Document:

exv10w4

Exhibit 10.4

CBS PERSONNEL HOLDINGS, INC. EXECUTIVE BONUS PLAN

Effective as of January 1, 2005, Compass CS, Inc. hereby establishes the CBS Personnel Holdings,
Inc. Executive Bonus Plan for the purpose of inducing the service or encouraging the continued
service of certain Employees, in order that the interests of the Employer may be advanced.

	1.	 	Definitions. Unless otherwise required by the context, for the purpose of this Plan,
the following words and phrases shall have the meanings indicated.

	 	a.	 	“Account” shall mean the account or accounts established with the Investment
Company in the name of a Participant, to which contributions are made under the terms
hereof.
	 
	 	b.	 	“Affiliate” means any entity if such entity, with the Company, constitutes (a)
a controlled group of corporations (within the meaning of Section 414(b) of the Code),
(b) a group of trades or businesses under common control (within the meaning of Section
414(c) of the Code), (c) an affiliated service group (within the meaning of Section
414(m) of the Code), or (d) a group of entities required to be aggregated pursuant to
Section 414(o) of the Code and the regulations thereunder.
	 
	 	c.	 	“Beneficiary” shall mean the persons or entities designated by the Participant
in the form and manner acceptable to the Committee.
	 
	 	d.	 	“Board” shall mean the Board of Directors of the Company.
	 
	 	e.	 	“Code” means the Internal Revenue Code of 1986, as now or hereafter existing,
amended, construed, interpreted, and applied by regulations, rulings or cases.
	 
	 	f.	 	“Committee” shall mean the person or persons designated by the Board to
administer the Plan. If no such person or persons are designated, then Committee shall
mean the President of the Company.
	 
	 	g.	 	“Company” shall mean Compass CS, Inc., or any successor entity.
	 
	 	h.	 	“Compensation” “Compensation” means, except as otherwise provided below, all
amounts received by a Participant from an Employer which are basic salary or wages,
bonus, overtime payments, vacation, holiday and paid personal time or commissions,
without giving effect to any reduction of compensation resulting from pre-tax saving
contributions under a cash or deferred arrangement under Section 401(k) of the Code or
any salary reduction arrangement pursuant to Section 125 of the Code, but will not
include any Employer contributions to Social Security, other contributions to this or
any other welfare benefit or deferred compensation plan or program, severance pay,
stock options, disability income payments which are not paid through the Employer’s
payroll system, relocation expense reimbursement, or the value of any other fringe
benefits provided at the expense of the Employer. The Compensation taken into account
for a Participant

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	 	 	 	for a Plan Year will include compensation in excess of the limit under Section
401(a)(17) of the Code.
	 
	 	i.	 	“Disability” shall mean a Participant’s total and permanent disability, as
defined for purposes of any long-term disability plan sponsored by the Employer under
which the Participant may become eligible for benefits. If no such plan exists, then
Disability shall mean the total and permanent inability of the Participant, as the
result of injury or illness, to perform the customary duties of the Participant’s
regular occupation for the Employer. The existence of a Participant’s Disability shall
be determined by the Committee in its sole and absolute discretion, upon the advice of
one or more physicians retained by the Committee for this purpose.
	 
	 	j.	 	“Effective Date” shall mean January 1, 2005.
	 
	 	k.	 	“Eligible Employee” shall mean an Employee who has completed 6 or more months
of service with the Employer and who is designated by the Committee as eligible to
become a Participant.
	 
	 	l.	 	“Employee” shall mean a person employed by the Employer, or any Affiliate of
the Employer.
	 
	 	m.	 	“Employee Contributions” shall mean the amount to be paid by the Employee into
the Account, as described in Section 3.
	 
	 	n.	 	”Employer” shall mean the Company or any Affiliate by which an Employee is
employed
	 
	 	o.	 	 “Employer Contributions” shall mean the amount to be paid by the Employer into
the Account, as described in Section 3a.
	 
	 	p.	 	“Investment Company” shall mean the company with which the investment account
is maintained, or its successor.
	 
	 	q.	 	“Normal Retirement Date” of a Participant shall mean the Participant’s 65th
birthday.
	 
	 	r.	 	“Participant” shall mean an Eligible Employee who has satisfied the
requirements of Section 2.
	 
	 	s.	 	“Payroll Period” shall mean a biweekly or other period with respect to which a
Participant receives payment of Compensation.
	 
	 	t.	 	“Plan” shall mean the CBS Personnel Holdings, Inc. Executive Bonus Plan, as set
forth herein or as amended from time to time.
	 
	 	u.	 	“Plan Year” shall mean the period beginning with the Effective Date and ending
on December 31, 2005, and any subsequent calendar year while the Plan is in effect.

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	 	v.	 	“Years of Continuous Employment” of a Participant shall mean the completion of
12 months of employment as a full time Employee of an Employer after the date on the
Employee became a Participant.

	2.	 	Participation. An Eligible Employee shall become a Participant as of the January 1,
April 1, July 1 or October 1 which coincides with or immediately follows the date on which the
Eligible Employee:

	 	a.	 	completes the account setup from the investment company; and
	 
	 	b.	 	executes the election to become a Participant, substantially in the form
attached hereto as Exhibit A.

	3.	 	Employee and Employer Contributions.

	 	a.	 	For each Payroll Period the Employer will pay to the Participant’s Account the
Employee Contributions which the Participant has elected to be withheld from his
Compensation otherwise payable during the Payroll Period.
	 
	 	b.	 	For each calendar quarter, the Employer may, in its discretion, make Employer
Contributions to the Plan. Employer Contributions shall be allocated to the Account of
each eligible Participant in proportion to the Participant’s Employee Contributions
during the quarter. Provided, however, that such Employer Contributions will be
determined without regard to any Employee Contributions made for a Payroll Period which
are less than 2% or more than 4% of the Participant’s Compensation for the Payroll
Period. Employer Contributions will be forwarded by the Employer to the Account as
soon as practicable, but in any event no later than 30 days after the end of, the
preceding calendar quarter. The amount of any Employer Contributions for a calendar
quarter shall be determined by the Board in its discretion based upon company
profitability.
	 
	 	c.	 	No Employer Contributions shall be made to a Participant’s Account after upon
the date on which the Participant’s employment by the Employer is terminated for any
reason, (including, but not limited to, the Participant’s death or Disability).

