EMPLOYMENT AGREEMENT

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) deemed effective as of June 16, 2008 and is entered into by and among Westaff Support, Inc., Westaff (USA), Inc. and Westaff, Inc. (collectively, the “Company”) and Xxxxxxx Xxxxxxx (the “Executive”). The parties agree to the following terms and conditions of the Executive’s employment.

1.  EMPLOYMENT.  The Company hereby employs the Executive, and the Executive hereby accepts such employment, upon the terms and subject to the conditions hereinafter set forth.

2.  DUTIES.

(a) Position and Responsibilities. The Executive shall be employed as the Company’s Senior Vice President and Chief Financial Officer.  The Executive shall devote her full working time, attention and energies to the performance of her duties for the Company and the Executive shall at all times comply with the Company’s Conflict of Interest Policy and Code of Business Conduct and Ethics and abide by the rules, regulations, and practices as adopted or modified from time to time by the Company.

(b) Term. The Executive’s employment shall commence on Monday, June 16, 2008, and her employment shall be of indefinite duration, subject to termination under Section 4 of this Agreement. The Executive acknowledges that there is no express or implied agreement between her and the Company or any of its subsidiaries, whether domestic or foreign, for any specific period of employment or for continuing or long-term employment.

(c) Other Activities.  Except upon the prior written consent of the Company, the Executive will not, during the term of this Agreement, (i) accept any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that might interfere with Executive’s duties and responsibilities hereunder or create a conflict of interest with the Company.

(d) No Conflict.  Executive represents and warrants that her execution of this Agreement, employment with the Company, and the performance of her proposed duties under this Agreement shall not violate any obligations she may have to any other employer, person or entity, including any obligations with respect to proprietary or confidential information of any other person or entity.

3.  COMPENSATION AND BENEFITS.  In consideration for the services of the Executive, the Company shall compensate the Executive as follows:

(a) Base Salary. The Company shall pay the Executive an initial annual base salary of $250,000 (“Base Salary”), less required and authorized withholdings, which shall be paid to the Executive in accordance with the Company’s normal payroll practices and schedule.

(b) Benefits.  As the Executive becomes eligible, she shall have the right to participate in and to receive benefits from all present and future employee benefit plans specified in the Company’s policies and generally made available to similarly situated employees of the Company. The amount and extent of benefits to which the Executive is entitled shall be governed by the specific benefit plan, as amended.

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(c) Expenses. The Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of her duties, in accordance with Company policies, as they may be amended in the Company’s sole discretion.

(d) Incentive Compensation. The Executive shall be eligible for an annual bonus of up to 50% of his Base Salary, prorated for FY 2008.  The bonus will be based on the Company’s performance metrics and will be approved annually by the Compensation Committee.  The Executive will not be eligible for any bonus or incentive compensation payment if his employment with the Company terminates for Cause before such bonus or incentive compensation payment is earned or paid.   If the Executive’s employment with the Company terminates without Cause prior to such bonus or incentive compensation payment being earned or paid, Executive will be entitled to a prorated portion of such bonus or incentive compensation.

(e) Stock Options.  Subject to approval from the Company’s Board of Directors (or a duly authorized committee of the Company’s Board of Directors) (the “Board”), the Executive will be eligible to participate in the Company’s 2006 Stock Incentive Plan (the “Stock Option Plan”).  If approved, Executive will be awarded 100,000 stock options pursuant to the terms stated in the Company’s Stock Option Plan and the Notice of Stock Option Award (including, but not limited to the vesting schedule for the option shares).

(f) Vacation.  The Executive shall accrue four (4) weeks of vacation per year, subject to the Company’s policies with respect to maximum vacation accruals.

(g) Indemnification.  The Company and the Executive shall enter into the Company’s customary form of indemnification agreement applicable to directors and executive officers of the Company, in the form attached as Exhibit A (the “Indemnification Agreement”).

4.  TERMINATION OF EMPLOYMENT.

(a) Termination of Employment For Cause.  For purposes of this Agreement, the Company may terminate the Executive’s employment for “Cause” at any time, without any notice, if the Executive does any one or more of the following:

(i) acts in bad faith, or in breach of trust, to the detriment of the Company;

(ii) refuses or fails to act in accordance with any policy of the Company or any specific direction or order of the Company;

(iii) exhibits, in regard to her employment and as determined by the Company in its sole discretion, unfitness or unavailability for service, unsatisfactory or inadequate performance (including but not limited to the Executive’s failure or inability to meet the Company’s expectations, goals, standards and/or deadlines with respect to her duties), misconduct, dishonesty, habitual neglect of duties or incompetence;

(iv) commits, is convicted of, or pleads no contest to a crime involving dishonesty, breach of trust, moral turpitude, or physical harm to any person;

(v) breaches any material term of this Agreement or any other agreement that the Executive has entered into with the Company (including but not limited to her Confidentiality, Invention, Design Agreement, which is attached hereto and incorporate herein as Exhibit B);

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(vi) dies; or

(vii) becomes disabled and therefore unable to perform the essential duties of her position for a period of more than 12 workweeks within any twelve (12)-month period.

