amounts owing under that certain Amended
and Restated Unsecured Subordinated Note in favor of Robert W. Stover due
August 18, 2007.


7.             REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE BORROWERS.  The Parent and the US Borrower, jointly and severally, and
the UK Borrower, only in respect of itself, severally, make the following
representations and warranties to each Lender and each Agent with respect to
all Credit Parties:


7.1        Power and Authority.  Each of the Credit Parties has all corporate or other
organizational power and authority to enter into this Forbearance and, as
applicable, the Consent of Guarantors attached hereto (the “Consent”),
and to carry out the transactions contemplated by, and to perform its
obligations under or in respect of, this Forbearance (including, without
limitation, the Consent).


7.2        Due Authorization, Non-Contravention.  The execution, delivery and performance by each Credit
Party of this Forbearance and the Consent, as applicable, and the performance
of the obligations of each Credit Party under or in respect of this Forbearance
(including, without limitation, the Consent) (a) have been duly authorized
by all necessary corporate, limited liability company or partnership action,
(b) do not contravene any provision of such Person’s charter, bylaws or
partnership or operating agreement, as applicable, (c) do not violate any
law or regulation or any order or decree of any court or Governmental Authority
of the United States or the United Kingdom or, in each case, any political
subdivision thereof, (d) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the acceleration
of any performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Person is a party or by which such
Person or any of its property is bound, except where any such violations,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, and (e) do not result in the creation or
imposition of any Lien on any of the property of such Person.


 


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7.3        Execution, Delivery and Enforceability.  This Forbearance and the
Consent have been duly executed and delivered by each Credit Party which is a
party thereto and this Forbearance and the Consent, constitute the legal, valid
and binding obligations of such Credit Party, enforceable in accordance with
their terms, except as enforceability may be limited by Insolvency Laws or
similar laws affecting creditors’ rights generally or by general equitable
principles.


7.4        No Default, Event of Default or Forbearance Default.  Except for the Specified Events of Default, no event has occurred
and is continuing after giving effect to this Forbearance (including, without
limitation, the Consent) or will result from the execution and delivery of this
Forbearance or the Consent that would constitute a Default, an Event of Default
or a Forbearance Default (without giving effect to any grace period set forth
in clause (f) of such definition).


7.5        Representations and Warranties.  After giving effect to this Forbearance, each of the
representations and warranties contained in the Loan Documents is and will be
true and correct in all material respects on and as of the date hereof and as
of the effective date of this Forbearance, except to the extent that such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects as of such
earlier date.


7.6        Other
Material Agreements.  The
occurrence of the Specified Events of Default do not result in a breach or
default under any other material agreement or contract to which any of the
Borrowers or Credit Parties are a party or by which its property may be bound,
except for any such breaches or defaults which have been waived.


8.             CONDITIONS TO EFFECTIVENESS OF THIS FORBEARANCE.  This Forbearance shall be
effective as of the date that all of the following conditions are satisfied, as
determined by the Agent:


(i) such Forbearance has been signed by, and when
counterparts hereof shall have been delivered to the US Agent or its counsel
(by hand delivery, mail or telecopy) by the Parent, the Borrowers and the
Lenders;


 


(ii) each Guarantor shall have delivered to the US
Agent or its counsel executed counterparts of the Consent;


 


(iii) Borrowers shall have paid to the US Agent for
the pro-rata benefit of the Lenders the first installment of the Forbearance
Fee as required by Section 4.4 hereof;


 


(iv) Borrowers shall have delivered to the US Agent
or its counsel a certificate certifying (x) that the charters, bylaws (or other
similar organizational documents) and resolutions authorizing the execution,
delivery and performance by the Credit Parties of their obligations under the
Credit Agreement and the other Loan Documents, each in the form delivered to
the Agent on the Closing Date, are in full force and effect and have not been
amended, rescinded or otherwise modified


 


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as of the date of this Forbearance (other than an
amendment to Parent’s bylaws to increase the number of members of the board of
directors from five to nine), (y) that the resolutions attached thereto are the
only resolutions adopted with respect to this Forbearance, and (z) that no
further authorization or consent is required to be obtained with respect to the
execution, delivery and performance of this Forbearance, the Consent and the
Credit Agreement as modified hereby; and an incumbency certificate for each
Credit Party; and


 


(v) the US Borrower on behalf of itself and the
other Credit Parties and the UK Borrower on behalf of itself shall have
delivered to the US Agent or its counsel a certificate certifying that the
representations and warranties contained herein and in the Loan Documents are
true and correct in all material respects as of such date (except to the extent
that such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects as of such earlier date), and other than the Specified Events of
Default, no Default, Event of Default or Forbearance Default (without giving
effect to any grace period set forth in clause (f) of such definition) has
occurred and will be continuing (after giving effect to this Forbearance,
including Section 6.1 hereof).


