Exhibit 10.9


 


EXECUTION VERSION


 





EMPLOYMENT
AGREEMENT


 


THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is made effective as of December 3, 2012, by and between B G Staff Services Inc., a Texas
corporation (“Employer”), and Thomas Leonard, an individual resident of the State of Massachusetts (“Employee”).


 


RECITALS


 


WHEREAS, BG Staffing,
LLC, a Delaware limited liability company (“BG Staffing”), American Partners, Inc., a Rhode Island corporation
(“American Partners”), and, in each case of (i) and (ii) below, solely for the purposes stated therein, (i)
Employee, Justin Franks, an individual resident of the State of Rhode Island, and Ronald Wnek, an individual resident of the State
of Florida, and (ii) LTN Acquisition, LLC, a Delaware limited liability company, propose to enter into that certain Asset Purchase
Agreement, dated as of the same date of this Agreement (the “Asset Purchase Agreement”), pursuant to which,
among other things, (i) American Partners shall sell, transfer, assign and deliver to BG Staffing and BG Staffing shall purchase
and take from American Partners, the Assets (as defined in the Asset Purchase Agreement), and (ii) BG Staffing shall assume the
Assumed Liabilities (as defined in the Asset Purchase Agreement), in each case upon the terms and subject to the conditions set
forth therein;


 


WHEREAS, contemporaneously
with the execution and delivery of the Asset Purchase Agreement, and prior to the closing of the Asset Purchase Agreement, Employee
is to execute and deliver this Agreement to Employer and Employer is to execute and deliver this Agreement to Employee;


 


WHEREAS, Employee desires
to be employed by Employer as of the Start Date (as defined below); and


 


WHEREAS, Employer desires
to employ Employee as of the Start Date and to utilize his services as indicated herein, and Employee has agreed to provide such
services to Employer.


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows:


 


PROVISIONS


 


1.          Term
and Duties. Employer hereby agrees to employ Employee as the President of the American Partners Division of BG Staffing, commencing
on the date of this Agreement (“Start Date”) and continuing for a period of two years (the “Initial
Term”), or until earlier terminated in accordance with Section 4. Subject to Section 4, unless terminated
by either Employee or Employer by written notice delivered at least 90 days prior to the expiration of the Initial Term, Employee’s
employment shall continue for successive one year terms (each one year term hereinafter referred to as a “Subsequent Term”
and, together with the Initial Term, the “Term”) until terminated by written notice delivered at least 90 days
prior to the expiration of the Subsequent Term. Subject to the provisions of this Agreement, during the Term, and excluding any
periods of paid time off to which Employee is entitled, Employee shall devote his commercially reasonable efforts to the performance
of Employee’s duties on behalf of the American Partners Division of BG Staffing and to the promotion of its interests, subject
to the general direction and control of the President and CEO of BG Staffing. Employee shall devote substantially all of his business
time, energies, attention and abilities to the operation of the business of the American Partners Division of BG Staffing and shall
not, unless the prior approval of the President and CEO of BG Staffing shall have been obtained, be involved as an executive or
an employee of any other trade or business.


 




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2.          Compensation.


 


(a)          Base
Compensation. In consideration of the services to be rendered by Employee during the Term, Employer shall pay to Employee as
base salary $215,000 per year (“Base Compensation”), payable in accordance with Employer’s normal payroll
practices and prorated for any partial employment period. From time to time throughout each fiscal year during the Term, the Base
Compensation may be reviewed for a potential increase.


 


(b)          Bonus.
Subject to the limitations set forth in this Agreement, commencing at the beginning of Employer’s 2013 fiscal year, Employee
shall be eligible to receive an annual incentive bonus (the “Incentive Bonus”) based upon the achievement of
performance goals reasonably determined by the President and CEO of BG Staffing with input from Employee prior to the commencement
of each fiscal year. The terms and conditions of the Incentive Bonus will be set forth in a bonus agreement entered into between
Employer and Employee, substantially in the form attached hereto as Exhibit A.


 


3.          Benefits.


 


(a)          Employee
shall be eligible to participate in such pension and welfare benefit programs that may be offered by Employer, such as 401(k),
health, prescription drug, dental, life insurance, vision, disability, accidental death, and paid time off policies, to similarly-situated
employees from time to time and in each case on no less favorable terms of benefits than are generally available to the employees
of Employer (based on seniority and salary level), subject in each case to the generally applicable terms and conditions of any
such plan, benefit or program in question.


 


(b)          Employer
shall reimburse Employee for all reasonable expenses incurred by him in the course of performing his duties under this Agreement
which are consistent with Employer’s policies in effect from time to time with respect to travel, entertainment and other
business expenses, subject to Employer’s reasonable requirements with respect to reporting, documentation and approval of
such expenses.


