EMPLOYMENT AGREEMENT
Exhibit 10.4
THIS
EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the 29th
day
of July, 2005, by and between U.S. Dry Cleaning Corporation ("the Company")
a
Delaware Corporation, and Xxxxxxx Xxxxxx Xxxxx ("Employee").
1. Term
of Employment.
The
Company hereby employs Employee, and Employee hereby agrees to serve the
Company, under and subject to all of the terms, conditions and provisions of
this Agreement for a period from the date hereof through July 31, 2007, in
the
capacity of Chief Executive Officer of the Company, or to serve in such other
executive capacity with the Company as the Company's board of directors (the
"Board") may from time to time designate, provided such assignment is consistent
with Employee's level of experience and expertise. This Agreement may be
extended for up to three additional years upon mutual written agreement of
the
Company and the Employee. Company
shall give Employee six months advance notice of its intentions regarding such
extension. In
the
performance of his duties and the exercise of his discretion, Employee shall
report only to the Board of Directors. Employee's duties shall be designated
by
the Board and shall be subject to such policies and directions as may be
established or given by the Board from time to time.
2. Devotion
of Time to Company Business.
Employee shall devote substantially all of his productive time, ability and
attention to the business of the Company during the term of this Agreement.
Employee shall not, without the prior written consent of the Board, directly
or
indirectly render any services of a business, commercial or professional nature
to any other person or organization, whether for compensation or otherwise,
which may compete or conflict with the Company's business or with Employee's
duties to the Company.
3. Compensation.
3.1 Base
Salary.
For all
services rendered by Employee under this Agreement, the Company shall pay
Employee a base salary ("Base Salary") payable semi-monthly, at the rate
of$14,585.00 per month for the first year and $15,300.00 per month for the
second year.
3.2 Bonuses.
In
addition to the amount specified in Section 3.1, at the sole discretion of
the
Board of Directors (with Employee not voting and not present during the
deliberations of the Board of Directors), the Company may award discretionary
cash bonuses to Employee for significant accomplishments that produce material
benefits for the Company. In considering whether to award any such discretionary
bonus, the Board shall take into account the size such discretionary bonus,
the
Board shall take into account the size and nature of the matter, the extra
efforts of Employee, the difficulty of attaining the result that he has
attained, the time required to accomplish the result, the merits and benefits
to
the Company, the effect on the market price of the Company's stock, and such
other factors as the Board may deem appropriate. The Board shall not be required
to award any such bonus, and neither the Company nor the directors shall have
any liability to Employee for any action or non-action under this Section
3.2.
3.3 In
addition to the Base Salary and bonuses, if any, the Employee shall participate
in the Company's stock option plan at a level commensurate with the position
of
Chief Operating Officer. The option shall be granted under the Company's stock
option plan and shall be evidenced by a stock option agreement containing terms
and conditions satisfactory to the Company and consistent with stock options
granted by fair market value of the Company's Common Stock on the date of grant,
as determined in good faith by the Board of Directors (with Employee not voting
and not present during the deliberations of the Board of
Directors.)
4. Benefits.
4.1 In
addition to the compensation set forth in Section 3, Employee will be entitled
to participate in all benefits of employment available to other members of
the
Company's management, on a commensurate basis as they may be offered from time
to time by the Board of Directors to the Company's other management employees.
Such benefits include, but are not limited to, full medical, dental and long
term disability insurance for Employee, participation in group life insurance
and retirement plans, and whole life insurance of$ 1,000,000.00 payable to
Employee's designees, provided premium for such policy shall not exceed $18,000
annually. (The company may also purchase and maintain up to $1,000,000.00 of
term life insurance on Employee's life payable to the Company.)
4.2 It
is
anticipated that Employee will spend considerable amount of time traveling
on
behalf of the Company in the discharge of his duties. During the period of
his
employment hereunder, a company credit card will be available for reasonable
business, travel and entertainment expenses incurred in accordance with Company
policy on behalf of the Company in connection with his employment. Additional
out of pocket expenses will be reimbursed when necessary. Employee will be
required to submit appropriate expense reports for approval by signature of
the
Chief Financial Officer or Chairman of the Board as a condition of reimbursement
of such expenses. Frequent traveler bonus points thus earned will accrue to
the
personal account of Employee as additional compensation.
4.3 In
lieu
of a company provided automobile, the Company will pay an expense allowance
for
an automobile owned by Employee, in an amount of $1,500 per month.
4.4 Employee
shall be entitled to one (1)
week
vacation upon completion of every three (3)
full
months of employment under this Agreement. To the extent that Employee does
not
take vacation, Employee may accumulate such vacation time throughout the term
of
this Agreement up to a maximum of six (6)
weeks.
