Document:

Rancher
      Energy Corp.

    999-18th
      Street, Suite 1740

    Denver,
      Colorado 80202

    Telephone:
      (303) 629-1122

    Fax:
      (720) 904-5698

    

    December
      13, 2006

    

    
      	
              To:

            	
              The
                holders of options (individually an “Option
                Holder”
                and collectively the “Option
                Holders”)
                to purchase shares (the “Shares”)
                of common stock, $.0001 par value (the “Common
                Stock”)
                of Rancher Energy Corp. (the “Company”)

            

    

     

    Dear
      Option Holder:

    

    This
      letter agreement (the “Agreement”)
      sets
      forth the terms and conditions under which certain of the Option Holders who
      have acquired one or more Options to purchase Common Stock agree to amend their
      option agreement to temporarily delay their ability to exercise any Option
      held
      by such Option Holder. Capitalized terms used herein and not defined herein
      shall have the meanings set forth in the Plan (as defined below).

     

    As
      you
      may be aware, the Company has entered into agreements to (1) acquire certain
      property located in Big Muddy Field (located in the Powder River Basin in
      Wyoming), and (2) acquire working interests in Cole Creek South Field and South
      Glenrock B Field (both of which are located in the Powder River Basin), and
      is
      in the process of obtaining funds through one or more financings (each a
“Financing”)
      sufficient to consummate one or more acquisitions (the “Acquisitions”).

     

    The
      Company currently has 100,000,000 shares of Common Stock authorized under its
      Articles of Incorporation, as amended (the “Articles”),
      and
      such amount of authorized shares is insufficient to accomplish the financing(s)
      required to obtain funds sufficient to consummate the Acquisitions. The Company
      intends to amend the Articles to increase its authorized shares of Common Stock
      to 225,000,000 shares of Common Stock as promptly as practicable after the
      closing of the Financing(s).

     

    Each
      Option Holder holds one or more Options pursuant to Awards from the Company
      to
      such Option Holder and subject to the Company’s 2006 Stock Incentive Plan (the
“Plan”),
      which
      states in Section 7(d) that each Option shall be exercised in whole or in part
      by delivering to the Company written notice of such Option Holder’s intent to
      exercise the Option, along with the number of the number of shares with respect
      to which the Option is to be exercised. 

     

    To
      facilitate the Company’s ability to accomplish the Financing(s) and to raise
      funds sufficient to consummate the Acquisitions, the undersigned Option Holder
      agrees to waive certain rights under the Plan and to enter into certain other
      agreements as further described below. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      consideration of the foregoing, and for other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, the undersigned
      agrees as follows:

     

    
      	1.	
              Waiver
                and Agreement.
                Pursuant to Section 20(b) of the Plan, each of the undersigned Option
                Holders hereby consents and agrees to waive such Option Holder’s right and
                ability to exercise any Option held by such Option Holder until such
                time
                as the Company has amended its Articles to increase its authorized
                shares
                of Common Stock to at least 225,000,000
                shares.

            

    

     

    
      	2.	
              Governing
                Law.
                THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
                THE
                INTERNAL LAWS AND DECISIONS OF THE STATE OF COLORADO, WITHOUT REGARD
                TO
                THE CONFLICT OF LAWS PROVISIONS
                THEREOF.

            

    

     

    
      	3.	
              Captions.
                Section captions and headings used in this Agreement are for convenience
                only, and shall not affect the construction of this
                Agreement.

            

    

     

    
      	4.	
              Severability.
                Whenever possible, each provision of this Agreement shall be interpreted
                in such manner as to be effective and valid under applicable law,
                but if
                any provision of this Agreement shall be prohibited by or invalid
                under
                such law, such provision shall be ineffective to the extent of such
                prohibition or invalidity, without invalidating the remainder of
                such
                provision or the remaining provisions of this
                Agreement.

            

    

     

    
      	5.	
              Counterparts
                and Execution of Agreement.
                This Agreement may be executed in any number of counterparts and
                by the
                different parties hereto on separate counterparts, and each such
                counterpart shall be deemed to be an original, but all such counterparts
                shall together constitute one and the same agreement. The exchange
                of
                copies of this Agreement and of signature pages by facsimile transmission
                shall constitute effective execution and delivery of this Agreement
                as to
                the parties and may be used in lieu of the original Agreement for
                all
                purposes. Signatures of the parties transmitted by facsimile shall
                be
                deemed to be their original signatures of all
                purposes.