 


4.          Termination.
Subject to Section 1, Employee’s employment shall terminate upon the first to occur of the following (each, along
with any termination occurring pursuant to Section 1, a “Termination Date”):


 


(a)          Employee’s
death or Disability (as hereinafter defined), so that Employee cannot substantially perform his duties hereunder for a period of
90 consecutive calendar days or for 135 calendar days during any consecutive 365 calendar day period during the Term;


 




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(b)          Employee’s
termination of his employment for Good Reason (as hereinafter defined), upon not less than 45 business days’ prior written
notice to Employer;


 


(c)          Employee’s
voluntary termination of his employment without Good Reason, upon not less than 45 business days’ prior written notice to
Employer;


 


(d)          Employer’s
termination of Employee’s employment with Cause (as hereinafter defined); or


 


(e)          Employer’s
termination of Employee’s employment Without Cause (as hereinafter defined).


 


5.          Definitions
for Certain Termination Events.


 


For purposes of this
Agreement the following terms shall have the respective meanings set forth below:


 


(a)          Cause.
“Cause” shall mean Employee’s:


 


(i)          conviction
for a felony involving a material act of dishonesty which constitutes common law fraud or embezzlement (other than occasional,
customary and de minimis use of the property of Employer or its affiliates for personal purposes) or a felony causing material
harm to the business or reputation of Employer or its affiliates;


 


(ii)         gross
negligence on the part of Employee in the performance of his duties hereunder;


 


(iii)        breach
of Employee’s fiduciary duties to Employer;


 


(iv)        ongoing
refusal or failure of Employee to perform his duties or Employee’s deliberate and consistent refusal to conform to or follow
any reasonable, lawful policy adopted by Employer, in each case after receiving written notice describing his noncompliance; or


 


(v)         material
breach by Employee of this Agreement, and


 


in the case of clauses
(iv) and (v), which is not cured (to the extent curable) within 20 business days following written notice from Employer.


 


(b)          Disability.
“Disability” shall mean Employee’s inability, during the Term, to perform his duties, obligations and
the essential functions of his position, with or without reasonable accommodations, for the time periods specified in Section 4(a)
due to mental, emotional or physical incapacity as determined by a physician selected by Employer or its insurers and acceptable
to Employee or Employee’s legal representative (such determination by Employee or his legal representative as to acceptability
not to be withheld unreasonably).


 




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(c)          Good
Reason. “Good Reason” shall mean:


 


(i)          a
material change in Employee’s responsibilities or obligations under this Agreement without Employee’s prior written
consent;


 


(ii)         any
reduction in Employee’s Base Compensation, as in effect on the Start Date or as the same may be increased from time to time,
unless such reduction is agreed to by Employee in writing;


 


(iii)        a
relocation of Employee’s principal place of employment to a location outside of a fifty (50) mile radius of Pawtucket, Rhode
Island; or


 


(iv)        Without
limiting the generality of the foregoing, any material breach by Employer of (A) this Agreement or (B) any other material agreement
between Employee and Employer.


 


(d)          Special
Severance Compensation. “Special Severance Compensation” shall mean an amount equal to four (4) times
Employee’s weekly base salary on the Termination Date.


 


(e)          Without
Cause. “Without Cause” shall mean a termination by Employer of Employee’s employment during the Term
for any reason other than a termination based upon Cause, death or Disability.


 


6.          Obligations
of Employer Upon Termination.


 


(a)          Death
or Disability. If Employee’s employment is terminated due to his death or Disability, Employer shall pay to Employee,
his estate or legal representative, as the case may be, all accrued but unpaid amounts payable to Employee hereunder as of the
Termination Date.


 


(b)          Without
Cause; Good Reason. If Employee’s employment is terminated by Employer Without Cause or if Employee resigns for Good
Reason, Employer shall be obligated, in lieu of any other remedies available to Employee, to (i) pay Employee the Special Severance
Compensation in accordance with this Section 6(b) (the “Termination Payment”); and (ii) pay Employee
all accrued but unpaid amounts payable to Employee as of the Termination Date under this Agreement; provided, however,
that Employer’s obligation to pay the Termination Payment shall be conditioned upon Employee’s execution, delivery
and non-revocation of a valid and enforceable release of claims in a form reasonably acceptable to Employer as attached hereto
(the “Release”) within 60 days of his termination. For the avoidance of doubt, Employer shall not be obligated
to pay the Termination Payment unless and until Employee’s execution, delivery and non-revocation of the Release. Subject
to this Section 6(b) and Section 6(e)(iii), the Termination Payment shall be paid in installments on Employer’s
regular payroll dates occurring during the four-week period immediately following the effectiveness of the Release; provided, however
that if such four-week period begins in one calendar year and ends in a second calendar year, the Termination Payment will begin
to be paid in the second calendar year. Solely for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), each installment payment is considered a separate payment.


 




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(c)          Resignation
Without Good Reason. If Employee’s employment is terminated by Employee through his resignation without Good Reason,
Employer shall pay to Employee all accrued but unpaid amounts payable to Employee hereunder as of the Termination Date.


 


(d)          Cause.
If Employee’s employment is terminated by Employer for Cause, Employer shall pay to Employee all accrued but unpaid amounts
payable to Employee hereunder as of the Termination Date.


 


(e)          Miscellaneous
Termination Provisions.


 


(i)          Any
termination of the Term shall not adversely affect or alter Employee’s rights under any employee benefit plan of Employer
in which Employee, at the Termination Date, has a vested interest, unless otherwise provided in such employee benefit plan or any
agreement or other instrument in connection therewith.