	4.	 	Restrictions on Account.

	 	a.	 	By accepting Employer Contributions hereunder, the Employee agrees that, except
as set forth in this section 4, during the term of his employment with the Employer,
the Participant shall not, without the written consent of the Company, close or
transfer the Account, or take or receive any withdrawals from the Account, or otherwise
assign, transfer, pledge or alienate the Account or any assets therein.
	 
	 	b.	 	Provided, however, that the restrictions contained in subsection a shall not
apply in the event of:

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	 	i.	 	the Participant’s death,
	 
	 	ii.	 	the Participant’s Disability;
	 
	 	iii.	 	the Participant’s completion of five Years of Continuous Plan
Enrollment;
	 
	 	iv.	 	the Participant’s reaching the Normal Retirement Date; or
	 
	 	v.	 	the completion of the payment to the Company described in Section 5.

	 	c.	 	The Company shall consent to a limited waiver of the restrictions contained in
subsection a to the extent that the restrictions would prevent the Participant from
receiving a distribution from the Account for the purpose of making the payment
described in Section 5.

	5.	 	Payment to the Company. Upon the termination of the Participant’s employment by the
Employer prior to the Participant’s completion of five Years of Continuous Plan Enrollment,
the Participant shall pay to the Company, within 30 days after such event, an amount equal to
a percentage of the cumulative Employer Contributions paid by the Employer since the date of
issuance. The percentage shall be determined based upon the Participant’s continuous Years of
Continuous Plan Enrollment after becoming a Participant, as follows:

	 	 	 	 	 
	Years of Continuous	 	Percentage of Employer
	Plan Enrollment	 	Contributions Returned
	Less than 1
	 	 	100	%
	1
	 	 	80	%
	2
	 	 	60	%
	3
	 	 	40	%
	4
	 	 	20	%
	5 or more
	 	 	0	%

	 	 	If the payment described in this section does not occur within 30 days of the termination of
the Participant’s employment, then the Company may withhold from any amounts due to the
Participant (including, but not limited to, the payment of Compensation) the amount of the
Participant’s obligation hereunder.
	 
	6.	 	Election of Beneficiary. Any election of a Beneficiary to whom the proceeds of the
Account are payable in the event of the Participant’s death shall be made by the Participant
in accordance with the rules and procedures imposed by the Investment Company. The Employer
shall have no right to receive any death proceeds from the Policy or to designate a
Beneficiary of any such proceeds.
	 
	7.	 	Ownership of Account. The Participant shall at all times be the sole owner of the
Account, and the Employer shall not have any direct or indirect interest in the Account or
assets held therein.

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	8.	 	Amendments to the Plan. The Board may amend or terminate the Plan at any time,
without the consent of any Participant or Beneficiary.
	 
	9.	 	Powers of Committee: The Committee may establish such rules and regulations, not
inconsistent with the provisions of this Plan, as it in its discretion deems necessary to
determine eligibility to participate in this Plan and for the proper administration of this
Plan, and may amend or revoke any rule or regulation so established. The Committee may
exercise its sole and absolute discretion to make such determinations and interpretations
under or in connection with this Plan as it deems necessary or advisable. All such rules,
regulations, determinations and interpretations shall be final, binding and conclusive upon
any Participant, and upon the Employer, and all its employees, and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other persons claiming
under or through any of them.
	 
	10.	 	Withholding. The Employer shall withhold from a Participant’s Compensation any and
all taxes of any nature resulting from the benefits provided hereunder and required by any
government to be withheld.
	 
	11.	 	No Guarantees. No Participant shall have any rights whatsoever against the Employer
as a result of this Plan except those expressly granted hereunder. Nothing herein shall be
construed to constitute a contract for employment or to grant any Participant the right to
remain an Employee. The Employer is not obligated to make contributions to the Plan.
	 
	12.	 	Gender and Number. Pronouns and other similar words used in the masculine gender
shall be read as the feminine gender where appropriate and the singular form of words shall be
read as the plural where appropriate.
	 
	13.	 	Governing Law. Except as otherwise required by law, the validity, construction and
administration of this Plan shall be determined under the laws of the State of Ohio. This
Plan is not intended to constitute a “nonqualified deferred compensation plan” as defined in
Section 409A of the Code or an “employee benefit plan” as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, and shall be interpreted in accordance with
such intent.

Executed
on behalf of the Company by its duly authorized officer as of this 1st day of
January, 2005.

	 	 	 	 	 

	 

	 	COMPASS CS, INC.	 	 
	 
	 	 	 	 
	 
	 	/s/ Elias J. Sabo	 	 
	 

	 	 

Signature
	 	 
	 
	 	 	 	 
	 
	 	Secretary	 	 
	 

	 	 

	 	 
	 

	 	Title	 	 

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EXHIBIT A

Election to Participate in the CBS Personnel Holdings, Inc. Executive Bonus Plan

	1.	 	I have established the following Account:

	 	 	 	 	 	 	 

	 

	 	Participant	 	 	 	 
	 

	 	
	 	 

	 	 
	 

	 	Account No.
	 	 

	 	 
	 

	 	
	 	 

	 	 
	 

	 	Investment Company
	 	 

	 	 
	 

	 	 	 	 

	 	 

	2.	 	In order to participate in the Plan, I agree to:

	 	a)	 	retain ownership of the Account, and
	 
	 	b)	 	have the Employer withhold Employee Contributions in the amount
specified below from my Compensation and pay such Employee Contributions to the
account.

	3.	 	My Employee Contributions shall be in the following amount:
	 
	 	 	_________% of my Compensation
	 
	4.	 	I wish to change my Employee contribution amount to ___________% effective
_______________________(date).
	 
	4.	 	I have read the Executive Bonus Plan and agree to all of its terms and
conditions.
	 
	5.	 	I understand that if I terminate employment for any reason (other than my death
or Disability) before the fifth anniversary of participation in the plan, I will
reimburse the Employer for a portion of the total Employer Contributions paid under the
Plan, as described in the Plan.

	 	 	 	 	 	 	 	 	 

	 	 	 	 	CBS Personnel Holdings, Inc	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	Participant

	 	Signature	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 

Entered
into system _______________

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Endorsement of Ownership Rights

Account
No._______________ issued to _____________________ (the participant) by
____________________ (hereinafter called the Company).

Employee/Owner
____________________________

Employer:
CBS Personnel Holdings, Inc.

It is agreed by the undersigned that:

	1.	 	The participant shall be the Owner of the Account; however, upon execution of this agreement,
the Owner maintain at all times, a sufficient balance in the account to repay any unvested
employer contributions in the event of termination.
	 
	2.	 	The Owner may change and successively change the beneficiaries entitled to receive payment or
payments upon the death of the participant.
	 
