EXHIBIT 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (the “Agreement”), dated June 1st, 2007 (the
“Effective Date”), is between WESTAFF SUPPORT, INC., WESTAFF (USA), INC., and
WESTAFF, INC. (collectively, the “Company”), and MICHAEL T. WILLIS
(“Executive”).

I.                                         POSITION AND RESPONSIBILITIES

A.            Term.  The Company shall employ Executive from the Effective Date
until the three-year anniversary of the Effective Date, unless Executive’s
employment is terminated earlier in accordance with Sections III or IV below
(the “Term”).  On the three-year anniversary of the Effective Date, the Term
shall automatically be extended for one (1) additional year, unless the Company
provides written notice of non-renewal to Executive at least ninety (90) days
prior to such renewal date.

B.            Position.  Executive is employed by the Company to render services
to the Company in the positions of President and Chief Executive Officer of
Westaff, Inc. (“WSTF”).  Executive shall perform such duties and
responsibilities as are normally related to such positions in accordance with
the standards of the industry and any additional duties now or hereafter
assigned to Executive by the Board of Directors of Westaff, Inc. (the “Board”). 
Executive shall abide by the rules, regulations, and practices as adopted or
modified from time to time by the Board in its sole discretion.

C.            Other Activities.  Except upon the prior written consent of the
Company, 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 his execution
of this Agreement, employment with the Company, and the performance of his
proposed duties under this Agreement shall not violate any obligations he 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.

II.                                     COMPENSATION AND BENEFITS

A.            Base Salary.  In consideration of the services to be rendered
under this Agreement, the Company shall pay Executive a salary at the rate of
Five Hundred and Fifty Thousand Dollars ($550,000) per year (“Base Salary”). 
The Base Salary shall be paid in accordance with the Company’s regularly
established payroll practice.  Executive’s first salary payment following the
Effective Date shall include Base Salary for the period from May 1, 2007 through
the Effective Date, less any consulting fees received from the Company during
that period.

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B.            Performance-Based Incentive Bonus.  Executive shall be eligible
for a performance-based incentive bonus for each fiscal year of his employment
with the Company.

1.             Fiscal Year 2007 Bonus:  In lieu of a performance-based bonus for
fiscal year 2007, Executive shall receive a guaranteed bonus in the amount of
One Hundred and Fifty Thousand Dollars ($150,000), which shall be payable on
November 1, 2007.

2.             Fiscal Year 2008 Bonus:  For fiscal year 2008 (“FY2008”),
Executive shall be eligible to earn a bonus based on achievement of quantitative
goals described below and qualitative goals established by the Board.  The
quantitative portion of this bonus (“Target Bonus”) shall equal up to
seventy-five percent (75%) of Executive’s Base Salary and shall be based on the
Company’s Earnings Before Taxes, Interest, Depreciation and Amortization for
FY2008, as calculated and reported by the Company in accordance with its
accounting policies currently in effect (“EBITDA”):

EBITDA for FY2008

 

Percentage of Quantitative Component Earned

<$12M

 

None

$12M-$13.99M

 

25% of Quantitative Component

$14M-$15.99M

 

50% of Quantitative Component

$16M-$16.99M

 

75% of Quantitative Component

>$17M

 

100% of Quantitative Component

 

Executive shall be eligible for additional bonus compensation, equivalent to up
to twenty-five percent (25%) of his Base Salary, based on achievement of
qualitative objectives established by the Board in its discretion.  In no event
shall Executive’s aggregate bonus compensation for FY2008 exceed 100% of
Executive’s Base Salary.  Executive’s FY2008 bonus will be paid in cash,
provided that the Board may elect to pay up to thirty percent (30%) of
Executive’s FY2008 bonus in fully vested and unrestricted WSTF stock (priced at
the fair market value of the stock as of the date of the stock bonus). 
Executive’s FY2008 bonus will be paid on or prior to March 15, 2009.

3.             Fiscal Year 2009 Bonus:  For fiscal year 2009, Executive shall be
eligible to earn a bonus based on achievement of goals to be established by the
Board at the end of FY2008.  Such goals shall be based on the expectation that
the Company’s EBITDA will exceed Twenty Million Dollars ($20,000,000) by the
three-year anniversary of the Effective Date, excluding EBITDA related to
acquisitions or other transactions.  Executive’s FY2009 bonus program will be
established within 90 days of the beginning of FY2009 after consultation with
Executive, and will be similar in nature and effect to the FY2008 bonus program,
but containing targets, expectations and goals established by the Board for
FY2009.  Executive’s FY2009 bonus will be paid in cash, provided that the Board
may elect to pay up to thirty percent (30%) of Executive’s FY2009 bonus in fully
vested and unrestricted WSTF stock (priced at the fair market value of the stock
as of the date of the stock bonus.)  Executive’s FY2009 bonus will be paid on or
prior to March 15, 2010.