 


(ii)         The
phrase “accrued but unpaid amounts” for purposes of this Section 6 shall only include amounts earned by Employee
for services performed under this Agreement as of the Termination Date but not paid by Employer as of the Termination Date, including
but not limited to any awarded but unpaid Incentive Bonus, subject to and in accordance with the terms and conditions of any bonus
agreement entered into between Employee and Employer.


 


(iii)        This
Agreement is intended to comply with Section 409A of the Code, if and to the extent applicable, and will be interpreted and applied
in a manner consistent with that intention. Toward that end, notwithstanding anything to the contrary contained herein, payments
and benefits payable by reason of the termination of Employee’s employment shall be delayed for six months following such
termination of employment if and to the limited extent necessary in order to satisfy the requirements of Section 409A(a)(2)(B)
of the Code. For the avoidance of doubt, payments and benefits will not be delayed if and to the extent such payments and benefits
do not constitute deferred compensation under Section 409A of the Code, including, without limitation, by reason of the exceptions
described in Section 1.409A-1(b)(9). Any payments that are delayed pursuant to this Section 6(e)(iii) will be made in a
single lump sum at the expiration of the required delay period (but not later than six months after termination of employment).


 




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7.          Noncompetition;
Nonsolicitation. In consideration of the purchase of the Assets (as defined in the Asset Purchase Agreement), the goodwill
associated therewith, and the Business (as defined in the Asset Purchase Agreement), and the mutual covenants and agreements contained
herein, the receipt and sufficiency of which is hereby acknowledged by Employer and Employee:


 


(a)          Employee
covenants to Employer that, for a period beginning on the Start Date and continuing until the later to occur of: (i) five years
following the Start Date, or (ii) two years following the Termination Date (such period, the “Non-Competition Period”),
without the prior written consent of Employer (which consent may be withheld in the sole and absolute discretion of Employer),
none of Employee or any Affiliate (as defined below) of Employee (each, a “Covenanting Person”) will, directly
or indirectly (in any capacity, including as a shareholder, partner, member, investor, lender, principal, director, officer, employee,
consultant or agent of any other Person (as defined below)): (x) engage in, or have any financial interest in any other Person
that engages in, the business of marketing or providing temporary staffing and employment services (a “Competing Business”)
within the United States of America; (y) solicit or influence, or attempt to solicit or influence, any Person who is a customer
of the BG Affiliated Group (as defined below), or any Person who could reasonably be expected to become a customer of the BG Affiliated
Group (based upon the nature of such Person’s business and operations), to purchase any Competing Business services from
any Person other than the BG Affiliated Group; or (z) solicit, entice, induce or hire any Person who is an employee or independent
contractor of the BG Affiliated Group, or who to the knowledge of Employee becomes an employee or independent contractor of the
BG Affiliated Group, to become employed or independently contracted by any other Person or to leave his or her employment with
the BG Affiliated Group or cease independently contracting for the BG Affiliated Group, or approach any such employee or independent
contractor for such purpose or authorize or knowingly approve the taking of such actions by any other Person; provided,
however, that the foregoing restriction shall not prohibit the solicitation or hiring of any such employee or independent
contractor through an advertisement or a general solicitation (including by an independent employment agency) that is not specifically
targeted at the employees and independent contractors of the BG Affiliated Group. It will not be a violation of the restrictive
covenants set forth in this Section 7(a) for a Covenanting Person to invest in publicly-traded equity securities constituting
less than one percent of the outstanding securities of such class. The restrictive covenants set forth in this Section 7(a)
shall terminate in the event of a Default (as defined in Section 6.1(a) of the Asset Purchase Agreement) that is not cured pursuant
to and in accordance with the same terms and conditions set forth in such section of the Asset Purchase Agreement.


 


(b)          Employee
acknowledges and agrees that the BG Affiliated Group would be irreparably harmed by any breach of the restrictive covenants set
forth in Section 7(a) and that, in addition to all other rights and remedies available to Employer at law or in equity,
Employer will be entitled to injunctive and other equitable relief to prevent or enjoin any such breach and without the necessity
of posting bond. If any Covenanting Person breaches Section 7(a), the period of time during which the provisions thereof
are applicable will automatically be extended for a period of time equal to the time that such breach began until such violation
permanently ceases.


 




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(c)          Employee
represents to Employer that he is willing and able to engage in businesses that are not restricted pursuant to this Section
7 and that enforcement of the restrictive covenant set forth in this Section 7 will not be unduly burdensome to him.
Employee acknowledges that his agreement to the restrictive covenant set forth in this Section 7 is a material inducement
and condition to Employer and the BG Affiliated Group’s willingness to enter into this Agreement, the Asset Purchase Agreement
and the other Buyer Documents (as defined in the Asset Purchase Agreement), to consummate the transactions contemplated hereby
and thereby and to perform Employer’s and the BG Affiliated Group’s obligations hereunder and thereunder. Employee
acknowledges and agrees that the restrictive covenant and remedy set forth in this Section 7 are reasonable as to time,
geographic area and scope of activity and do not impose a greater restraint than is necessary to protect the goodwill and legitimate
business interests of the BG Affiliated Group.