	3.	 	This endorsement is released once the owner is fully vested pursuant to Section 5A of plan
document.
	 
	4.	 	On the release of this endorsement by CBS Personnel Holdings, Inc., its successors or
assigns, the Owner may exercise and enjoy every right, privilege, option and benefit granted
by this account on his/her sole signature.

     In witness whereof, the parties have hereunto set their hands and seals on the day and year
first above written.

	 	 	 	 	 

	 

	 	COMPANY	 	 
	PARTICIPANT:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

7exv10w5

Exhibit 10.5

STAFFMARK HOLDINGS, INC.

2011 OMNIBUS PLAN

     Section 1. Purpose. The purposes of this Staffmark Holdings, Inc. 2011 Omnibus
Plan are to promote the interests of Staffmark Holdings, Inc. and its stockholders by (i)
attracting and retaining employees and directors of, and consultants to, the Company and its
Affiliates, as defined below; (ii) motivating such individuals by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such individuals to
participate in the long-term growth and financial success of the Company.

     Section 2. Definitions. As used in the Plan, the following terms shall have the
meanings set forth below:

     “Affiliate” shall mean any employer with which the Company would be considered a single
employer under Sections 414(b) and (c) of the Code, applied using 50% as the percentage of
ownership required under such Code sections; provided, however, that the term Affiliate shall be
construed in a manner in accordance with the registration provisions of applicable securities laws.

     “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted
Stock Unit Award, Performance Award, Other Stock-Based Award, or Performance Compensation Award
made or granted from time to time hereunder.

     “Award Agreement” shall mean any written agreement, contract, or other instrument or document
evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

     “Board” shall mean the Board of Directors of the Company.

     “Cause” as a reason for a Participant’s termination of employment or service shall have the
meaning assigned such term in the employment, severance, or similar agreement, if any, between the
Participant and the Company or an Affiliate. If the Participant is not a party to an employment,
severance, or similar agreement with the Company or an Affiliate in which such term is defined,
then unless otherwise defined in the applicable Award Agreement, “Cause” shall mean: (i) the
intentional engagement in any acts or omissions constituting dishonesty, breach of a fiduciary
obligation, wrongdoing or misfeasance, in each case, in connection with a Participant’s duties or
otherwise during the course of a Participant’s employment or service with the Company or an
Affiliate; (ii) the commission of a felony or the indictment for any felony, including, but not
limited to, any felony involving fraud, embezzlement, moral turpitude, or theft; (iii) the
intentional and wrongful damaging of property, contractual interests, or business relationships of
the Company or an Affiliate; (iv) the intentional and wrongful disclosure of secret processes or
confidential information of the Company or an Affiliate in violation of an agreement with or a
policy of the Company or an Affiliate; (v) the continued failure to substantially perform the
Participant’s duties for the Company or an Affiliate; (vi) current alcohol or prescription drug
abuse affecting work performance; (vii) current illegal use of drugs; or (viii) any intentional
conduct contrary to the Company’s or an Affiliate’s written policies or practices.

 

 

     “Change of Control” shall mean the occurrence of any of the following: (i) the sale, lease,
transfer, conveyance or other disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Company to any “person” or “group” (as such terms are used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act); or (ii) any person or group is or becomes
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have “beneficial ownership” of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than fifty percent (50%) of the total voting power of the voting
stock of the Company, including by way of merger, consolidation, or otherwise.

     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

     “Committee” shall mean either (i) a committee of the Board designated by the Board to
administer the Plan and composed of not less than two directors, each of whom is required to be a
“Nonemployee Director” (within the meaning of Rule 16b-3) and an “outside director” (within the
meaning of Section 162(m) of the Code) to the extent Rule 16b-3 and Section 162(m) of the Code,
respectively, are applicable to the Company and the Plan; or (ii) a committee of the Board
designated by the Board to administer the Plan and, with respect to “applicable employee
remuneration” for purposes of Code Section 162(m), a subcommittee designated by the Board composed
of not less than two directors, each of whom is required to be a “Nonemployee Director” and an
“outside director” (as such terms are defined above), which subcommittee shall be considered a
compensation committee for purposes of Code Section 162(m) and the regulations promulgated
thereunder.

     “Company” shall mean Staffmark Holdings, Inc., a Delaware corporation, together with any
successor thereto.

     “Covered Employee” shall mean a “covered employee” as defined in Code Section 162(m)(3).

     “Effective Date” shall have the meaning ascribed to it in Section 16(a).

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” shall mean (i) with respect to any property other than Shares, the fair
market value of such property determined by such methods or procedures as shall be established from
time to time by the Committee and (ii) with respect to the Shares, as of any date, (1) the closing
sale price (excluding any “after hours” trading) of the
Shares as reported on the New York Stock Exchange for such date (or if not then trading on the New York Stock Exchange, the closing sale price of
the Shares on the stock exchange or over-the-counter market on which the Shares are principally
trading on such date), or, if there were no sales on such date, on the closest preceding date on
which there were sales of Shares, or (2) in the event there shall be no public market for the
Shares on such date, the fair market value of the Shares as determined in good faith by the
Committee (which determination shall, to the extent applicable, be made in a manner that complies
with Section 409A of the Code).

     “Final Year” means the calendar year.

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     “Good Reason” as a reason for a Participant’s termination of employment or service shall have
the meaning assigned such term in the employment, severance, or similar agreement, if any, between
the Participant and the Company or an Affiliate. If the Participant is not a party to an
employment, severance, or similar agreement with the Company or an Affiliate in which such term is
defined, then unless otherwise defined in the applicable Award Agreement, for purposes of this
Plan, the Participant shall not be entitled to terminate his or her employment or service for Good
Reason.

     “Incentive Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto. Incentive Stock Options may be granted only to
Participants who meet the definition of “employees” under Section 3401(c) of the Code.

     “Negative Discretion” shall mean the discretion authorized by the Plan to be applied by the
Committee to eliminate or reduce the size of a Performance Compensation Award; provided that the
exercise of such discretion would not cause the Performance Compensation Award to fail to qualify
as “performance-based compensation” under Section 162(m) of the Code. By way of example and not by
way of limitation, in no event shall any discretionary authority granted to the Committee by the
Plan including, but not limited to, Negative Discretion, be used to (a) grant or provide payment in
respect of Performance Compensation Awards for a Performance Period if the Performance Goals for
such Performance Period have not been attained, or (b) increase a Performance Compensation Award
above the maximum amount payable under Section 4(a) or Section 11(d)(vi) of the Plan. In no event
shall Negative Discretion be exercised by the Committee with respect to any Option or Stock
Appreciation Right (other than an Option or Stock Appreciation Right that is intended to be a
Performance Compensation Award under Section 11 of the Plan).

