EMPLOYMENT AGREEMENT April 1, 1997
This agreement is made this 1st day of April, 1997, by and between MOTO PHOTO,
INC. a Delaware Corporation ("Employer"), and Michael F. Adler ("Employee")
under the following circumstances:
A. The parties desire to enter into an Employment Agreement upon the terms and
conditions set forth herein.
B. During the term of his employment, Employee will receive access to
proprietary information and/or trade secret relating to Employer's business, its
franchisees and its business contacts which are of a highly confidential,
unique, and valuable nature. In addition, Employee may be adding to
confidential information of Employer.
C. The parties acknowledge that the Employer would suffer great loss and
damage in the event that any Confidential Information (as hereinafter defined in
Section 4) is divulged at any time other than for the benefit of the Employer.
D. The parties further acknowledge that Employee may establish close working
relationships with valued employees of Employer and its franchisees and that
Employer's business may suffer substantial harm if, upon the termination of
Employee's employment with Employer, Employee should thereafter employ or
attempt to employ, directly or indirectly, certain personnel of Employer, its
franchisees or their employees.
NOW, THEREFORE, in consideration of the foregoing promises contained
herein, the parties agree as follows:
1. Duties. Employer hereby employs Employee as Chairman of the Board and
Chief Executive Officer, and the Employee hereby accepts such employment upon
the terms and conditions specified in this Agreement. During the term of his
employment, Employee shall work for Employer as the Chief Executive Officer and
he will report to the Board of Directors and he shall have the following duties:
1.1 He will be responsible for establishing the strategic direction
of the Company, establishing operating goals, corporate policies, and overseeing
operations of the company and hiring and discharging senior management.
1.2 He will perform such other reasonable duties consistent with
those of a senior corporate executive as directed from time to time by the Board
of Directors.
2. Compensation. As base compensation for Employee's services to
Employer during the term of this Agreement, Employer shall pay Employee a
regular salary at the rate of One Hundred Sixty One Thousand Five Hundred
Dollars ($161,500) per year payable in such a manner as the Employer pays its
other executives. In addition Employee shall be entitled to an annual bonus
program to be negotiated with the Compensation Committee.
Prior to December 31st of each year of this agreement, the Employer
will review the compensation of the Employee for the subsequent year. The base
salary may be increased and the bonus may be adjusted either higher or lower.
The Board of Directors may increase the amount of this bonus in the event of
exemplary performance by the Employee.
3. Term. The term of Employee's employment with Employer shall be
from January 1, 1997 until December 1999, unless sooner terminated in accordance
with Section 10 of this Agreement and shall automatically renew at the end of
each fiscal year for an additional three year term unless the Board takes other
action.
4. Restrictive Covenants.
4.1 Duties. During the term of this Agreement, Employee shall devote
his best efforts and full time, subject to Section 5, to advance the business
and welfare of Employer. Employee shall not take any action against the best
interest of Employer and he shall pursue no other business interests during the
term of this Agreement that conflict with his employment with the Employer.
4.2 Covenant Not to Compete. Employee acknowledges that Employer's
activities are international in scope. During the term of this Agreement and
for a period of two years after the termination of Employee's employment with
Employer its successors or assigns, or cessation of payment, whichever is later,
Employee shall not, directly or indirectly, engage or be interested (as
principal, agent, manager, employee, consultant, owner, partner, officer,
director, stockholder, trustee or otherwise) in any entity engaged in a business
which competes in a material manner with Employer within a three mile radius of
any business location of Employer or any of its subsidiaries, affiliates, or
franchisees. Employee's ownership of less than two percent (2%) of the
outstanding voting stock of any publicly held corporation, or any other entity
specifically authorized by the Board of Directors of Employer, shall not
constitute a violation of this Section 4. The Employer specifically
acknowledges that Employee's association with Progressive Industries
Corporation, National Photo Labs, Inc. and National Photo Labs II, Inc. does not
constitute a violation of this Section 4, but Employee shall not perform any
acts on behalf of these companies that would violate this Section 4 of this
contract.
