EMPLOYMENT AGREEMENT
Exhibit
10.3
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of July 1, 2007 to be
effective as of the date services were first rendered, by Monarch Staffing,
Inc., a Nevada corporation (the “Company”) and Xxxxx X. Xxxx (the
“Executive”).
WHEREAS,
the Company desires to retain the services of Executive and the Executive
desires to render such services on the terms and conditions set forth
herein;
NOW,
THEREFORE, in consideration of the mutual promises contained herein, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Employment
Term. The Company employs the Executive and the Executive
accepts employment by the Company for one year, upon the terms and subject
to
the conditions set forth in this Agreement. Employment may be sooner
terminated under other terms of this Agreement. The period of the
Executive’s employment by the Company hereunder is referred to herein as the
“Employment Term”.
2. Responsibilities
and Reporting. The Executive shall devote the Executive's
time, efforts, attention and skill to, and shall perform faithfully, loyally
and
efficiently the Executive's duties as the President and Chief Operating Officer
of the Company (for the period from July 1 through August 31, 2007) and as
the
Chief Executive Officer of the Company (from and after September 1,
2007). Executive shall have such responsibilities and duties as may,
from time to time, be designated by the Company. The Executive shall report
to the
Company’s Board of Directors. Further, the Executive will punctually
and faithfully perform and observe all rules and regulations which the Company
may now or shall hereafter reasonably establish governing the Executive's
conduct and the conduct of the Company's business which are consistent with
this
Agreement. Executive further agrees that Executive will devote all of
Executive’s business time and attention to the business of the Company, except
that Executive may engage in a reasonable amount of related and complementary
activities in operation of his company Sanspar, Inc.; provided that such
activities are consistent with Executive’s position with the Company and do not
interfere with Executive’s duties to the Company. Executive will not
render commercial or professional services of any nature to any other person
or
organization, whether or not for compensation, without the prior written consent
of the Board of Directors.
3. Compensation;
Benefits. In consideration of the services rendered to the
Company by the Executive, the Company shall provide the Executive with the
following compensation and benefits during the Employment Term:
(a) Salary.
(i) The
Company will pay the
Executive a salary at the annual rate of $160,000 (the “Salary”). The
Company will evaluate the Executive’s performance six months following the date
hereof and will consider whether an adjustment in the Salary is
appropriate. Thereafter, performance appraisals and Salary
adjustments will occur on each anniversary date of hire.
(ii) The
Salary shall be payable in accordance with the normal payroll practices of
the
Company then in effect. The Salary, and all other forms of
compensation paid to the Executive hereunder, shall be subject to all applicable
taxes required to be withheld by the Company pursuant to federal, state or
local
law. The Executive shall be solely responsible for income taxes
imposed on the Executive by reasons of any cash or non-cash compensation and
benefits provided by this Agreement.
(b) Bonus. The
Company will pay the Executive a quarterly bonus (the “Bonus”) equal to the
excess, if any, of (x) 10% of EBITDA (as defined below) from the date hereof
through the end of such fiscal quarter, over (y) the cumulative amount of Bonus
that has been paid to Executive pursuant to this Section 3(b) for prior
periods. The Bonus will be payable within 45 days following the end
of each fiscal quarter. “EBITDA” means the earnings before
interest, taxes, depreciation and amortization of the Company, as determined
by
Company (calculated to include revenue from only normal business operations
and
to exclude any extraordinary or nonrecurring income items).
(c) Options. The
Company will grant to Executive an option to purchase a number of shares of
the
Company’s common stock equal to 8% of the number of currently outstanding shares
of common stock. The exercise price of such option will
be: (i) $0.25/share (with respect to 25% of the shares), (ii)
$0.50/share (with respect to 25% of the shares), (iii) $0.75/share (with respect
to 25% of the shares), and (iv) $1.00/share (with respect to 25% of the
shares). The option will vest 20% upon grant, and thereafter equally
per quarter over the next succeeding eight quarters, and, so long as you
continue to be employed by the Company. The option will remain
exercisable during the Employment Term and for a period of 90 days thereafter;
provided that upon any termination of Executive’s employment pursuant to clause
(vi) of Paragraph 4 below, the option will remain exercisable through the
Expiration Date (as defined below).
(d) Expenses
and Benefits.
(i) The
Executive will be entitled to the following time off from work with pay: (A)
all
legal and religious holidays, and (B) three weeks vacation per annum (after
completing six months of employment). The Executive shall arrange for
vacations in advance at such time or times as shall be mutually agreeable to
the
Executive and the Company’s Board of Directors. The Executive may not
receive pay in lieu of vacation.