     “Nonqualified Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 6 of the Plan and that does not qualify as an Incentive Stock Option.

     “Option” shall mean an Incentive Stock Option or a Nonqualified Stock Option.

     “Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.

     “Participant” shall mean any employee of, or consultant to, the Company or its Affiliates, or
nonemployee director who is a member of the

Board or the board of directors of an Affiliate,
eligible for an Award under Section 5 of the Plan and selected by the Committee to receive an Award
under the Plan.

     “Performance Award” shall mean any right granted under Section 9 of the Plan.

     “Performance Compensation Award” shall mean any Award designated by the Committee as a
Performance Compensation Award

pursuant to Section 11 of the Plan.

     “Performance Criteria” shall mean the criterion or criteria that the Committee shall select
for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any
Performance Compensation Award under the Plan. The Performance Criteria that will be used to
establish the Performance Goal(s) shall be based on the attainment of specific

- 3 -

 

levels of performance of the Company (or an Affiliate, division, or operational unit of the
Company). The Performance Criteria applicable to any Award that is intended to qualify for the
performance-based exception from the tax deductibility limitations of Section 162(m) of the Code
shall be based on one or more of the following criteria: return on net assets, return on
stockholders’ equity, return on assets, return on capital, revenue, average revenue, stockholder
returns, profit margin, earnings per Share, net earnings, operating earnings, free cash flow,
earnings before interest, taxes, depreciation and amortization, cash flows, growth of business,
operating expenses, capital expenses, cost targets, Share price, enterprise value, equity market
capitalization, or sales or market share. To the extent required under Section 162(m) of the Code,
the Committee shall, within the first ninety (90) days of a Performance Period (or, if longer,
within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion
the manner of calculating the Performance Criteria it selects to use for such Performance Period.

     “Performance Formula” shall mean, for a Performance Period, one or more objective formulas
applied against the relevant Performance Goals to determine, with regard to the Performance
Compensation Award of a particular Participant, whether all, some portion but less than all, or
none of the Performance Compensation Award has been earned for the Performance Period.

     “Performance Goals” shall mean, for a Performance Period, one or more goals as may be
established in writing by the Committee for the Performance Period based upon the Performance
Criteria. The Committee is authorized at any time during the first ninety (90) days of a
Performance Period, or at any time thereafter (but only to the extent the exercise of such
authority after the first ninety (90) days of a Performance Period would not cause the Performance
Compensation Awards granted to any Participant for the Performance Period to fail to qualify as
“performance-based compensation” under Section 162(m) of the Code), in its sole discretion, to
adjust or modify the calculation of a Performance Goal for such Performance Period to the extent
permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the
rights of Participants, (a) in the event of, or in anticipation of, any unusual or extraordinary
corporate item, transaction, event, or development affecting the Company; or (b) in recognition of,
or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions. Achievement of
Performance Goals may be measured by including or excluding items determined to be extraordinary,
unusual in nature, infrequent in occurrence, related to the acquisition or disposition of a
business, or related to a change in accounting principle, in each case based on Opinion No. 30 of
the Accounting Principles Board (APB Opinion No. 30), or other applicable accounting rules, or
consistent with the Company’s policies and practices for measuring the achievement of Performance
Goals on the date on which the Committee establishes the Performance Goals.

     “Performance Period” shall mean the one or more periods of time of at least one (1) year in
duration, as the Committee may select, over which the attainment of one or more Performance Goals
will be measured for the purpose of determining a Participant’s right to and the payment of a
Performance Compensation Award.

- 4 -

 

     “Person” shall mean any individual, corporation, partnership, association, limited liability
company, joint-stock company, trust, unincorporated organization, government, or political
subdivision.

     “Plan” shall mean this Staffmark Holdings, Inc. 2011 Omnibus Incentive Plan.

     “Restricted Stock” shall mean any Share granted under Section 8 of the Plan.

     “Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.

     “Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

     “SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall
include the staff thereof.

     “Shares” shall mean the common stock of the Company, $0.001 par value, or such other
securities of the Company (i) into which such common stock shall
be changed by reason of a
recapitalization, merger, consolidation, split-up, combination, exchange of shares, or other
similar transaction or (ii) as may be determined by the Committee pursuant to Section 4(b) of the
Plan; provided that such other securities shall, for Options and Stock Appreciation Rights, always
constitute “service recipient stock” within the meaning of Section 409A of the Code.

     “Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.

     “Substitute Awards” shall have the meaning specified in Section 4(c) of the Plan.

     “Ten Percent Shareholder” shall mean an individual who, at the time an Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any parent corporation or subsidiary corporation of the Company. An
individual shall be considered as owning the stock owned, directly or indirectly, by or for the
individual’s brothers and sisters, spouse, ancestors, and lineal descendants; and stock owned,
directly or indirectly, by or for a corporation, partnership, estate, or trust shall be considered
as being owned proportionately by or for its stockholders, partners, or beneficiaries.

     Section 3. Administration. (a) The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted
to a Participant and designate those Awards which shall constitute Performance Compensation Awards;
(iii) determine the number of Shares to be covered by, or with respect to which payments, rights,
or other matters are to be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards
may be settled or exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under
what circumstances cash, Shares, other securities, other Awards, other property, and other amounts
payable with respect to an Award (subject to Section 162(m) of the

- 5 -

 

Code with respect to Performance Compensation Awards) shall be deferred either automatically
or at the election of the holder thereof or of the Committee (in each case consistent with Section
409A of the Code); (vii) interpret, administer, or reconcile any inconsistency, correct any defect,
resolve ambiguities and/or supply any omission in the Plan, any Award Agreement, and any other
instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; (ix) establish and administer Performance Goals and
certify whether, and to what extent, they have been attained; and (x) make any other determination
and take any other action that the Committee deems necessary or desirable for the administration of
the Plan.

     (b) Unless otherwise expressly provided in the Plan or limited by Section 409A of the Code,
all designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, and any stockholder.

     (c) The mere fact that a Committee member shall fail to qualify as a “Nonemployee Director” or
“outside director” within the meaning of Rule 16b-3 and Section 162(m) of the Code, respectively,
shall not invalidate any Award made by the Committee which Award is otherwise validly made under
the Plan.

     (d) No member of the Committee shall be liable to any Person for any action or determination
made in good faith with respect to the Plan or any Award hereunder.

