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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of February
___, 1998, between 1-800 CONTACTS, INC., a Delaware corporation (the
"Company"), and Xxxxxxxx X. Xxxx (the "Executive"). This Agreement shall be
deemed to be effective as of the date hereof (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
President of the Company and shall have the normal duties, responsibilities and
authority of such office.
(b) Executive shall report to the Company's board of directors (the
"Board"), 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. 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 of more Subsidiaries.
3. Base Salary and Benefits.
(a) During the first year of the Employment Period, Executive's base
salary shall be $120,000 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 the Board.
During the Employment Period, Executive shall be entitled to participate in all
of the Company's employee benefit programs for which senior executive 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 50% 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 four weeks vacation each year with salary,
subject to additional weeks upon Board approval;
(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) reimbursement for the reasonable expenses of preparation of
Executive's annual tax returns.
4. Termination. (a) The Employment Period shall continue until earlier
of (i) the third 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 (other than due to 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 or bonuses for periods 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
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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 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, 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,
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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 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.
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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, (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:
Xxxxxxxx X. Xxxx
00000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxx, Xxxx 00000
Notices to the Company:
1-800 CONTACTS, INC.
00000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx X-000
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.
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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 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 DELAWARE, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
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:___________________________
Name: Xxxx Xxxxxxx
Its: Vice President, Operations
______________________________
Xxxxxxxx X. Xxxx
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