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Prepared by MERRILL CORPORATION

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Exhibit 10.3.6    
  

 
 

EMPLOYMENT AGREEMENT    
  

    This Employment Agreement ("Agreement"), effective
May 1, 2001, is among Westaff Support, Inc., a California corporation ("Westaff"),  Westaff,
 Inc., a Delaware corporation (the "Company"), and TOM D.
SEIP (the "Executive"). Westaff, the Company and the Executive agree to the following terms and conditions of employment. 

    1.  Employment. Westaff hereby employs the Executive, and the Executive
hereby accepts 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 President and Chief Executive Officer of Westaff and the Company, which is the ultimate parent company of Westaff. The Executive shall have such executive responsibilities and duties as are
consistent with his position. The Executive agrees to devote his full working time, attention and energies to the performance of his duties for Westaff or the Company. It shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or charitable boards or committees or (ii) deliver lectures, fulfill speaking engagements or teach at educational
institutions so long as such activities do not significantly interfere with the performance of the Executive's responsibilities to Westaff or the Company in accordance with this Agreement and provided
that the Executive otherwise complies with Westaff's Conflict of Interest Policy. 

    (b) Election to Chairman of the Board. It is the intention of the Board
of Directors of the Company (the "Board") that on the date of the Company's annual stockholders' meeting in calendar year 2001, which is presently
scheduled for May 23, 2001 and will be held no later than June 30, 2001, the Board
shall appoint the Executive to succeed to and replace W. Robert Stover as Chairman of the Board, effective at the annual stockholders' meeting in calendar year 2002. It is the intention of the Board
that following the annual stockholders' meeting in calendar year 2002, W. Robert Stover will remain a director with the title of Chairman-Emeritus. This planned leadership change will be announced
coincident with the public announcement of the Executive joining Westaff and the Company as President and Chief Executive Officer and such change shall be contingent upon satisfactory performance
hereunder in the discretion of the Board. 

    (c) Term. The Executive's employment shall commence on May 1,
2001, and shall be for a term of five (5) years, subject to termination under Section 4 of this Agreement. 

    3.  Compensation and Benefits. In consideration for the services of the Executive, Westaff shall
compensate the Executive as follows: 

    (a) Base Salary. Westaff shall pay the Executive, in accordance with
Westaff's then current payroll practices and schedule, a base salary ("Base Salary"). The Base Salary to be paid Executive shall be Five Hundred
Thousand Dollars ($500,000), less income and employment tax withholding or other withholdings required by law, and such Base Salary may be increased, but not decreased, from time to time. 

    (b) Benefits.

     (i) Vacation. The Executive shall be entitled to vacation leave of four
(4) weeks per year or more as reasonably needed, subject to Westaff's policies with respect to maximum annual accruals. 

    (ii) Benefit Plans. The Executive shall be eligible to participate in
and to receive benefits from all present and future benefit plans specified in Westaff's policies and generally made 

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available to similarly situated employees of Westaff. The amount and extent of benefits to which the Executive is entitled shall be governed by the specific benefit plan, as amended. The Executive
shall also be entitled to any benefits or compensation tied to termination as described in Section 4. 

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

    (d) Annual Incentive Compensation. The Executive shall receive a cash
incentive bonus for improving the Company's annual corporate pre-tax net income from continuing operations, under the following terms: 

     (i) Fiscal Year. The period for measuring improvement in the Company's
annual corporate pre-tax net income from continuing operations shall be the Company's fiscal year, which ends on the last Saturday nearest the end of October each year and begins on the
Sunday immediately following. 

    (ii) Measurement of Improvement to Annual Corporate Pre-Tax Net
Income. The base of comparison for the first year of the award shall be the improvement from fiscal year 2000 (October 31, 1999 to October 28, 2000) to fiscal
year 2001 (October 29, 2000 to November 3, 2001). In calculating the improvement in annual corporate pre-tax net income from continuing operations from fiscal year 2000 to
fiscal year 2001, pre-tax net income from fiscal year 2000 shall be normalized, so that the 1everaged buy-out expenses of approximately Two Million Dollars ($2,000,000), and
the discontinued operations and costs of the medical business shall be excluded. The award shall be one-tenth (1/10) of the amount of improvement in annual corporate
pre-tax net income from continuing operations, measured as the increase in the Company's annual corporate pre-tax net income from continuing operations from the previous fiscal
year to the current fiscal year. The expense of the award shall be included in calculating the pre-tax net income from continuing operations for the purpose of determining the amount of
the award. 

