Exhibit
10.12


 


 





 


KEY EMPLOYEE


TRANSITION COMPENSATION PLAN


AND SUMMARY PLAN DESCRIPTION


Effective June 2, 2003


(Amended September 20, 2004)


 

















 





KEY EMPLOYEE


TRANSITION COMPENSATION PLAN


AND SUMMARY PLAN DESCRIPTION


 


 


Introduction


 


Westaff (USA), Inc. and
its wholly-owned subsidiary, Westaff Support, Inc. (the “Company”), have
established the Westaff®  Key
Employee Transition Compensation Plan (the “KETC Plan”) to provide transition
compensation to select regular employees whose positions have been eliminated.
This document constitutes both the formal plan document and the summary plan
description of the KETC Plan.


 


Eligible Employees


 


“Eligible Employees” are
active regular employees (or regular employees on an approved leave of absence
of no more than six (6) months in the twelve (12) month period prior to the
time of position elimination) who:


 


(a)                                  have
been designated as a “key employee” by senior management of the Company;


 


(b)                                 are
participants in the Salary Reduction Initiative of June 2003 effective
the pay period beginning June 30, 2003;


 


(c)                                  are
not dismissed for “Cause” or “Performance-related Issues” as further explained
below; and


 


(d)                                 have
not voluntarily terminated employment (quit) prior to the elimination of their
position.


 


Such employees become
eligible for transition compensation under the KETC Plan for (a) up to one year
following a “Change in Control” as defined below, or (b) in the event of job
elimination when they have not been offered a “Comparable Position.”  A Comparable Position is defined as follows:


 


•                  A position
similar in responsibility, skill requirements and work schedule as the
employee’s current position; and


 


•                  A position for
which the salary offered would require no more than a 10% reduction in the
employee’s then current pay; and


 


•                  A position that
does not require the employee to travel more than 30 miles from his or her
current primary place of work.


 


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Change in Control


 


A “Change in Control” means:


 


•                  The sale, lease or disposition of
substantially all of the assets of the Company (directly or indirectly) and its
parent, Westaff, Inc. (“the Parent”);


 


•                  Any consolidation or merger of the
Company and the Parent with or into any other corporation or other entity or
person, or any other corporate reorganization, in which the stockholders of the
Company and the Parent immediately prior to such consolidation, merger or
reorganization, own less than 50% of the Company’s and the Parent’s voting
power immediately after such consolidation, merger or reorganization; or


 


•                  A change in ownership or control of the Company or the
Parent effected through any of the following transactions:


 


(i)                                     any transaction or series of related transactions
as a result of which any person or related group of persons initially becomes
the beneficial owner (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934), directly or indirectly, of securities possessing more
than fifty percent (50%) of the total combined voting power of the Company’s or
the Parent’s then outstanding voting securities.  For purposes of this sub-paragraph, the term “person”
shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Parent or of a subsidiary and (ii) a corporation
owned directly or indirectly by the stockholders of the Parent in substantially
the same proportions as their ownership of the common stock of the Parent;


 


(ii)                                  or a change in the composition of the Board of the
Parent 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 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.


 


A transaction shall not
constitute a Change in Control if its sole purpose is to create a holding
company that will be owned, directly or indirectly, in substantially the same
proportions by the persons who held the Parent’s securities immediately before
such transaction.


 


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Termination for Cause or for Performance-related Issues


 


A Termination for “Cause”
or for “Performance-related Issues” means the employee:


 


•                  acts in bad faith, or in breach of
trust, to the detriment of the Company;


 


•                  intentionally refuses or fails to act
in a way that constitutes a material violation of Company policy;


 


•                  exhibits, in regard to his/her
employment, unfitness or unavailability for service, unsatisfactory performance
of the duties required of their employment, provided that the Company has given
him/her written notice of the unsatisfactory performance and the action
required by the employee to make such performance satisfactory, and the
employee has not improved his/her performance to a satisfactory level;


 


•                  exhibits habitual or willful
misconduct in the performance of his/her duties;


 


•                  is convicted of a crime involving
dishonesty; or


 


•                  materially breaches his/her
Employment Contract


 


Benefits


 


Each Eligible Employee
who is entitled to benefits under the KETC Plan shall receive transition
compensation in the form of a single lump sum cash payment equivalent to 26
weeks of his or her then current pay less appropriate withholdings.  “Current pay” means the employee’s base
salary rate in effect on the date the employee’s position is eliminated.  This payment is in addition to other
compensation which may be provided by the Company’s current Transition
Compensation Plan (TCP) in effect at that time, or specific provisions of the
employee’s Employment Contract related to severance pay.


