EXHIBIT NO. 10.97
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 22nd day of February, 2000, is between
Sterling Vision, Inc., a New York corporation having an office at 0000 Xxxxxxxxx
Xxxxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxxxx X. Xxxx, an
individual residing at 0000 Xxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx 00000 (the
"Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to obtain the services of the Employee, on
its own behalf and on behalf of all existing and future affiliated entities
(defined as any corporation or other business entity or entities that, directly
or indirectly, controls, is controlled by, or is under common control with the
Company), and the Employee desires to be employed by the Company upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and the
Employee hereby agree as follows:
1. Term of Employment.
The Company hereby employs the Employee to render services to
the Company in the position and with the duties and responsibilities described
in Section 2 hereof commencing on the 22nd day of February, 2000 (the "Effective
Date") and continuing thereafter until February 28, 2003, unless earlier
terminated in accordance with the provisions of Section 4 hereof. For purposes
of this Agreement, the "Term of Employment" shall be the approximate three (3)
year period commencing on the Effective Date, subject to earlier termination
pursuant to the provisions hereof.
2. Position, Duties, Responsibilities.
a. Position. The Employee hereby accepts such employment and agrees to
serve as the President and Chief Executive Officer of the Company's Internet
Division or in such other position(s) as the Board of Directors (the "Board") of
the Company, at any time, may designate; provided, however, that the duties
associated with such other position(s) shall be substantially the same as those
duties contemplated to be rendered pursuant to this Agreement. The Employee
shall devote his best efforts and his full business time and attention to the
performance of the services customarily incidental to such office and to such
other services as may be reasonably requested by the Board; provided, however,
that it is expressly understood and agreed that the Employee, during the first
three (3) months of the Term of Employment, only, may render consulting services
to Rare Medium, Inc. and/or Rare Medium Group, Inc., provided: (i) he does not
devote more than ten (10) hours per week in rendering such services; and (ii)
the same does not materially interfere with the Employee's performance of his
duties hereunder. The Company shall retain full direction and
control over the means and methods by which the Employee shall perform the above
services and of the place(s) at which such services are to be rendered;
provided, however, that it is expressly understood and agreed that the duties to
be rendered by the Employee hereunder shall be rendered primarily from the
Dallas, Texas area and, accordingly, that the Employee shall not be required to
(but may, at his option) relocate his personal residence outside of Dallas,
Texas.
b. Other Activities. Except upon the prior written consent of the
Board, the Employee, during the Term of Employment, will not: (i) accept any
other employment; (ii) serve on the board of directors of any other corporation
(except that he may serve, in any capacity, with any civic, professional,
educational or charitable organization or governmental entity or trade
association); or (iii) engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that is or may be
competitive with, or that might reasonably place him in a competing position to
that of, the Company or any of its affiliated entities.
3. Salary, Benefits, Expenses.
a. Salary. In consideration of the services to be rendered hereunder,
the Employee, commencing as of March 1, 2000, shall be paid a salary computed at
the rate of Two Hundred Thousand ($200,000) Dollars per annum during the first
year of the Term of Employment ending February 28, 2001, which salary shall
increase by not less than five (5%) percent as of each of March 1, 2001 and
2002, in each case, payable in substantially equal, semi-monthly installments.
b. Benefits and Other Arrangements. In addition to the salary set forth
in Subsection 3(a) hereof, the Employee shall be entitled to: (i) the
reimbursement of his reasonable, out-of-pocket legal fees incurred in
negotiating this Agreement, not to exceed the sum of $2,000; and (ii)
participate in any plan, arrangement or policy of the Company providing for
medical benefits and sick leave on substantially the same terms as are generally
made available to the other executives of the Company.
c. Vacation. The Employee shall be entitled to a three (3) week, paid
vacation during each year of the Term of Employment, such vacation to: (i)
accrue at the rate of 1.25 days per month during the Term of Employment; and
(ii) be subject to the Company's general policies, as the same may be amended
from time to time; provided, however, that if the Employee, due to his work
load, is restricted from taking said vacation (or any portion thereof) during
any year of the Term of Employment, said unused vacation days shall carry over
to the ensuing year. Notwithstanding the foregoing, it is understood and agreed
that in the event the employment of the Employee shall cease at a time when the
Employee has earned, but has not used, vacation days, compensation, in an amount
equal to the vacation to which the Employee shall be entitled hereunder, shall
be paid, by the Company, to the Employee (based upon the salary then payable to
the Employee pursuant to Subsection 3(a) hereof) within ten (10) business days
thereafter.