 


(d)          Notwithstanding
the foregoing, if the restrictive covenant set forth in this Section 7 is found by a court of competent jurisdiction to
contain limitations as to time, geographic area or scope of activity that are not reasonable or not necessary to protect the goodwill
or legitimate business interests of the BG Affiliated Group, then such court is hereby authorized and directed to reform such provisions
to the minimum extent necessary to cause the limitations contained in this Section 7 as to time, geographical area and scope
of activity to be reasonable and to impose a restraint that is not greater than necessary to protect the goodwill and legitimate
business interests of the BG Affiliated Group.


 


(e)          For
purposes of this Section 7, (i) the term “Affiliate” means, with respect to a specified Person, any other
Person or member of a group of Persons acting together that, directly or indirectly, through one or more intermediaries, controls,
or is controlled by or is under common control with, the specified Person, (ii) the term “BG Affiliated Group”
means Employer and its Affiliates from time to time, including, without limitation, BG Staffing, BG Personnel Services, LP, BG
Personnel, LP, LTN Staffing, LLC, and LTN Acquisition, LLC, and, after the closing of the Asset Purchase Agreement, American Partners,
and (iii) the term “Person” means any individual, corporation, partnership, governmental body or other entity.


 


8.          No
Conflict With Prior Agreements. Employee represents and warrants that his performance of all the terms of this Agreement does
not and shall not breach any fiduciary or other duty or any covenant, agreement or understanding (including, without limitation,
any agreement relating to any proprietary information, knowledge or data acquired in confidence, trust or otherwise) to which he
is a party or by the terms of which he may be bound. Employee further covenants and agrees not to enter into any agreement or understanding,
either written or oral, in conflict with the provisions of this Agreement.


 




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9.          Arbitration.
Subject to Section 7 and Section 14, in the event any dispute or controversy arises under this Agreement and is not
resolved by mutual written agreement between Employee and Employer within 30 days after notice of the dispute is first given, then,
upon the written request of Employee or Employer, such dispute or controversy shall be submitted to arbitration to be conducted
in accordance with the rules of the American Arbitration Association (“AAA”). Judgment may be entered thereon
and the results of the arbitration will be binding and conclusive on the parties hereto. Any arbitrator’s award or finding
or any judgment or verdict thereon will be final and unappealable. All parties agree that venue for arbitration will be in Dallas,
TX, and that any arbitration commenced in any other venue will be transferred to Dallas, TX, upon the written request of either
party to this Agreement. Unless otherwise agreed to by the parties hereto, all arbitrations will have three individuals acting
as arbitrators: one arbitrator will be selected by Employee, one arbitrator will be selected by Employer and the two arbitrators
so selected will select a third arbitrator. Any arbitrator selected will not be affiliated, associated or related to the party
selecting such arbitrator in any matter whatsoever. The decision of the majority of the arbitrators will be binding on all parties.
Employer and Employee shall each be responsible for paying its respective attorneys’ fees, costs and other expenses (including
AAA fees and expenses invoiced by the AAA) pertaining to any such arbitration and any related enforcement action regardless of
whether an arbitrator’s award or finding or any judgment or verdict thereon is entered for or against Employee.


 


10.         Miscellaneous.


 


(a)          Notices.
All notices and other communications under this Agreement must be in writing and will be deemed given (i) when delivered personally,
(ii) on the fifth business day after being mailed by certified mail, return receipt requested, (iii) the next business
day after delivery to a recognized overnight courier, or (iv) upon transmission and confirmation of receipt by an email or
facsimile operator if sent by email or facsimile, to the parties at the following email addresses or facsimile numbers (or to such
other address or facsimile number as such party may have specified by notice given to the other party pursuant to this provision):


 


if to Employee:


 


Thomas Leonard


36 Hiller Drive


Seekonk,
MA 02771


Email: tleonard@americanpartnersinc.com


 


if to Employer:


 


L. Allen Baker, Jr.


President and CEO


B G Staff Services Inc.


14900 Landmark Blvd., Suite 300


Dallas,
Texas 75254


Email: abaker@bgstaffing.com


 




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with copy (which shall not constitute
notice) to:


 


William P.
Bowers


Fulbright &
Jaworski L.L.P.


2200 Ross Avenue,
Suite 2800


Dallas,
Texas 75201


Facsimile:
(214) 855-8200


Email: bbowers@fulbright.com


 


11.         Entire
Agreement. Except for the Asset Purchase Agreement and the exhibits and schedules thereto, this Agreement cancels and supersedes
any and all prior agreements and understandings between the parties hereto with respect to the obligations of Employee and Employer,
whether oral or written. Further, the parties agree that, upon entering into this Agreement, any prior employment agreement or
arrangement by and between Employee and American Partners shall be terminated and of no further force nor effect. This Agreement,
together with the Asset Purchase Agreement and the exhibits and schedules thereto, constitutes the entire agreement between the
parties with respect to the matters herein provided, and no modifications or waiver of any provision hereof shall be effective
unless in writing and signed by Employer and Employee.


