EMPLOYMENT AGREEMENT
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 Michael Eugene Drace
("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
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