4.3 Confidentiality. During the term of this Agreement and
thereafter, Employee shall not at any time other than for the benefit of the
Employer: (i) divulge, furnish, disclose, or make accessible to any person,
firm, or corporation, or use for his own purposes, any Confidential Information
(ii) make or cause to be made any copies, facsimiles, or other reproductions of
any Confidential Information without Employer's express written consent; or
(iii) remove any Confidential Information from Employer's premises or fail or
refuse to surrender (notwithstanding the failure of Employer to make demands for
such materials) the same to Employer immediately upon termination of Employee's
employment with Employer or at any time prior thereto upon Employer's request.
For purposes of this Agreement, the term "Confidential Information"
shall mean and include (a) any information with respect to Employer's accounts,
plans, business policies, software, know-how, trade secrets, customers,
franchisees, prospects, mailing lists, suppliers, pricing policies or rates,
marketing techniques, or any other information which may now or in the future be
considered confidential or proprietary information of Employer and (b)
unpublished manuals, files, records, software, memoranda, correspondence,
drawings, designs, or other writings belonging to or in the possession of
Employer or which may be produced by or come into Employer's possession in the
course of Employee's employment with Employer.
4.4 Solicitation of Employer's Employees. For a period of two years
year after the termination of Employee's employment with Employer its successors
or assigns, or cessation of payment, whichever is later, Employee shall not (i)
employ or attempt to employ directly or indirectly, personally or through any
entity in which Employee may be associated (as principal, agent, manager,
employee, consultant, owner, partner, officer, director, stockholder, trustee,
or otherwise) any employee of Employer, its subsidiaries or affiliates, or (ii)
induce any employee of any franchisee of Employer to leave the employment of any
franchisee.
4.5 Equitable Relief. The parties acknowledge and agree that a
breach of this Section 4 cannot be compensated for by monetary damages and that
any remedy at law is inadequate and Employee agrees that, in the event of a
breach of any restrictive covenant set forth herein, Employer may seek and
obtain a temporary restraining order, preliminary injunction, and permanent
injunction restraining Employee from violating Section 4 of this Agreement in
addition to any other legal relief available to Employer. For the purposes of
this provision, the parties confer jurisdiction upon the courts located in
Montgomery County, Ohio, and agree on venue in Montgomery County, Ohio.
4.6 Reformation. In the event that any provision of this Section 4
should be determined by a court of competent jurisdiction to be unenforceable by
reason of its being extended for too great a period of time, for too large a
geographic area, or for too great a range of activities, it shall be reformed to
extend only over the maximum period of time, geographic area, or range of
activities as to which it may be enforceable.
5. Vacation. Employee shall be entitled to vacation as is reasonable for
the executives in a comparable position.
6. Health and Insurance Plans; Fringe Benefits. Employee shall be
entitled to participate in all plans or agreements maintained by Employer
relating to health insurance for the Employee, his wife and children, subject to
the terms and conditions of such plans in effect from time to time. Employee
shall also be entitled to all other fringe benefits provided senior officers of
the Employer. Employee shall have his tax filings prepared by the company's
auditor and paid for by Employer during the term of the employment agreement.
7. Reimbursement for Expenses. Employer shall reimburse Employee for all
reasonable expenses incurred on behalf of Employer in line with Employer
policies.
8. Automobile. Employer shall furnish Employee with the use of an
automobile or an automobile allowance of $900.00 per month during the term of
this contract, subject to company policy.
9. Notice. Any notice required to be given pursuant to the provisions of
the Agreement shall be in writing and shall be delivered by certified mail or in
person to the parties at the following addresses:
Employer:
Moto Photo, Inc.
4444 Lake Center Drive
Dayton, Ohio 45426
Attn: David A. Mason, E.V.P.
Employee:
Michael F. Adler
5464 Sherfield Drive
Dayton, Ohio 45426
or at such other place as either party may designate in writing to the other.