 


12.         Binding
Effect. All of the terms and provisions of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable
by, Employer and Employee and its, their or his heirs, executors, administrators, legal representatives, successors and assigns,
except that the duties and responsibilities of Employee hereunder are of a personal nature and shall not be assignable or delegable
by Employee in whole or in part without Employer’s prior written consent.


 


13.         Severability.
In the event that any other provision of this Agreement or application thereof to anyone or under any circumstance is found to
be invalid or unenforceable in any jurisdiction to any extent for any reason, such invalidity or unenforceability shall not affect
any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or
application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.


 


14.         Remedies;
Waiver.


 


(a)          No
remedy conferred upon Employer or Employee by this Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law
or in equity.


 




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(b)          Notwithstanding
Section 9, Employer and Employee acknowledge and agree that a breach of any of the provisions in Section 7 will result
in irreparable harm to Employer, for which there would be no adequate remedy at law, and therefore, Employer and Employee irrevocably
and unconditionally (i) agree that in addition to any other remedies which Employer may have under this Agreement or otherwise,
all of which remedies shall be cumulative, Employer shall be entitled to apply to a court of competent jurisdiction for preliminary
and permanent injunctive relief and other equitable relief, without the necessity of proving actual damage, restraining Employee
from doing or continuing to do or perform any acts constituting such breach or threatened breach, (ii) agree that such relief and
any other claim by Employer pursuant hereto may be brought solely and exclusively in the United States District Court for the Northern
District of Texas, or if such court does not have subject matter jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in the State of Texas, (iii) consent to the exclusive jurisdiction of any such court in any such suit, action
or proceeding, and (iv) waive any objection which Employer or Employee, as applicable, may have to the laying of venue of any such
suit, action or proceeding in any such court.


 


(c)          No
delay or omission by Employer or Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall
be construed as a waiver thereof, and any such right, remedy or power may be exercised by the party possessing the same from time
to time and as often as may be deemed expedient or necessary by such party in its sole discretion.


 


15.         Counterparts.
This Agreement may be executed in several counterparts, each of which is an original and all of which shall constitute one instrument.
It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other
counterparts.


 


16.         Governing
Law. The validity, interpretation, construction, performance and enforcement of this Agreement shall be governed by the laws
of the State of Texas, without application of conflict of laws principles.


 


17.         Headings.
The captions and headings contained in this Agreement are for convenience only and shall not be construed as a part of this Agreement.


 


18.         Condition.
This Agreement shall be binding on the parties as of the date hereof.


 


[Signature
Page Follows.]


 




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


 


	 	EMPLOYER:
	 	 
	 	B G Staff Services Inc.
	 	 	 
	 	By:	/s/ L. Allen Baker, Jr.
	 	Name: L. Allen Baker, Jr.
	 	Title: President and CEO
	 	 
	 	EMPLOYEE:
	 	 
	 	/s/ Thomas Leonard
	 	Thomas Leonard


 


[Signature Page to Employment Agreement
for Thomas Leonard] 


 




    	 



    	 



    

 


Exhibit A


 


Form of Bonus Agreement


 


This 2013 Bonus Agreement
(the “Agreement”) is entered into as of [____________], 2012 by and between B G Staff Services Inc. (“BG”)
and Thomas Leonard, an individual resident of the State of Massachusetts (“Employee”).


 


WHEREAS, BG desires
to provide incentives to certain members of its leadership team in order to ensure outstanding service in the performance of their
respective duties;


 


WHEREAS, BG has developed
this Bonus methodology to provide such an incentive to certain leadership team members;


 


WHEREAS, Employee is
a member of the leadership team, serving as the President of the American Partners Division of BG Staffing, LLC; and


 


WHEREAS, BG desires
Employee to be eligible to receive this Bonus in accordance with the terms and conditions of this Agreement.


 


NOW, THEREFORE, for
good and valuable consideration, the receipt of which is hereby acknowledged, BG and Employee hereby agree as follows:


 


1.          Definitions.


 


The following words as used herein
shall have the meaning set out opposite each such word:


 


(a)          Bonus:
The bonus, is the product of Employee’s annual base salary for the Plan Year times the PMF.


 


(b)          Profit
Modification Factor (“PMF”): This factor is determined by dividing the Actual Contribution to Overhead by the Budgeted
Contribution to Overhead and using the matrix below.


 


Actual Contribution as a Percentage of
Budgeted Contribution


 


	At Least	 	 	But Less Than	 	 	PMF	 
	 	 	 	 	 	 	 	 
	 	0	%	 	 	90	%	 	 	0	%
	 	 	 	 	 	 	 	 	 	 	 
	 	90	%	 	 	95	%	 	 	10	%
	 	 	 	 	 	 	 	 	 	 	 
	 	95	%	 	 	100	%	 	 	15	%
	 	 	 	 	 	 	 	 	 	 	 
	 	100	%	 	 	110	%	 	 	20	%
	 	 	 	 	 	 	 	 	 	 	 
	 	110	%	 	 	and up	 	 	 	30	%



 




    	 



    	 



    

 


Note: If the Actual Contribution
to Overhead is less than 90% of the Budgeted


 


Contribution to Overhead, the Profit
Modification Factor is zero and the Bonus will be zero.