   (iii) Basis for Calculation of Annual Corporate Pre-Tax Net
Income. For purposes of determining the amount of the award, the Company's annual corporate pre-tax net income from continuing operations shall be calculated based
on the Company's consolidated fiscal year and financial statements, as audited by the Company's independent public accountant. 

    (iv) Termination or Resignation. Except as provided in
Section 4(b) of this Agreement, if the Executive is not employed by Westaff or the Company on the last day of a given fiscal year, he shall not receive any award for improvement in corporate
pre-tax net income from continuing operations for that fiscal year. 

    (v) Timing and Form. The award shall be paid after January 1 each
year and not later than January 15 of the same year, whether or not the Executive is employed on the date of payment. The award shall be paid in a lump sum, and Westaff shall deduct amounts
required to be withheld by law for income and employment taxes or other legally required withholdings. 

    (e) Stock Options. The Executive shall be granted stock options to
purchase an aggregate of one million (1,000,000) shares of the Company's common stock on the date his employment begins. Five hundred thousand (500,000) shares shall be granted as incentive stock
options (the "Initial Grant") to the extent permitted by law and, to the extent not an incentive stock option, shall be transferable by the executive
for estate planning purposes. The terms of the Initial Grant shall be stated in two separate stock option agreements (one an incentive stock option and the other a non-qualified stock
option, the "Initial Grant Stock Option Agreements"), which both parties 

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shall sign in accordance with the Company's 1996 Stock Option/Stock Issuance Plan, as amended and restated as of April 30, 2001 (the
"Plan"). The exercise price per share shall be equal to the fair market value per share, as defined by the Plan, on the date these options are granted
to the Executive. The shares subject to the Initial Grant shall vest in the following five (5) installments, with vesting of the first installment to occur upon the hire date (the
"Vesting Commencement Date") and continued vesting annually thereafter upon the Executive's completion of each additional year of service measured from
the first anniversary of the Vesting Commencement Date through the fourth anniversary of the Vesting Commencement Date: 

	Date
	 	Vested Option Shares

	Vesting Commencement Date	 	150,000
	First Anniversary of the Vesting Commencement Date	 	125,000
	Second Anniversary of the Vesting Commencement Date	 	100,000
	Third Anniversary of the Vesting Commencement Date	 	75,000
	Fourth Anniversary of the Vesting Commencement Date	 	50,000

    Five
hundred thousand (500,000) shares shall be granted as nonqualified stock options (the "Rescindable Grant") and shall be
transferable by the executive for estate planning purposes; provided, however, that the Rescindable Grant shall be rescinded if a majority of the
stockholders of the Company vote against the amendment and restatement of the Plan to increase the maximum number of shares with respect to which stock options, stock appreciation rights and direct
stock issuances may be granted to an individual in any calendar year from five hundred thousand (500,000) shares of Company common stock to one million (1,000,000) shares of Company common stock. The
Company agrees that it shall submit such amendment and restatement of the Plan for approval of its stockholders at the earliest opportunity, but not later than June 30, 2001, and that the Board
shall recommend such approval to the stockholders of the Company. The terms of the Rescindable Grant shall be stated in a stock option agreement (the "Rescindable Grant Stock
Option Agreement"), which both parties shall sign in accordance with the Plan. The exercise price per share shall be equal to the fair market value per share, as defined by the
Plan, on the date this option is granted to the Executive. The shares subject to the Rescindable Grant shall vest in the following five (5) installments, with vesting of the first installment
to occur upon the Vesting Commencement Date and continued vesting annually thereafter upon the Executive's completion of each additional year of service measured from the first anniversary of the
Vesting
Commencement Date through the fourth anniversary of the Vesting Commencement Date; provided, however, that, except as provided below, vested shares
subject to the Rescindable Grant may only be exercised after June 15, 2002. 

