**EXHIBIT10.8.29**

 

**FIRST AMENDMENT TO FINANCING AGREEMENT**

 

**THIS FIRSTAMENDMENT TO FINANCING AGREEMENT (“***First Amendment***”)**ismade as of March 31, 2008 to amend and provide certain consents under thatcertain Financing Agreement****(the “*Agreement*”), dated as of February 14,2008, among Westaff (USA), Inc., a California corporation (“*Borrower*”), Westaff, Inc., a Delawarecorporation and the sole shareholder of Borrower, as parent guarantor (“*Parent Guarantor*”), each of the lendersparty thereto and defined therein as “*Lenders*”,and U.S. Bank National Association in its separate capacities as the LC Issuerthereunder and as Agent for the benefit of the Secured Parties. Capitalizedterms used herein and not otherwise defined herein having the respectivemeanings ascribed thereto in the Agreement.

 

**RECITALS**

 

A.            Borrower has advised Agent that WestaffSupport, Inc., a California corporation and a wholly owned subsidiary ofBorrower (“*Westaff Support*”),intends to sell each of the ordinary shares (as further defined in the PurchaseAgreement (as defined below), the “*SaleShares*”) of Westaff UK Limited, a corporation organized under thelaws of England and Wales (“*Westaff**UK*”) it owns to FortisRecruitment Group Limited (“*Fortis*”)pursuant to that certain Share Purchase Agreement, dated on or about March 31,2008, between Westaff Support and Fortis (the “*PurchaseAgreement*’), in consideration of a cash payment by Fortis to WestaffSupport 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 consentto the consummation of the Westaff UK Sale, and Lenders have agreed to consentthereto on the terms and subject to the conditions specified herein.

 

**AGREEMENT**

 

**NOW,THEREFORE**, inconsideration of the foregoing recitals and the mutual covenants herein setforth, 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 asdescribed in the Recitals hereto and prospectively waive any Event of Defaultto the extent caused by, or to the extent otherwise directly resulting from,the consummation of the Westaff UK Sale upon or concurrently with the EffectiveDate (as defined in Section 6 below).  In furtherance of the foregoing consent, uponthe Effective Date, following satisfaction of each of the conditions set forthin Section 6 below, (a) the U.K. Debenture (as defined in theAgreement before giving effect to this First Amendment) will be automaticallyterminated, (b) Agent’s charge on and security interest in all personalproperty of Westaff UK granted by Westaff UK pursuant to the U.K. Debenture andthe other Security Documents will be automatically terminated and released, (c) Agent’scharge on and security interest in the Sale Shares granted by Westaff Supportpursuant to the U.K. Debenture and the other Security Documents will beautomatically terminated and released, (d) Agent will deliver to WestaffSupport (or its designee) all deeds of release, Companies Form 403a (to befiled with Companies House in the United Kingdom), UCC financing statementterminations (to be filed in the UCC filing office in Washington D.C.) and suchother charge or security interest release documents or notices related theretoas Borrower or Westaff Support may reasonably request in order to evidence orotherwise give public notice to such collateral terminations and releases andWestaff Support (or its designee) is authorized to file such; provided, however,that any and all such charge and security interest release documents shall beprepared 

 

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

 

**2.****            ****Amendments.**

 

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

 

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

 

“Advance Rate” meansa 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 BilledReceivables Advance Rate”) and to Borrower Eligible Unbilled Receivables (the “EligibleUnbilled Receivables Advance Rate”) for the purpose of determining theBorrowing Base.  The initial AdvanceRates are as follows:  the EligibleBilled Receivables Advance Rate is 85%; and the Eligible Unbilled ReceivablesAdvance Rate is 75%.

 

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

 

“Available Cash”means, as of any date of determination, all cash and other CashEquivalents of any Credit Party (and then available at the close ofbusiness) maintained in a Controlled Deposit Account or carried in aControlled Securities Account and available to such Credit Party at the closeof 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 appliedto the Net Amount of Eligible Billed Receivables then outstanding; *plus*

 

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

 

(iii)          the then Reserve Amount.

 

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

 

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

 

“Security Documents”means the Security Agreement, the Trademark Security Agreements, the StockPledge Agreement and each other agreement, instrument and document executed anddelivered from time to time by, or on behalf of, Borrower, any other CreditParty 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 ofMediaWorld as permitted by Section 10.21, MediaWorld shall cease tobe a Subsidiary Guarantor under and for purposes of this Agreement and theother Loan Documents.