Upon the termination of this Agreement, with or without cause, and to the extent
that Employee has accumulated vacation time up to the maximum allowed, the
Company shall pay to Employee, in addition to all other consideration due
Employee in the event of termination herein, the full value of such accumulated
vacation time commensurate with the Base Salary provided
above.
4.5 Employee
shall not be required to move his principle residence during the first term
of
this agreement. If a change of residence becomes a condition for subsequent
extensions, the Company shall pay reasonable relocation costs, including but
not
limited to moving expenses.
5. Authority.
So long
as Employee serves as Chief Executive Officer of the Company under this
Agreement he shall have the authority specified in the By-Laws of the Company,
except that he shall not proceed with any matters, or permit the Company to
take
any actions, which are prohibited by, or are in conflict with, resolutions
or
guidelines adopted by the Board of Directors; and under no circumstances shall
Employee, without express prior authorization by the Board of Directors, make
any change in capital structure or issue any stock of the Company, incur
additional debt, change the Company's lines of business, or make any other
material changes to the corporate structure and provided further that any
payments or checks in excess of $75,000.00 shall require the signature of two
persons designated by resolution of the Board of Directors.
6. Termination.
This
Agreement shall terminate in advance of the time specified in Section 1 above
(and except as provided herein, Employee shall have no right to receive any
compensation due and payable to his or his estate at the time of such
termination) under any of the following circumstances:
6.1 Upon
the death of Employee during the term of this Agreement, the Company shall
pay
to the estate of Employee Base Salary, bonuses, and any other compensation
accrued or earned by Employee as of the date of death, plus an amount equal
to
(a) six (6) months of Base Salary or (b) the Base Salary that Employee would
have received up to the expiration of the Agreement, whichever period is
less.
6.2 In
the
event that Employee shall become either physically or mentally incapacitated
so
as to not be capable of performing his duties as required hereunder, and if
such
incapacity shall continue for a period of three months consecutively, the
Company may, at its option, terminate this Agreement by written notice to
Employee at that time or at any time thereafter while such incapacity continues.
In case of termination under this Section, Employee or his estate shall be
entitled to receive Base Salary, bonuses and any other compensation accrued
or
earned as of or to the date of termination, and for six months following such
termination or until the expiration of the term of this
Agreement,
whichever is earlier. In
addition, the Company shall permit Employee to participate in Company's medical,
dental, and long term disability and long term care insurance plans,
if
any,
at Employee’s cost, for a period of one (1) year following termination herein
and to the extent permitted by law.
6.3 By
Employee, if the Company shall have materially breached any of
the
provisions of this Agreement; provided,
that
the Company shall pay Employee his Base Salary through the remaining term of
this Agreement.
6.4 By
the
Company at any time, without Cause; provided that the Company
shall pay Employee his Base Salary and any bonuses which would otherwise have
become payable under Section 3.2 above, for six months following such
termination or until the expiration of the term of this Agreement, whichever
is
later.
6.5 By
the
Company for Cause. The term "Cause" used in this Section (6.5)
means Employee., (i) after repeated notices and warnings, fails to perform
his
reasonably assigned duties as reasonably determined by the Company, (ii)
materially breaches any of the terms or conditions of Sections 1 or 2 of this
Agreement, or (iii) commits or engages in a felony or any intentionally
dishonest or fraudulent act which materially damages or may damage the Company's
business or reputation. If the Company terminates Employee for Cause, no
payments or benefits under this
Agreement
shall become payable after the date of Employee's termination.
7. Loyalty,
Non-Competition and Confidentiality.
7.1 Non-
Competition.
Employee agrees and covenants that, except for the benefit of the Company
(and/or successor, parent or subsidiary) during the Non-Competition Period
(as
defined in Section 7(b)) he will not engage, directly or indirectly (whether
as
an officer, director, consultant, employee, representative, agent, partner,
owner, stockholder, or otherwise) in any business engaged in by the Company
in
the Non-Competition Area (as defined in Section 7.3 nor will Employee compete
against the Company for any transaction or corporate opportunity which the
Company has or may have an interest in pursuing. It is the parties' express
intention that if a court of competent jurisdiction finds or holds the
provisions of this Section 7 to be excessively broad as to time, duration,
geographical scope, activity or subject, this Section 7 shall then be construed
by limiting or reducing it so as to comport with then applicable
law.
7.2 Non-Competition
Period.
As used
herein, the ''Non-Competition Period" means the period beginning on the date
hereof and ending on a date which is one
year after
the
later to occur of (i) July 31, 2007 or (ii) the date on which Employee's
employment with the Company terminates; provided however. that if Employee's
employment is terminated by the Company without Cause, the Non-competition
Period shall end on the date of such termination.