d. Expenses. The Employee shall be entitled to reimbursement for all
ordinary and necessary business expenses incurred in the performance of his
duties hereunder (including, but not limited to, all expenses associated with
the Employee's use of a cellular telephone) subject to the Company's receipt of
reasonable substantiation and/or reasonable documentation thereof.
e. Annual Bonus. In addition to the salary set forth in Section 3(a)
hereof, the Employee shall be entitled to an annual bonus solely to the extent,
if any, awarded by the Company's Compensation Committee.
f. Option Grant. In addition to the salary set forth in Subsection 3(a)
hereof, and in partial consideration for the Employee's execution and delivery
of this Agreement, the Company, subject to the provisions of this Subsection
3(f), shall grant to the Employee stock options (the "Options") to purchase up
to an aggregate of eight hundred thousand (800,000) shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock"), at a price per
share equal to the composite closing price of the Company's Common Stock, as
reported on NASDAQ- NMS, on the trading day immediately preceding the date of
the commencement of the Term of Employment ($8.0625). One-third (33 1/3%) of
said Options shall vest as of the expiration of the initial twelve (12) months
of the Term of Employment, an additional one-third (33 1/3%) shall vest as of
the expiration of the second twelve (12) months of the Term of Employment, and
the balance shall vest as of the expiration of the third twelve (12) months of
the Term of Employment, all in accordance with the terms set forth in the
proposed form of Stock Option Agreement annexed hereto as Exhibit A (the "Stock
Option Agreement") to be executed and delivered by the Employee and the Company.
With respect to the foregoing, the Employee hereby acknowledges that:
(i) the Company does not presently have available a sufficient number of shares
of its Common Stock reserved for issuance under its 1995 Stock Incentive Plan
(the "Plan") so as to be able to issue said Options on the Effective Date
hereof; (ii) that the Company intends to call a special meeting of its
shareholders, to be held on or about April 17, 2000, at which it intends to
request that such shareholders approve of an increase in the shares of the
Company's Common Stock reserved for issuance under said Plan; and (iii) that the
Company's issuance of the aforesaid Options is expressly subject to, and
contingent upon, the Company obtaining the requisite shareholder approval (the
"Requisite Shareholder Approval") necessary to authorize said increase, it being
understood that in the event the Company fails to obtain said requisite
shareholder approval on or before April 30, 2000, the Employee shall have the
right to elect to terminate this Agreement pursuant to, and in accordance with,
the provisions of Subsection 4(e) hereof.
4. Termination.
a. The employment of the Employee hereunder may be terminated by the
Company on not less than thirty (30) days' prior written notice to the Employee
in the event that the Employee is determined to be permanently disabled. As used
in this Section, the Employee shall be deemed to be "permanently disabled" if
the Employee has been substantially unable to discharge his duties and
obligations hereunder, by reason of illness, accident or disability (as
reasonably determined by an MD selected by the Company [and approved by the
Employee, which approval shall not be unreasonably withheld or delayed];
provided, however, that the Employee shall be required to forthwith deliver to
such MD all of his medical records [related to the conditions which were the
cause of such disability] and timely submit to any physical examinations and/or
tests reasonably requested by such MD) for a period of ninety (90) or more
consecutive days, it being specifically understood that in the event the
Employee shall resume the full time performance of his duties
hereunder prior to the effective date of any such termination hereunder, the
Company's termination of this Agreement shall be deemed to be of no force and/or
effect. In the event the employment of the Employee is terminated because of a
permanent disability, the Employee shall receive (net of all benefits available
to the Employee under any policy of disability insurance provided to the
Employee) compensation until the earlier of the date which is three (3) months
after the date on which the Employee first became disabled and the date on which
the Term of Employment shall expire pursuant to Section 1 hereof, payable at the
rate and on the terms provided for herein as if he had not been terminated.