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4.             Bonuses for Subsequent Fiscal Years:  Executive’s bonus program
for any subsequent fiscal year will be established within 90 days of the
beginning of each fiscal year after consultation with Executive, and will be
similar in nature and effect to the FY2009 bonus program, but containing
targets, expectations and goals established by the Board for such fiscal year.

C.            Stock Options.  The Company shall recommend to the Board of
Directors that Executive be provided with an option to purchase One Hundred
Thousand (100,000) shares of the Common Stock of Westaff, Inc.  This
recommendation will be considered for approval at the Company’s next Board of
Directors’ meeting.  Any approved stock options will be priced at their fair
market value as of the date of the grant, in accordance with the terms of the
Stock Option Plan.  Executive’s entitlement to any stock options that may be
approved is conditioned upon Executive’s signing of the Stock Option Agreement
and is subject to its terms and the terms of the Stock Option Plan under which
the options are granted, including vesting requirements.

D.            Living Allowance and Travel Reimbursements.  For a period of
twelve (12) months following the Effective Date, the Company shall pay Executive
an allowance of Six Thousand Dollars ($6,000) per month for housing, automobile,
and other personal expenses (“Living Allowance”).  During this period, the
Company also shall reimburse Executive for his airfare between his home in
Houston and the Company’s headquarters in San Francisco, up to one round trip
ticket per week.  Executive shall be allowed to travel one grade above
economy/coach class.  Whenever possible, Executive will upgrade with travel
coupons, and the Company shall pay the cost of such coupons.  The Company also
shall reimburse Executive’s reasonable expenses of transportation to and from
the airport.  Following this twelve (12) month period, the Company shall
determine any further personal allowances or travel reimbursements in its
discretion.

E.             Financial Planning Reimbursement.  During the Term, the Company
shall reimburse Executive for his expenditures on personal financial planning
services, up to a maximum reimbursement of Ten Thousand Dollars ($10,000) per
year.

F.             Benefits.  Executive shall be eligible to participate in the
benefits made generally available by the Company to similarly-situated
executives, in accordance with the benefit plans established by the Company, and
as may be amended from time to time in the Company’s sole discretion.

G.            Reimbursement of Business Expenses.  The Company shall reimburse
Executive for reasonable business expenses incurred in the performance of
Executive’s duties hereunder in accordance with the Company’s expense
reimbursement guidelines.  Executive shall be allowed to travel one grade above
economy/coach class, for business-related trips.  Whenever possible, Executive
will upgrade with travel coupons, and the Company shall pay the cost of such
coupons.  The Company also shall reimburse Executive’s reasonable expenses of
transportation to and from the airport.  For overseas travel, Executive may
travel at an airfare class no higher than business class or its equivalent.

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

I.              Indemnification.  The Company and 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 B (the
“Indemnification Agreement”).

III.                                 AT-WILL EMPLOYMENT; TERMINATION BY COMPANY

A.            At-Will Termination by Company.  Executive’s employment with the
Company shall be “at-will” at all times.  Either party may terminate Executive’s
employment with the Company at any time, without any advance notice, for any
reason or no reason at all, notwithstanding anything to the contrary contained
in or arising from any statements, policies or practices of the Company relating
to the employment, discipline or termination of its employees.  Upon and after
such termination, all obligations of the Company under this Agreement shall
cease, except as otherwise provided herein.