     (e) With respect to any Performance Compensation Award granted to a Covered Employee under
the Plan, the Plan shall be interpreted and construed in accordance with Section 162(m) of the
Code.

     (f) The Committee may delegate to one or more officers of the Company (or, in the case of
awards of Shares, the Board may delegate to a committee made up of one or more directors) the
authority to grant Awards to Participants who are not Covered Employees or executive officers or
directors of the Company subject to Section 16 of the Exchange Act.

     Section 4. Shares Available for Awards.

     (a) Shares Available.

          (i) Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with
respect to which Awards may be granted from time to time under the Plan shall in the aggregate not
exceed, at any time, [_______]; provided that the aggregate number of Shares with
respect to which Incentive Stock Options may be granted under the Plan shall be
[_______]. The maximum number of Shares with respect to which Incentive Stock
Options may be granted to any Participant in any fiscal year shall be [______]. The
maximum number of Shares with respect to which Options and Stock Appreciation Rights may be granted
to any

- 6 -

 

Participant in any fiscal year shall be [________] and the maximum number of
Shares which may be paid to a Participant in the Plan in connection with the settlement of any
Award(s) designated as “Performance Compensation Awards” in respect of a single Performance Period
shall be [________] or, in the event such Performance Compensation Award is paid in
cash, the equivalent cash value thereof. The maximum number of Restricted Stock and Restricted
Stock Units that may be granted to any Participant in any fiscal year shall be
[_______], and the maximum number of Shares that may be granted as Other Stock-Based
Awards shall be [_______].

          (ii) Shares covered by an Award granted under the Plan shall not be counted unless and until
they are actually issued and delivered to a Participant and, therefore, the total number of Shares
available under the Plan as of a given date shall not be reduced by Shares relating to prior Awards
that have expired or have been forfeited or cancelled, and upon payment in cash of the benefit
provided by any Award, any Shares that were covered by such Award will be available for issue
hereunder. Notwithstanding anything to the contrary contained herein: (A) if Shares are tendered
or otherwise used in payment of the exercise price of an Option, the total number of Shares covered
by the Option being exercised shall reduce the aggregate limit described in Section 4(a)(i); (B)
Shares withheld by the Company to satisfy a tax withholding obligation shall count against the
aggregate limit described in Section 4(a)(i); and (C) the number of Shares covered by a Stock
Appreciation Right, to the extent that it is exercised and settled in Shares, and whether or not
Shares are actually issued to the Participant upon exercise of the Stock Appreciation Right, shall
be considered issued or transferred pursuant to the Plan. To the extent that any outstanding Award
is settled in cash in lieu of Shares, the Shares allocable to such portion of the Award may again
be subject to an Award granted under the Plan.

     (b) Adjustments. Notwithstanding any provisions of the Plan to the contrary, in the event
that the Committee determines in its sole discretion that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other corporate transaction or
event affects the Shares, such that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall equitably adjust any or all of (i) the number of Shares or other
securities of the Company (or number and kind of other securities or property) with respect to
which Awards may be granted, (ii) the number of Shares or other securities of the Company (or
number and kind of other securities or property) subject to outstanding Awards, and (iii) the grant
or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award in consideration for the cancellation of such Award,
which, in the case of Options and Stock Appreciation Rights shall equal the excess, if any, of the
Fair Market Value of the Share subject to each such Option or Stock Appreciation Right over the per
Share exercise price or grant price of such Option or Stock Appreciation Right.

     (c) Substitute Awards. Awards may, in the discretion of the Committee, be made under the Plan
in assumption of, or in substitution for, outstanding awards previously granted by the Company or
its Affiliates or a company acquired by the Company or with which the

- 7 -

 

Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards
shall be counted against the aggregate number of Shares available for Awards under the Plan.

     (d) Sources of Shares Deliverable under Awards. Any Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

     Section 5. Eligibility. Any employee of, or consultant to, the Company or any of
its Affiliates (including any prospective employee, but not before his/her hire date), or
nonemployee director who is a member of the Board or the board of directors of an Affiliate, shall
be eligible to be selected as a Participant.

     Section 6. Stock Options.

     (a) Grant. Subject to the terms of the Plan, the Committee shall have sole authority to
determine the Participants to whom Options shall be granted, the number of Shares to be covered by
each Option, the exercise price thereof and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options,
or to grant Nonqualified Stock Options, or to grant both types of Options. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply
with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and
any regulations implementing such statute. All Options when granted under the Plan are intended to
be Nonqualified Stock Options, unless the applicable Award Agreement expressly states that the
Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive
Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an
Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion
thereof) shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan;
provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements
relating to Nonqualified Stock Options. No Option shall be exercisable more than ten (10) years
from the date of grant; provided, however, that in the case of a Ten Percent Shareholder, no
Incentive Stock Option shall be exercisable later than the fifth (5th) year anniversary
of the date of its grant. No Option shall include any feature for the deferral of income other
than the deferral of recognition of income until the later of the exercise or disposition of the
Option.

     (b) Exercise Price. The Committee shall determine and establish the exercise price at the
time each Option is granted, which exercise price shall be set forth in the applicable Award
Agreement and which shall not be less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant; provided, however, if the Option is an Incentive Stock Option granted
to a Ten Percent Shareholder, the exercise price of the Option must not be less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of the grant of the Option.

     (c) Exercise. Each Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement.
The Committee may impose such conditions with respect to the exercise of

- 8 -

 

Options, including without limitation, any relating to the application of federal or state
securities laws, as it may deem necessary or advisable.

     (d) Payment. (i) No Shares shall be delivered pursuant to any exercise of an Option until
payment in full of the aggregate exercise price therefore is received by the Company. Such payment
may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the optionee (which
are not the subject of any pledge or other security interest and which have been owned by such
optionee for at least six months and acquired other than through an Incentive Stock Option), or (y)
subject to such rules as may be established by the Committee, through delivery of irrevocable
instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option
and to deliver promptly to the Company an amount equal to the aggregate exercise price or by a
combination of the foregoing, provided that the combined value of all cash and cash equivalents and
the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender
is at least equal to such aggregate exercise price and the taxes, if any, required to be withheld.

          (ii) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the
exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares,
the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery
requirement by presenting proof of beneficial ownership of such Shares, in which case the Company
shall treat the Option as exercised without further payment and shall withhold such number of
Shares from the Shares acquired by the exercise of the Option.

     Section 7. Stock Appreciation Rights.

