EXHIBIT 10.7


 





 


WESTAFF, INC.


 


EMPLOYEE STOCK
PURCHASE PLAN


 


(As Amended and
Restated April 16, 2008)


 


I.              PURPOSE
OF THE PLAN


 


This Employee Stock Purchase Plan is intended to promote the interests
of Westaff, Inc. by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under Section 423
of the Code.


 


Capitalized terms herein shall have the meanings assigned to such terms
in the attached Appendix.


 


II.            ADMINISTRATION
OF THE PLAN


 


The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations
for administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in the Plan.


 


III.          STOCK
SUBJECT TO PLAN


 


A.            The
stock purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares of Common Stock purchased on the open
market. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed One Million Three Hundred Sixty-Two
Thousand and Five Hundred (1,362,500) shares.


 


B.            Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made
to (i) the maximum number and class of securities issuable under the Plan,
(ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.


 


IV.          PURCHASE
PERIODS


 


A.            Shares
of Common Stock shall be offered for purchase under the Plan through a series
of successive purchase periods until such time as (i) the maximum number
of shares of Common Stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated. The Board
shall have the power to change the duration of purchase periods (including the
commencement and termination dates thereof) with respect to future purchase
periods without stockholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first purchase
period to be affected thereafter.


 


B.            Each
purchase period shall have a duration of six (6) months. Purchase periods
shall run from the first business day in February to the last business day
in July each year and from the first business day in August each year
to the last business day in January of the following year. The first
purchase period began on November 3, 1996 and ended on the last business
day in January 1997.


 

















 


V.            ELIGIBILITY


 


A.            Each
individual who is an Eligible Employee on the start date of any purchase period
shall be eligible to participate in the Plan for that purchase period.


 


B.            To
participate in the Plan for a particular purchase period, the Eligible Employee
must complete the Enrollment/Change Form prescribed by the Plan Administrator
(including a Stock Purchase Agreement) and file such forms with the Plan
Administrator (or its designate) on or before the start date of the purchase
period.


 


VI.          PAYROLL
DEDUCTIONS


 


A.            The
payroll deduction authorized by the Participant for purposes of acquiring
shares of Common Stock under the Plan may be any multiple of one percent (1%)
of the Cash Earnings paid to the Participant during each purchase period, up to
a maximum of ten percent (10%). The deduction rate so authorized shall continue
in effect for the entire purchase period. The Participant may not increase his
or her rate of payroll deduction during a purchase period. However, the
Participant may, at any time during the purchase period, reduce his or her rate
of payroll deduction to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant may not, however,
effect more than one (1) such reduction per purchase period.


 


B.            Payroll
deductions shall begin on the first pay day following the start date of the
purchase period and shall (unless sooner terminated by the Participant)
continue through the pay day ending with or immediately prior to the last day
of the purchase period. The amounts so collected shall be credited to the
Participant’s book account under the Plan, but no interest shall be paid on the
balance from time to time outstanding in such account. The amounts collected
from the Participant shall not be held in any segregated account or trust fund
and may be commingled with the general assets of the Corporation and used for
general corporate purposes.


 


C.            Payroll
deductions shall automatically cease upon the termination of the Participant’s
purchase right in accordance with the provisions of the Plan.


 


D.            The
Participant’s acquisition of Common Stock under the Plan on any Purchase Date
shall neither limit nor require the Participant’s acquisition of Common Stock
on any subsequent Purchase Date.


 


VII.         PURCHASE
RIGHTS


 


A.            Grant of Purchase
Right.  A Participant shall be
granted a separate purchase right on the start date of each purchase period in
which he or she participates. The purchase right shall provide the Participant
with the right to purchase shares of Common Stock on the Purchase Date upon the
terms set forth below. The Participant shall execute a stock purchase agreement
embodying such terms and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.


 


Under no circumstances shall purchase rights
be granted under the Plan to any Eligible Employee if such individual would,
immediately after the grant, own (within the meaning of Code Section 424(d))
or hold outstanding options or other rights to purchase, stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Corporation or any Corporate Affiliate.


 


B.            Exercise of the
Purchase Right.  Each purchase
right shall be automatically exercised on the Purchase Date, and shares of
Common Stock shall accordingly be purchased on behalf of each Participant
(other than any Participant whose payroll deductions have previously been
refunded pursuant to the Termination of Purchase Right provisions below) on
such date. The purchase shall be effected by applying the Participant’s payroll
deductions for the purchase period ending on such Purchase Date to the purchase
of shares of Common Stock (subject to the limitation on the maximum number of
shares purchasable per Participant on any one Purchase Date) at the purchase
price in effect for that purchase period.