 


(c)          Budgeted
Contribution to Overhead: The amount of Budgeted Contribution to Overhead for the Plan Year is $3,650,000.


 


(d)          Actual
Contribution to Overhead: (i) The revenue earned by the Operations for the Plan Year, minus (ii) the cost of services
to the Operations for the Plan year, which shall consist of billable staffing contractor payments, the temporary payroll, temporary
payroll taxes, temporary benefits paid by BG or its affiliates with respect to the Operations, and worker’s compensation
insurance cost associated with the temporary payroll, minus (iii) expenses relating to the Operations, which shall not include
any allocation of corporate overhead from BG or its affiliates to the Operations, in each case, calculated by Employer in accordance
with Employer’s accounting methods, policies, practices and procedures.


 


(e)          Operations:
American Partners Division of BG Staffing, LLC.


 


(f)          Plan
Year: The 52-week period beginning December 31, 2012 and ending on December 29, 2013.


 


2.          Administration.
This Agreement and the payment of the Bonus, if any, shall be administered by BG. BG shall have the power to interpret the Agreement
and make all other determinations necessary or desirable to administer the Agreement.


 


3.          Determination
of Bonus


 


(a)          As
soon as practicable after the completion of the audit of BG’s financial statements for the Plan Year, BG shall determine
the Bonus, if any, based on the Actual Contribution to Overhead for the Plan Year.


 


(b)          Except
as BG may determine, in its discretion, in the event that, for any reason, Employee is not providing services for BG on a full-time
basis in the capacity of President of the American Partners Division of BG Staffing, LLC on the last day of the Plan Year, Employee
shall, for no consideration, forfeit any right to receive the Bonus. If on the other hand, Employee is so providing services for
BG on a full-time basis in the capacity of President of the American Partners Division of BG Staffing, LLC on the last day of the
Plan Year, Employee shall have the right to receive the Bonus, subject to and upon the terms and conditions set forth in this Agreement.


 


4.          Bonus
Payment


 


(a)          The
Bonus, if any, will be paid in one lump sum during fiscal 2014, within ten days after the amount of the Bonus is determined pursuant
to Section 3(a), but in no event later than May 15 of the year following the end of the Plan Year.


 




    	 



    	 



    

 


(b)          There
shall be deducted from the Bonus any taxes required to be withheld by the federal or any state or local government and paid over
to such government for the accounts of Employee.


 


5.          Amendment
and Termination. BG, by action of its President or his designee, may suspend or terminate this Agreement, in whole or in part,
at any time or may, from time to time, amend the Agreement in such respects as BG may deem advisable.


 


6.          General


 


(a)          The
decision of BG on any questions concerning or involving the interpretation or administration of the Agreement shall be final and
conclusive.


 


(b)          No
officer or director of BG shall be liable for any act done or determination made in good faith on behalf of BG with respect to
the administration of this Agreement.


 


(c)          This
Agreement shall not be construed as giving Employee the right to remain in the position of President of the American Partners Division
of BG Staffing, LLC, nor shall it interfere with the right of BG to discharge or otherwise deal with Employee without regard to
the existence of the Agreement. Further, this Agreement shall not be construed as giving Employee the right to remain employed
by BG in any capacity.


 


(d)          No
moneys or other property of BG, and no liability of BG hereunder, whether pending, accrued, determined or determinable in amount,
shall be subject to any claim of any creditor of Employee, nor shall Employee have the power to pledge, encumber or assign the
Bonus provided hereunder until actually paid.


 


(e)          The
funds used to pay the Bonus hereunder shall be deemed to come from the general assets of BG, and this Agreement shall not be construed
as establishing a separate fund, account or trust for the benefit of Employee. Any interest or rights of Employee under the Agreement
shall be those of a general unsecured creditor of BG, and with respect to the creditors of BG, Employee shall not have any preferred
claims on, or any beneficial ownership in, the assets of BG, including any assets in which BG may invest to aid in meeting its
obligations under the Agreement.


 


(f)          Any
provision of this Agreement prohibited by law shall be ineffective to the extent of such prohibition without invalidating the remaining
provisions.


 


(g)          The
Agreement shall be governed by the laws of the State of Texas.


 


[Signature Page Follows.]


 




    	 



    	 



    

 


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


  


	 	EMPLOYER:
	 	 
	 	B G Staff Services Inc.
	 	 	 
	 	By:	 
	 	Name: L. Allen Baker, Jr
	 	Title:  President and CEO
	 	 
	 	EMPLOYEE:
	 	 
	 	 
	 	Thomas Leonard


  




    	 



    	 



    

 


FORM OF SEPARATION
AGREEMENT AND RELEASE


 


This Separation Agreement
and Release (this “Agreement”) is entered into as of [_________] by and among Thomas Leonard, an individual
resident of the State of Massachusetts (the “Executive”), and B G Staff Services Inc., a Texas corporation (“Employer”).
The parties hereto acknowledge that the terms and conditions of this Agreement have been voluntarily agreed to and are intended
to be final and binding.