10. Termination. Employer may terminate Employee's employment under this
Agreement only for cause upon written notice to Employee. For purposes of this
Agreement, the term "cause" means those situations or occurrences described
below:
10.1 Dishonesty, embezzlement, fraud, breach of fiduciary duty,
actions involving moral turpitude, or conviction of a felony by Employee; or
10.2 Gross neglect of duty or gross insubordination by Employee,
including the failure to abide by any reasonable and material instructions of
Employer; provided, however, that it will not be reasonable if such instructions
request or demand actions which would be inconsistent with the duties of a
senior corporate executive; or
10.3 Material breach of the provisions of Section 4 of this
Agreement.
10.4 Should Employee dispute that his discharge was for cause,
Employee must submit his claim to arbitration in accordance with Section 12
within sixty (60) days after his termination of employment. If a discharge of
Employee is eventually determined under arbitration to have been for cause, or
if no arbitration is requested by Employee within (60) days after the
termination of Employee's employment, Employer shall have no liability
whatsoever under this Agreement from and after the date of termination.
If the termination of Employee is without cause, Employer shall be
responsible for payment of thirty-six (36) month's salary as subject to Section
12, Mitigation, plus all fringe benefits which Employee receives prior to
termination including health insurance, use of suitable office and secretarial
support, but it would not include the auto lease payments.
Should termination by Employer be voluntary or involuntary, with or
without cause, Employee shall be entitled to a prorata bonus, to the extent
described in Section 2, but only to the end of the month prior to the end of
termination of Employee's employment.
Should Employee terminate his employment with Employer for any reason,
all obligations of Employer, except for the prorated bonus described in the
immediately preceding paragraph under this Agreement shall be extinguished as of
the date of termination of employment, but Employee shall remain subject to all
of his covenants in Section 4.
11. Death or Disability. In the event off the death of the Employee,
employment will terminate but Employee's spouse or estate shall receive
Employee's then current salary and the benefits contemplated by paragraph 6 and
8 for 90 days after the death of the Employee.
If Employee is disabled and cannot perform the duties of his
assignment, he will receive full compensation for the first six months of
continuous disability and then 70% of the compensation he was receiving at the
time he was disabled until the earlier of death, the Employee is no longer
disabled or three years from the commencement of the employment contract. Any
amount owed under this provision will be reduced by amounts paid to the Employee
under the Employer's long term disability insurance program.
Termination or expiration of this Agreement for any reason shall not
affect any obligations of Employee under Section 4 of this agreement.
12. Mitigation. In the event of the termination of this Agreement,
payments will be reduced by any compensation from employment the Employee may
receive after taking suitable permanent employment for which he is qualified.
13. Arbitration. Except as provided for in Section 4.6 of this Agreement,
any controversy or claim arising out of or relating to this Agreement, shall be
settled by arbitration in Dayton, Ohio in accordance with the Commercial Rules
of Arbitration of the American Arbitration Association. Such Arbitration may be
commenced by either party notifying the other and also the American Arbitration
Association that it or he intends to seek arbitration. The decision of the
American Arbitration Association shall be final and binding upon all parties
hereto. Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. The expenses of Arbitration shall be
borne equally by the parties.
14. Governing Law. The Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio.
15. Assignability. This Agreement is personal and shall not be assignable
by Employee; provided, however, that the terms of this Agreement shall be
binding upon, shall inure to the benefit of, and shall be enforceable by
Employer, its successor and assigns.
16. Waiver. The waiver of either party of any breach of any provision of
this Agreement shall not be construed as or constitute a continuing waiver or a
waiver of any other breach of any provision of this Agreement.
17. Partial Invalidity. In the event that any word, phrase, clause,
sentence, or other provision herein violates any applicable statute, ordinance,
or rule of law in any jurisdiction in which it is used, such provision shall be
ineffective to the extent of such violation, without violating any other
provision herein.
18. Complete Agreement; Modification. This Agreement supersedes all prior
agreements, written or oral, is intended as a complete and exclusive statement
of the terms of the Agreement between parties, and may be amended, modified, or
rescinded only by a written instrument executed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
WITNESSES: EMPLOYER:
EMPLOYEE:
Michael F. Adler, President & CEO
BY
MOTO PHOTO, INC.
BY
Frank Benson, Chairman of the Compensation
Committee of the Board of Directors, Moto