Employment Agreement by Monarch Staffing, Inc. of David Walters
Effective April 1, 2006
Monarch Staffing, Inc., a Nevada corporation ("Employer") hereby hires David
Walters ("Employee") as its Chief Executive Officer, as well as appoints him
as its Chairman of the Board of Directors. As such, Employer and Employee
agree that the following terms and conditions shall be all of the material
terms and conditions of Employee's employment by Employer. This agreement,
upon due execution by Employer and Employee, shall supersede in its entirety
any other prior agreements or understandings whether written or oral, other
than the written Indemnification of Officer and Director agreement. This
agreement, together with the Indemnification of Officer and Director
agreement, is an integrated document and sets forth all of the material terms
and conditions of Employee's employment with Employer and may only be amended
in a writing specifically providing as such that is signed by the Employer and
Employee.
Employer and Employee hereby agree that the material terms and conditions of
Employee's employment by Employer are as follows:
1. The term of Employee's employment with Employer shall be for an
initial period of two years ("Initial Term") commencing on April 1, 2006 (the
"Commencement Date") and shall continue thereafter as herein provided for one
(1) year terms unless (i) notice that the agreement is not being renewed is
provided by either Employer or Employee in compliance with paragraph 4 below
(the "Expiration Date") or (ii) the agreement is terminated pursuant to the
provisions of paragraph 5 below;
2. Employee's job title during the Initial Term and any Renewal Term
shall be Chief Executive Officer and he shall report to the Board of
Directors. All other employees and officers of Employer shall report to
Employee. Employee shall also be the Chairman of the Board of Employer.
Employee shall have all of the powers and duties commensurate of a Chief
Executive Officer of a publicly traded company of similar capitalization as
Employer;
3. Employer shall provide all certifications and resources to Employee
as may be required from time to time to operate Employer in compliance with
applicable laws, including but not limited to the Sarbanes Oxley Act;
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4. Either Employer or Employee may give notice of non-renewal of
Employee's employment beyond the expiration of the Initial Term by giving
written notice to the other no less than ninety (90) days prior to the
expiration of the Initial Term. If neither Employer nor Employee provides
such non-renewal notice to the other ninety (90) days prior to the expiration
of the Initial Term, then Employee's employment with Employer shall
automatically renew for a one (1) year term at the compensation (including
bonus structure and stock options) set by the Compensation Committee of
Employer, which compensation shall be no less than 110% of the Employee's
compensation in effect for the year immediately preceding the renewal. The
term of the renewal agreement shall commence immediately upon the expiration
of the Initial Term and run for a 1-year period (the "Renewal Term").
Thereafter the employment of Employee by Employer shall renew for successive 1
year periods unless either party provides written notice to the other no later
than ninety (90) days prior to the expiration of the 1 year Renewal Term;
5. "Termination of Employment and Compensation Thereon."
Employee's employment by Employer shall terminate on the earliest to occur of
(i) the Expiration Date; or (ii) if the Employee's employment is terminated
(x) by his death, the date of death, or (y) for any other reason permitted by
this agreement, the date on which such termination is to be effective pursuant
to the notice of termination given by the party terminating the employment
relationship;
(a) Death. The Employee's employment hereunder shall terminate upon the
close of business on the date of his death. In such event, the Employer shall
pay to such person as the Employee shall have designated in a notice filed
with Employer, or if no such person shall have been designated, to his estate,
as provided in paragraph 5(d);
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(b) Incapacity. If in the reasonable judgment of the Board Of
Directors of the Employer, as a result of the Executive's incapacity due to
physical or mental illness or otherwise, the Employee shall for at least three
(3) consecutive months during the term of this agreement have been unable to
perform his duties under this agreement on substantially a full time basis,
the Employer may terminate the Employee's employment as provided in this
paragraph 5(b). If the Employer desires to so terminate Employee's
employment, the Employer shall:
i. give prompt written notice to Employee of any such termination; and
ii. until the Expiration Date, continue to pay to the Employee or in the
event of Employee's subsequent death, such person as the Employee shall have
designated in a notice filed with the Employer, or, if no such person shall
have been designated, to his estate, as provided in paragraph 5(d).