 


RECITALS


 


WHEREAS, the Executive
and Employer have previously entered into an Employment Agreement, dated as of December 3, 2012 (the “Employment Agreement”);


 


WHEREAS, the Executive
separated from employment in all capacities with Employer on [_________] (the “Separation Date”); and


 


WHEREAS, as a condition
precedent and a material inducement for Employer to provide to the Executive the Separation Payments (as defined below), the Executive
has agreed to execute this Agreement and be bound by the provisions herein.


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained herein, and for the monetary and other consideration
set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


 


1.          Separation
from Employment. The Executive and Employer agree that on the Separation Date, the Executive resigned from any position or
office with or in Employer and its subsidiaries or affiliates, which resignations have been accepted as of the Separation Date
by Employer or its respective subsidiaries or affiliates. The Executive and Employer understand and agree that from and after the
Separation Date the Executive was no longer authorized to incur any expenses, obligations or liabilities on behalf of Employer
or any of its subsidiaries or affiliates. In consideration of acceptance of the terms contained in this Agreement, Employer shall
pay the Executive [_________], in the aggregate, during the period commencing on the date hereof through [_______________] in equal
installments in accordance with Employer’s normal payroll procedures (the “Separation Payments”); provided,
however, that Employer’s obligation to provide, and the Executive’s right to retain, the Separation Payments
shall be conditioned upon (x) the Executive’s continued compliance with his obligations under the noncompetition and nonsolicitation
provisions of the Employment Agreement and that certain Asset Purchase Agreement, dated as of December 3, 2012 (the “Asset
Purchase Agreement”), by and among BG Staffing, LLC, a Delaware limited liability company, American Partners, Inc., a
Rhode Island corporation, and, in each case of (i) and (ii) below, solely for the purposes stated therein, (i) Executive, Justin
Franks, an individual resident of the State of Rhode Island, and Ronald Wnek, an individual resident of the State of Florida, and
(ii) LTN Acquisition, LLC, a Delaware limited liability company, and (y) the Executive’s continued compliance with his obligations
under this Agreement.


 




    	 



    	 



    

  


2.          Release
of Claims by the Executive.


 


(a)          In
consideration of Employer entering into this Agreement, the sufficiency of which the Executive acknowledges, the Executive, with
the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and
forever discharge Employer and all its subsidiaries and affiliates (the “Company Affiliated Group”), its present
and former officers, directors, executives, shareholders, agents, attorneys, employees and employee benefit plans (and the fiduciaries
thereof) and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”)
of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money,
accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity
or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected,
which the Executive, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or
held, arising on or prior to the date hereof, against any Company Released Party which arise out of or relate to the Executive’s
employment with, or his separation or termination from, Employer, including, without limitation, any and all claims (i) in respect
of the Employment Agreement, (ii) arising out of or in any way connected with the Executive’s service to any member of the
Company Affiliated Group (or the predecessors thereof) in any capacity, or the termination of such service in any such capacity,
(iii) for severance or vacation benefits, unpaid wages, salary or incentive payments, (iv) for breach of contract, wrongful discharge,
impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, in each case which arise
out of or relate to the Executive’s employment with, or his separation or termination from, Employer, (v) for any violation
of applicable state and local labor and employment laws (including, without limitation, all laws concerning unlawful and unfair
labor and employment practices), and (vi) for employment discrimination under any applicable federal, state or local statute,
provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964, as
amended (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities
Act, as amended (the “ADA”), the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
the Age Discrimination in Employment Act, as amended (the “ADEA”) and any similar or analogous state statute,
excepting only:


 


(i)          rights
of the Executive under this Agreement;


 


(ii)         the
right of the Executive to receive COBRA continuation coverage in accordance with applicable law;


 


(iii)        claims
for vested or accrued and unpaid benefits under any health, disability, retirement or other similar employee benefit plan (within
the meaning of Section 3(3) of ERISA) of the Company Affiliated Group; and


 


(iv)        rights
to indemnification the Executive has under the by-laws or certificate of incorporation of any member of the Company Affiliated
Group or otherwise through or from the Employer, including under any policy of insurance providing indemnification or coverage.


 




    	 



    	 



    

 


(b)          The
Executive acknowledges and agrees that the release of claims set forth in this Section 2 is not to be construed in any way
as an admission of any liability whatsoever by any Company Released Party, any such liability being expressly denied.


 


(c)          The
release of claims set forth in this Section 2 applies to any relief no matter how called, including, without limitation,
wages, back pay, front pay, compensatory damages, liquidated damages, punitive damages, damages for pain or suffering, costs and
attorneys’ fees and expenses.


 


(d)          The
Executive specifically acknowledges that his acceptance of the terms of the release of claims set forth in this Section 2
is, among other things, a specific waiver of his rights, claims and causes of action under Title VII, the ADEA, the ADA and any
state or local law or regulation in respect of discrimination of any kind; provided, however, that nothing
herein shall be deemed, nor does anything contained herein purport, to be a waiver of any right or claim or cause of action which
by law the Executive is not permitted to waive.