 


C.            Purchase Price.  The purchase price per share at which Common
Stock will be purchased on the Participant’s behalf on each Purchase Date shall
be equal to ninety percent (90%) of the lower
of (i) the Fair Market Value per share of Common Stock on the start date
of the purchase period or (ii) the Fair Market Value per share of Common
Stock on that Purchase Date.


 

















 


D.            Number of Purchasable
Shares.  The number of shares of
Common Stock purchasable by a Participant on each Purchase Date shall be the
number of whole shares obtained by dividing the amount collected from the
Participant through payroll deductions during the purchase period ending with
that Purchase Date by the purchase price in effect for that Purchase Date.
However, the maximum number of shares of Common Stock purchasable per
Participant on any one Purchase Date shall not exceed one thousand one hundred
twenty-five (1,125) shares, subject to periodic adjustments in the event of
certain changes in the Corporation’s capitalization.


 


E.             Excess Payroll
Deductions.  Any payroll
deductions not applied to the purchase of shares of Common Stock on any
Purchase Date because they are not sufficient to purchase a whole share of
Common Stock shall be held for the purchase of Common Stock on the next
Purchase Date. However, any payroll deductions not applied to the purchase of
Common Stock by reason of the limitation on the maximum number of shares
purchasable by the Participant on the Purchase Date shall be promptly refunded.


 


F.             Termination of
Purchase Right.  The following
provisions shall govern the termination of outstanding purchase rights:


 


1.             A
Participant may, at any time prior to the last day of the purchase period,
terminate his or her outstanding purchase right by filing the appropriate form
with the Plan Administrator (or its designate), and no further payroll
deductions shall be collected from the Participant with respect to the terminated
purchase right. Any payroll deductions collected during the purchase period in
which such termination occurs shall, at the Participant’s election, be
immediately refunded or held for the purchase of shares on the next Purchase
Date. If no such election is made at the time such purchase right is
terminated, then the payroll deductions collected with respect to the
terminated right shall be refunded as soon as possible.


 


2.             The
termination of such purchase right shall be irrevocable, and the Participant may
not subsequently rejoin the purchase period for which the terminated purchase
right was granted. In order to resume participation in any subsequent purchase
period, such individual must re-enroll in the Plan (by making a timely filing
of the prescribed Enrollment/Change Form) on or before the start date of the
new purchase period.


 


3.             Should
the Participant cease to remain an Eligible Employee for any reason (including
death, disability or change in status) while his or her purchase right remains
outstanding, then that purchase right shall immediately terminate, and all of
the Participant’s payroll deductions for the purchase period in which the
purchase right so terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an approved unpaid
leave of absence, then the Participant shall have the right, exercisable up
until the last business day of the purchase period in which such leave
commences, to (a) withdraw all the payroll deductions collected to date on
his or her behalf during such purchase period or (b) have such funds held
for the purchase of shares on the next scheduled Purchase Date. In no event,
however, shall any further payroll deductions be collected on the Participant’s
behalf during such leave. Upon the Participant’s return to active service, his
or her payroll deductions under the Plan shall automatically resume at the rate
in effect at the time the leave began, unless the Participant withdraws from
the Plan prior to his or her return.


 


G.            Corporate  Transaction.  In  the  event  of  a  proposed  Corporate  Transaction,  each  outstanding  purchase  right  shall  be  assumed  by  such  successor  corporation  or  a  parent  or  subsidiary  of  such  successor  corporation,  unless  the  Plan  Administrator,  in  the  exercise  of  its  sole  discretion  and  in  lieu  of  such  assumption,  determines  to  shorten  the  purchase  period  then  in  progress  by  setting  a  new  Purchase  Date  (the  “New  Purchase  Date”).  If  the  Plan  Administrator  shortens  the  purchase  period  then  in  progress  in  lieu  of  assumption  in  the  event  of  a  Corporate  Transaction,  the  Plan  Administrator  shall  notify  each  Participant  in  writing  at  least  ten  (10)  business  days  prior  to  the  New  Purchase  Date,  that  the  Purchase  Date  for  the  Participant’s  option  has  been  changed  to  the  New  Purchase  Date  and  that  either:


 


1.             the
Participant’s purchase right will be exercised automatically on the New
Purchase Date, unless prior to such date the Participant has terminated his or
her purchase right as provided in Section VII.F.1; or


 


2.             the
Company shall pay to the Participant on the New Purchase Date an amount in
cash, cash equivalents, or property as determined by the Plan Administrator
that is equal to the difference in the Fair Market Value of the shares subject
to the purchase right and the purchase price due had the Participant’s purchase
right been exercised automatically under clause 1 above.