     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to
determine the Participants to whom Stock Appreciation Rights shall be granted, the number of Shares
to be covered by each Stock Appreciation Right Award, the grant price thereof and the conditions
and limitations applicable to the exercise thereof. Stock Appreciation Rights with a grant price
equal to or greater than the Fair Market Value per Share as of the date of grant are intended to
qualify as “performance-based compensation” under Section 162(m) of the Code. In the sole
discretion of the Committee, Stock Appreciation Rights may, but need not, be intended to qualify as
performance-based compensation in accordance with Section 11 hereof. Stock Appreciation Rights may
be granted in tandem with another Award, in addition to another Award, or freestanding and
unrelated to another Award. Stock Appreciation Rights granted in tandem with an Award will be
granted at the same time as the Award. No Stock Appreciation Right shall be exercisable more than
ten years from the date of grant.

     (b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to receive
an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the
Stock Appreciation Right over the grant price thereof (which shall not be less than one hundred
percent (100%) of the Fair Market Value on the date of grant). The Committee shall determine in
its sole discretion whether a Stock Appreciation Right shall be settled in cash, Shares, or a
combination of cash and Shares.

     (c) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine, at the grant of a Stock Appreciation Right,

- 9 -

 

the term, methods of exercise, methods and form of settlement, and any other terms and
conditions of any Stock Appreciation Right. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate; provided
that the Stock Appreciation Right shall not include any feature for the deferral of income other
than the deferral of income until the exercise of the Stock Appreciation Right.

     Section 8. Restricted Stock and Restricted Stock Units.

     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to
determine the Participants to whom Shares of Restricted Stock and Restricted Stock Units shall be
granted, the number of Shares of Restricted Stock and/or the number of Restricted Stock Units to be
granted to each Participant, the duration of the period during which, and the conditions, if any,
under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and
the other terms and conditions of such Awards.

     (b) Transfer Restrictions. Shares of Restricted Stock and Restricted Stock Units may not be
sold, assigned, transferred, pledged, or otherwise encumbered, except, in the case of Restricted
Stock, as provided in the Plan or the applicable Award Agreements. Unless otherwise directed by
the Committee, (i) certificates issued in respect of Shares of Restricted Stock shall be registered
in the name of the Participant and deposited by such Participant, together with a stock power
endorsed in blank, with the Company, or (ii) Shares of Restricted Stock shall be held at the
Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer
of such Shares of Restricted Stock. Upon the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall, as applicable, either deliver such certificates to the
Participant or the Participant’s legal representative, or the transfer agent shall remove the
restrictions relating to the transfer of such Shares.

     (c) Payment. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of
a Share. Restricted Stock Units shall be paid in cash, Shares, other securities or other property,
as determined in the sole discretion of the Committee, upon the lapse of the restrictions
applicable thereto, or otherwise in accordance with the applicable Award Agreement. Dividends paid
on any Shares of Restricted Stock shall be paid directly to the Participant, withheld by the
Company subject to vesting of the Restricted Stock pursuant to the terms of the applicable Award
Agreement, or may be reinvested in additional Shares of Restricted Stock, as determined by the
Committee and specified in the Award Agreement on the date of grant. Dividends may be credited on
Restricted Stock Units as additional Restricted Stock Units, if so determined by the Committee and
specified in the Award Agreement on the date of grant.

     Section 9. Performance Awards.

     (a) Grant. The Committee shall have sole authority to determine the Participants who shall
receive a “Performance Award,” which shall consist of a right which is (i) denominated in cash or
Shares; (ii) valued, as determined by the Committee, in accordance with the achievement of such
Performance Goals during such Performance Periods as the Committee shall establish; and (iii)
payable at such time and in such form as the Committee shall determine and specify in the Award
Agreement on the date of grant.

- 10 -

 

     (b) Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the Performance Goals to be achieved during any
Performance Period, the length of any Performance Period, the amount of any Performance Award, and
the amount and kind of any payment or transfer to he made pursuant to any Performance Award.

     (c) Payment of Performance Awards. Performance Awards may be paid in a lump sum or in
installments following the close of the Performance Period as set forth in the Award Agreement on
the date of grant.

     Section 10. Other Stock-Based Awards.

     (a) General. The Committee shall have authority to grant to Participants an “Other
Stock-Based Award,” which shall consist of any right which is (i) not an Award described in
Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to, Shares (including,
without limitation, securities convertible into Shares), as deemed by the Committee to he
consistent with the purposes of the Plan; provided that any such rights must comply, to the extent
deemed desirable by the Committee, with Rule 16b-3 and applicable law, including Code Section 409A.
Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine
the terms and conditions of any such Other Stock-Based Award, including the price, if any, at which
securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan.

     (b) Dividend Equivalents. In the sole discretion of the Committee, an Award (other than
Options or Stock Appreciation Rights), whether made as an Other Stock-Based Award under this
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the
Participant with dividends or dividend equivalents, payable in cash, Shares, other securities, or
other property on a current or deferred basis consistent with Code Section 409A; provided, that in
the case of Awards with respect to which any applicable Performance Criteria have not been
achieved, dividend equivalents may be paid only on a deferred basis, to the extent the underlying
Award vests.

     Section 11. Performance Compensation Awards.

     (a) General. The Committee shall have the authority, at the time of grant of any Award
described in Sections 6 through 10 of the Plan (other than Options and Stock Appreciation Rights),
to designate such Award as a Performance Compensation Award in order to qualify such Award as
“performance-based compensation” under Section 162(m) of the Code.

     (b) Eligibility. The Committee will, in its sole discretion, designate within the first
ninety (90) days of a Performance Period (or, if longer, within the maximum period allowed under
Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation
Awards in respect of such Performance Period. Designation of a Participant eligible to receive an
Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive
payment in respect of any Performance Compensation Award for such Performance Period. The
determination as to whether or not such Participant becomes entitled to

- 11 -

 

payment in respect of any Performance Compensation Award shall be decided solely in accordance
with the provisions of this Section 11. Moreover, designation of a Participant eligible to receive
an Award hereunder for a particular Performance Period shall not require designation of such
Participant eligible to receive an Award hereunder in any subsequent Performance Period and
designation of one person as a Participant eligible to receive an Award hereunder shall not require
designation of any other person as a Participant eligible to receive an Award hereunder in such
period or in any other period.

     (c) Discretion of Committee with Respect to Performance Compensation Awards. With regard to a
particular Performance Period, the Committee shall have full discretion to select the length of
such Performance Period, the type(s) of Performance Compensation Awards to be issued, the
Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or
level(s) of the Performance Goal(s) is/are to apply to the Company, and the Performance Formula.
Within the first ninety (90) days of a Performance Period (or, if longer, within the maximum period
allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance
Compensation Awards to be issued for such Performance Period, exercise its discretion with respect
to each of the matters enumerated in the immediately preceding sentence of this Section 11(c) and
record the same in writing.

