Document:

Exhibit 10.1

 

AMENDMENT NO. 12
TO SALE AND SERVICING AGREEMENT
 (VFCC
Transaction with Ares Capital CP Funding LLC)

 

THIS AMENDMENT
NO. 12 TO THE SALE AND SERVICING AGREEMENT,
dated as of December 5, 2008 (this “Amendment”),
is entered into in connection with that certain Sale and Servicing Agreement, dated
as of November 3, 2004 (as amended, modified, waived, supplemented or
restated through the date hereof, the “Sale and Servicing Agreement”), by
and among Ares Capital CP Funding LLC, as the borrower (together with its
successors and assigns in such capacity, the “Borrower”), Ares Capital
Corporation, as the originator (together with its successors and assigns in
such capacity, the “Originator”)
and as the servicer (together with its successors and assigns in such capacity,
the “Servicer”), each
of the Conduit Purchasers and Institutional Purchasers from time to time party
thereto, each of the Purchaser Agents from time to time party thereto, Wachovia
Capital Markets, LLC,  as the Administrative
Agent (together with its successors and assigns in such capacity, the “Administrative
Agent”) and as the Purchaser Agent with respect to Variable Funding Capital
Company LLC (f/k/a Variable Funding Capital Corporation), as Conduit Purchaser
(together with its successors and assigns in such capacity, the “VFCC Agent”),
U.S. Bank National Association, as the trustee (together with its successors
and assigns in such capacities, the “Trustee”), and Lyon Financial
Services, Inc. (d/b/a U.S. Bank Portfolio Services) as the backup servicer
(together with its successors and assigns in such capacity, the “Backup Servicer”).
 Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the Sale and
Servicing Agreement.

 

RECITALS

 

WHEREAS, the above-named
parties have entered into the Sale and Servicing Agreement, and, pursuant to
and in accordance with Section 13.1 thereof, the parties hereto desire to
amend the Sale and Servicing Agreement, in certain respects as provided herein;

 

NOW, THEREFORE,
based upon the above Recital, the mutual premises and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the undersigned, intending to be legally
bound, hereby agree as follows:

 

SECTION 1.                            AMENDMENTS.

 

(a)                                  The
“Recitals” of the Sale and Servicing Agreement are hereby amended by
deleting reference to the word “Tenth” and replacing it with the word “Twelfth”.

 

(b)                                 Section 1.1
of the Sale and Servicing Agreement is hereby amended by inserting the
following defined terms in appropriate alphabetical sequence:

 

““Asset
Coverage Ratio”: The ratio, determined on a consolidated basis, without
duplication, in accordance with GAAP, of (a) the fair market value of the
total assets of Ares Capital Corporation and its Subsidiaries as required by,
and in accordance with, the 1940 Act and any orders of the Securities and
Exchange Commission issued to the Originator, to be determined by the Board of
Directors of the Originator and reviewed by its auditors, less all liabilities
(other than Indebtedness, including Indebtedness 

 

 

hereunder) of Ares
Capital Corporation and its Subsidiaries, to (b) the aggregate amount of
Indebtedness of Ares Capital Corporation and its Subsidiaries.”

 

““Twelfth
Amendment Effective Date”: December 5, 2008.”

 

(c)                                  The
definition of “Advance Rate” in Section 1.1 of the Sale and
Servicing Agreement is hereby amended by replacing the table in the definition
with the following:

 

ELIGIBLE LOANS

 

	
  TYPE OF ELIGIBLE LOAN

  	
   

  	
  ADVANCE RATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Broadly Syndicated Loans

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  First Lien Loans

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Second Lien Loans

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Subordinated Loans

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  DIP Loans

  	
   

  	
  50

  	
  %

  

 

(d)                                 Section 2.14(e) of
the Sale and Servicing Agreement is hereby amended by deleting reference to the
word “Tenth” and replacing it with the word “Twelfth”.

 

(e)                                  Section 6.15(i) of
the Sale and Servicing Agreement is hereby amended and restated in its entirety
as follows:

 

“(i)                               at
any time, Ares Capital Corporation fails to maintain the Asset Coverage Ratio
at greater than or equal to 2:1;”

 

(f)                                    Section 6.15(j) of
the Sale and Servicing Agreement is hereby amended and restated in its entirety
as follows:

 

“(j)                               Ares
Capital Corporation fails to maintain the aggregate of its GAAP stockholders’
equity and subscribed stockholders’ equity in an amount equal to at least
$850,000,000, as increased by 75% of the proceeds of any equity offerings of
Ares Capital Corporation consummated after the Twelfth Amendment Effective
Date;”

 

SECTION 2.                            [RESERVED].