7.3 Non-Competition
Area.
As used
herein, the term ''Non- Competition
Area" means anywhere with a three-mile radius of any store operated by the
Company during the term of this agreement.
7.4 Other
Employees.
Employee agrees that during the Non- Competition
Period he shall not, directly or indirectly, for his own account or as agent,
servant or employee of any business entity, engage, hire or offer to hire or
entice away in any other manner persuade any officer, employee or agent of
the
Company or any subsidiary to discontinue his relationship with the Company
or
any subsidiary.
7.5 Confidentiality.
Employee acknowledges that he has learned and will
learn Confidential Information, as defined in Section 7.6, relating to the
business of the Company. Employee agrees that he will not, except in the normal
and proper course of his duties, disclose or use, either during the
Non-Competition Period or subsequently thereto, any such Confidential
Information without prior written approval of the Chairman of the Board of
the
Company.
7.6 Confidential
Information.
"Confidential Information" shall include, but is not limited to, the following
types of information regarding the Company: corporate information, including
contractual arrangements, plans, locations, strategies, tactics, potential
acquisitions or business combinations or joint venture possibilities, policies
and negotiations; marketing information, including sales, purchasing and
inventory plans, strategies, tactics, methods, customers, advertising, promotion
or market research data; financial information, including operating results
and
statistics, costs and performance data, projections, forecasts, investors,
and
holdings; and operational information, including trade secrets, secret formulae,
control and inspection practices, accounting systems and controls, computer
programs and data, personnel lists, resumes, personal data, organizational
structure and performance evaluations. Confidential Information does not include
skills, knowledge and experience acquired by Employee during his employment
with
any prior employer.
7.7 Corporate
Documents.
Employee agrees that all documents of any nature pertaining to activities of
the
Company or to any of the forgoing, matters in his possession now or at any
time
during the Non-Competition Period, including, without limitation, memoranda,
notebooks, notes, computer records, disks, electronic information data sheets,
records and blueprints, are and shall be the property of the Company and that
they and all copies of them shall be surrendered to the Company whenever
requested by the Company from time to time during the Non-Competition Period
and
thereafter and with or without request upon termination of Employee's employment
with the Company.
8. Equitable
Remedies.
In the
event of a breach by Employee of any of the provisions of the Section 7, the
Company, in addition to any other remedies it may have, shall be entitled to
an
injunction restraining Employee from doing or continuing to do any such act
in
violation of the Section 7.
9. Attorney
Fees.
The
successful party in any litigation relating to matters covered by this Agreement
shall be entitled to an award of reasonable attorneys' fees in such
action.
10. Assignment.
Neither
this Agreement nor any of the rights or obligations of either party hereunder
shall be assignable by either Employee or the Company, except that this
Agreement shall, be assignable by the Company to and shall inure to the benefit
of and be binding upon (i) any successor of the Company by way of merger,
consolidation or transfer of all or substantially all of the assets of the
Company to an entity other than any parent, subsidiary or affiliate of the
Company and (ii) any parent, subsidiary or affiliate of the Company to which
the
Company may transfer its rights hereunder.
11. Binding
Effect.
The
terms, conditions, covenants and agreements set forth herein shall inure to
the
benefit of, and be binding upon, the heirs, administrators, successors and
assigns of each of the parties hereto, and upon any corporation, entity or
person with which the Company may become merged, consolidated, combined or
otherwise affiliated.
12. Amendment.
This
Agreement may not be altered or modified except by further written agreement
by
the parties.
13. Notices.
Any
notice required or permitted to be given under this Agreement by one party
to
the other shall be sufficient if given or confirmed in writing and delivered
personally or mailed by first class mail, registered or certified, return
receipt requested (if mailed from the Untied States), postage prepaid, or sent
by facsimile transmission, addressed to such party as respectively indicated
below or as otherwise designated by such party in writing.
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If
to the Company, to:
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U.S.
Dry Cleaning Corporation
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00-000
Xxxx Xxxx Xxxxx Xxxxx 000
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Xxxxxxxxx
Xxxx, XX. 00000
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Attn:
Chairman of the Board
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Fax:
(000)000-0000
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If
to Employee, to:
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Xxxxxxx
X. Xxxxx
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000
Xxxxxxx Xxxxxx
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Xxxxxx,
XX 00000
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14. California
Law.
This
Agreement is being executed and delivered and is intended to be performed and
shall be governed by and construed in accordance with the laws of the State
of
California.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
U.S.
Dry
Cleaning Corporation
/s/
Xxxxxx
X. Xxx
By:
Xxxxxx X. Xxx, Chairman of the Board of Directors
/s/ Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx
Xxxxxx Xxxxx