 

















 


For purposes of this Subsection, a purchase right granted under the
Plan shall be deemed to be assumed if, in connection with the Corporate
Transaction, the purchase right is replaced with a comparable purchase right
with respect to shares of the successor corporation or parent thereof. The
determination of purchase right comparability shall be made by the Plan
Administrator prior to the Corporate Transaction and its determination shall be
final, binding and conclusive on all persons.


 


H.            Proration of Purchase
Rights.  Should the total number
of shares of Common Stock which are to be purchased pursuant to outstanding
purchase rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of the aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded.


 


I.              Assignability.  The purchase right shall be exercisable only
by the Participant and shall not be assignable or transferable by the
Participant.


 


J.             Stockholder Rights.  A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant’s behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.


 


VIII.       ACCRUAL LIMITATIONS


 


A.            No
Participant shall be entitled to accrue rights to acquire Common Stock pursuant
to any purchase right outstanding under this Plan if and to the extent such
accrual, when aggregated with (i) rights to purchase Common Stock accrued
under any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would
otherwise permit such Participant to purchase more than Twenty-Five Thousand
Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding.


 


B.            For
purposes of applying such accrual limitations, the following provisions shall
be in effect:


 


1.             The
right to acquire Common Stock under each outstanding purchase right shall
accrue on the Purchase Date in effect for the purchase period for which such
right is granted.


 


2.             No
right to acquire Common Stock under any outstanding purchase right shall accrue
to the extent the Participant has already accrued in the same calendar year the
right to acquire Common Stock under one (1) or more other purchase rights
at a rate equal to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock
(determined on the basis of the Fair Market Value per share on the date or
dates of grant) for each calendar year such rights were at any time
outstanding.


 


3.             If
by reason of such accrual limitations, any purchase right of a Participant does
not accrue for a particular purchase period, then the payroll deductions which
the Participant made during that purchase period with respect to such purchase
right shall be promptly refunded.


 


C.            In
the event there is any conflict between the provisions of this Article and
one or more provisions of the Plan or any instrument issued thereunder, the
provisions of this Article shall be controlling.


 

















 


IX.          EFFECTIVE
DATE AND TERM OF THE PLAN


 


A.            The
Plan was adopted by the Board on April 25, 1996 and became effective on November 3,
1996, provided no purchase rights
granted under the Plan were to be exercised, and no shares of Common Stock were
to be issued hereunder, until (i) the Plan had been approved by the
stockholders of the Corporation and (ii) the Corporation had complied with
all applicable requirements of the 1933 Act (including the registration of the
shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq Global Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval were not obtained, or such compliance were not effected,
within twelve (12) months after the date on which the Plan is adopted by
the Board, the Plan was to have terminated and have no further force or effect
and all sums collected from Participants during the initial purchase period
hereunder were to have been refunded.


 


B.            Unless
sooner terminated by the Board, the Plan shall terminate upon the earliest to occur of (i) the last
business day in January 2017, (ii) the date on which all shares
available for issuance under the Plan shall have been sold pursuant to purchase
rights exercised under the Plan or (iii) the date on which all purchase
rights are exercised in connection with a Corporate Transaction. No further
purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.


 


X.            AMENDMENT
OF THE PLAN


 


The Board may alter, amend, suspend or discontinue the Plan at any time
to become effective immediately following the close of any purchase
period.  To the extent necessary to
comply with Section 423 of the Code (or any successor rule or
provision or any other applicable law), the Company shall obtain stockholder
approval in such a manner and to such degree as required.


 


On July 26, 2006, the Board adopted and approved an amendment and
restatement of the Plan to extend the term of the Plan to the last business day
of January, 2017 and, effective for purchase periods commencing on and after August 1,
2006, to modify the purchase price per share discount from eighty-five percent
(85%) to ninety percent (90%) and to expand the actions the Company may take in
connection with a Corporate Transaction and to modify the list of Participating
Corporations who extend the benefits of the Plan to their Eligible Employees.


 


XI.          GENERAL
PROVISIONS


 


A.            All
costs and expenses incurred in the administration of the Plan shall be paid by
the Corporation.


 


B.            Nothing
in the Plan shall confer upon the Participant any right to continue in the
employ of the Corporation or any Corporate Affiliate for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Corporate Affiliate employing such person) or of the
Participant, which rights are hereby expressly reserved by each, to terminate such
person’s employment at any time for any reason, with or without cause.