 

SECTION 3.                            Agreement in Full Force and Effect as AMENDED.

 

Except as
specifically amended hereby, all provisions of the Sale and Servicing Agreement
are hereby ratified and shall remain in full force and effect.  After this Amendment becomes effective, all
references to the Sale and Servicing Agreement, and corresponding references
thereto or therein such as “hereof,” “herein,” or words of similar effect
referring to the Sale and Servicing Agreement shall be deemed to mean the Sale
and Servicing Agreement as amended hereby. 
This Amendment shall not be deemed to expressly or impliedly waive,
amend 

 

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or supplement
any provision of the Sale and Servicing Agreement other than as expressly set
forth herein, and shall not constitute a novation of the Sale and Servicing Agreement.

 

SECTION 4.                            Representations.

 

Each of the
Originator, the Servicer and the Borrower, severally for itself only, represents
and warrants as of the date of this Amendment as follows:

 

(i)                                     it
is duly incorporated or organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization;

 

(ii)                                  the
execution, delivery and performance by it of this Amendment and the Sale and
Servicing Agreement as amended hereby are within its powers, have been duly
authorized, and do not contravene (A) its charter, by-laws, or other
organizational documents, or (B) any Applicable Law;

 

(iii)                               no
consent, license, permit, approval or authorization of, or registration, filing
or declaration with any governmental authority, is required in connection with
the execution, delivery, performance, validity or enforceability of this Amendment
and the Sale and Servicing Agreement as amended hereby by or against it;

 

(iv)                              this
Amendment has been duly executed and delivered by it;

 

(v)                                 each
of this Amendment and the Sale and Servicing Agreement as amended hereby constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally or by general principles of
equity;

 

(vi)                              it
is not in default under the Sale and Servicing Agreement, as amended hereby;
and

 

(vii)                           upon
giving effect to this Amendment, there is no Termination Event, Unmatured
Termination Event, or Servicer Default.

 

SECTION 5.                            Conditions to Effectiveness.

 

The
effectiveness of this Amendment is conditioned upon: (i) payment of the
outstanding fees and disbursements of the Purchasers; (ii) payment of the
outstanding fees and disbursements of Dechert LLP, as counsel to the
Administrative Agent and the Purchasers; and (iii) delivery of executed
signature pages by all parties hereto to the Administrative Agent.

 

SECTION 6.                            Miscellaneous.

 

(a)                                  Without
in any way limiting any other obligation hereunder or under the Transaction
Documents, the Borrower agrees to provide, from time to time, any additional
documentation and to execute additional acknowledgements, amendments,
instruments or other 

 

3

 

agreements as may be reasonably requested and
required by the Administrative Agent to effectuate the foregoing.

 

(b)                                 This
Amendment may be executed in any number of counterparts (including by facsimile),
and by the different parties hereto on the same or separate counterparts, each
of which shall be deemed to be an original instrument but all of which together
shall constitute one and the same agreement.

 

(c)                                  The
descriptive headings of the various sections of this Amendment are inserted for
convenience of reference only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.

 

(d)                                 This
Amendment may not be amended or otherwise modified except as provided in the Sale
and Servicing Agreement.

 

(e)                                  The
failure or unenforceability of any provision hereof shall not affect the other provisions
of this Amendment or the Sale and Servicing Agreement.

 

(f)                                    Whenever
the context and construction so require, all words used in the singular number
herein shall be deemed to have been used in the plural, and vice versa, and the
masculine gender shall include the feminine and neuter and the neuter shall include
the masculine and feminine.

 

(g)                                 This
Amendment and the Sale and Servicing Agreement represent the final agreement
between the parties only with respect to the subject matter expressly covered
hereby and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements between the parties. 
There are no unwritten oral agreements between the parties.

 

(h)                                 THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
CHOICE OF LAW PROVISIONS SET FORTH IN THE SALE AND SERVICING AGREEMENT AND
SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS SET FORTH IN
THE SALE AND SERVICING AGREEMENT.