b. The employment of the Employee hereunder may be terminated by the
Company for cause, at any time during the Term of Employment, upon the
Employee's receipt of written notice from the Company documenting that: (i) the
Employee was convicted of a felony; or (ii) in the opinion of a majority of the
members of the Company's Board (other than the Employee, if he shall then be a
member of said Board), as determined at a Board meeting at which the Employee
and his counsel shall be given an opportunity to defend the allegations
contained in any such notice of default from the Company to the Employee, the
Employee shall have: (x) intentionally and wilfully refused or failed, or
demonstrated gross negligence in the performance of his assigned duties
hereunder, after not less than ten (10) days' prior written notice (to the
Employee) setting forth the specific conduct complained of and that such
refusal, failure and/or gross negligence would constitute a default hereunder,
to perform, in any material respect, any of his material duties hereunder, other
than any such failure resulting from the Employee's incapacity due to illness or
injury, and the Employee shall have failed to have cured such default(s) within
said ten (10) day period; or (y) committed an intentional, wrongful disclosure
of any of the Company's trade secrets and/or confidential information and such
act shall have been materially harmful to the Company.
With respect to the foregoing, it is expressly understood that: (i) no
act or failure to act on the part of the Employee shall give rise to the
Company's right to terminate this Agreement (pursuant to this Subsection 4(b))
if such act or failure to act was due primarily to an error in judgement and/or
negligence (but not gross negligence) on the part of the Employee.
c. The employment of the Employee hereunder shall automatically be
deemed terminated on the date of the Employee's death.
d. If the Employee's employment is terminated pursuant to Subsections
4(b) or (c) above, the Employee shall be entitled to, and the Company's
obligation shall be limited to, all compensation accrued under each of the
provisions of Section 3 hereof to the date of such termination or, in the case
of a termination under Subsection 4(a) hereof, to the date specified therein.
e. Notwithstanding anything to the contrary contained herein, in the
event the Company shall at any time during the Term hereof: (i) fail to maintain
at least $7.5 million of Directors' and Officers' liability insurance; or (ii)
commit a material breach of any material obligation of the Company hereunder
(including, but not limited to, a wrongful termination of the Employee's
employment hereunder) and such breach is not cured by the Company within ten
(10) days after its receipt of written notice thereof from the Employee; or
(iii) the failure of the Company to obtain, on
or before April 30, 2000, the Requisite Shareholder Approval (each a "Triggering
Event"), then, and in any such event, the Employee, within a maximum period of
120 days from and after the occurrence of any such Triggering Event, time being
of the essence hereof, shall have the right to serve not less than ninety (90)
days' prior written notice on the Company of his election to terminate this
Agreement and, in such event, the Employee shall be entitled to, and the
Company's obligation shall be limited to: (x) the vesting (pursuant to Section 2
of the Stock Option Agreement) of all of the Options granted to the Employee
pursuant to the provisions of Subsection 3(f) hereof; (y) all compensation
accrued and unpaid to date pursuant to the provisions of Subsection 3(a) hereof,
together with all such compensation to become due through the original
expiration date of the Term of Employment (February 28, 2003); and (z) the
additional sum of $2 million, which additional sum shall be reduced (except in
the case of clause (ii) above), by the product of the number of Options granted
to the Employee pursuant to the provisions of Subsection 3(f) hereof (800,000)
and then available for sale either: (A) pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act") or (B)
pursuant to Rule 144 promulgated under the Act, and provided the Employee is not
then precluded from selling shares of the Company's Common Stock by virtue of
the provisions of the Securities Exchange Act of 1934, as amended, or Company
policy, multiplied by the difference, if any, between the Exercise Price of said
Options ($8.0625) and the Fair Market Value of the shares of the Company's
Common Stock. For purposes hereof, Fair Market Value shall be defined as the
average, composite closing prices of the Company's Common Stock (as reported on
Nasdaq-NMS or the principal, national securities exchange on which the Common
Stock may then be trading) during the twenty (20) trading day period commencing
ten (10) days after the effective date of any such termination pursuant to the
provisions of this Subsection 4(e).