            

    

     

    
      	6.	
              Successors
                and Assigns.
                This Agreement shall be binding upon the parties hereto and their
                respective successors and assigns, and shall inure to the benefit
                of such
                parties and their respective successors and
                assigns.

            

    

     

    
      	7.	
              Enforceability.
                The parties further acknowledge and agree that the enforceability
                of this
                Agreement as it pertains to the undersigned Option Holder shall not
                be
                dependent upon obtaining an executed Agreement from any other Option
                Holder or any other holder of the Company’s securities.
                

            

    

     

    
      	8.	
              Full
                Force and Effect.
                Except as specifically stated in this Agreement (i) this Agreement
                shall not limit, diminish or waive the obligations of the parties
                under
                the Plan or any Award, and (ii) the parties reaffirm their obligations
                under the Plan and each Award to which they are a party and agree
                that the
                Plan and any such Award remain in full
                force.

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	9.	
              Information.
                The Option Holder acknowledges that it has all information needed
                to enter
                into the agreements and make the waivers contemplated by this Agreement
                and if it has requested any information from the Company it acknowledges
                receiving the same.

            

    

     

    [Remainder
      of Page Intentionally Left Blank]

    
      
        
        

      

      
        -3-

        
          

        

      

       

    

    

    If
      you
      accept the foregoing terms, please execute in the space provided below and
      return one copy to the Company at the above fax number. 

     

    Sincerely,

     

    RANCHER
      ENERGY CORP.

     

    
      	 	 	 	 	 
	By:	 	 	 	 
	 	
              
                

              

              John Works

              President and Chief Executive Officer

            	 	 	
            

    

     

    AGREED
      AND ACCEPTED effective as of the date set forth above:

    

    OPTION
      HOLDER:

     

    
      	Signature of Individual Option
              Holder: 	 	___________________________________________
	Printed Name of Individual Option
              Holder:	 	___________________________________________

    

     

    
      _________________________________________________

    

    Printed
      Name of Entity (if applicable)

    

    
      
        	 	 	 	 	 
	By (Signature):	_________________________________	 	 	 
	 	
                Name (printed)_____________________

                Title:_____________________________

              	 	 	
              

      

    

           

    _________________________________________________

    Address

    

    _________________________________________________

    City,
      State, Postal or Zip Code, Country

    

    [Signature
      Page to Option Holder Letter Agreement]EX 10.1

    EXHIBIT
      10.1

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 12th day
      of December, 2006, by and between U.S. Dry Cleaning Corporation, a Delaware
      Corporation (“the Company”), and Robert Y. Lee (“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; and

     

    WHEREAS,
      the Board of Directors of the Company has determined that it is crucial to
      the
      success of such endeavor that the Company engage the services of a new chief
      executive officer who has been successful in both areas; and

     

    WHEREAS,
      Employee has successfully consolidated highly fragmented, small store retail
      operations in the past; and

     

    WHEREAS,
      Employee has extensive experience structuring the acquisition of such retail
      operations; and

     

    WHEREAS,
      Employee is well-know and respected in the investment banking community and
      has
      been successful in securing financing for other companies in the same stage
      of
      development as the Company; and

     

    WHEREAS,
      Employee is experienced in managing the operations of consolidated small retail
      stores; and

     

    WHEREAS,
      Employee has extensive knowledge of the dry cleaning industry and has developed
      a pipeline of prospective acquisition candidates for the Company;
      and

     

    WHEREAS,
      Employee has intimate knowledge of the Company and its operations;
      and

     

    WHEREAS,
      Employee has comprehensive experience in growing and managing retail operations
      from start up to in excess of $100,000,000 in annual revenues as a public
      company chief executive officer; 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 chief executive officer;
      and

     

    WHEREAS,
      Employee is willing to be so employed under the terms set forth in this
      Agreement;

      
        
           

        

        
          Page
            1

          
            

          

        

        
           

        

      

    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 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 $20,000.00 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 $25,000.00 per month
                thereafter.