	Date
	 	Vested Option Shares

	Vesting Commencement Date	 	150,000
	First Anniversary of the Vesting Commencement Date	 	125,000
	Second Anniversary of the Vesting Commencement Date	 	100,000
	Third Anniversary of the Vesting Commencement Date	 	75,000
	Fourth Anniversary of the Vesting Commencement Date	 	50,000

    Notwithstanding
the foregoing, vested shares subject to the Rescindable Grant may be exercised on or before June 15, 2002, but only following stockholder approval of the
amendment and restatement of the Plan to increase the maximum number of shares with respect to which stock options, stock appreciation rights and direct stock issuances may be granted to an individual
in any calendar year to one million (1,000,000) shares of common stock. 

    Notwithstanding
the foregoing vesting schedules, both the Initial Grant and the Rescindable Grant shall become fully vested and exercisable upon the effective date of a "Change in
Control," a "Corporate Transaction," or a "Hostile Take-Over," as such terms are defined in the Plan, whichever 

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event shall first occur while the Executive is employed by the Company or Westaff and notwithstanding any assumption, substitution or replacement of such Grants in connection with such event. 

    At
termination of the employment relationship by either party, both the Initial Grant and the Rescindable Grant must be exercised within three (3) months from the date of
termination; provided, however, that (i) should termination of the Executive's employment be for Cause, as defined herein, such Grants shall be
cancelled upon the date of such termination, and (ii) should termination of Executive's employment be on account of death or disability or without Cause, such Grants shall remain exercisable
for twelve (12) months from the date of such termination. 

    The
Company agrees to register the shares of Company common stock subject to the Initial Grant and the Rescindable Grant under the Securities Act of 1933 so that such shares will be
publicly tradable. 

4.  Termination of Employment.  

    (a) Definition of Cause. For purposes of this Agreement, "Cause" means
the occurrence of any one or more of the following: 

     (i) the Executive's conviction of, or plea of no contest with respect to, any crime involving fraud, dishonesty or moral
turpitude; 

    (ii) the Executive's fraud, embezzlement, misappropriation or dishonesty which has or could reasonably be expected to
materially and adversely affect the Company or its reputation; or 

   (iii) the Executive's intentional and material breach of this Agreement, violation of any lawful, written directive of
the Board of the Company, intentional and material breach of any lawful written policy of Westaff that has been communicated to or made available to the Executive, or intentional and material breach
of any statutory or fiduciary duty owed to Westaff that has or could reasonably be expected to materially and adversely affect the Company or its reputation; provided that the foregoing breach or
violation is not corrected within fifteen (15) days after written notice thereof has been provided by the Board to the Executive; 

    (b) Termination by Westaff without Cause. At any time, Westaff may
terminate the Executive's employment for any reason, without Cause, by providing the Executive ninety (90) days' advance written notice. If the Executive's employment is terminated without
Cause, Westaff shall pay the Executive his earned but unpaid Base Salary, accrued vacation pay through the date of termination and, in addition, severance pay equal to one (1) year of his Base
Salary. Such earned but unpaid Base Salary and accrued vacation pay shall be paid immediately upon the Executive's termination of employment. If Executive's termination occurred after more than six
months of employment in the fiscal year, he shall also receive a pro rata payment of the cash incentive bonus provided in Section 3(d). The cash incentive bonus shall be paid in accordance with
Section 3(d)(v). Severance pay shall be paid in accordance with Westaff's standard payroll schedule and not as a lump sum. Following termination of employment, the Executive shall continue to
participate in Westaff's employee benefit plans in accordance with the terms of such plans. 

    (c) Termination by Westaff for Cause. At any time, and without prior
notice, Westaff may terminate the Executive for Cause. If employment shall be terminated by Westaff for Cause, Westaff shall pay the Executive his earned but unpaid Base Salary and accrued vacation
pay through the date of termination. Such earned but unpaid Base Salary and accrued vacation pay shall be paid immediately upon the Executive's termination. Following termination of employment, 

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the Executive shall continue to participate in Westaff's employee benefit plans in accordance with the terms of such plans. 

    (d) Resignation by Executive. At any time, the Executive may terminate
his employment for any reason by providing Westaff ninety (90) days' advance written notice. Westaff shall pay the Executive his earned but unpaid Base Salary and accrued vacation pay through
the date of termination immediately upon the Executive's termination of employment. Following termination of employment, the Executive shall continue to participate in Westaff's employee benefit plans
in accordance with the terms of such plans. 