f. The employment of the Employee hereunder may be terminated by the
Employee, by not less than ninety (90) days' prior written notice given by the
Employee to the Company within a maximum period of one-hundred twenty (120) days
(time being of the essence hereof) after the occurrence of any of the following
events: (i) the acquisition, by any individual, group (including creditors of
the Company) or entity of beneficial ownership, of forty (40%) percent or more
of the combined voting power of the then outstanding voting stock of the
Company; (ii) if, at any time from and after August 1, 2000, the individuals
who, as of such date, constitute the Board of Directors cease, for any reason,
to constitute at least a majority of such Board; or (iii) the consummation of a
reorganization, merger or consolidation where the existing shareholders of the
Company do not retain at least 51% of their ownership interests in the Company,
or a sale or other disposition of 50% or more of the operating assets then
comprising the Company's Internet division, it being understood and agreed that
in the event the Employee shall elect to terminate this Agreement pursuant to
the provisions of this Subsection 4(f), the Employee shall be entitled to, and
the Company's obligations shall be limited to: (x) the vesting (pursuant to
Section 2 of the Stock Option Agreement) of all of the Options granted to the
Employee pursuant to the provisions of Subsection 3(f) hereof; and (y) all
compensation accrued and unpaid to date pursuant to the provisions of Subsection
3(a) hereof, together with all such compensation to become due through the
original expiration date of the Term of Employment (February 28, 2003).
5. Confidentiality.
a. The Employee shall not, during the Term of Employment or at any time
thereafter, use (other than in the performance of his duties to the Company) or
disclose to any person, firm or corporation (except as required by law or with
the prior written approval of the Company) any confidential information
concerning the business, inventions, discoveries, clients, affairs or other
trade secrets of the Company that he may have acquired in the course of, or as
an incident to, his employment by the Company.
b. The obligations of confidentiality and non-use set forth in
Subsection 5(a) above shall not apply to information: (i) which is or becomes
published in any written document or otherwise is or becomes a part of the
public domain without breach of the aforementioned obligation by the Employee;
or (ii) which the Employee can establish was already in his possession and not
subject to a secrecy obligation at the time he encountered such information in
the course of, or as an incident to, his employment by the Company. Specific
information shall not be deemed published or otherwise in the public domain, or
in the Employee's prior possession, merely because it is encompassed by some
general information published, or in the public domain, or in the Employee's
prior possession.
c. As a material inducement to the Company in entering into this
Agreement, and expressly in partial exchange for the performance of the
Company's obligations under this Agreement, the Employee hereby covenants and
agrees that, during the Term of Employment and for a period of six (6) months
thereafter, he will not, either on his own account, or directly or indirectly in
conjunction with or on behalf of any person, firm or entity (other than by
reason of the Employee's equity ownership in any publicly traded firm or
corporation provided that such equity ownership shall not confer upon the
Employee the right or ability to influence or direct, directly or indirectly,
the management of the business and/or affairs of any such firm or corporation):
(i) Solicit or employ, or attempt to solicit or employ, any person who
is then or has, within the six (6) month period prior thereto, been an officer,
director or employee of the Company or any of its affiliates, whether or not
such a person would commit a breach of his or her contract of employment, if
any, by reason of leaving the service of the Company or any of its subsidiaries;
(ii) Solicit the business of any person, firm or company (other than,
and expressly excluding, Rare Medium Group, Inc. and its subsidiaries) which is
then, or has been, at any time during the preceding six (6) month period prior
to such solicitation, a customer, client, contractor, supplier or agent of the
Company or any of its subsidiaries; or
(iii) Provided the employment of the Employee has been terminated for
cause pursuant to Subsection 4(b) hereof, carry on or be engaged, concerned or
interested in, or devote any material time to the affairs of, any trade or
business then engaged in the optical segment of the Internet B-to-B industry
and/or such other or different segments of the Internet B-to-B industry engaged
in by the Company (or any of its subsidiaries) as of the effective date of the
termination of such employment.
6. Mitigation.
The Company hereby acknowledges that it will be difficult, if not
impossible, for the Employee to find reasonably comparable employment following
the termination of this Agreement. Accordingly, the payment of any monies
hereunder in accordance with the terms of this Agreement is hereby acknowledged
by the Company to be reasonable; and the Employee will not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor will any of his profits, income, earnings or
other benefits, from any source whatsoever, create any mitigation.