(ii) The
Company will provide the Executive with, or reimburse the Executive for the
cost
of obtaining, medical and dental insurance for Executive and members of his
immediate family. The Executive may participate in all other employee
benefit plans and/or arrangements adopted by the Company relating to pensions,
hospital, medical, dental, disability and life insurance, deferred salary and
savings plans, and other similar employee benefit plans or arrangements to
the
extent that the Executive meets the eligibility requirements for any such plan
as in effect from time to time.
(iii) The
Company will provide the Executive with, or reimburse the Executive for the
cost
of purchasing the following equipment for use by Executive in connection with
his employment hereunder: laptop computer and mobile or smart
phone In addition, the Company will pay, or the Executive will
receive reimbursement by the Company, for reasonable and customary business
and
out-of-pocket expenses incurred by the Executive in connection with the
performance by the Executive of the Executive's duties under this Agreement
in
accordance with the Company's policies and practices for reimbursement of such
expenses, as in effect from time to time, including, without limitation, charges
for the maintenance and operation of a cellular phone and internet services,
reasonable and necessary travel, lodging, entertainment and meals incurred
by
the Executive in furtherance of the Company's business and at the Company's
request.
4. Termination
of Employment. The Executive's employment hereunder shall
terminate upon the earliest to occur of any the following events, on the dates
and at the times specified below:
(i) the
close of business on the date that is one year after the effective date of
this
Agreement, unless renewed in writing by the Company and the Executive (the
“Expiration Date”);
(ii) the
close of business
on the date of the Executive's death (“Death”);
(iii) the
close of business
on the Termination Date (as defined below) specified in the Notice of
Termination (as defined below) which the Company shall have delivered to the
Executive due to the Executive's Disability. "Disability" shall mean
(i) if the Executive is absent from work for 30 calendar days in any
twelve-month period by reason of illness or incapacity whether physical or
otherwise; and (ii) a medical doctor certifies that Executive is disabled from
performing the essential functions of his job, including attendance, with or
without accommodation, and that he cannot attend work. The Executive
agrees, in the event of any dispute under this Section, and after receipt by
the
Executive of such Notice of Termination from the Company, to submit to a
physical examination by a licensed physician selected by the
Company. The Executive may seek a second opinion from a licensed
physician acceptable to the Company. If the results of the first
examination and the second examination are different, a licensed physician
selected by the physicians who have performed the first and second examinations
shall perform a third physical examination of the Executive, the result of
which
shall be determinative for purposes of this Section;
(iv) the
close of business
on the Termination Date specified in the Notice of Termination which the
Executive shall have delivered to the Company to terminate his employment
(“Voluntary Termination”);
(v) the
close of business on
the Termination Date specified in the Notice of Termination which the Company
shall have delivered to the Executive to terminate the Executive's employment
for Cause. “Cause” as used herein means termination based on (i) the
Executive's material breach of this Agreement, (ii) conviction of the Executive
for (a) any crime constituting a felony in the jurisdiction in which committed,
(b) any crime involving moral turpitude whether or not a felony), or (c) any
other criminal act against the Company involving dishonesty or willful
misconduct intended to injure the Company (whether or not a felony), (iii)
substance abuse by the Executive, (iv) the failure or refusal of the Executive
to follow one or more lawful and proper directives of the Board of Directors
delivered to the Executive in writing, or (v) willful malfeasance or gross
misconduct by the Executive which discredits or damages the Company;
and
(vi) the
close of business on the Termination Date specified in the Notice of Termination
which the Company shall have delivered to the Executive to terminate the
Executive's employment other than for Cause.
Any
purported termination by the
Company or the Executive (other than by reason of Death or on the Expiration
Date) shall be communicated by written Notice of Termination to the
other. As used herein, the term “Notice of Termination” shall mean a
notice which indicates the specific termination provision in this Agreement
relied upon and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. After receipt of a Notice of Termination
related to a Voluntary Termination, the Executive shall continue to be available
to the Company on a part-time basis at reasonable and customary hourly rates
to
assist in the necessary transition.
As
used herein, the term “Termination
Date” shall mean, (i) in the case of Death, the date of the Executive's death,
(ii) in the case of expiration of the term hereof, the Expiration Date, or
(iii)
in all other cases, the date specified in the Notice of
Termination.
Upon
the
termination of Executive’s employment, the Company shall pay to the Executive
within five (5) days all sums due hereunder earned prior to or on the
Termination Date; provided that upon any termination of Executive’s employment
pursuant to clause (vi) of this Paragraph 4, the Company shall pay the Executive
the balance of the Salary payable for the period from the Termination Date
through the Expiration Date.
5. Employee
Covenants.