    (e) Termination by Disability. In the event of termination for reason of
disability, Westaff shall pay the Executive his accrued but unpaid Base Salary and accrued vacation pay through the date of termination and, in addition, severance pay equal to three (3) months
of his Base Salary. Such earned but unpaid Base Salary and accrued vacation pay shall be paid immediately upon the Executive's termination. Severance pay shall be paid in accordance with Westaff's
standard payroll schedule and not as a lump sum, and it shall be reduced by any payments received by the Executive under Westaff's Long Term Disability Plan during the three (3) month severance
payment period. Following termination of employment, the Executive shall continue to participate in Westaff's employee benefit plans in accordance with the terms of such plans. 

5.  Termination Obligations.  

    (a) Representations and Warranties. The representations and warranties
contained in this Agreement and the Executive's obligations under Section 5 and Section 6 on Proprietary Information and Non-Solicitation shall survive the termination of
employment. 

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

    (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 his employment, belongs to Westaff and shall be
returned promptly to Westaff upon termination of employment. 

6.  Proprietary Information and Non-Solicitation.  

    (a) Proprietary Information. The Executive recognizes and acknowledges
that certain assets of Westaff and the Company constitute Proprietary Information, including all information that is known only to the Executive or Westaff or the Company, and relating to the business
of Westaff or the Company (including, without limitation, information regarding employees, clients, customers, pricing policies, methods of operation, sales, products, costs, markets, key personnel,
formulae, product applications, technical processes, confidential data, and trade secrets), and that protection of such information is essential to the interests of Westaff and the Company. The
Executive will be required to sign, as a condition of employment, Westaff's Confidential Information and Invention Agreement. 

    (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 Westaff'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 

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his employment, he shall not, directly or indirectly, (i) solicit, induce, or influence any employee, consultant or independent contractor of Westaff or the Company to terminate his or her
employment or relationship with Westaff or the Company or to work for any other business entity or person; or (ii) solicit (other than on behalf of Westaff or the Company), divert, or attempt
to divert, the business of any client or customer of Westaff or the Company in any district, territory, state or country where Westaff or the Company conducts business. 

    (c) Non-Competition During Severance Period. If the
Executive engages in any business activity that is or may be competitive with Westaff in any district, territory, state or country where Westaff conducts business during the severance period, then the
Executive's right to receive severance payments shall cease immediately upon his engaging in any such competition. The period of non-competition shall not exceed one (1) year
following the date of employment termination. 

    7.  Arbitration. Any controversy or claim arising out of or relating to
the Executive's employment and its termination, including, but not limited to, claims of employment discrimination, this Agreement, the Stock Option Agreement, the Confidential Information and
Invention Agreement, or the breach thereof, (except for injunctive relief as provided for below) shall be subject to binding, mandatory arbitration under the auspices of the American Arbitration
Association ("AAA") in San Francisco, California conducted by a single, neutral arbitrator in accordance with the AAA National Rules for the Resolution
of Employment Disputes. 

    To
the extent permitted by law, each party will pay one half (1/2) of the costs of the arbitration, and the parties shall bear their own attorneys' fees and costs
except as otherwise required by law. The parties shall have the right to conduct discovery which provides them with access to documents and witnesses that are essential to the dispute, as determined,
by the arbitrator. The arbitrator's written award shall include the essential findings and conclusions upon which the award is based. 

    This
mutual agreement to arbitrate disputes does not prohibit or limit either the Executive's or Westaff's or the Company's right to seek equitable relief from a court for claims
involving a violation of the Confidential Information and Invention Assignment Agreement, including, but not limited to, injunctive relief, pending the resolution of a dispute by arbitration or during
limited judicial review. Except for such injunctive relief, claims under the Confidential Information and Invention Agreement are subject to arbitration under this Agreement. 

8.  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. 

    (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, the Stock Option Agreement, the
Confidential Information and Invention Agreement, and Westaff's employment policies to the extent not inconsistent with the provisions of this Agreement contain the entire understanding of the
parties, supersede all prior agreements and relating to the subject matter and shall not be amended except by a written instrument hereafter signed by each of the parties. 