B.            Severance.  Executive shall be eligible for severance benefits in
the event that Executive’s employment is terminated by the Company without Cause
or by Executive for Good Reason during the Term.  If such termination occurs
within twelve (12) months following the Effective Date, Executive will be
eligible to receive severance pay equal to the lesser of (a) twelve (12) months
of Executive’s Base Salary or (b) Executive’s Base Salary for the remainder of
the Term.  If such termination occurs more than twelve (12) months following the
Effective Date, Executive will be eligible to receive severance pay equal to the
lesser of (a) eighteen (18) months of Executive’s Base Salary or (b) Executive’s
Base Salary for the remainder of the Term.  Such severance pay (“Severance”)
shall be payable in the form of salary continuation, and shall not be reduced by
any remuneration paid to Executive because of Executive’s employment or
self-employment during the severance period.  The timing of such Severance
payments may be subject to delay in accordance with the provisions of Section XI
below.  Additionally, if Executive elects to continue his medical coverage under
COBRA, the Company shall pay the premiums for Executive’s COBRA coverage until
the earlier of (a) the date Executive ceases to receive Severance payments or
(b) the date Executive becomes eligible for coverage under another employer’s
health plan.  Executive’s eligibility for the foregoing severance benefits is
conditioned on (a) Executive having first signed a general release of claims in
a form provided by the Company, and (b) Executive’s agreement not to compete
with the Company, or its successors or assigns, during the severance period.  If
Executive engages in any business activity competitive with the Company or its
successors or assigns during the severance period, all severance benefits
immediately shall cease.  Executive shall not be entitled to any severance
benefits if Executive’s employment is terminated (a) For Cause, By Death or By
Disability (as defined in Section IV below); (b) by Executive without Good
Reason (as defined in Section IV below); or (c) by expiration or non-renewal of
the Term.

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C.            “Change of Control.”  In the event Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason within
twelve (12) months following a Change of Control, (1) any Company stock options
awarded to Executive which vest solely upon length of service would become
immediately vested and exercisable and (2) the Company would make a lump-sum
cash payment to Executive equal to fifty percent (50%) of his then-current Base
Salary, pro-rated based on the number of calendar months Executive is employed
during the fiscal year in which such termination occurs.  For purposes of this
Agreement, “Change of Control” shall mean a change in ownership or control of
the Company effected through a merger, consolidation or acquisition by any
person or related group of persons (other than an acquisition by the Company or
by a Company-sponsored employee benefit plan or by a person or persons that
directly or indirectly controls, is controlled by, or is under common control
with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities Exchange Act of 1934) of securities possessing more than fifty
percent of the total combined voting power of the outstanding securities of the
Company.  Notwithstanding the foregoing, a “Change in Control” shall not include
(i) any changes prior to the date of this Agreement; or (iii) any changes
pursuant to actions taken by DelStaff, LLC.  Executive shall not be entitled to
any accelerated vesting under this Section III(C) if Executive’s employment is
terminated (a) For Cause, By Death or By Disability (as defined in Section IV
below); (b) by Executive without Good Reason (as defined in Section IV below);
or (c) by expiration or non-renewal of the Term.

IV.                                OTHER TERMINATIONS

A.            Termination for Cause.  For purposes of this Agreement, “For
Cause” shall mean:  (i) Executive commits a crime involving dishonesty, breach
of trust, or physical harm to any person; (ii) Executive willfully engages in
conduct that is in bad faith and materially injurious to the Company, including
but not limited to, misappropriation of trade secrets, fraud or embezzlement;
(iii) Executive commits a material breach of this Agreement, which breach is not
cured within twenty days after written notice to Executive from the Company;
(iv) Executive willfully refuses to implement or follow a lawful policy or
directive of the Company, which breach is not cured within twenty days after
written notice to Executive from the Company; or (v) Executive engages in
misfeasance or malfeasance demonstrated by a pattern of failure to perform job
duties diligently and professionally.  The Company may terminate Executive’s
employment For Cause at any time, without any advance notice.  The Company shall
pay to Executive all compensation to which Executive is entitled up through the
date of termination, subject to any other rights or remedies of the Company
under law; and thereafter all obligations of the Company under this Agreement
shall cease.

B.            By Death.  Executive’s employment shall terminate automatically
upon Executive’s death.  The Company shall pay to Executive’s beneficiaries or
estate, as appropriate, any compensation then due and owing.  Thereafter all
obligations of the Company under this Agreement shall cease.  Nothing in this
Section shall affect any entitlement of Executive’s heirs or devisees to the
benefits of any life insurance plan or other applicable benefits.

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C.            By Disability.  If Executive becomes eligible for the Company’s
long term disability benefits or if, in the sole opinion of the Company,
Executive is unable to carry out the responsibilities and functions of the
position held by Executive by reason of any physical or mental impairment for
more than ninety consecutive days or more than one hundred and twenty days in
any twelve-month period, then, to the extent permitted by law, the Company may
terminate Executive’s employment.  The Company shall pay to Executive all
compensation to which Executive is entitled up through the date of termination,
and thereafter all obligations of the Company under this Agreement shall cease. 
Nothing in this Section shall affect Executive’s rights under any disability
plan in which Executive is a participant.

