EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of February 9, 2002
between 1-800 CONTACTS, INC., a Delaware corporation (the "COMPANY"), and Xxxxx
X. Xxxxxx (the "EXECUTIVE"). This Agreement shall be deemed to be effective as
of February 9, 2002 (the "EFFECTIVE DATE").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement, for the period beginning on the Effective Date and ending as
provided in paragraph 4 hereof (the "EMPLOYMENT PERIOD").
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as the Chief
Operating Officer and Chief Financial Officer of the Company and shall have the
normal duties, responsibilities and authority of such positions.
(b) Executive shall report to the Company's Chief Executive Officer and
such other persons as the board of directors ("the Board") may direct from time
to time, and Executive shall devote his best efforts and his full business time
and attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the Company and its
Subsidiaries (as herein after defined). Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
(c) For purposes of this Agreement, "SUBSIDIARIES" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. BASE SALARY AND BENEFITS.
(a) During the first year of the Employment Period, Executive's base salary
shall be $190,890 per annum (the "BASE SALARY"), which salary shall be payable
in regular installments in accordance with the Company's general payroll
practices and shall be subject to customary withholding. Thereafter, the Base
Salary shall be such higher rate as the Board may designate from time to time.
As used in this Agreement, the term "Base Salary" shall be deemed to include any
such increases as may be designated from time to time by corporate management.
During the Employment Period, Executive shall be entitled to participate in all
of the Company's employee benefit programs for which management employees of the
Company and its Subsidiaries are generally eligible (including the Company's
stock option program).
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(b) In addition to the Base Salary, the Board will award an annual bonus of
up to 10% of the Executive's Base Salary to Executive following the end of each
fiscal year during the Employment Period upon the Company achieving certain
operating targets as determined by the Board at the beginning of each fiscal
year during the Employment Period. In addition to the Base Salary and any
bonuses payable to Executive pursuant to this paragraph, Executive shall be
entitled to the following benefits during the Employment Period:
(i) Reimbursement for the cost of an annual physical examination by
a physician of Executive's choice;
(ii) A maximum of three weeks vacation each year with salary, subject
to additional weeks upon executive approval; and
(iii) Reimbursement for travel, entertainment and other business
expenses reasonably incurred by Executive (including costs associated with
the use of a mobile telephone); and
(iv) $500 per month car allowance; and
(v) $400 per month house cleaning allowance; and
(vi) Payment of all medical premiums
(vii) Reimbursement for out of pocket dental costs
(viii) Annual Tax Planning up to the amount of $1,000.
4. TERMINATION. (a) The Employment Period shall continue until earlier of
(i) the fourth anniversary of the Effective Date (the "EXPIRATION DATE") or (ii)
Executive's resignation, death or disability or other incapacity (as determined
by the Board in its good faith judgment) or until the Board determines in its
good faith judgment that termination of Executive's employment is in the best
interests of the Company. Notwithstanding the foregoing, the Employment Period
shall be automatically extended for an additional year unless either the Company
or the Executive delivers written notice to the other within 60 days of the
Expiration Date of its or his intention not to extend the Employment Period. In
the event of Executive's resignation of employment for any reason, (other than a
breach by the Company of paragraph 2(a)), or termination for Cause (as defined
herein), Executive shall not be entitled to receive his Base Salary or any
fringe benefits for any period after the termination of the Employment Period.
Upon any other termination of the Employment Period, Executive shall be entitled
to receive (i) his Base Salary and the health and disability benefits described
in paragraph 3(a) for a period of 12 months thereafter, and (ii) following the
end of the fiscal year in which Executive's employment is terminated and the
determination of the amount of bonus which Executive would have been entitled if
he remained employed by the Company or its Subsidiaries for the entire fiscal
year (the "Bonus Amount"), (A) 50% of the Bonus Amount if such termination
occurs in the first six months of such fiscal year or (B) 100% of the Bonus
Amount if such termination occurs in the second six months of such fiscal year.