    (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 

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exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity. 

    (e) Assignment; Successors and Assigns. The Executive agrees that he
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 Westaff or the Company with, or its merger into, any other entity, or the sale by
Westaff or the Company of all or substantially all of its assets, or the otherwise lawful assignment by Westaff or 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, without regard to that State's principles of conflict of laws. 

    (g) Beneficiaries. This agreement is intended to benefit both the
Company and Westaff such that any references herein to either corporation shall apply interchangeably to both corporations, particularly with respect to the termination provisions of Section 4,
and this Agreement shall inure to the benefit of any present or future subsidiary of the Company that may become the Executive's employer due to a corporate restructuring. Notwithstanding the
foregoing, the references to the Company in the following Sections of this Agreement shall pertain solely to Westaff, Inc. (the "Company") and not to Westaff Support, Inc. ("Westaff):
Section 3(d) and each of its subparts, relating to the Annual Incentive Compensation; Section 3(e) relating to Stock Options; and the reference to the Board of the Company in
Section 4(a)(iii), relating to the definition of Cause. 

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

	 	 	/s/ Tom D.
Seip                                 5/1/01
TOM D.
SEIP
	

 	
 	
WESTAFF, INC.
	

 	
 	

By:	
 	

/s/ W. Robert Stover
 W. Robert Stover

Chairman of the Board, interim

President and Chief Executive

Officer
	

 	
 	
WESTAFF SUPPORT, INC.
	

 	
 	

By:	
 	

/s/ W. Robert Stover

	 	 	Its:	 	W. Robert Stover

Chairman of the Board, interim

President and Chief Executive

Officer

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Exhibit 10.3.6

EMPLOYMENT AGREEMENTPrepared by MERRILL CORPORATION

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Exhibit 10.3.6.1    
  

 
 

WESTAFF, INC.
  NOTICE OF GRANT OF STOCK OPTION    
  

    Notice is hereby given of the following option grant (the "Option") to purchase shares of the Common Stock of Westaff, Inc. (the "Corporation"): 

    Optionee:  Tom D. Seip 

    Grant Date:  May 1, 2001 

    Vesting Commencement Date:  May 1, 2001 

    Exercise Price:  $2.05 per share 

    Number of Option Shares:  243,900 shares 

    Expiration Date:  April 30, 2011 

    Type of Option:  Incentive Stock Option 

    Exercise Schedule:  The Option shall vest in accordance with the following schedule. In no event shall the Option become
exercisable for any additional Option Shares after Optionee's cessation of Service. 

	Date
	 	Vested Option Shares

	Vesting Commencement Date	 	48,780
	First Anniversary of the Vesting Commencement Date	 	48,780
	Second Anniversary of the Vesting Commencement Date	 	48,780
	Third Anniversary of the Vesting Commencement Date	 	48,780
	Fourth Anniversary of the Vesting Commencement Date	 	48,780

    Optionee
understands and agrees that the Option is granted subject to and in accordance with the terms of the Westaff, Inc. 1996 Stock Option/Stock Issuance Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A. Optionee hereby acknowledges
receipt of a copy of the official prospectus for the Plan and a copy of the Plan in the forms attached hereto as Exhibit B. 

    The
foregoing provisions of this section are pursuant to the terms of the Employment Agreement. 

    No Employment or Service Contract.  Nothing in this Grant Notice or in the attached Stock Option Agreement or in the
Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause,
subject to the terms of any effective employment agreement between the Corporation (or any Parent or Subsidiary employing or retaining Optionee) and Optionee. 

    Definitions.  All capitalized terms in this Grant Notice shall have the meaning assigned to them in this Grant Notice or
in the attached Stock Option Agreement. 

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Date:  May 1, 2001 

	 	 	WESTAFF, INC.
	

 	
 	

By:	
 	

/s/ W. Robert Stover
	 	 	 	 	

	 	 	 	 	W. Robert Stover
	

 	
 	

 	
 	

Title: Chairman of the Board
	

 	
 	

 	
 	

/s/ Tom D. Seip
	 	 	 	 	

	 	 	 	 	Tom D. Seip, OPTIONEE
	

 	
 	

Address: 30 Ridge Lane
	 	 	                Orinda, California 94563

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EXHIBIT A
  
    STOCK OPTION AGREEMENT    
  

  

 
 

WESTAFF, INC.
  STOCK OPTION AGREEMENT    
  

RECITALS  

    A.  The
Corporation has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of
directors of any Parent or Subsidiary and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). 