 


Entitlement to Benefits


 


The KETC Plan’s benefits
will be provided only to an Eligible Employee who signs and returns a Release
as described below.  Benefits are paid
when employment is terminated and the Release is irrevocable, except as
otherwise provided by Older Worker Protection Act’s revocation clause.


 


Release


 


To receive transition
compensation under the KETC Plan, an Eligible Employee must sign a Release in
the form and within the time established by the Company.


 


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Withholding for Taxes


 


Notwithstanding any other
provision of the KETC Plan, all transition compensation shall be reduced by
applicable federal, state, or local tax withholding.


 


No Other Similar Compensation and Right of Setoff


 


Other than pursuant to
the terms of the KETC Plan, the Company’s separation pay in lieu of notice
policy, and any specific provisions of the employee’s Employment Contract, the
Company has no prior or other obligation, whether by express or implied
contract or otherwise, to provide any transition or other severance benefit to
employees who are discharged by the Company other than in accordance
with the Transition Compensation Plan (TCP.)


 


Any payment made under
the KETC Plan is a voluntary payment made by the Company, which payment
employees are not entitled to receive except according to the terms of the KETC
Plan.  In the event that the Company is or
becomes obligated to provide payment under any other plan or by reason of any
applicable law, settlement or decision, the amount of any payment made to an
employee under the KETC Plan shall be set off against the amount that the
Company is liable to pay that employee, if any, under such other plan, law,
settlement or decision.


 


Source of Benefits


 


The benefits provided
under the KETC Plan shall be unfunded and payable solely from the general
assets of the Company.


 


Expenses


 


The expenses of operating
and administering the KETC Plan shall be borne entirely by the Company.


 


KETC Plan Sponsor and Administrator


 


The Company shall be the
“KETC Plan Sponsor” and the “Administrator” of the KETC Plan, as such terms are
defined in the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).  The Administrator shall make
any and all determinations required to be made in connection with the
operations and administration of the KETC Plan, including (without limitation)
the determination of whether an employee is an eligible employee and the amount
of any benefit payable hereunder.  The
Administrator shall have the discretionary power to interpret the provisions of
the KETC Plan as it may determine is necessary or appropriate for the
operations and administration of the KETC Plan.


 


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Named Fiduciary


 


The Company is the “named
fiduciary” of the KETC Plan within the meaning of ERISA, including the “named
fiduciary” with the power to act with respect to the review of claims for
compensation under the KETC Plan that are denied.


 


Allocation and Delegation of Responsibilities


 


The Company may allocate
any of its responsibilities for the operation and administration of the KETC
Plan to any officer or employee of the Company.  It may also delegate any of its responsibilities under the KETC
Plan by designating, in writing, another person to carry out such
responsibilities.  Any person so
designated shall then be responsible for carrying out the responsibilities
described in such writing.


 


No Individual Liability


 


It is the express purpose
and intention of the Company that no individual liability whatsoever shall
attach to, or be incurred by, any director, officer, employee, representative
or agent of the Company under, or by reason of the operation of, the KETC Plan.


 


No Amendment or Termination of the KETC Plan


 


The Company affirms that
this June 2, 2003 KETC Plan will remain in full force and effect with regard to
the Eligible Employees and will continue for up to one year after a Change in
Control during which time it will not be subject to amendment or termination
with regard to the Eligible Employees unless both the Company and the Eligible
Employee agree in writing.


 


Claims and Review Procedures


 


Any employee who believes
that the employee has not received the proper compensation under the KETC Plan
must file a written claim with the Administrator.  The Administrator will review the claim and notify the employee
of its decision in writing within 60 days after the claim is received.


 


If the Administrator denies
a claim, in whole or in part, the Administrator’s notice will set forth:


 


1.                                       The
specific reason(s) for denial;


 


2.                                       The
KETC Plan provision(s) on which the denial is based;


 


3.                                       A
description of any material or information necessary for the claimant to
perfect the claim, and an explanation of any such material or information is
necessary and;


 


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4.                                       Information
concerning the steps to be taken if the claimant wishes to submit the claim for
further review.