     (d) Payment of Performance Compensation Awards. (i) Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company on the last day of a
Performance Period to be eligible for payment in respect of a Performance Compensation Award for
such Performance Period.

          (ii) Limitation. A Participant shall be eligible to receive payment in respect of a
Performance Compensation Award only to the extent that: (1) the Performance Goals for such period
are achieved; and (2) the Performance Formula as applied against such Performance Goals determines
that all or some portion of such Participant’s Performance Award has been earned for the
Performance Period.

          (iii) Certification. Following the completion of a Performance Period, the Committee shall
meet to review and certify in writing whether, and to what extent, the Performance Goals for the
Performance Period have been achieved and, if so, to calculate and certify in writing that amount
of the Performance Compensation Awards earned for the period based upon the Performance Formula.
The Committee shall then determine the actual size of each Participant’s Performance Compensation
Award for the Performance Period and, in so doing, may apply Negative Discretion, if and when it
deems appropriate.

          (iv) Negative Discretion. In determining the actual size of an individual Performance Award
for a Performance Period, the Committee may reduce or eliminate the amount of the Performance
Compensation Award earned under the Performance Formula in the Performance Period through the use
of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate.

          (v) Timing of Award Payments. The Awards granted for a Performance Period shall be paid to
Participants as soon as administratively possible following completion of the certifications
required by this Section 11; provided that in no event shall any Award granted

- 12 -

 

for a Performance Period be paid later than the fifteenth day of the third month following the
end of such Performance Period.

          (vi) Maximum Award Payable. As provided in Section 4(a)(i) hereof, the maximum Performance
Compensation Award payable to any one Participant under the Plan for a Performance Period is
450,000 Shares or, in the event the Performance Compensation Award is paid in cash, the equivalent
cash value thereof on the last day of the Performance Period to which such Award relates.
Furthermore, any Performance Compensation Award that has been deferred shall not (between the date
as of which the Award is deferred and the payment date) increase (i) with respect to the
Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year
greater than a reasonable rate of interest set by the Committee
prior to the applicable
fiscal year; or (ii) with respect to a Performance Compensation Award that is payable in Shares, by
an amount greater than the appreciation of a Share from the date such Award is deferred to the
payment date.

     Section 12. Amendment and Termination.

     (a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate
the Plan or any portion thereof at any time; provided that if an amendment to the Plan that (i)
would materially increase the benefits accruing to Participants under the Plan; (ii) would
materially increase the number of securities which may be issued under the Plan; (iii) would
materially modify the requirements for participation in the Plan; or (iv) must otherwise be
approved by the stockholders of the Company in order to comply with applicable law or the rules of
the Nasdaq Stock Market, or, if the Shares are not traded on the Nasdaq Stock Market, the principal
national securities exchange upon which the Shares are traded or quoted; such amendment will be
subject to stockholder approval and will not be effective unless and until such approval has been
obtained; and provided, further, that any such amendment, alteration, suspension, discontinuance,
or termination that would impair the rights of any Participant or any holder or beneficiary of any
Award previously granted shall not be effective without the written consent of the affected
Participant, holder, or beneficiary.

     (b) Amendments to Awards. The Committee may waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel, or terminate, any Award theretofore granted;
provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation, or
termination that would impair the rights of any Participant or any holder or beneficiary of any
Award previously granted shall not be effective without the written consent of the affected
Participant, holder or beneficiary.

     (c) Adjustment of Awards upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee is hereby authorized to make equitable adjustments in the terms and conditions of, and
the criteria included in, all outstanding Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(b) hereof) affecting the Company,
any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee determines, after
consultation with its advisors, that such adjustments are appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made available under the Plan.

- 13 -

 

     (d) Repricing. Except in connection with a corporate transaction or event described in
Section 4(b) hereof, the terms of outstanding Awards may not be amended to reduce the exercise
price of Options or the grant price of Stock Appreciation Rights, or cancel Options or Stock
Appreciation Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with
an exercise price or grant price, as applicable, that is less than the exercise price of the
original Options or grant price of the original Stock Appreciation Rights, as applicable, without
stockholder approval.

     Section 13. Change of Control.

     (a) Except as otherwise provided in an Award Agreement or by the Committee in a written
resolution at the date of grant, to the extent outstanding Awards granted under this Plan are not
assumed, converted, or replaced by the resulting entity in the event of a Change of Control, all
outstanding Options and Stock Appreciation Rights shall become fully exercisable, all restrictions
with respect to outstanding Awards shall lapse and become vested and non-forfeitable, and any
specified Performance Goals with respect to outstanding Awards shall be deemed to be satisfied at
target, provided that payment of restricted and Performance Awards or Performance Compensation
Awards shall be made in accordance with Section 13(d).

     (b) Except as otherwise provided in an Award Agreement or by the Committee in a written
resolution at the date of grant or thereafter, to the extent outstanding Awards granted under this
Plan are assumed, converted, or replaced by the resulting entity in the event of a Change of
Control, (i) any outstanding Awards that are subject to Performance Goals shall be converted by the
resulting entity as if target performance had been achieved as of the date of the Change of
Control; (ii) each Performance Award or Performance Compensation Award with service requirements
shall continue to vest with respect to such requirements during the remaining period set forth in
the Award Agreement; and (iii) all other Awards shall continue to vest (and/or the restrictions
thereon shall continue to lapse) during the remaining periods set forth in the Award Agreement.

     (c) Except as otherwise provided in an Award Agreement or by the Committee in a written
resolution at the date of grant or thereafter, to the extent outstanding Awards granted under this
Plan are either assumed, converted, or replaced by the resulting entity in the event of a Change of
Control, if a Participant’s employment or service is terminated without Cause by the Company or an
Affiliate or a Participant terminates his or her employment or service with the Company or an
Affiliate for Good Reason (if applicable), in either case, during the twelve (12) month period
following a Change of Control, all outstanding Options and Stock Appreciation Rights held by the
Participant shall become fully exercisable and all restrictions with respect to outstanding Awards
shall lapse and become vested and non-forfeitable.