 


 


9.             EFFECT OF LIMITED WAIVER, FORBEARANCE; RATIFICATION.  This Forbearance is a Loan Document.  From and after the date on which this
Forbearance becomes effective, all references in the Loan Documents to the Credit
Agreement shall mean the Credit Agreement as amended or supplemented
hereby.  Except as expressly amended or
waived hereby, the Credit Agreement and the other Loan Documents, including the
Liens granted thereunder, shall remain in full force and effect, and all terms
and provisions thereof are hereby ratified and confirmed.  Each of the Parent and each Borrower confirms
that, as amended hereby, each of the Loan Documents is in full force and
effect.  The limited waiver contained in
Section 6.1 hereof, and the forbearance contained herein, are limited to
the precise terms hereof, and neither the Agent nor any Lender is obligated to
consider or consent to any additional request by any Borrower, any Credit Party
or any other Person for any other forbearance, waiver, consent or amendment
with respect to the Credit Agreement  or any
Loan Documents.  Each of the Borrowers
and the other Credit Parties acknowledges that the Lenders and the Agent have
not made any assurances concerning any possibility of an extension of the
Forbearance Period.  The forbearance
contained herein is not and shall not be deemed to be a waiver of the Agent’s
or any Lender’s right to payment of any principal, interest or fees owing in
respect of the Loans or any of the other Obligations under the Credit Agreement  or any other Loan Document.


10.           ACKNOWLEDGMENT OF OUTSTANDING AMOUNTS.  Each of the
Borrowers and the other Credit Parties hereby acknowledges and agrees that the
aggregate outstanding principal amount of the US Revolving Loan is
$36,639,049.00 (all in the form of outstanding Letters of Credit as of October
16, 2007) and the aggregate outstanding principal amount of the UK Revolving
Loan is £9,833.71 (as of October 16, 2007), and that such principal amounts,
plus interest and fees, are payable pursuant to the Credit Agreement and other
Loan Documents without defense, offset, withholding, counterclaim or deduction
of any kind.  This section shall any survive termination of this Forbearance.


 


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11.           RELEASE AND WAIVER OF CLAIMS, DEFENSES AND RIGHTS OF
SET OFF.  Each of the Parent
and the Borrowers acknowledges that the US Agent, the UK Agent and the Lenders
have performed all obligations and duties owed to the Parent and the Borrowers
under the Loan Documents through the date hereof, and each such party further,
acknowledges, represents and warrants that none of the Parent or the Borrowers
has any claim, cause of action, defense, or right of set off against the US
Agent, the UK Agent or any Lender or Lenders, and, to the extent that any such
party has any such rights, each of the Parent and the Borrowers hereby
releases, waives, and forever discharges the US Agent, the UK Agent and the
Lenders (together with each of their predecessors, successors and assigns) and
each of their officers, directors, employees, agent and representatives from
each action, cause of action, suit, debt, defense, right of set off, or other
claim whatsoever, in law or in equity, known or unknown against the US Agent,
the UK Agent or the Lenders, or such officers, employees, agent or representatives.  Each of the Parent and each Borrower hereby
specifically waives as against the US Agent, the UK Agent or the Lenders any
rights they or any of them may have under Section 1542 of the California Civil
Code, which provides as follows:  “A general
release does not extend to claims which the creditor does not know or suspect
to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with
the debtor.”  This section shall survive
any termination of this Forbearance.


12.           APPLICABLE LAW. 
THIS FORBEARANCE SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES. 
THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS FORBEARANCE.


13.           COMPLETE AGREEMENT. 
This Forbearance sets forth the complete agreement of the
parties in respect to the subject matter hereof.  The execution, delivery and effectiveness of
this Forbearance do not constitute a waiver of any Default or Event of Default,
amend or modify any provision of any Loan Document or constitute a course of
dealing or any other basis for altering the Obligations of any Credit Party.


14.           CAPTIONS; COUNTERPARTS.  The catchlines and captions herein
are intended solely for convenience of reference and shall not be used to
interpret or construe the provisions hereof. This Forbearance may be executed
by one or more of the parties to this Forbearance on any number of separate
counterparts (including by telecopy), all of which taken together shall
constitute but one and the same instrument.