If the Executive’s employment shall be terminated by the Company for Cause as defined above, the Company shall pay the Executive her earned but unpaid Base Salary and accrued but unused vacation pay, and shall provide her benefits under the applicable benefit plans through the date of termination and otherwise as required by law.  The Executive shall not be eligible or entitled to a severance payment described in Section 4(b) below if her employment is terminated for Cause and no other compensation or benefits will accrue or be owed to the Executive for any period after the effective date of termination in the event of a termination for Cause.

(b) Termination by Employer Not For Cause.  The Company may terminate the Executive’s employment at any time for any reason.  If the Executive’s employment is terminated without Cause, the Company shall pay the Executive her earned but unpaid Base Salary, her accrued but unused vacation pay and her earned but unpaid bonus, if any, and shall provide her benefits under the applicable benefit plans through the date of termination and otherwise as required by law.  In addition, the Executive shall be entitled to a severance payment, as set forth below (the “Severance Payment”), provided she signs a separation agreement and general release of claims (to be prepared by the Company at the time of termination) in exchange for such severance payment:

(i) If the Executive’s employment is terminated without Cause within one year from his date of hire, or if the Company relocates its headquarter offices outside a thirty-five (35) mile radius of 000 X. Xxxxx Xxxx, Xxxxxx Xxxxx, XX  00000, or Executive’s duties and responsibilities are significantly reduced without Cause, Executive’s Severance Payment shall be equal to six (6) months’ pay at his current Base Salary, less required and authorized withholdings, which shall be paid to the Executive in the form of salary continuation for a period of six (6) months following the effective date of termination, payable in accordance with the Company’s normal payroll practices and schedule.

The Company shall be entitled to cease its payment of the Severance Payment in the event that the Executive breaches or violates any of her obligations under this Agreement or her Confidential Information and Invention Agreement during the applicable severance period.  Notwithstanding any other provision of this Agreement to the contrary, the Company, in its sole discretion and without the Executive’s consent, may amend or modify this Agreement in any manner to provide for the application and effects of Section 409A of the Internal Revenue Code (the “Code”) (relating to deferred compensation arrangements) and any related regulatory or administrative guidance issued by the Internal Revenue Service.  The Company shall have the authority to delay the payment of any benefits described under this Agreement to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “key employees” of certain publicly-traded companies) and in such event, any such payments to which the Executive would otherwise be entitled during the six (6) month period immediately following the Executive’s separation from service will be paid on the first business day following the expiration of such six (6) month period.

(c) Resignation by Executive. At any time, the Executive may terminate her employment for any reason by providing the Company two (2) weeks’ advance written notice.  If the Executive’s employment is terminated due to the Executive’s resignation, the Company shall pay the Executive her earned but unpaid Base Salary and accrued vacation pay, and shall provide her benefits under the applicable benefit plans, through the date of termination and otherwise as required by law.  The Executive shall not be entitled to the Severance Payment under Section 4(b) if she resigns for any reason,

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and no other compensation or benefits will accrue or be owed to the Executive for any period after the effective date of termination in the event of that she resigns for any reason.

5.  TERMINATION OBLIGATIONS.

(a) Representations and Warranties.  The Executive shall sign, as a condition of employment, the Company’s Confidential Information and Invention Agreement.  The representations and warranties contained in this Agreement and the Executive’s obligations under her Confidential Information and Invention Agreement shall survive the termination of employment for any reason.  Nothing in this Agreement shall be deemed to modify or limit the Executive’s obligations under her Confidential Information and Invention Agreement, and nothing in the Confidential Information and Invention Agreement shall be deemed to modify or limit the Executive’s obligations under this Agreement.

(b) Cooperation in Pending Work. Following any termination of employment, the Executive shall fully cooperate with the Company in all matters relating to the winding up of pending work on behalf of the Company and the orderly transfer of work to other executives/employees of the Company or any of its domestic subsidiaries.

(c) Return of Company Property.  All property including, without limitation, all equipment, tangible Proprietary Information as defined in Section 6(a), documents, books, records, reports, notes, contracts, lists, computer disks (and other computer-generated files and data), and copies thereof, created on any medium and furnished to, obtained by, or prepared by the Executive in the course of or incident to her employment, belongs to the Company or any of its subsidiaries, whether domestic or foreign, and shall be returned promptly to the Company upon termination of employment for any reason.  In addition, the Executive shall immediately return to or arrange for prompt delivery to the Company all equipment, supplies, keys, manuals, and other property or equipment of whatever nature in her possession or control or which she may have entrusted to any other party.