7. Notices.
Any notice, request, claim, demand or other communication hereunder to
any party shall be effective upon receipt (or refusal of receipt) and shall be
in writing and delivered personally or sent by certified or registered mail,
return receipt requested, postage prepaid, as follows:
(i) If to the Company, addressed to its principal executive offices to
the attention of its General Counsel, with a copy to be simultaneously delivered
to its Chairman of the Board of Directors; or
(ii) If to the Employee, to him at the address set forth above, with a
copy to be simultaneously delivered to Xxxx Xxxxxxx, Esq., Xxxxxxx & Xxxxxxx,
0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000; or
(iii) At any such other address as either party shall have specified by
written notice given to the other as herein provided.
8. Entire Agreement.
The terms of this Agreement are intended by the parties, as of the date
hereof, to be the final expression of their agreement with respect to the
employment of the Employee by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement.
9. Amendments; Waivers.
Except as otherwise set forth in Section 4 hereof, this Agreement may
not be modified, amended or terminated except by an instrument, in writing,
signed by the Employee and by the Company's Chairman. By an instrument in
writing similarly executed, either party may waive compliance by the other party
with any provision of this Agreement that such other party was or is obligated
to comply with or perform; provided, however, that such waiver shall not operate
as a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy or power
provided for herein, or by law, or in equity.
10. Severability; Enforcement.
If any provision of this Agreement, or the application thereof to any
person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other persons, places and
circumstances, shall remain in full force and effect.
11. Assignability.
a. In the event that the Company shall merge or consolidate with any
other corporation, partnership or business entity, or all or substantially all
of the Company's business or assets shall be transferred, in any manner, to any
other corporation, partnership or business entity, such successor shall
thereupon succeed to, and be subject to, all rights, interests, duties and
obligations of, and shall thereafter be deemed for all purposes hereof to be,
the Company hereunder.
b. This Agreement is personal in nature, and none of the parties hereto
shall, without the prior written consent of the other, assign or transfer this
Agreement or any of its or his rights or obligations hereunder, except by
operation of law or pursuant to the terms of this Section 10.
c. Nothing expressed or implied herein is intended or shall be
construed to confer upon, or give to any person, other than the parties hereto
(and, with respect to the Employee, his heirs, executors, administrators and/or
trustees) any right, remedy or claim under, or by reason of, this Agreement, or
of any term, covenant or condition hereof.
12. Restrictive Covenant.
To the extent that a restrictive covenant contained herein may, at any
time, be more restrictive than permitted under the laws of any jurisdiction
where this Agreement may be subject to review and interpretation, the terms of
such restrictive covenant shall be those allowed by law, and the covenant shall
be deemed to have been revised accordingly.
13. Governing Law.
The validity, interpretation, enforceabiity and performance of this
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York.
14. Employee's Representation and Acknowledgment.
This Employee hereby represents that he is free to enter into this
Agreement and is not under any contractual restraint which would prohibit him
from satisfactorily performing his duties to the Company hereunder. The Employee
also acknowledges: (i) that he has consulted with or has had the opportunity to
consult with independent counsel of his own choice concerning this Agreement
and has been advised to do so by the Company; (ii) that he has read and
understands this Agreement, is fully aware of its legal effects and has entered
into it freely, based upon his own judgment; and (iii) that he has obtained the
written consent of his present employer to the Company entering into this
Agreement.
15. Arbitration.
Any controversy between the Employee and the Company, or any employee,
director or stockholder of the Company, involving the construction or
application of any of the terms, provisions or conditions of this Agreement or
otherwise arising out of, or related to, this Agreement, shall be settled by
arbitration (to be conducted in the New York City office of the American
Arbitration Association) in accordance with the then current commercial
arbitration rules of the American Arbitration Association, and judgment on the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof, it being specifically understood that any such award may include the
reasonable, legal fees and expenses incurred by the substantially prevailing
party in any such proceeding.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
STERLING VISION, INC.
By: /s/ Xxxxxx Xxxxx
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Title: Xxxxxx Xxxxx
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Chairman
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EMPLOYEE:
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