    B.  Optionee
is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation's grant of an option to Optionee. 

    C.  All
capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix. 

    NOW, THEREFORE, it is hereby agreed as follows: 

    1.  Grant of Option.  The Corporation hereby grants to Optionee, as of the Grant Date, an option to
purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the
Exercise Price. 

    2.  Option Term.  This option shall have a term of ten (10) years measured from the Grant Date and
shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6. 

    3.  Limited Transferability.  This option shall be neither transferable nor assignable by Optionee other
than by will or by the laws of descent and distribution following Optionee's death and may be exercised, during Optionee's lifetime, only by Optionee. 

    4.  Dates of Exercise.  This option shall become exercisable for the Option Shares in one or more
installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6. 

    5.  Cessation of Service.  The option term specified in Paragraph 2 shall terminate (and this
option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: 

    (a) Should
Optionee cease to remain in Service for any reason (other than death, Permanent Disability, Cause or termination of Service by the Corporation (or any Parent
or Subsidiary employing or retaining Optionee) for any reason other than Cause) while this option is outstanding, then Optionee shall have a period of three (3) months (commencing with the date
of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date. 

    (b) Should
the Corporation (or any Parent or Subsidiary employing or retaining Optionee) terminate Optionee's Service for any reason other than Cause while this option
is outstanding, then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this
option be exercisable at any time after the Expiration Date. 

    (c) Should
Optionee die while this option is outstanding, then the personal representative of Optionee's estate or the person or persons to whom the option is
transferred 

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pursuant to Optionee's will or in accordance with the laws of descent and distribution shall have the right to exercise this option. Such right shall lapse, and this option shall cease to be
outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee's death or (ii) the Expiration Date. 

    (d) Should
Optionee cease Service by reason of Permanent Disability while this option is outstanding, then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date. 

    (e) Should
Optionee's Service be terminated for Cause, then this option shall terminate immediately and cease to remain outstanding. 

    (f)  During
the applicable post-Service exercise period, this option may not be exercised in the aggregate for more than the number of vested Option Shares
for which the option is exercisable at the time of Optionee's cessation of Service. Upon the expiration of such exercise period or (if earlier) upon the Expiration Date, this option shall terminate
and cease to be outstanding for any vested Option Shares for which the option has not been exercised. However, this option shall, immediately upon Optionee's cessation of Service for any reason,
terminate and cease to be outstanding with respect to any Option Shares in which Optionee is not otherwise at that time vested or for which this option is not otherwise at that time exercisable. 

    6.  Special Acceleration of Option.

    (a) Corporate
Transaction. 

     (i) This
option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this
option shall, immediately prior to the effective date of such Corporate Transaction become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully-vested shares of Common Stock. Immediately following the Corporate Transaction, this option, to the extent not previously exercised, shall terminate and cease to be
outstanding or exercisable except to the extent assumed by the successor corporation (or parent thereof) in connection with such Corporate Transaction. 

    (ii) If
this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the
same. 

    (b) Change in Control/Hostile Take-Over.  In the event of a Change in Control or Hostile
Take-Over, this option, to the extent outstanding but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of
such Change in Control or Hostile
Take-Over, become exercisable for all the Option Shares at the time subject to the option and may be exercised for any or all of the Option Shares as fully-vested shares of Common Stock.
This option shall remain exercisable for such fully-vested Option Shares until the earlier to occur of the Expiration Date or the sooner termination of this option in accordance with Paragraphs 5 or
6(a). 

2

 

    (c) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

    7.  Adjustment in Option Shares.  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 total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder. 

    8.  Stockholder Rights.  The holder of this option shall not have any stockholder rights with respect to
the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares. 

    9.  Manner of Exercising Option.

    (a) In
order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following actions: 

     (i) Execute
and deliver to the Corporation a Notice of Exercise for the Option Shares for which the option is exercised. 