 


If the claimant feels the
denial of the claim is improper, the claimant, or the claimant’s duly
authorized representative, must file a written request for a full review of the
claim.  A request for review must be filed
with the Administrator within 90 days after the claimant receives the notice of
denial and should set forth all of the grounds upon which it is based, all
facts in support of the request and any other matters the claimant (or the
claimant’s representative) deems pertinent. 
The Administrator will furnish the claimant with a final written
decision within 60 days after receipt of the request for review.


 


Questions Regarding the KETC Plan


 


An employee having
questions regarding the KETC Plan or its application should direct them to the
Company’s Human Resources Department.


 


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TO EVIDENCE THE ADOPTION OF THE WESTAFF® KEY
EMPLOYEE TRANSITION COMPENSATION PLAN effective as of June 2, 2003 and amended
as of September 20, 2004 this document has been executed by an authorized
officer of the Company.


 


	
   

  	
   

  	
  Westaff (USA), Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   Dated: September 20, 2004

  	
   

  	
  By: /s/ Dwight S.
  Pedersen

  	
   

  
	
   

  	
   

  	
  Dwight S. Pedersen

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  



 


 


By signing below, the employee acknowledges receipt and
agreement to the terms of the June 2, 2003 Key Employee Transition Compensation
Plan and amended September 20, 2004:


 


 


	
  By:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
								



 


 


Note:  A copy of this
signed document is to be maintained in the employee’s personnel file.


 


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EMPLOYEE RIGHTS UNDER ERISA


 


As a participant in the
KETC Plan, employees are entitled to certain rights and protections under
ERISA.  All participants are entitled
under ERISA to:


 


1.                                       Examine,
without charge, at the office of the Administrator of the KETC Plan, copies of
all documents filed by the KETC Plan with the U.S. Department of Labor, such as
detailed annual reports; and


 


2.                                       Obtain
copies of other KETC Plan information upon written request to the
Administrator.  The Administrator may
make a reasonable charge for the copies.


 


In addition to creating
rights for KETC Plan participants, ERISA imposes duties upon the people who are
responsible for the operation of the KETC Plan.  The people who operate the KETC Plan, called “fiduciaries” of the
KETC Plan, have a duty to do so prudently and in the interest of the employee
and the other KETC Plan participants and their beneficiaries.


 


No one, including the
employer or any other person, may discriminate against an employee in any way
to prevent the employee from obtaining a benefit or exercising his/her rights
under ERISA. If an employee’s claim for benefits is denied, in whole or in
part, the employee must receive a written explanation of the reason for the
denial, and the employee has the right to have the Administrator review and
reconsider the claim.  (See Claims
and Review Procedures above.)


 


Under ERISA, there are
steps an employee can take to enforce his/her rights. For instance, if the
employee requests materials from the Administrator and does not receive them
within 30 days, the employee may file suit in a federal court.  In such a case, the court may require the
Administrator to provide the materials and pay the employee up to $110 a day
until the materials are received, unless the materials were not sent because of
reasons beyond the Administrator’s control. If the employee has a claim for
benefits which is denied or ignored, in whole or in part, he/she may file suit
in state or federal court.


 


If it should happen that
the employee is discriminated against for asserting his/her rights under ERISA,
the employee may seek assistance from the U.S. Department of Labor, or may file
suit in a federal court. The court will decide who should pay court costs and
legal fees.  If the employee is
successful, the court may order the person being sued to pay these costs and
fees.  If the employee loses, the court
may order the employee to pay these costs and fees, for example, if it finds
the employee’s claim is frivolous.


 


If an employee has
questions about this statement or about individual rights under ERISA, the
employee should contact the U.S. Department
of Labor Employee Benefits Security Administration.


 


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ERISA INFORMATION


 


KETC PLAN NAME:


 


Westaff®  Key Employee Transition Compensation Plan


 


KETC PLAN IDENTIFICATION NUMBER:


 


502


 


KETC PLAN SPONSOR:


 


Westaff (USA), Inc.


P.O. Box 9280


Walnut Creek, CA  94598-0980


Telephone:  (925) 930-5300


 


KETC PLAN ADMINISTRATOR:


 


Westaff (USA), Inc.


P.O. Box 9280


Walnut Creek, CA  94598-0980


Telephone:  (925) 930-5300


 


KETC PLAN SPONSOR’S FEDERAL EMPLOYER IDENTIFICATION NUMBER:


 


68-0095781


 


AGENT FOR SERVICE OF LEGAL PROCESS:


 


KETC
Plan Administrator


 


KETC PLAN YEAR:


 


Calendar Year


 


TYPE OF PLAN:


 


Employee Welfare Benefit
Plan


 


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