(b) For purposes of this Agreement, "Cause" shall mean (i) the willful
and continued failure by Executive to perform his duties of the position set
forth herein or his continued failure to perform duties reasonably requested or
reasonably prescribed by the Board (other than as a result of Executive's death
or disability), (ii) the engaging by Executive in conduct which is materially
monetarily injurious to the Company or any of its Subsidiaries, (iii) gross
negligence or
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willful misconduct by Executive in the performance of his duties which results
in, or causes, material monetary harm to the Company or any of its Subsidiaries,
or (iv) Executive's commission of a felony or other civil or criminal offense
involving moral turpitude. In the case of (i), (ii) and (iii) above, finding of
Cause for termination shall be made only after reasonable notice to Executive
and an opportunity for Executive, together with counsel (if requested by
executive), to be heard before the Board. A determination of Cause by the Board
shall be effective only if agreed upon by a majority of the directors, which
shall include at least one director who is not an employee of the Company or its
Subsidiaries.
5. CONFIDENTIAL INFORMATION. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries concerning the business or affairs of the Company or any other
Subsidiary ("CONFIDENTIAL INFORMATION") are the property of the Company or such
Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own purposes any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the termination of the Employment Period, or at
any other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data
(and copies thereof) relating to the Confidential Information, Work Product (as
defined below) or the business of the Company or any Subsidiary which he may
then possess or have under his control.
6. INVENTIONS AND PATENTS. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) which
relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company and its Subsidiaries ("WORK PRODUCT") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
7. NON-COMPETE, NON-SOLICITATION.
(a) In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of his employment with the
Company he shall become familiar with the Company's trade secrets and with other
Confidential Information concerning the Company and its Subsidiaries and that
his services shall be of special, unique and extraordinary value to the Company
and its Subsidiaries. Therefore, Executive agrees that, during the Employment
Period and for two years thereafter (the "NONCOMPETE PERIOD"), he shall not,
without the express written consent of the Company, directly or indirectly own
any interest in, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
the Company or its Subsidiaries, as such businesses exist or are in process on
the date of the termination of Executive's employment, within any geographical
area in which the
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Company or its Subsidiaries engage or plan to engage in such businesses. Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation, which is publicly
traded, so long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) hire any person who was an employee of the
Company or any Subsidiary at any time during the three-month period prior to the
expiration of the Employment Period or (ii) induce or attempt to induce any
customer, supplier, licensee, licensor, franchisee or other business relation of
the Company or any Subsidiary to cease doing business with the Company or such
Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Subsidiary (including, without limitation, making any negative statements or
communications about the Company or its Subsidiaries) which interference causes
material monetary damage to the Company or its Subsidiaries.
8. ENFORCEMENT. If, at the time of enforcement of paragraph 5, 6, 7 or 8
of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area. Because
Executive's services are unique and because Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
not be an adequate remedy for any breach of this Agreement. Therefore, in the
event a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof (without posting a bond or other
security). In addition, in the event of an alleged breach or violation by
Executive of paragraph 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured. Executive agrees that the restrictions
contained in paragraph 7 are reasonable.
9. OTHER BUSINESSES. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services for,
any business other than the business of the Company, any of its Subsidiaries or
any corporation or partnership in which the Company or any of its Subsidiaries
have an equity interest; provided, that Executive may devote a de minimis
portion of his time to engaging in, or rendering services for, any such business
if such activities do not in any material way interfere with the performance by
Executive of his obligations hereunder and such activities do not in any way
materially and adversely affect the Company. Executive shall notify the Company
prior to engaging in any such activities. Nothing contained in this paragraph 9
shall limit the provisions of paragraph 7 above.
10. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound,
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(ii) Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms. Executive hereby acknowledges and
represents that he fully understands the terms and conditions contained herein.
11. SURVIVAL. Paragraphs 5, 6, and 7 and paragraphs 11 through 19 shall
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
12. NOTICES. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
NOTICES TO EXECUTIVE:
Xxxxx Xxxxxx
000 Xx. Xxx Xxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
NOTICES TO THE COMPANY:
1-800 CONTACTS, INC.
00 X. Xxxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxx 00000
Attn: Board of Directors
WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
13. 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 is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced
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in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
14. COMPLETE AGREEMENT. This Agreement, those documents expressly referred
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
15. NO STRICT CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
16. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
17. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign his rights
or delegate his obligations hereunder without the prior written consent of the
Company.
18. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND
SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF UTAH, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF UTAH OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF UTAH.
19. AMENDMENT AND WAIVER. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
1-800 CONTACTS, INC.
By:
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Name: Xxxxxxxx Xxxx
Its: Chief Executive Officer
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Xxxxx X. Xxxxxx
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