    (ii) Pay
the aggregate Exercise Price for the purchased shares in one or more of the following forms: 

    (A) cash
or check made payable to the Corporation; 

    (B) shares
of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or 

    (C) to
the extent this option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide irrevocable written instructions (I) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale transaction. Except to the extent the sale and remittance procedure is utilized in connection with the option exercise,
payment of the Exercise Price must accompany the Notice of Exercise delivered to the Corporation in connection with the option exercise. 

    (iii) Furnish
to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this
option. 

    (iv) Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local
income and employment tax withholding requirements applicable to the option exercise. 

3

 

    (b) As
soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends affixed thereto. 

    (c) In
no event may this option be exercised for any fractional shares. 

    10. Compliance with Laws and Regulations.

    (a) The
exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and
issuance. 

    (b) The
inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and
sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall
not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals. 

    11. Successors and Assigns.  Except to the extent otherwise provided in Paragraphs 3 and 6, the
provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate. 

    12. Notices.  Any notice required to be given or delivered to the Corporation under the terms of this
Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated below Optionee's signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid
and properly addressed to the party to be notified. 

    13. Construction.  This Agreement and the option evidenced hereby are made and granted pursuant to the
Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement
shall be conclusive and binding on all persons having an interest in this option. 

    14. Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of California without resort to that State's conflict-of-laws rules. 

    15. Additional Terms Applicable to an Incentive Option.  In the event this option is designated an
Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant: 

    (a) This
option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares:
(A) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (B) more than twelve (12) months
after the date Optionee ceases to be an Employee by reason of Permanent Disability. 

    (b) No
installment under this option shall qualify for favorable tax treatment as an Incentive Option if (and to the extent) the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or 

4

 

dates of grant) of the Common Stock or other securities for which this option or any other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred
Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this option shall nevertheless become exercisable for the excess shares in such calendar year as a Non-Statutory
Option. 

    (c) Should
the exercisability of this option be accelerated upon a Corporate Transaction, Change in Control or Hostile Take-Over, then this option shall
qualify for favorable tax treatment as an Incentive Option only to the extent the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option first becomes
exercisable in the calendar year in which the Corporate Transaction, Change in Control or Hostile Take-Over occurs does not, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities for which this option or one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the
Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
Should the applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in the calendar year of such Corporate Transaction, Change in Control or Hostile Take-Over, the option
may nevertheless be exercised for the excess shares in such calendar year as a Non-Statutory Option. 

    (d) Should
Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same
calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. 

    16. Leave of Absence.  The following provisions shall apply upon Optionee's commencement of an authorized
leave of absence: 

    (a) The
exercise schedule in effect under the Grant Notice shall be frozen as of the first day of the authorized leave, and the option shall not become exercisable for
any additional installments of the Option Shares during the period Optionee remains on such leave. 

    (b) Should
Optionee resume active Employee status within sixty (60) days after the start date of the authorized leave, Optionee shall, for purposes of the
exercise schedule set forth in the Grant Notice, receive Service credit for the entire period of such leave. If Optionee does not resume active Employee status within such sixty (60)-day
period, then no Service credit shall be given for the period of the leave. 

    (c) If
the option is designated as an Incentive Stock Option in the Grant Notice, then the following additional provision shall apply: 

  If
the leave of absence continues for more than ninety (90) days, then the option shall automatically convert to a Non-Statutory Option under the federal tax laws
on the day three (3) months and one (1) day following the ninety-first (91st) day of such leave, unless Optionee's reemployment rights are guaranteed by statute or by written agreement.
Following any such conversion of the option, all subsequent exercises of such option, whether effected before or after Optionee's return to active Employee status, shall result in an immediate taxable
event, and the Corporation shall be required to collect from Optionee the federal, state and local income and employment withholding taxes applicable to such exercise. 

    (d) In
no event shall this option become exercisable for any additional Option Shares or otherwise remain outstanding if Optionee does not resume Employee status prior
to the Expiration Date of the option term. 

5

 
 

EXHIBIT I
  
    NOTICE OF EXERCISE    
  

    I hereby notify Westaff, Inc. (the "Corporation") that I elect to purchase shares of the Corporation's Common Stock (the "Purchased Shares") at the
option exercise price of $2.05 per share (the "Exercise Price") pursuant to that certain option (the "Option") granted to me under the Corporation's 1996 Stock Option/Stock Issuance Plan on
May 1, 2001. 