D.            Termination for Good Reason.  Executive’s termination shall be for
“Good Reason” if (i) Executive provides written notice to the Company of the
event(s) constituting Good Reason for termination, within ninety (90) days
following the occurrence of such event(s); (ii) Executive provides the Company
with a period of at least thirty (30) days to cure the Good Reason and the
Company fails to cure the Good Reason within that period, and (iii) Executive
resigns within forty-five (45) days following the date of the written notice
described in subsection (i).  For purposes of this Agreement, “Good Reason”
shall mean any of the following events if effected by the Company without the
consent of Executive:  (A) a change in Executive’s position with the Company
which materially reduces Executive’s duties, responsibilities or authority; or
(B) a material reduction in Executive’s Base Salary or bonus eligibility, except
for reductions that are comparable to reductions generally applicable to all
similarly situated senior executives of the Company; or (C) Executive is removed
from the Board (other than for cause, as determined under Delaware law) or not
elected by WSTF’s stockholders to serve on the Board (other than due to
Executive’s resignation from the Board or Executive’s decision not to stand for
reelection to the Board).

V.                                    TERMINATION OBLIGATIONS

A.            Return of Property.  Executive agrees that all property (including
without limitation all equipment, tangible proprietary information, documents,
records, notes, contracts and computer-generated materials) furnished to or
created or prepared by Executive incident to Executive’s employment belongs to
the Company and shall be promptly returned to the Company upon termination of
Executive’s employment.

B.            Resignation and Cooperation.  Upon termination of Executive’s
employment, Executive shall be deemed to have resigned from all offices and
directorships then held with the Company.  Following any termination of
employment, Executive shall cooperate with the Company in the winding up of
pending work on behalf of the Company and the orderly transfer of work to other
employees.  Executive shall also cooperate with the Company in the defense of
any action brought by any third party against the Company that relates to
Executive’s employment by the Company.

VI.                                INVENTIONS AND CONFIDENTIAL INFORMATION;
PROHIBITION ON THIRD PARTY INFORMATION

A.            Confidentiality Agreement.  Executive agrees to sign and be bound
by the terms of the Company’s Confidentiality, Invention, Design Agreement,
which is attached as Exhibit A (“Confidentiality Agreement”).

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B.            Non-Solicitation.  Executive acknowledges that because of
Executive’s position in the Company, Executive will have access to material
intellectual property and confidential information.  During the term of
Executive’s employment and for one year thereafter, in addition to Executive’s
other obligations hereunder or under the Confidentiality Agreement, Executive
shall not, for Executive or any third party, directly or indirectly (i) solicit,
induce, recruit or encourage any person employed by the Company to terminate his
or her employment, or (ii) divert or attempt to divert from the Company any
business with any customer, client, member, business partner or supplier about
which Executive obtained confidential information during his employment with the
Company, by using the Company’s trade secrets or by otherwise engaging in
conduct that amounts to unfair competition.

C.            Non-Disclosure of Third Party Information.  Executive represents
and warrants and covenants that Executive shall not disclose to the Company, or
use, or induce the Company to use, any proprietary information or trade secrets
of others at any time, including but not limited to any proprietary information
or trade secrets of any former employer, if any; and Executive acknowledges and
agrees that any violation of this provision shall be grounds for Executive’s
immediate termination and could subject Executive to substantial civil
liabilities and criminal penalties.  Executive further specifically and
expressly acknowledges that no officer or other employee or representative of
the Company has requested or instructed Executive to disclose or use any such
third party proprietary information or trade secrets.

VII.                            AMENDMENTS; WAIVERS; REMEDIES

This Agreement may not be amended or waived except by a writing signed by
Executive and by a duly authorized representative of the Company other than
Executive.  Failure to exercise any right under this Agreement shall not
constitute a waiver of such right.  Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches.  All rights or
remedies specified for a party herein shall be cumulative and in addition to all
other rights and remedies of the party hereunder or under applicable law.

VIII.                        ASSIGNMENT; BINDING EFFECT

A.            Assignment.  The performance of Executive is personal hereunder,
and Executive agrees that Executive shall have no right to assign and shall not
assign or purport to assign any rights or obligations under this Agreement. 
This Agreement may be assigned or transferred by the Company; and nothing in
this Agreement shall prevent the consolidation, merger or sale of the Company or
a sale of any or all or substantially all of its assets.