(a) Trade
Secrets and
Proprietary Information. The Executive agrees and understands
that due to the Executive's position with the Company, the Executive will be
exposed to, and has received and will receive, confidential and proprietary
information of the Company or relating to the Company's business or affairs
collectively, the “Trade Secrets”), including but not limited to technical
information, product information and formulae, processes, business and marketing
plans, strategies, customer information, other information concerning the
Company's services or products, promotions, development, financing, expansion
plans, business policies and practices and other forms of information considered
by the Company to be proprietary and confidential and in the nature of trade
secrets. Trade Secrets shall not include any such information which (A) was
known to the Executive prior to his employment by the Company or (B) was or
becomes generally available to the public other than disclosure by the Executive
in violation of the provisions of this Section. Except to the extent
that the proper performance of the Executive's duties, services and
responsibilities hereunder may require disclosure, the Executive agrees that
during the Employment Term and at all times thereafter the Executive will keep
such Trade Secrets confidential and will not disclose such information, either
directly or indirectly, to any third person or entity without the prior written
consent of the Company. This confidentiality covenant has no
temporal, geographical or territorial restriction. On the Termination
Date unless the Executive remains as an employee of the Company thereafter
(in
which case, on the date which the Executive is no longer an employee of the
Company), the Executive will promptly supply to the Company all property, keys,
notes, memoranda, writings, lists, files, reports, customer lists,
correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical
data, formulae or any other tangible product or document which has been produced
by, received by or otherwise submitted to and retained by the Executive in
the
course of his employment with the Company. Any material breach of the
terms of this Paragraph shall be considered Cause.
(b) Prohibited
and
Competitive Activities. The Executive and the Company recognize
that due to the nature of the Executive's engagement hereunder and the
relationship of the Executive to the Company, the Executive has had and will
have access to, has had and will acquire, and has assisted and may continue
to
assist in, developing confidential and proprietary information relating to
the
business and operations of the Company and its affiliates, including, without
limitation, Trade Secrets. The Executive acknowledges that such
information has been and will be of central importance to the business of the
Company and its affiliates and that disclosure of it to, or its use by, others
(including, without limitation, the Executive (other than with respect to the
Company's business and affairs)) could cause substantial loss to the
Company.
The
Executive and the Company also
recognize that an important part of the Executive's duties will be to develop
good will for the Company and its affiliates through the Executive's personal
contact with Clients (as defined below), employees, and others having business
relationships with the Company, and that there is a danger that this good will,
a proprietary asset of the Company, may follow the Executive if and when the
Executive's relationship with the Company is terminated. The
Executive accordingly agrees that the Executive will not at any time during
the
Employment Term or for a period of twelve months thereafter: (A) (other than
in
the course of the Executive's employment) disclose or furnish to any other
person or, directly or indirectly, use for the Executive's own account or the
account of any other person, any Trade Secrets, no matter from where or in
what
manner he may have acquired such Trade Secrets, and the Executive shall retain
all such Trade Secrets in trust for the benefit of the Company, its affiliates
and the successors and assigns of any of them, (B) directly or through one
or
more intermediaries, solicit for employment or recommend to any subsequent
employer of the Executive the solicitation for employment of, any person who,
at
the time of such solicitation, is employed by the Company or any affiliate,
(C)
directly or indirectly, whether for the Executive's own account or for the
account of any other person, solicit, divert, or endeavor to entice away from
the Company or any entity controlled by the Company, or otherwise engage in
any
activity intended to terminate, disrupt, or interfere with, the Company's or
any
of its affiliates’ relationships with, Clients, or otherwise adversely affect
the Company's or any of its affiliates' relationships with Clients or other
business relationships of the Company or any affiliate thereof, or (D) publish
or make any statement critical of the Company or any shareholder or affiliate
of
the Company or in any way adversely affect or otherwise malign the business
or
reputation of any of the foregoing persons (any activity described in clause
(A), (B), (C) or (D) of this Section being referred to as a Prohibited
Activity”); provided, however, that if in the written opinion of counsel, the
Executive is legally compelled to disclose Trade Secrets to any tribunal or
else
stand liable for contempt or suffer other similar censure or penalty, then
the
disclosure to such tribunal of only those Trade Secrets which such counsel
advises in writing are legally required to be disclosed shall not constitute
a
Prohibited Activity provided that the Executive shall give the Company as much
advance notice of such disclosure as is reasonably practicable. As
used herein, the term “Clients” shall mean those persons who, at any time during
the Executive's course of employment with the Company (including, without
limitation, prior to the date of this Agreement) are or were clients or
customers of the Company or any affiliate thereof or any predecessor of any
of
the foregoing.