 

[Remainder of Page Intentionally Left
Blank]

 

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IN WITNESS WHEREOF,
the undersigned have caused this Amendment to be executed by their respective
officers thereunto duly authorized, as of the date first above written.

 

 

	
  THE BORROWER:

  	
  ARES CAPITAL CP FUNDING LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Joshua M. Bloomstein

  
	
   

  	
   

  	
  Name: Joshua M. Bloomstein

  
	
   

  	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE ORIGINATOR

  	
  ARES CAPITAL CORPORATION

  
	
  AND THE SERVICER:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Richard S. Davis

  
	
   

  	
   

  	
  Name: Richard S. Davis

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

	
  CONDUIT PURCHASER:

  	
  VARIABLE FUNDING CAPITAL

  COMPANY LLC (f/k/a Variable Funding

  Capital Corporation)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Wachovia Capital Markets, LLC,

  as attorney-in-fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Douglas R. Wilson, Sr.

  
	
   

  	
   

  	
  Name: Douglas R. Wilson, Sr.

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE ADMINISTRATIVE AGENT

  	
  WACHOVIA CAPITAL MARKETS, LLC

  
	
  AND THE VFCC AGENT:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Kevin Sunday

  
	
   

  	
   

  	
  Name: Kevin Sunday

  
	
   

  	
   

  	
  Title: Vice President

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

	
  THE TRUSTEE:

  	
  U.S. BANK NATIONAL ASSOCIATION,

  not in its individual capacity but solely as

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/John T. Edwards

  
	
   

  	
   

  	
  Name: John T. Edwards

  
	
   

  	
   

  	
  Title: Assistant Vice PresidentExhibit 10.1

 

SECOND
AMENDMENT TO SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

 

THIS SECOND AMENDMENT TO SECOND AMENDED AND
RESTATED FORBEARANCE AGREEMENT (this “Amendment”), dated as of December 3,
2008, is entered into by and among the financial institutions identified on the
signature pages hereto (collectively, the “Lenders”), U.S. Bank
National Association, as administrative agent for the Lenders (in such
capacity, the “Agent”), Westaff (USA), Inc., a California
corporation (the “Borrower”), and Westaff, Inc., a Delaware
corporation and the sole shareholder of the Borrower, as parent guarantor (the “Parent
Guarantor”),
with reference to the following facts:

 

RECITALS

 

A.            The Borrower, the Parent Guarantor,
the Agent and the Lenders are parties to a Second Amended and Restated
Forbearance Agreement, dated as of September 30, 2008 (the “Forbearance
Agreement”), pursuant to which the Agent and the Lenders agreed to forbear
through November 21, 2008 from exercising their available Default Rights
and Remedies in response to the occurrence and continuation of certain Existing
Events of Default under the Financing Agreement, dated as of February 14,
2008, among the Borrower, the Parent Guarantor, the Agent and the Lenders, as
amended.

 

B.            Pursuant to the First Amendment to
Second Amended and Restated Forbearance Agreement, dated as of November 20,
2008, the parties to the Forbearance Agreement amended the Forbearance
Agreement to extend the term of the forbearance period thereunder by ten (10) business
days, from November 21, 2008 to December 5, 2008.

 

C.            The parties are in the process of
exploring further negotiations with respect to certain additional terms and
conditions of an extended forbearance period and, in an effort to provide
additional time for such discussions, the parties hereto wish to amend the
Forbearance Agreement to extend the term of the forbearance period thereunder
by an additional ten (10) business days, from December 5, 2008 to December 19,
2008.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.             Defined Terms.  Any and all initially-capitalized terms used
in this Amendment (including, without limitation, in the recitals to this
Amendment) without definition shall have the respective meanings assigned
thereto in the Forbearance Agreement.

 

2.             Extension of Forbearance Period.  Section 2 of the Forbearance
Agreement is hereby amended to read in full as follows:

 

“2.  Limited Forbearance Agreement.  So long as no additional Events of Default
occur during such period, the Agent and the Lenders hereby agree to forbear
from exercising any of their Default Rights and Remedies in response to the
occurrence and continuance of the Existing Events of Default throughout the
period commencing on December 5, 2008 and ending on December 19, 2008
(the ‘Forbearance Period’).”