 


C.            The
provisions of the Plan shall be governed by the laws of the State of California
without resort to that State’s conflict-of-laws rules.


 

















 


Schedule A


 


CURRENT LIST OF PARTICIPATING CORPORATIONS


 


Domestic


 


Westaff, Inc., a Delaware corporation


 


Westaff (USA), Inc., a California
corporation


 


Westaff Support, Inc., a California
corporation


 

















 


APPENDIX


 


The following definitions shall be in effect
under the Plan:


 


A.            Board shall
mean the Corporation’s Board of Directors.


 


B.            Cash Earnings
shall mean the (i) regular base salary paid to a Participant by one or
more Participating Companies during such individual’s period of participation
in one or more offering periods under the Plan plus (ii) any pre-tax
contributions made by the Participant to any Code Section 401(k) salary
deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate plus (iii) all
overtime payments, bonuses, commissions, current profit-sharing distributions
and other incentive-type payments. However, Cash Earnings shall not include any contributions (other than
Code Section 401(k) or Code Section 125 contributions) made on
the Participant’s behalf by the Corporation or any Corporate Affiliate under
any employee benefit or welfare plan now or hereafter established.


 


C.            Code shall
mean the Internal Revenue Code of 1986, as amended.


 


D.            Common Stock
shall mean the Corporation’s common stock.


 


E.             Corporate Affiliate
shall mean any parent or subsidiary corporation of the Corporation (as
determined in accordance with Code Section 424), whether now existing or
subsequently established.


 


F.             Corporate Transaction
shall mean either of the following stockholder-approved transactions to which
the Corporation is a party:


 


1.             a
merger or consolidation in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction;


 


2.             the
sale, transfer or other disposition of all or substantially all of the assets
of the Corporation in complete liquidation or dissolution of the Corporation;
or


 


3.             an
acquisition in a single or series of related transactions by any person or
related group of persons (other than the Company or by a Company-sponsored
employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of securities possessing
more than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities.


 


G.            Corporation
shall mean Westaff, Inc., a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Westaff, Inc.
which shall by appropriate action adopt the Plan.


 


H.            Eligible Employee
shall mean any person who is employed by a Participating Corporation on a basis
under which he or she is regularly expected to render more than twenty
(20) hours of service per week for more than five (5) months per
calendar year for earnings considered wages under Code Section 3401(a).


 


I.              Fair Market Value
per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:


 


1.             If
the Common Stock is are listed on one or more established stock exchanges or
national market systems, including without limitation The NASDAQ Global Select
Market, The NASDAQ Global Market and The NASDAQ Capital Market, its Fair Market
Value shall be the closing sales price for such shares (or the closing bid, if
no sales were reported) as quoted on the principal exchange or system on which
the Common Stock is listed (as determined by the Plan Administrator) on the
date of determination (or, if no closing sales price or closing bid was
reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street
Journal or such other source as the Plan Administrator deems reliable;


 

















 


2.             If
the Common Stock is regularly quoted on an automated quotation system
(including the OTC Bulletin Board) or by a recognized securities dealer, its
Fair Market Value shall be the closing sales price for such shares as quoted on
such system or by such securities dealer on the date of determination, but if
selling prices are not reported, the Fair Market Value of the Common Stock
shall be the mean between the high bid and low asked prices for the Common
Stock on the date of determination (or, if no such prices were reported on that
date, on the last date such prices were reported), as reported in The Wall
Street Journal or such other source as the Plan Administrator deems reliable;
or


 


3.             In
the absence of an established market for the Common Stock of the type described
in (1) and (2), above, the Fair Market Value thereof shall be determined
by the Plan Administrator in good faith.


 


J.             1933 Act
shall mean the Securities Act of 1933, as amended.


 


K.            Participant
shall mean any Eligible Employee of a Participating Corporation who is actively
participating in the Plan.


 


L.            Participating
Corporation shall mean the Corporation and such Corporate Affiliate or
Affiliates as may be authorized from time to time by the Board to extend the
benefits of the Plan to their Eligible Employees. The current Participating
Corporations in the Plan are listed in attached Schedule A.


 


M.           Plan shall mean
the Corporation’s Employee Stock Purchase Plan, as set forth in this document.


 


N.            Plan Administrator
shall mean the committee of two (2) or more non-employee Board members
appointed by the Board to administer the Plan.


 


O.            Purchase Date
shall mean the last business day of each purchase period. The initial Purchase
Date shall mean January 31, 1997.