            

    

     

    
      	 	
              3.2

            	
              Bonuses.
                In addition to the amount specified in Section 3.1, the Company shall
                pay
                or deliver Employee the following bonuses at the times indicated
                below:

            

    

     

    
      	 	
              (a)

            	
              Promptly
                after the
                execution of this Agreement a promissory note in the amount of Two
                Hundred
                Thousand Dollars ($200,000.00) bearing interest at the rate of eight
                percent (8%) per annum payable interest only on monthly basis, with:
                (i)
                $50,000 of the principal balance of such note payable at the earlier
                of
                the

            

      
        
           

        

        
          Page
            2

          
            

          

        

        
           

        

      

    

     

    expiration
      of three years from the date of this Agreement and the closing
      subsequent to the date of this Agreement of a debt or equity financing for
      the
      Company of at least $1,500,000 and (ii) the balance of such note payable upon
      the earlier of the expiration of three years from the date of this Agreement
      and
      initial sale of the Company’s stock following the date of this Agreement with
      proceeds of at least $3,000,000; and

     

    
      	 	
              (b)

            	
              If,
                upon the Company achieving monthly revenues in excess of $4,166,667
                and
                positive “Four-Wall Income” for all stores considered in the aggregate for
                any 30 day period on or before December 31, 2007, the market price
                of the
                Company’s common stock (appropriately adjusted to reflect stock splits,
                combinations and dividends, recapitalizations, and reclassifications
                after
                the date of this Agreement) equals or exceeds $5.00 per share, a
                bonus of
                $350,000, or if the market price of the Company’s common stock is less
                than $5.00 per share, a bonus of $250,000; and

            

    

     

    
      	 	
              (c)

            	
              If,
                upon the Company achieving monthly revenues in excess of $8,333,333
                and
                positive Four-Wall Income for all stores considered in the aggregate
                for
                any 30 day period on or before December 31, 2008, the market price
                of the
                Company’s common stock (appropriately adjusted to reflect stock splits,
                combinations and dividends, recapitalizations, and reclassifications
                after
                the date of this Agreement) equals or exceeds $5.00 per share, a
                bonus of
                $500,000, or if the market price of the Company’s common stock is less
                than $5.00 per share, a bonus of
                $350,000.

            

    

     

    For
      purposes of this Agreement, the term “Four-Wall Income” shall mean Operating
      Income computed in accordance with generally accepted accounting principals
      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 such
      discretionary bonus, 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
      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 3.2.

     

    
      	
            	3.3	
              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:

            

      
        
           

        

        
          Page
            3

          
            

          

        

        
           

        

      

    
      	
            	(a)	
              Incentive
                stock options to purchase 200,000 shares of the Company’s common stock at
                $3.50 per share;

            

    

     

    
      	 	
              (b)

            	
              Incentive
                stock options to purchase an additional 200,000 shares of the Company’s
                common stock at $5.00 per share;

            

    

     

    
      	 	
              (c)

            	
              Incentive
                stock options to purchase an additional 200,000 shares of the Company’s
                common stock at $7.50 per share;

            

    

     

    
      	 	
              (d)

            	
              Incentive
                stock options to purchase an additional 200,000 shares of the Company’s
                common stock at $10.00 per share.

            

    

     

    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).

     

    
      	 	
              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 (including vision), dental and long term disability
                insurance
                for Employee and his family, participation in group life insurance
                and
                retirement plans. The Company shall also maintain Employee’s existing
                $1,000,000 whole life insurance policy, payable to Employee’s designees,
                and the Employee’s existing $500,000 whole life and $2,500,000 term life
                insurance policies payable to the Company, both of which will be
                transferred to the Employee upon his termination other than upon
                his
                death. The policies payable to the Company may be converted to universal
                life policies at the option of Employee, provided the premiums for
                all
                such policies shall not in the aggregate exceed $50,000
                annually.

            

    

     

    
      	 	
              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
                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.

            

      
        
           

        

        
          Page
            4

          
            

          

        

        
           

        

      

    
      	 	
              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 maintain his principal residence
                in
                Rancho Mirage, California. Employee shall not be required to move
                his
                principle residence. The Company will provide Employee with reimbursement
                for housing in Orange County, California at such times as Employees
                determines necessary or appropriate of up to $3,000.00 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.

            

    

     

    
      
        
          	
                	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 him 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 the lesser of (a) six (6) months of Base Salary
                or (b)
                the Base Salary that Employee would have received up to the expiration
                of
                the Agreement.