6.  PROPRIETARY INFORMATION AND NON-SOLICITATION.

(a) Proprietary Information. The Executive recognizes and acknowledges that certain assets of the Company or its subsidiaries, whether domestic or foreign, constitute “Proprietary Information,” including all information that is known only to the Executive or the Company or such subsidiaries, and relating to the business of the Company or such subsidiaries (including, without limitation, information regarding employees, clients, customers, xxxx and pay rates, employees’ pay and skills, pricing policies, methods of operation, operating manuals, sales, sales techniques, advertising materials, products, costs, markets, key personnel, formulas, product applications, technical processes, other statistical information, confidential data, and trade secrets), and that protection of such information is essential to the interests of the Company and such subsidiaries.

(b) Non-Solicitation of Employees and Clients. The Executive acknowledges and agrees that the pursuit of activities forbidden by this subsection would necessarily involve the use or disclosure of Proprietary Information in breach of the Company’s Confidential Information and Invention Agreement.  To forestall this disclosure, use, and breach, and in consideration of the employment under this Agreement, the Executive agrees that for a period of one (1) year after termination of her employment, she shall not, directly or indirectly, for or on behalf of any other person, firm, corporation or other entity that directly competes with the Company:  (i) solicit, induce, or influence any employee, consultant, or independent contractor of the Company or any of its subsidiaries, whether domestic or foreign, to terminate her or her employment or relationship with the Company or any of such subsidiaries or to work for any other business entity or person; or (ii) solicit (other than on behalf of the Company or such subsidiaries), divert, or attempt to divert the business of any client or customer of the Company in any district, territory,

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state or country where the Company conducts business, unless the Executive can prove that any action taken in violation of this Section 6(b) was taken without the use of any of the Company’s Proprietary Information. For purposes of this non-solicitation covenant, a customer of the Company is defined as any person, firm or corporation that the Company or any of its subsidiaries has serviced within one year preceding the termination of the Executive’s employment and with whom the Executive is or became familiar as a result of her employment with the Company.  For purposes of this non-solicitation covenant, an employee of the Company is defined as any person who has received salary or wages from the Company or any of its subsidiaries within one year preceding the termination of the Executive’s employment and with whom the Executive is or became familiar as a result of her employment with the Company.

(c) Injunctive Relief for Violation. The Executive acknowledges that the obligations and restrictions set forth in this Section 6 are reasonably necessary for the protection of the Company’s business, goodwill, property, customer and employee relationships.  The Executive further acknowledges that the character, duration and geographical scope of her obligations under this Section 6 are reasonable in light of the circumstances as they exist on the date upon which this Agreement has been executed. The Executive recognizes that irreparable damage will result to the Company in the event of any violation of her obligations under this Section 6 and agrees to the issuance of a restraining order and/or an injunction against her for such a material violation in addition to any other legal or equitable remedies that the Company may have.

7.  GENERAL.

(a) Severability. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality or enforceability of the remaining provisions hereof shall not in any way be affected or impaired.  If any provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal or unenforceable, the affected provisions of this Agreement shall automatically and without requirement of further action by the parties be deemed reformed solely to the extent required to render such provisions valid, enforceable and legal and this Agreement, including such reformed provisions, shall continue in full force and effect.  If such reformation is not possible, then the affected provisions shall be eliminated from this Agreement to the extent necessary to permit the remaining provisions to be enforced.

(b) Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(c) Entire Agreement.  This Agreement is intended to be the final, complete, and exclusive statement of the terms of the Executive’s employment by the Company and may not be contradicted by evidence of any prior or contemporaneous statements or agreements, except for agreements specifically referenced herein (including the Indemnification Agreement attached as Exhibit A, the Confidentiality Agreement attached as Exhibit B, and the Stock Plan and Stock Option Agreement of the Company).  To the extent that the practices, policies or procedures of the Company, now or in the future, apply to the Executive and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.  Any subsequent change in the Executive’s duties, position, or compensation will not affect the validity or scope of this Agreement.

(d) Amendments; Waivers. This Agreement may not be amended except by an instrument in writing, signed by each of the parties. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

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(e) Assignment; Successors and Assigns. The Executive agrees that she will not assign, sell, transfer, delegate, or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, any rights or obligations under this Agreement. Any such purported assignment, transfer, or delegation shall be void. Nothing in this Agreement shall prevent the consolidation of the Company with, or its merger into, any other entity, or the sale by the Company of all or substantially all of its assets, or the otherwise lawful assignment by the Company of any rights or obligations under this Agreement.  Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors, and permitted assigns, and shall not benefit any person or entity other than those specifically enumerated in this Agreement.

(f) Governing Law. This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of California.

The parties have duly executed this Agreement as of the date and year first above written.

	EXECUTIVE:
	/s/X. Xxxxxxx
	Xxxxxxx Xxxxxxx
	COMPANY:
	By:	/s/ Xxxxxxx X. Xxxxxx
		Xxxxxxx X. Xxxxxx
	Title: COB, President & CEO

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