Any dispute between the Board of Directors of Employer and Employee with
respect to the Employee's incapacity shall be settled by reference to a
competent medical authority mutually agreed to by the Board of Directors and
the Employee or his duly authorized representative, whose decision shall be
binding on all parties;
(c) Termination by Employer. Employer may terminate Employee'
employment at any time for "Cause." The effective date of such termination of
employment shall be the close of business on the prospective termination date
set forth in the written notice of termination of employment provided by
Employer to Employee through which Employer notifies Employee of the basis for
the "Cause" warranting Employee's termination of employment. For purposes of
this agreement "Cause" shall be defined to mean (i) the conviction of Employee
of a felony or a crime substantially involving Employee's personal dishonesty
or moral turpitude, (ii) Employee's material breach of this agreement, (iii)
substance abuse by Employee that materially prevents Employee from carrying
out his duties and responsibilities to Employer for which Employee refuses to
enter a qualified rehabilitation program, or (iv) breach of any fiduciary
duties and responsibilities he may have because of any position he holds with
Employer; provided, however, if the action or failure to act on the part of
the Employee that would otherwise constitute "Cause" is
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susceptible to cure, then in order to constitute "Cause", the Employer must
notify the Employee in writing of its intent to terminate the Employee for
"Cause" and the reason therefore with as much specificity as reasonable under
the circumstances, and provide Employee thirty (30) days from the date of such
notice to Employee to effect a cure. Should Employer terminate Employee's
employment for "Cause", Employee shall not be entitled to receive any
additional payments for the remaining portion of the Initial Term or Renewal
Term, as applicable, other than unpaid salary and other benefits accrued
through the date of such termination. A termination of Employee's employment
for any other reason other than as expressly provided in this subparagraph
shall be a termination "without Cause;"
(d) Other than for "Cause", Employer may only terminate Employee's
employment by paying employee for the balance, as applicable, of the Initial
Term or the Renewal Term remaining after the date of termination of employment
by Employer, as well as the Employee Severance;
6. Year 1 Compensation shall mean (a) a payment of $33,750 in cash upon
execution hereof and (b) annual base salary of $135,000.00 payable in cash
payable semi-monthly Employee's base salary shall at no time be adjusted
below $135,000 during the Initial Term of employment. Employer and Employee
shall also agree upon an appropriate bonus plan for Employee, which shall be
in addition to the above forms of compensation;
7. Year 2 Compensation shall mean (i) an annual base salary of
$160,000.00 payable in cash. Employee's base salary shall at no time be
adjusted below $160,000 during the Renewal Term of employment. Employer and
Employee shall mutually agree upon a bonus plan, which shall be in addition to
the above compensation;
8. "Employee Severance Payment" shall mean, in addition to the salary
and benefits due Employee during the Initial Term or the Renewal Term, one (1)
additional year of salary and benefits at the then rate prevailing rate for
the year in which Employee's employment is terminated by Employer without
"Cause;"
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9. Employee shall be entitled to a car allowance of $700 per month paid
by Employer;
10. Vacation Pay. Employee shall be entitled to take three (3) weeks of
paid vacation per year, which paid time off shall be in addition to the
Employer observed holidays;
11. During the Initial Term and any Renewal Term Employer agrees to
maintain an office for Employee to work out of in Orange County California
irrespective of wherever Employer may elect to relocate Employer's offices;
12. Employer agrees to pay on no less than a monthly basis the cell
phone expense of Employee's cell phone, reasonable business promotion expenses
incurred by Employee for the benefit of Employer, and travel and meal related
expenses incurred by Employee for Employer's business;
13. Employer agrees to use it's best efforts to obtain Director and
Officer Liability insurance with such insurers that are rated no less than A++
with no less than a three million dollar ($3,000,000.00) policy limit that
shall not be reduced through the payment of defense costs on any claims made
against the policy for all periods of time during, and for one year following
the termination of, Employee's employment with Employer in such amounts as are
reasonable for the size of Employer's business. Such policy, if and once
obtained, shall name Employee specifically or by reference to positions held
by Employee, as an insured or additional insured under such policy of
insurance and the deductible, if any, for such insurance shall not exceed
$25,000.00. Should a policy be obtained, to the fullest extent permitted by
law, Employer agrees to timely pay the full amount of the deductible on all
claims made against the policy and agrees that Employee shall have no
responsibility to pay any portion of the deductible, and that Employer shall
hold Employee free and harmless from the payment of or responsibility for any
amount of the deductible;
14. Employer further agrees to indemnify, defend, and hold harmless
Employee from any and all claims to the fullest extent permitted by Delaware
law;
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15. Should a change of control take place either at any time prior to or
within six (6) months following the expiration of the Initial Term or the
Renewal Term, then 100% of Employee's unvested stock options shall accelerate
and immediately vest;
16. Employer shall reimburse Employee for his out of pocket legal
expense incurred in connection with this memorandum of understanding
concerning Employee's terms of employment and the preparation and finalization
of a definitive employment agreement; and
17. Employer acknowledges that Employee is a member and managing
director of Monarch Bay Capital Group LLC and Monarch Bay Management Company
LLC, and that Employee will continue to have such interests during all or part
of the Initial Term and/or any Renewal Term.
18. Where specified in this Agreement, Employer notification to Employee
shall consist of written notification signed by more than fifty percent (50%)
of the disinterested Board of Directors of Employer. Disinterested Board of
Directors of Employer shall be Board members other than Employee.
Employer and Employer agree that the foregoing accurately reflects all
of the material terms of Employee's employment with Employer and each agrees
to be bound by such material terms and conditions effective as April 1, 2006.
Monarch Staffing, Inc.,
a Nevada corporation
Employer
/s/ Keith Moore
By: Keith Moore
Its: Director
Dated: March 21, 2006
David Walters
Employee
/s/ David Walters
By: David Walters
Dated: March 21, 2006
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