B.            Binding Effect.  Subject to the foregoing restriction on
assignment by Executive, this Agreement shall inure to the benefit of and be
binding upon each of the parties; the affiliates, officers, directors, agents,
successors and assigns of the Company; and the heirs, devisees, spouses, legal
representatives and successors of Executive.

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IX.                                NOTICES

All notices or other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if delivered:  (a)
by hand; (b) by a nationally recognized overnight courier service; or (c) by
United States first class registered or certified mail, return receipt
requested, to the principal address of the other party, as set forth below.  The
date of notice shall be deemed to be the earlier of (i) actual receipt of notice
by any permitted means, or (ii) five business days following dispatch by
overnight delivery service or the United States Mail.  Executive shall be
obligated to notify the Company in writing of any change in Executive’s
address.  Notice of change of address shall be effective only when done in
accordance with this paragraph.

Company’s Notice Address:

298 North Wiget Lane
Walnut Creek, CA 94598
Attn: Legal Department
Fax: (925) 937-0593

Executive’s Notice Address:

298 North Wiget Lane

Walnut Creek, CA 94598

X.                                    SEVERABILITY

If any provision of this Agreement shall be held by a court or arbitrator to be
invalid, unenforceable, or void, such provision shall be enforced to the fullest
extent permitted by law, and the remainder of this Agreement shall remain in
full force and effect.  In the event that the time period or scope of any
provision is declared by a court or arbitrator of competent jurisdiction to
exceed the maximum time period or scope that such court or arbitrator deems
enforceable, then such court or arbitrator shall reduce the time period or scope
to the maximum time period or scope permitted by law.

XI.                                TAXES

All amounts paid under this Agreement (including without limitation Base Salary,
Living Allowance, or Severance) shall be paid less all applicable state and
federal tax withholdings and any other withholdings required by any applicable
jurisdiction.

The Company shall have the authority to delay the payment of any amounts under
this Agreement to the extent it deems necessary or appropriate to comply with
Section 409A(a)(2)(B)(i) of the Internal Revenue Code (relating to payments made
to certain “specified employees” of certain publicly-traded companies); in such
event, any payment to which Executive would otherwise be entitled during the six
(6) month period following the date of Executive’s termination of employment
will be payable on the first business day following the expiration of such six
(6) month period.

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XII.                            GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
the State of California.

XIII.                        INTERPRETATION

This Agreement shall be construed as a whole, according to its fair meaning, and
not in favor of or against any party.  Sections and section headings contained
in this Agreement are for reference purposes only, and shall not affect in any
manner the meaning or interpretation of this Agreement.  Whenever the context
requires, references to the singular shall include the plural and the plural the
singular.

XIV.                       OBLIGATIONS SURVIVE TERMINATION OF EMPLOYMENT

Executive agrees that any and all of Executive’s obligations under this
agreement, including but not limited to Exhibits A and B, shall survive the
termination of employment and the termination of this Agreement.

XV.                           COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this Agreement, but all of which together shall
constitute one and the same instrument.

XVI.                       AUTHORITY

Each party represents and warrants that such party has the right, power and
authority to enter into and execute this Agreement and to perform and discharge
all of the obligations hereunder; and that this Agreement constitutes the valid
and legally binding agreement and obligation of such party and is enforceable in
accordance with its terms.

XVII.                   ENTIRE AGREEMENT

This Agreement is intended to be the final, complete, and exclusive statement of
the terms of 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 Confidentiality
Agreement attached as Exhibit A, the Indemnification 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 Executive and are inconsistent with the terms of this
Agreement, the provisions of this Agreement shall control.  Any subsequent
change in Executive’s duties, position, or compensation will not affect the
validity or scope of this Agreement.

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XVIII.               EXECUTIVE ACKNOWLEDGEMENT

EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT LEGAL COUNSEL
CONCERNING THIS AGREEMENT, THAT HE HAS READ AND UNDERSTANDS THE AGREEMENT, THAT
HE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT HE HAS ENTERED INTO IT FREELY
BASED ON HIS OWN JUDGMENT AND NOT ON ANY REPRESENTATIONS OR PROMISES OTHER THAN
THOSE CONTAINED IN THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.

WESTAFF, INC.

 

MICHAEL T. WILLIS

 

 

 

/s/ Jeffrey Elias

 

/s/ Michael Willis

Signature

 

Signature

 

 

 

Sr. VP — Human Resources

 

07-03-07

Title

 

Date

 

 

 

07-03-07

 

 

Date

 

 

 

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