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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and
entered into as of the 18
th day
of July 2007, by and between U.S. Dry Cleaning Corporation, a
Delaware corporation (the “Company”), and F. Kim Cox
(“Employee”).
RECITALS
WHEREAS,
the Company intends to embark upon a series of acquisitions in
the highly fragmented dry cleaning industry which will require
significant additional financing for the Company plus
financial and operational experience;
WHEREAS,
the Company desires to engage the services of a Chief
Financial Officer (the “CFO”) who can assist its
Chief Executive Officer (the “CEO"”) in
accomplishing the Company’s goals; and
WHEREAS,
Employee has successfully carried out such responsibilities;
and
WHEREAS,
Employee is experienced in managing corporate operations and
finance functions in a public environment; and
WHEREAS,
for all of the reasons set forth above, the Board of Directors
of the Company wishes to employ Employee as the
Company’s CFO; and
WHEREAS,
Employee is willing to be so employed under the terms set
forth in this Agreement;
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing, and of the
mutual covenants and conditions set forth herein, the parties
hereto agree as follows:
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 of three
(3) years from the date hereof, in the capacity of CFO of the
Company, or to serve in such other executive capacity with the
Company as the Company’s CEO may from time to time designate,
provided such assignment is consistent with Employee’s
current position, 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. The 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 CEO.
Employee’s duties shall be designated by the CEO and shall be
subject to such policies and discretions as may be established or
given by the Company 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 CEO, 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 $16,666,667 per
month until the Company achieves monthly revenues from normal
operations in excess of $4,166,667 and positive four-wall
income for all stores considered in the aggregate for any 30
day period, and $20,850.00 per month thereafter.
3.2.
Employee
shall be included in the bonus plans, if any, provided other
executives and such other bonus awards as approved by the CEO
and/or Board of Directors.
3.3.
For
purposes of this Agreement, the term “four-wall
income” shall mean Operating Income computed in
accordance with generally accepted accounting principles plus
Administrative Expenses and Professional Fees. In 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 additional
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 of such discretionary bonus, the
size and nature of the matter, the extra efforts of Employee,
the difficulty of attaining the result that 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 additional bonus, and neither the Company nor the
directors shall have any liability to Employee for any action
or non-action with respect to any such discretionary
additional bonus under this Section 3.3.
3.4.
In
addition to his Base Salary and cash bonuses, if any, the
Employee shall receive the following fully vested options
under the Company’s stock option plan:
Such
options 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 Board of
Directors (with Employee not voting and not present during the
deliberations of the Board of Directors).
(a)
Incentive
stock options to purchase 100,000 shares of the Company’s
common stock at $3.50 per share;
(b)
Incentive
stock options to purchase an additional 100,000 shares of the
Company’s common stock at $5.00 per share,
(c)
Incentive
stock options to purchase an additional 100,000 shares of the
Company’s common stock at $7.00 per share.
4.
Benefits.
4.1.
The
Company shall maintain Employee’s existing life and
disability insurance policies provided such cost shall not exceed
$25,000 annually.
4.2.
It
is anticipated that Employee will spend considerable amount of
time traveling to the Company’s headquarters and 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
CEO 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 $2,000 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.
The
Company acknowledges that Employee maintains his principal
residence in Portland, Oregon. Employee shall not be required
to move his principal residence. Recognizing that Employee
will perform his duties at the Company’s headquarters,
the Company will provide Employee with reimbursement for
housing in Palm Springs, California at such times as Employee
determines necessary or appropriate of up to $4,000.00 per
month. If Employee agrees to change his permanent residence at
the request of the Company, the Company shall pay reasonable
relocation costs, including but not limited to moving
expenses.
4.6.
Employee,
due to his professional degrees in both accounting and
finance, is required to meet certain training classes required
by the relevant licensing authorities. The Company shall treat
the cost of classes as a reimbursable business expense so
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