 

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

 

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

 

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

 

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

 

“Controlled SecuritiesAccount” means each securities account (including all financial assets heldtherein and all certificates and instruments, if any, representing orevidencing such financial assets) that is the subject of an effective ControlAgreement and that is maintained by any Credit Party with U.S. Bank oranother securities intermediary approved by Agent in its reasonablediscretion.

 

**(iii)****        **The definition of “Borrower EligibleBilled Receivables” set forth in Section 1.1 of the Agreement isamended (a) by deleting the words “Eligible Billed Receivables” in thesecond line of clause (i) thereof and inserting in their place the words “BorrowerEligible Billed Receivables”; and (b) deleting the words “and of WestaffUK” 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 RobertStover” from the parenthetical in clause (c) thereof.

 

**(v)****           **The definition of “Net Amount of Eligible BilledReceivables” set forth in Section 1.1 of the Agreement is amended bydeleting the words “Eligible Billed Receivables” in the second line thereof andinserting in their place the words “Borrower Eligible Billed Receivables”.

 

**(vi)****         **The definition of “Net Amount of EligibleUnbilled Receivables” set forth in Section 1.1 of the Agreement isamended by deleting the words “Eligible Unbilled Receivables” in the secondline thereof and inserting in their place the words “Borrower Eligible UnbilledReceivables”.

 

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

 

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“Charged Assets”

 

“Eligible BilledReceivables”

 

“Eligible UnbilledReceivables”

 

“U.K. Debenture”

 

“Westaff UK”

 

“Westaff UK EligibleBilled Receivables”

 

“Westaff UK EligibleUnbilled Receivables”

 

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

 

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

 

(i)            a first priority security interest in all ofthe Collateral pursuant to the Security Agreement dated as of the date of thisAgreement between each Credit Party and Agent, for the benefit of the SecuredParties (the “Security Agreement”), and accompanying financingstatements;

 

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

 

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

 

**(e)****          **Section 8.3 (Reporting regardingReceivables and Notes Payable).  Section 8.3 of the Agreement is herebyamended and restated as follows:

 

8.3 Reporting RegardingReceivables and Notes Receivable. Not less frequently than weekly, Borrower shall deliver to Agent aborrowing base certificate in the form of Exhibit D (a “BorrowingBase Certificate”) by no later than Tuesday of each week (which is based onvalues as of the end of the immediately preceding Saturday), which BorrowingBase Certificate shall update the aging of the Borrower Eligible BilledReceivables and the Borrower Eligible Unbilled Receivables described in theimmediately 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 ifavailable, Borrower shall deliver to Agent a report (the “Fiscal PeriodReport”) of Borrower’s sales, credits to sales or credit memorandaapplicable to sales, collections and non-cash charges (from whatever source,including sales and noncash journals or other credits to Receivables) for theapplicable period, and acceptable supporting documentation thereto (including,a report indicating the Dollar value of the Eligible Receivables, and all otherinformation reasonably deemed necessary by Agent to determine levels of thatwhich is and is not Eligible Receivables), and monthly agings of Receivableslisted by invoice date, in each case reconciled to the Borrowing BaseCertificate 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 anyextensions of the maturity of, any refinancing of, or any other materialchanges in the terms of any Receivables in such format as is specified by Agentfrom time to time, together with such further information with respect theretoin such format as Agent may then reasonably require.

 

**(f)****           **Section 8.5 (Interim FinancialStatements; Payable Information).  Section 8.5 of theAgreement is hereby amended by deleting from the last sentence thereof thewords “each of Borrower’s and Westaff UK’s” and inserting in their place theword “Borrower’s”.

 

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

 

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

 

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

 

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

 

**(k)****          **Section 11.1 (Events of Default).  Section 11.1(i)(f) ofthe 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 (“BankruptcyCase”) under any existing or future bankruptcy, insolvency, reorganization,liquidation or arrangement or readjustment of debt law or any similar existingor future law of any applicable jurisdiction (“Insolvency Law”), (2) aninvoluntary Bankruptcy Case (“Involuntary Proceeding”) is commencedagainst Credit Party (other than MediaWorld) under any Insolvency Law and theInvoluntary Proceeding is not controverted within 10 days, or is not dismissedwithin 60 days, after the commencement of the Bankruptcy Case, or (3) acustodian, receiver, trustee, sequestrator, or agent is appointed or authorizedto take charge of any properties of any Credit Party (other than MediaWorld);

 

**(l)****           **Exhibit D (Form of Borrowing BaseCertificate).  Exhibit D is hereby amended to replaceAttachment A to the Borrowing Base Certificate with the attachment to Exhibit Ahereto.

