EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of September 1,
2006 to be effective as of the date services were first rendered, by
Monarch Staffing, Inc., a Nevada corporation (the "Company") and Xxxx
Xxxxxxxx (the "Executive").
WHEREAS, the Company desires to retain the services of a Chief Executive
Officer of the Company 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 two years, upon the terms and subject
to the conditions set forth in this Agreement. Employment may be sooner
terminated under other terms of this Agreement and is automatically
renewable for successive one-year terms as set forth herein. 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 Chief
Executive Officer of the Company. 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.
3. COMPENSATION; BENEFITS. In consideration of the services rendered to
the Company by the Executive, the Company shall provide the Executive will
the following compensation and benefits during the Employment Term:
(a) Salary.
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(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. The Company
understands that Executive is, and expects to remain during the Employment
Term, a resident of the State of Utah.
(b) Bonus.
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The Company will pay the Executive a quarterly bonus (the
"Bonus") equal to 5% of the excess, if any, of (x) 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.
(c) Options.
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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.
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(i) The Executive will be entitled to the following time off from
work with pay: (A) all legal and religious holidays, and (B) two weeks
vacation per annum. 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 at the
Executive's home-based office in Park City, Utah: laptop computer, smart
phone (Treo), printer, scanner (or fax), and business phone. The Company
will provide the Executive with a monthly allowance of $250 as
reimbursement for the expense of maintaining a business telephone line,
cell phone usage and internet broadband service. 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, 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.
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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 two years after the
effective date of this Agreement, if either the Company or the Executive
have given 30 (thirty) days' advance written notice of termination (the
"Expiration Date"). If no such notice is given, the Agreement and
Executive's employment shall automatically renew for successive one-year
terms until terminated by either party;
(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 if (i) 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) or (ii) the Company reasonably
determines that the Executive is unable to perform his duties, services and
responsibilities by reason of illness or incapacity (whether physical or
otherwise) for a total of 30 calendar days in any twelve-month period
during the Employment Term. 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
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(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, or, if the
Agreement has been renewed, the Company shall pay the Executive the balance
of the Salary payable for the period from the Termination Date through the
end of the one-year renewal period.
5. EMPLOYEE COVENANTS.
(a) Trade Secrets and Proprietary Information.
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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.
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(b) Prohibited and Competitive Activities.
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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.
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(c) Remedies.
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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, 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.
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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:
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(i) 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.
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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]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
"Company"
Monarch Staffing, Inc.
By: ___________________________
Name: Xxxxx Xxxxxxx
Title: Chairman of the Board of Directors
"Executive"
Xxxx Xxxxxxxx
By: ___________________________
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