     (d) Notwithstanding anything in this Plan or any Award Agreement to the contrary, to the
extent any provision of this Plan or an Award Agreement would cause a payment of nonqualified
deferred compensation that is subject to Section 409A of the Code to be made upon the occurrence of
(i) a Change of Control, then such payment shall not be made unless such Change of Control also
constitutes a “change in ownership,” “change in effective control,” or “change in ownership of a
substantial portion of the Company’s assets” within the meaning of Section 409A of the Code or (ii)
a termination of employment or service, then such payment

- 14 -

 

shall not be made unless such termination of employment or service also constitutes a
“separation from service” within the meaning of Section 409A of the Code. Any payment that does
not comply with the preceding sentence shall be made in accordance with the payment schedule that
would have applied in the absence of a Change of Control or termination of employment or service,
but disregarding any performance requirements and substituting the passage of time for any future
service requirements and any Performance Periods. If a Change of Control constitutes a “change of
control” within the meaning of Code Section 409A, payment shall be made in a lump sum within ten
business days of the Change of Control unless the Award Agreement specifies otherwise. If a
termination following a Change of Control qualifies as a “separation from service” within the
meaning of Code Section 409A, distribution will be made in a lump sum within sixty (60) days of the
separation from service date unless the Award Agreement specifies otherwise.

     Section 14. General Provisions.

     (a) Nontransferability.

          (i) Each Award, and each right under any Award, shall be exercisable only by the Participant
during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s
legal guardian or representative.

          (ii) No Award may be sold, assigned, alienated, pledged, attached, or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and
any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided that the designation of a
beneficiary shall not constitute a sale, assignment, alienation, pledge, attachment, transfer or
encumbrance.

     (b) No Rights to Awards. No Participant or other Person shall have any claim to be granted
any Award, and there is no obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and
interpretations with respect thereto need not be the same with respect to each Participant (whether
or not such Participants are similarly situated).

     (c) Share Certificates. Shares or other securities of the Company delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Shares or other securities
are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such restrictions.

     (d) Withholding. (i) A Participant may he required to pay to the Company or any Affiliate,
and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any
Award, from any payment due, or transfer made under any Award or under the Plan, or from any
compensation or other amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in

- 15 -

 

respect of an Award, its exercise, or any payment, or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.

          (ii) Without limiting the generality of clause (i) above, a Participant may satisfy, in whole
or in part, the foregoing withholding liability by delivery of Shares owned by the Participant
(which are not subject to any pledge or other security interest and which have been owned by the
Participant for at least six (6) months and acquired other than through an Incentive Stock Option)
with a Fair Market Value equal to such withholding liability or by having the Company withhold from
the number of Shares otherwise issuable pursuant to the exercise of the Option a number of Shares
with a Fair Market Value equal to such withholding liability.

     (e) Award Agreements. Each Award hereunder shall he evidenced by an Award Agreement which
shall he delivered to the Participant and shall specify the terms and conditions of the Award and
any rules applicable thereto, including but not limited to the effect on such Award of the death,
disability, or termination of employment or service of a Participant and the effect, if any, of
such other events as may he determined by the Committee.

     (f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Affiliate from adopting or continuing in effect other compensation arrangements,
which may, but need not, provide for the grant of options, restricted stock, shares and other types
of awards provided for hereunder (subject to stockholder approval if such approval is required),
and such arrangements may be either generally applicable or applicable only in specific cases.

     (g) No Right to Employment. The grant of an Award shall not he construed as giving a
Participant the right to be retained in the employ of, or in any consulting relationship to, or as
a director on the Board or board of directors, as applicable, of, the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss a Participant from employment or
discontinue any consulting relationship, free from any liability or any claim under the Plan,
unless otherwise expressly provided in any applicable employment contract or agreement.

     (h) No Rights as Stockholder. Subject to the provisions of the applicable Award, no
Participant or holder or beneficiary of any Award shall have any rights as a stockholder with
respect to any Shares to be distributed under the Plan until he or she has become the holder of
such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the Participant shall not be
entitled to the rights of a stockholder in respect of such Restricted Stock.

     (i) Governing Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of Delaware, applied without giving effect to its conflict of laws principles.

     (j) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award,

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or would disqualify the Plan or any Award under any law deemed applicable by the Committee,
such provision shall be construed or deemed amended to conform to the applicable laws, or if it
cannot be construed or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall he stricken as to such
jurisdiction, Person, or Award and the remainder of the Plan and any such Award shall remain in
full force and effect.

     (k) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder, or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant, holder, or
beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal securities laws.

     (l) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any Affiliate.

     (m) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall he canceled, terminated, or otherwise eliminated.

     (n) Deferrals. In the event the Committee permits a Participant to defer any Award payable in
the form of cash, all such elective deferrals shall be accomplished by the delivery of a written,
irrevocable election by the Participant on a form provided by the Company. All deferrals shall be
made in accordance with administrative guidelines established by the Committee to ensure that such
deferrals comply with all applicable requirements of Section 409A of the Code.

     (o) Disqualifying Dispositions. A Participant shall be obligated to give the Company or any
Affiliate for which the Participant works notice of any disposition of any Incentive Stock Option
prior to the applicable holding periods.

     (p) Headings. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.

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     Section 15. Compliance with Section 409A of the Code.

     (a) To the extent applicable, it is intended that this Plan and any grants made hereunder
comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of
Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made
hereunder shall be administered in a manner consistent with this intent.

     (b) Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the
right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable
under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment. Except as permitted under Section 409A of the
Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a
Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced
by, or offset against, any amount owing by a Participant to the Company or any of its Affiliates.

     (c) If, at the time of a Participant’s separation from service (within the meaning of Section
409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section
409A of the Code and using the identification methodology selected by the Company from time to
time) and (ii) the Company shall make a good faith determination that an amount payable hereunder
constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of
which is required to be delayed pursuant to the six- (6-) month delay rule set forth in Section
409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the
Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it,
with interest, on the earlier of the first business day of the seventh month following the
separation from service date or within 60 days following the date of death.

     (d) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light
of the uncertainty with respect to the proper application of Section 409A of the Code, the Company
shall amend this Plan and grants hereunder as the Company deems necessary or desirable to avoid the
imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant shall
he solely responsible and liable for the satisfaction of all taxes and penalties that may he
imposed on a Participant or for a Participant’s account in connection with this Plan and grants
hereunder (.including any taxes and penalties under Section 409A of the Code), and
neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise
hold a Participant harmless from any or all of such taxes or penalties.

     Section 16 Term of the Plan.

     (a) Effective Date. The Plan shall be effective as of the date of its approval by the Board
(the “Effective Date”), subject to approval of the Plan by the stockholders of the Company.

     (b) Expiration Date. No grant will be made under this Plan more than ten (10) years after the
Effective Date, but all grants made on or prior to such date will continue in effect thereafter
subject to the terms thereof and of this Plan.

* * *

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