 

 

3.             No Waiver.  The agreement of the Agent and the Lenders
under Section 2 of this Amendment conditionally to forbear from exercising
their Default Rights and Remedies throughout the Forbearance Period as extended
hereby shall not constitute a waiver of either of the Existing Events of
Default, and the Agent and the Lenders hereby expressly reserve all their
Default Rights and Remedies in connection with the Existing Events of Default.

 

4.             General Release.  In consideration of the agreement of the
Agent and the Lenders to enter into this Amendment and hereby conditionally
forbear from exercising their available Default Rights and Remedies throughout
the Forbearance Period as extended hereby, the Borrower and the Parent Guarantor
hereby release, discharge and acquit the Agent, each Lender and their
respective agents, servants, employees, successors and assigns from any and all
claims, demands, liabilities, obligations and causes of action, whether known
or unknown, against them, which the Borrower or the Parent Guarantor now own or
hold, which the Borrower or the Parent Guarantor has at any time heretofore
owned or held, or which the Borrower or the Parent Guarantor hereafter may own
or hold, by reason of any action, matter, cause or thing whatsoever done prior
to the date of this Amendment, including specifically, but not limited to, any
and all claims, demands, rights and causes of action whatsoever arising out of
or which could be alleged to arise out of the Forbearance Agreement, the
Financing Agreement or any of the other Loan Documents.

 

It is the intention of the Borrower and the
Parent Guarantor in executing this Amendment that the same shall be effective
as a bar to each and every claim, demand, and cause of action hereinabove
specified, and in furtherance of this intention the Borrower and the Parent
Guarantor each waives and relinquishes all rights and benefits under Section 1542
of the Civil Code of the State of California, which provides:

 

“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 might have materially affected his or her settlement with
the debtor.”

 

The Borrower and the Parent Guarantor
acknowledge that each of them may hereafter discover facts different from or in
addition to those now known or believed to be true with respect to such claims,
demands, or causes of action and agree that this Amendment shall be and remain
effective in all respects notwithstanding any such differences or additional
facts.

 

5.             Condition Precedent.  The effectiveness of this Amendment shall be
subject to the Agent’s receipt of this Amendment, duly executed by the
Borrower, the Parent Guarantor and each of the Lenders.

 

6.             Reaffirmation and Ratification.  The Borrower and the Parent Guarantor hereby
reaffirm, ratify and confirm their respective Obligations under the Forbearance
Agreement, the Financing Agreement and the other Loan Documents, acknowledge that
all of the terms and conditions of the Forbearance Agreement, the Financing
Agreement and such other Loan Documents remain in full force and effect, and
further acknowledge that the security interests granted to Agent in the
Collateral are valid and perfected.

 

2

 

7.             Integration.  This Agreement constitutes the entire
agreement of the parties in connection with the subject matter hereof and
cannot be changed or terminated orally. 
All prior agreements, understandings, representations, warranties and
negotiations regarding the subject matter hereof, if any, are merged into this
Amendment.

 

8.             Counterparts.  This Agreement may be executed in multiple
counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which, taken together, shall constitute but one and the
same agreement.

 

9.             Governing Law.  This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws (as opposed to the
conflicts of law principles) of the State of California.

 

[Rest of page intentionally left blank; signature pages follow]

 

3

 

IN WITNESS
WHEREOF, the parties hereto have executed this Amendment by their respective
duly authorized officers as of the date first above written.

 

 

	
   

  	
   

  	
  WESTAFF (USA), INC.,

  
	
   

  	
   

  	
  a California corporation,

  
	
   

  	
   

  	
  as the Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Christa C. Leonard

  
	
   

  	
   

  	
   

  	
  Christa C. Leonard

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WESTAFF, INC.,

  
	
   

  	
   

  	
  a Delaware corporation,

  
	
   

  	
   

  	
  as the Parent Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Christa C. Leonard

  
	
   

  	
   

  	
   

  	
  Christa C. Leonard

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  

 

1

 

	
   

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  as the Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Suzanne E. Geiger

  
	
   

  	
   

  	
   

  	
  Suzanne E. Geiger

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Suzanne E. Geiger

  
	
   

  	
   

  	
   

  	
  Suzanne E. Geiger

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  

 

2

 

	
   

  	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
   

  	
  NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Supremna Thurmond

  
	
   

  	
   

  	
   

  	
  Supremna Thurmond

  
	
   

  	
   

  	
   

  	
  Relationship Manager

  

 

3

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