(c) Remedies. The
Executive agrees that any breach of the terms of this Section would result
in
irreparable injury and damage to the Company for which the Company would have
no
adequate remedy at law. The Executive therefore agrees that in the event of
said
breach or any threat of breach, and upon proof satisfactory to the court, the
Company shall be entitled to an immediate injunction and restraining order
to
prevent such breach and/or threatened breach and/or continued breach by the
Executive and/or any and all persons and/or entities acting for and/or with
the
Executive, without having to prove damages. The terms of this paragraph shall
not prevent the Company from pursuing any other available remedies to which
the
Company may be entitled at law or in equity for any breach or threatened breach
hereof, including but not limited to the recovery of damages from the Executive.
The provisions of this Section 5 shall survive any termination of this
Agreement.
(d) Proprietary
Information and Inventions. The Executive agrees that any and all
inventions, discoveries, improvements, processes, formulae, business application
software, patents, copyrights and trademarks made, developed, discovered or
acquired by him prior to and during the Employment Term, solely or jointly
with
others or otherwise, which relate to the business of the Company, and all
knowledge possessed by the Executive relating thereto collectively, the
“Inventions”), shall be fully and promptly disclosed to the Board of Directors
and to such person or persons as the Board of Directors shall direct and the
Executive irrevocably assigns to the Company all of the Executive's right,
title
and interest in and to all Inventions of the Company and all such Inventions
shall be the sole and absolute property of the Company and the Company shall
be
the sole and absolute owner thereof. The Executive agrees that he
will at all times keep all Inventions secret from everyone except the
Company and such persons as the Board of Directors may from time to time
direct. The Executive shall, as requested by the Company at any time
and from time to time, whether prior to or after the expiration of the
Employment Term, execute and deliver to the Company any instruments deemed
necessary by the Company to effect disclosure and assignment of the Inventions
to the Company or its designees and any patent applications (United States
or
foreign) and renewals with respect thereto, including any other instruments
deemed necessary by the Company for the prosecution of patent applications,
the
acquisition of letters patent and/or the acquisition of patents or copyrights
in
any and all countries and to vest title thereto in the Company or its
nominee.
6. Representations
and Warranties of the Executive. The Executive represents
and warrants to the Company that:
(i) Except
as set forth in
paragraph 2, above, the Executive's employment by the Company as contemplated
will not conflict with, and will not be constrained by, any prior or current
employment, consulting agreement or relationship, whether written or oral;
and
(ii) The
Executive does not
possess confidential information arising out of any employment, consulting
agreement or relationship with any person or entity other than the Company
which
could be utilized in connection with the Executive's employment by the
Company.
7. Binding
Effect or Assignment. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective heirs, executors,
representatives, estates, successors and assigns, including any successor or
assign to all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition
of
stock, or otherwise; provided, however, that no party hereto shall assign all
or
any portion of the such party’s rights or obligations under this Agreement
without the prior written consent of the other party.
8. Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted, and shall be effective upon
receipt.
9. Amendment
and Modification. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is
agreed to in writing and signed by each of the Executive and the Company. No
such waiver or discharge by either party hereto at any time or any waiver or
discharge of any breach by the other party hereto of, or compliance with, any
condition or provision of this agreement to be performed by such other party,
shall be deemed a waiver or discharge of similar or dissimilar provisions or
conditions, or a waiver or discharge of any breach of any provisions, at the
same or at any prior or subsequent time.
10. Governing
Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of California without giving effect to the conflict
of
law principles of that state.
11. Severability. In
the event that any one or more of the provisions of this Agreement shall be
held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other portion of this
Agreement, and this Agreement shall be construed as if such provision had never
been contained herein.
12. Withholding
Taxes. Notwithstanding anything contained herein to the
contrary, all payments required to be made hereunder by the Company to the
Executive, or his estate or beneficiaries, shall be subject to the withholding
of such amounts as the Company may reasonably determine it should withhold
pursuant to any applicable federal, state or local law or
regulation.
13. Arbitration
of Disputes. The parties hereto mutually consent to the resolution by
arbitration of all claims and controversies arising out of or relating to this
Agreement.
14. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same instrument.
15. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any and all prior agreements, written or
oral, understandings and arrangements, either oral or written, between the
parties with respect to the subject matter, and shall, as of the date hereof,
constitute the only employment agreement between the parties.
16. Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all further acts and things and shall execute and deliver
all other agreements, certificates, instruments, and documents as any other
party reasonably may request in order to carry out the intent and accomplish
the
purposes of this Agreement and the consummation of the transactions
contemplated.
17. Construction.
The headings in this Agreement are for reference purposes only and
shall not limit or otherwise affect the meaning or interpretation of this
Agreement.
[continued
on following page]
IN
WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first above
written.
“Company”
By:
__________________
Name:
Xxxxx Xxxxxxx
Title:
Chairman of the Board of Directors
“Executive”
Xxxxx
X.
Xxxx
By:
______________________