 


[signatures following; remainder of page intentionally left blank]


 


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IN WITNESS WHEREOF, each of the undersigned has duly executed this
Forbearance, Limited Waiver and Consent of Guarantors effective as of the date
set forth above.


	
  WESTAFF (USA), INC.

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title:

  	
  CFO
  & SVP

  
	
  WESTAFF SUPPORT, INC.

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title:

  	
  SVP
  & CFO

  
	
  WESTAFF (U.K.) LIMITED

  
	
  By:

  	
  /s/
  Michael Willis

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  GENERAL ELECTRIC CAPITAL  CORPORATION,

  
	
  as US
  Agent, UK Agent, a US Revolving Lender, a Term Lender and a UK Revolving Lender

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Robert M. Brichacek

  
	
  Name:

  	
  Robert
  M. Brichacek

  
	
  Title: 

  	
  Authorized
  Signatory

  
	
  BANK OF AMERICA, N. A.,

  
	
  as
  Documentation Agent, a US Revolving Lender, a Term Lender and a UK Revolving
  Lender

  
	
  By:

  	
  /s/
  David Knoblauch

  
	
  Name:

  	
  David
  Knoblauch

  
	
  Title: 

  	
  SVP

  



 


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The
following Person is a signatory to this Forbearance, Limited Waiver and Consent
of Guarantors in its capacity as a Credit Party and not as a Borrower.


	
  WESTAFF, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title

  	
  SVP
  & CFO

  



 


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CONSENT OF GUARANTORS


 


 


Each of the undersigned is
a Guarantor of the Obligations of the Borrowers under the Credit Agreement and
each other Loan Document (including US Borrower and Term Borrower in its
capacity as a Guarantor of the Obligations of the other Borrowers) and hereby
(a) consents to the foregoing Forbearance, (b) acknowledges that
notwithstanding the execution and delivery of the foregoing Forbearance,
including without limitation, the imposition of the Default Rate, the
obligations of each of the undersigned Guarantors are not impaired or affected
and the Parent Guaranty, the Subsidiary Guaranty, and the cross-guaranty
contained in the Credit Agreement continue in full force and effect, and
(c) ratifies the Parent Guaranty, the Subsidiary Guaranty or the
cross-guaranty contained in the Credit Agreement, as applicable, and each of
the Loan Documents to which it is a party and further ratifies the Liens
granted by it to any Agent for its benefit and the benefit of the Lenders.


 


[signatures following; remainder of
page intentionally left blank]


 


Consent-1

















 


 


	
                                  IN
  WITNESS WHEREOF, each of the undersigned has executed and delivered this
  CONSENT OF GUARANTORS as of the date first set forth above. 

  



 


	
   

  	
   

  
	
  WESTAFF, INC.

  
	
   

  	
   

  
	
  By

  	
  /s/ Dawn Jaffray

  
	
  Name:

  	
  Dawn Jaffray

  
	
  Title:

  	
  SVP & CFO

  
	
   

  	
   

  
	
  WESTERN MEDICAL SERVICES, INC.,
 a California corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title:

  	
  SVP
  & CFO

  
	
   

  	
   

  
	
  WESTAFF (USA), INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title:

  	
  SVP
  & CFO

  
	
   

  	
   

  
	
  WESTAFF SUPPORT, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title:

  	
  SVP
  & CFO

  
	
   

  	
   

  
	
  MEDIAWORLD INTERNATIONAL

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dawn
  Jaffray

  
	
  Name:

  	
  Dawn
  Jaffray

  
	
  Title:

  	
  SVP
  & CFO

  



 

















 


Annex I


Specified Events of Default


 


1.                                 Parent and its
Subsidiaries have failed to maintain, on a consolidated basis, for the 13
Fiscal Periods ended August 4, 2007, and for the 13 Fiscal Periods ended
September 1, 2007, a Minimum Fixed Charge Coverage Ratio of not less than 1.25
to 1.0, as required by paragraph (b) of Annex G to the Credit Agreement.


 


2.                                       Parent and its
Subsidiaries have failed to have, on a consolidated basis, at the end of the
Fiscal Quarter ended July 7, 2007, for the 13 Fiscal Periods then ended, a
Minimum EBITDA of $9,000,000, as required by 
paragraph (c) of Annex G to the Credit Agreement.