            

    

     

    
      
         

      

      
        Page
          5

        
          

        

      

      
         

      

    

    
      	 	
              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
                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 and failed to cure such breach within
                15
                calendar days after the Board of Directors of the Company receives
                written
                notice of such breach from Employee, or by the Company without Cause;
                provided,
                that the Company shall pay Employee his Base Salary through the remaining
                term of this Agreement.

            

    

     

    
      	 	
              6.4

            	
              By
                the Company for Cause. The term “Cause” used in this Section 6.5 means
                that Employee., (i) after repeated written notices and warnings and a
                reasonable opportunity for cure, fails to perform his reasonably
                assigned
                duties as reasonably determined by the Board of Directors, (ii) is
                convicted of any felony involving moral turpitude, or (iii) commits
                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.

            

    

     

    
      	 	
              6.5

            	
              Notwithstanding
                anything in this Agreement to the
                contrary:

            

    

     

    
      	 	
              (a)

            	
              If
                payment or provision of any amount or other benefit to Employee that
                is
                "deferred compensation" subject to Section 409A of the Internal Revenue
                Code ("Code") at the time otherwise specified in this Agreement would
                subject such amount or benefit to additional tax pursuant to Section
                409A(a)(1)(B) of the Code, and if payment or provision thereof at
                a later
                date would avoid any such additional tax, then the payment or provision
                thereof shall be postponed to the earliest date on which such amount
                or
                benefit can be paid or provided without incurring such additional
                tax.

            

    

     

    
      	 	
              (b)

            	
              If
                any payment or benefit permitted or required under this Agreement
                is
                reasonably determined by either party to be subject for any reason
                to a
                material risk of additional tax pursuant
                to

            

    

     

    
      
         

      

      
        Page
          6

        
          

        

      

      
         

      

    

     

    Section
      409A(a)(1)(B) of the Code, then the parties shall promptly agree in good faith
      on appropriate provisions to avoid such risk without materially changing the
      economic value of this Agreement to either party.

     

    
      	 	
              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 three years from the
                date of
                this Agreement; 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 any county within
                the United States in which any store is 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 or 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 of the Company.

            

    

     

    
      	 	
              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 Board of Directors of the
                Company.

            

      
        
           

        

        
          Page
            7

          
            

          

        

        
           

        

      

    

     

    
      	 	
              7.6

            	
              Confidential
                Information.
                “Confidential Information” shall mean 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 and other
                information of the company which derives economic value from not
                being
                generally known to the public or the company’s competitors. 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 Company’s Confidential Information 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 Board of Directors 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.

                

        

      

    

     

    
      
         

      

      
        Page
          8

        
          

        

      

      
         

      

    

    
      	
            	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 panics 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.

            	
              Prior
                Agreements. This Agreement supersedes and replaces all prior
                agreements between the parties
                hereto.

            

    

     

    
      
        
          	
                	14.	
                  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.

                

        

      

    

     

    If
      to the
      Company, to:

     

    U.S.
      Dry
      Cleaning Corporation

    125
      E.
      Tahquitz Canyon, Suite 203

    Palm
      Springs, CA 92262

    Attn:
      Chairman of the Board

    Fax:
      (760)323-3390

     

    If
      to
      Employee, to:

     

    Robert
      Y.
      Lee

    82
      Magdalena Drive

    Rancho
      Mirage, CA 92270

     

    
      
        
          	
                	15.	
                  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.

                

        

      

    

     

    
      
        
          	
                	16.	
                  Indemnification.
                    The Company has entered or shall enter into an Indemnification
                    Agreement
                    with Employee indemnifying him against personal liability to
                    the fullest
                    extent permissible under applicable corporate law and shall,
                    to the extent
                    it is reasonably economical to do so, maintain Side A and Side
                    B Directors
                    and Officers liability insurance for obligations of
                    indemnification.

                

        

      

    

     

    
      
         

      

      
        Page
          9

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      and year first above written.

     

    
      	 	
              U.S.
                DRY CLEANING CORPORATION

               

               

              By: 
                /s/
                ANTHONY J. A. BRYAN

              
                

              

              Name:
                Anthony J. A. Bryan

              Title:
                Chairman of the Board

            
	 	
               

              ROBERT
                Y. LEE

               

              /s/
                ROBERT Y. LEE

              
                

              

            

    

    

     

    
      
         

      

        Page
          10

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