    Concurrently
with the delivery of this Notice of Exercise to the Corporation, I shall hereby pay to the Corporation the Exercise Price for the Purchased Shares in accordance with the
provisions of my agreement with the Corporation (or other documents) evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for
exercise. Alternatively, I may utilize the special broker-dealer sale and remittance procedure specified in my agreement to effect payment of the Exercise Price for any Purchased Shares in which I am
at the time vested. 

	 
	 

	 	, 200      
	
 Date	 
	

 	

 Optionee
	

 	

Address:
	 	

	

 	

	

Print name in exact manner it

is to appear on the stock

certificate:	

 
	 	

	

Address to which certificate

is to be sent, if different from

address above:	

 
	 	

	

 	

	

Social Security Number:	

 
	 	

	

Employee Number:	

 
	 	

  

 
 

APPENDIX    
  

    The following definitions shall be in effect under the Agreement: 

    A.  Agreement shall mean this Stock Option Agreement. 

    B.  Board shall mean the Corporation's Board of Directors. 

    C.  Cause shall mean as such term is expressly defined in the Employment Agreement. 

    D.  Change in Control shall mean a change in ownership or control of the Corporation effected through either of the
following transactions: 

    (a) the
acquisition directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does
not recommend such stockholders to accept; 

    (b) or
a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period
or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the
time such election or nomination was approved by the Board. 

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

    F.  Common Stock shall mean the Corporation's common stock, with par value of $0.01 per share. 

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

    (a) 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, or 

    (b) the
sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation. 

    H.  Corporation shall mean Westaff, Inc., a Delaware corporation. 

    I.  Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to
the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 

    J.  Employment Agreement shall mean the Employment Agreement, effective as of May 1, 2001, among Optionee, the
Corporation and Westaff Support, Inc., or any successor employment agreement entered into between Optionee, the Corporation and/or any Parent or Subsidiary employing or retaining Optionee from
time to time. 

    K.  Exercise Date shall mean the date on which the option shall have been exercised in accordance with
Paragraph 9 of the Agreement. 

A–1

 

    L.  Exercise Price shall mean the exercise price per share as specified in the Grant Notice. 

    M. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice. 

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

    (a) If
the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on
the date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 

    (b) If
the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date
in question on the Stock Exchange determined by the Plan Administrator to be the primary- market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such
quotation exists. 

    O.  Grant Date shall mean the date of grant of the option as specified in the Grant Notice. 

    P.  Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee
has been informed of the basic terms of the option evidenced hereby. 

    Q.  Hostile Take-Over shall mean a change in ownership of the Corporation effected through the following
transaction: 

    (a) the
direct or indirect acquisition by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does
not recommend such stockholders to accept, and 

    (b) the
acceptance of more than fifty percent (50%) of the securities so acquired in such tender or exchange offer from holders other than the officers and directors of
the Corporation subject to the short-swing profit restrictions of Section 16 of the 1934 Act. 

    R.  Incentive Option shall mean an option which satisfies the requirements of Code Section 422. 

    S.  Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code
Section 422. 

    T.  Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I. 

    U.  Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant
Notice. 

    V.  Optionee shall mean the person to whom the option is granted as specified in the Grant Notice. 

    W.  Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than 

A–2

 

the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in
such chain. 

    X.  Permanent Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more. 

    Y.  Plan shall mean the Corporation's 1996 Stock Option/Stock Issuance Plan, as amended and restated from time to time. 

    Z.  Plan Administrator shall mean either the Board or a committee of Board members, to the extent the committee is at
the time responsible for the administration of the Plan. 

    AA. Service shall mean Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the
capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor. 

    BB. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange. 

    CC. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other corporations in such chain. 

A–3

QuickLinks

Exhibit 10.3.6.1

WESTAFF, INC. NOTICE OF GRANT OF STOCK OPTION

EXHIBIT A STOCK OPTION AGREEMENT

WESTAFF, INC. STOCK OPTION AGREEMENT

EXHIBIT I NOTICE OF EXERCISE

APPENDIX

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