 


(e)          As
to rights, claims and causes of action arising under the ADEA, the Executive acknowledges that he has been given but not utilized
a period of twenty-one days to consider whether to execute this Agreement. If the Executive accepts the terms hereof and executes
this Agreement, he may thereafter, for a period of seven days following (and not including) the date of execution, revoke this
Agreement as it relates to the release of claims arising under the ADEA. If no such revocation occurs, this Agreement shall become
irrevocable in its entirety, and binding and enforceable against the Executive, on the day next following the day on which the
foregoing seven-day period has elapsed. If such a revocation occurs, this Agreement shall be of no force or effect.


 


(f)          The
Executive acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date
hereof, filed any complaints, charges or lawsuits against any Company Released Party with any governmental agency, court or tribunal.


 


(g)          The
Executive acknowledges that he has been advised to seek, and has had the opportunity to seek, the advice and assistance of an attorney
with regard to the release of claims set forth in this Section 2 and has been given a sufficient period within which to
consider the release of claims set forth in this Section 2.


 


(h)          The
Executive acknowledges that the release of claims set forth in this Section 2 relates only to claims which exist as of the
date of this Agreement.


 


(i)          The
Executive acknowledges that the Separation Payments he is receiving in connection with the release of claims set forth in this
Section 2 are in addition to anything of value to which the Executive is entitled from Employer and its subsidiaries and
affiliates.


 


3.          Non-Disparagement.
From and after the Separation Date, the Executive shall not make or publish any disparaging statements (whether written or oral)
regarding any member of the Company Affiliated Group or the affiliates, directors, officers or executives of any of them.


 




    	 



    	 



    

  


4.          Return
of Company Property. The Executive shall return to Employer any and all documents, files, credit cards and other property of
any kind belonging to the Company Affiliated Group not later than the date hereof.


 


5.          Notices.
All notices and other communications under this Agreement must be in writing and will be deemed given (a) when delivered personally,
(b) on the fifth business day after being mailed by certified mail, return receipt requested, (c) the next business day
after delivery to a recognized overnight courier, or (d) upon transmission and confirmation of receipt by an email or facsimile
operator if sent by email or facsimile, to the parties at the following email addresses or facsimile numbers (or to such other
address or facsimile number as such party may have specified by notice given to the other party pursuant to this provision):


 


if to the Executive:


 


Thomas Leonard


36 Hiller Drive


Seekonk,
MA 02771


Email: [_____________]


 


if to Employer:


 


L. Allen Baker, Jr.


President and CEO


B G Staff Services Inc.


14900 Landmark Blvd., Suite 300


Dallas,
Texas 75254


Email: abaker@bgstaffing.com


 


with copy (which shall not constitute
notice) to:


 


William P.
Bowers


Fulbright &
Jaworski L.L.P.


2200 Ross Avenue,
Suite 2800


Dallas,
Texas 75201


Facsimile:
(214) 855-8200


Email: bbowers@fulbright.com


 


6.          Withholding.
Notwithstanding anything in this Agreement to the contrary, the Employer shall have the right to deduct from any amount payable
under this Agreement any taxes or other amounts required by applicable law to be withheld.


 


7.          Complete
Agreement. This Agreement, together with the Employment Agreement, constitutes the complete agreement of the parties hereto
with respect to the subject matter hereof and shall supersede all agreements between the parties hereto to the extent they relate
in any way to the employment, termination of employment, compensation and executive benefits of the Executive. For the avoidance
of doubt, this Agreement shall not supersede the Asset Purchase Agreement.


 




    	 



    	 



    

  


8.          Severability.
Each provision hereof and portion thereof is severable, and if one or more provisions hereof or portions thereof are declared invalid,
the remaining provisions and portions thereof shall nevertheless remain in full force and effect. If any provision of this Agreement
or portion thereof is so broad, in scope or duration or otherwise, as to be unenforceable, such provision shall be interpreted
to be only so broad as is enforceable.


 


9.          No
Waiver. The failure to enforce at any time any of the provisions of this Agreement or to require at any time performance by
another party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect the validity
of this Agreement, or any part hereof, or the right of any party hereto thereafter to enforce each and every such provision in
accordance with the terms of this Agreement.


 


10.         Counterparts.
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument. The parties hereto represent that each signatory to this Agreement on his, its or
their behalf is authorized to make the promises and commitments herein.


 


11.         Successors.
This Agreement shall be binding upon any and all successors and assigns of the Executive and Employer.


 


12.         Third-Party
Beneficiary. Each of the Company Released Parties shall be a third-party beneficiary with respect to Section 2 and shall
be entitled to enforce the provisions thereof.


 


13.         Governing
Law. Except for issues or matters as to which federal law is applicable, this Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas without giving effect to the conflicts of law principles thereof.


 


14.         Headings.
The captions and headings contained in this Agreement are for convenience only and shall not be construed as a part of the Agreement.


 


[Signature Page Follows.]


 




    	 



    	 



    

 


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


 


	 	EMPLOYER:
	 	 
	 	B G Staff Services Inc.
	 	 	 
	 	By:	 
	 	Name: 
	 	Title:  
	 	 
	 	EXECUTIVE:
	 	 
	 	 
	 	Thomas Leonard