 

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

 

**4.****            ****Representations andWarranties. **In order to induce Agent, LC Issuer andLenders to enter into this First Amendment, Borrower and Westaff Support herebyrepresent and warrant to Agent, LC Issuer and Lenders as follows:

 

**(a)****          ****Corporate Power andAuthority.**  Each Credit Party has all requisite corporatepower and authority to enter into this First Amendment and to carry out thetransactions contemplated hereby, including the consummation of the Westaff UKSale.

 

**(b)****          ****Authorization of Agreements.**  Theexecution and delivery of this First Amendment by each of the Credit Partiesand the performance of the Agreement, as amended by this First Amendment, asapplicable, and each of the other Loan Documents to which any Credit Party is aparty have been duly authorized by all necessary corporate action on the partof such Credit Party.

 

**(c)****          ****No Conflict.**  Theexecution and delivery by each of the Credit Parties of this First Amendmentand the performance by each of the Credit Parties of the Agreement, as amendedby this First Amendment, and each of the other Loan Documents to which suchCredit Party is a party do not and will not contravene (i) any law orregulation binding on or affecting any of the Credit Parties, (ii) thecertificate of incorporation, bylaws or other charter documents of any of theCredit Parties, (iii) any order, judgment or decree of any court or otheragency of government binding on any of the Credit Parties or (iv) anycontractual restriction binding on or affecting any of the Credit Parties.

 

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

 

**(e)****          ****Binding Obligation.**  This FirstAmendment has been duly executed and delivered by each of the Credit Partiesand is the binding obligation of each of the Credit Parties, enforceableagainst each in accordance with its terms, except as such enforceability may belimited by bankruptcy, insolvency, reorganization, liquidation, moratorium orother similar laws of general application and equitable principles relating toor affecting creditors’ rights generally.

 

**(f)****           ****Absence of Default.**  Aftergiving effect to this First Amendment and the consummation of the Westaff UKSale, no event has occurred and is continuing that would constitute a Defaultor an Event of Default under and as defined in the Agreement.

 

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**(g)****          ****Restatement of Representationsand Warranties in Agreement.**  Borrower and Parent Guarantor, with respectto the representations and warranties set forth in****Section 9 of the Agreement, represent and warrant thateach 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 toanother date or as specifically described therein in which case suchrepresentations and warranties are true, correct and complete as of such otherdate.

 

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

 

**6.****            ****Conditions Precedent toEffectiveness. **This First Amendment shall be deemedeffective as of the date (the “*EffectiveDate*”) Agent shall have confirmed satisfaction of each of thefollowing conditions precedent:

 

**(a)****          **Agent shall have received a copy of thisFirst Amendment executed by each Credit Party (other than Westaff UK) and eachLender;

 

**(b)****          **Agent shall have received a certificate ofthe secretary or assistant secretary of Borrower and Westaff Support certifyingthat attached thereto are (i) resolutions adopted by the board ofdirectors 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) confirmedreceipt of the Cash Purchase Price in a Controlled Deposit Account or (ii) receiveda solicitor’s undertaking, in form and substance acceptable to Agent ****in****its sole discretion, from Cobbetts LLP to, as promptly as possible, wirethe Cash Purchase Price to a Controlled ****Deposit********Account.

 

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

 

**8.****            ****Miscellaneous.**

 

**(a)****          ****Reference to and Effect onthe Agreement and the Other Loan Documents.**  On and after the EffectiveDate, each reference in the Agreement or the other Loan Documents to “thisAgreement,” “hereunder,” “hereof,” “herein” or words of like import shall meanand be a reference to such agreement after giving effect hereto.

 

**(b)****          ****Headings.**  Section andsubsection headings in this First Amendment are included herein for convenienceof reference only and shall not constitute a part hereof for any other purposeor be given any substantive effect.

 

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

 

**(d)****          ****Counterparts.** ThisFirst Amendment may be executed in counterparts, each of which when so executedshall be deemed an original, but all such counterparts together shallconstitute but one and the same instrument; signature pages may bedetached from multiple separate counterparts and attached to a singlecounterpart so that all signature pages are physically attached to thesame document.

 

[SIGNATURE PAGES TO FOLLOW]

 

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**WITNESS,**this First Amendment to Financing Agreement is duly executed by therespective duly authorized officers of the undersigned as of the date firstwritten 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 |

 

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|   | **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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