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Title: |
Employment Agreement |
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Date: |
2001 |
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Price: |
$38 |
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ID: |
#855816 |
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EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of the 28th day of June, 2001, by and between MOTO PHOTO, INC. a Delaware corporation ("Employer"), and LAWRENCE P. DESTRO ("Employee"). This Agreement is based on the following understandings:
a. Employer is the franchisor and operator of retail stores providing one hour photo processing, portraiture, and related imaging services and merchandise. Employer's system (the "System") of franchised and Employer-owned stores has approximately 321 stores in the United States and approximately 36 in Canada.
b. Employer wishes to employ Employee to secure his leadership of Employer in meeting the competitive and other pressures facing Employer and its franchisees.
c. Employer and Employee desire to enter into an employment agreement upon the terms and conditions set forth in this Agreement.
The parties agree as follows:
1. Term. The term of this Agreement ("the Term") shall be from July 1, 2001 through December 31, 2002, unless this Agreement is sooner terminated in accordance with Section 11 of this Agreement. Commencing January 1, 2002, the Term shall be extended so that it shall always be for a period of one (1) year until and unless either party gives the other party a one-year notice to terminate Employee's employment under this Agreement or Employee's employment is sooner terminated in accordance with Section 11 of this Agreement. For example, on February 15, 2002, the Term of this Agreement shall be for one (1) year through February 14, 2003.
2. Duties. Employer employs Employee as Chief Executive Officer, and Employee accepts such employment upon the terms and conditions specified in this Agreement. As Chief Executive Officer, Employee will report to the Board of Directors of Employer. He shall have the following duties:
2.1 Employee shall be responsible for establishing the strategic direction of Employer and Employer's franchise system, establishing operating goals and corporate policies, overseeing Employer's operations, and hiring and discharging senior management.
2.2 Employee shall perform such other reasonable duties consistent with those of a senior corporate executive as directed from time to time by the Board of Directors.
3. Compensation.
3.1 Base Compensation. As base compensation for Employee's services to Employer during the Term, Employer shall pay Employee a salary at the rate of Two Hundred Fifty Thousand Dollars ($250,000) per employment year (April 1 through March 31), payable in such manner as Employer pays its other executives.
3.2 Prepaid Bonus. Upon execution of this Agreement by both parties, Employer shall pay Employee a bonus of Thirty Thousand Dollars ($30,000) in lieu of an incentive bonus for fiscal year 2001.
3.3 Guaranteed Bonus. Employer shall pay Employee minimum guaranteed bonuses which shall be credited against the amount of the incentive bonuses, if any, to be paid as provided in Section 3.4 of this Agreement. In order to receive any given bonus, Employee must be in Employer's employ on the date specified. The guaranteed bonuses shall be as follows:
3.3.1 On June 30, 2002, Twenty-Five Thousand Dollars ($25,000) to be applied against the incentive bonus for fiscal year 2002.
3.3.2 On December 31, 2002, Twenty-Five Thousand Dollars ($25,000) to be applied against the incentive bonus for fiscal year 2002.
3.3.3 On June 30, 2003, Twenty-Five Thousand Dollars ($25,000) to be applied against the incentive bonus for fiscal year 2003)
3.4 Incentive Bonus. Employer shall pay Employee incentive bonuses as follows, provided Employee is in Employer's employ on the date the bonus is to be paid:
3.4.1 Bonus for Operating Results: The incentive bonus for operating results shall be based on the pre-tax profit of Employer. "Pre-tax profit" shall mean the profit, if any, reflected in the audited financial statements of Employer for a given fiscal year but shall exclude charges, approved by the Compensation Committee of Employer's Board of Directors (the "Compensation Committee"), associated with major changes in the strategy of Employer, including, but not limited to, reorganization charges and sale of Employer-owned stores. For Employee to receive the bonus, the pre-tax profit must be at least ninety percent (90%) of the "bonus floor" specified in this Section 3.4.1; Employer will pay an additional bonus of five percent of profits that exceed the bonus floor. For fiscal year 2002, the bonus floor is a pre-tax profit of Five Hundred Thousand Dollars ($500,000) and the bonus is Twenty-Five Thousand Dollars ($25,000). For fiscal year 2003, the bonus floor is One Million Five Hundred Thousand Dollars ($1,500,000) and the bonus is Seventy-Five Thousand Dollars ($75,000). There is no cap on the amount of bonus that Employee can earn.
3.4.2 Bonus for Improvement in System Sales Trends: The bonus for improvement in the System sales trends shall be based on the year-over-year comp store sales trends of the System, as reflected in the operating statements for Employer-owned stores and in the royalty reports for franchised stores. For Employee to receive the bonus, the sales trend must be equal to or better than the percentage specified. For fiscal year 2002, the year-over-year sales trend must be flat or better and the bonus is Twenty-Five Thousand Dollars ($25,000). For fiscal year 2003, the year-over-year sales trend must be positive three percent (3%) or better and the bonus is Fifty Thousand Dollars ($50,000).
3.4.3 Bonus for New Concept/Strategy Development: The Compensation Committee may, at its discretion, grant Employee additional bonuses for successful new concept/strategy development for Employer and the System.
The incentive bonus, if any, shall be paid no later than March 15 of each year for the preceding year.
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