Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of June 15, 2003 between
1-800 CONTACTS, INC., a Utah corporation (the “Company”), and David M. Saylor
(the “Executive”).  This Agreement shall be deemed to be effective as of June
15,  2003 (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 Vice President, Operations and Project Manager of the Company
and shall have the normal duties, responsibilities and authority of such
position.

 

(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 hereinafter 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 of more
Subsidiaries.

 

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3.                                       Base Salary and Benefits.

 

(a)                                  During the first year of the Employment
Period, Executive’s base salary shall be $160,000 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 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).

 

(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 fifteen days vacation each
year with salary, subject to additional vacation 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)                              $1000 annual tax planning allowance; and

(vii)                           401 (k) – Company will match 50% up to 6%
deferral; and

(viii)                        Paid LTD; and

(ix)                                Paid Life Insurance (Supplemental Life
Available); and

(x)                                   Paid Medical Coverage for self, spouse and
dependants; and

(xi)                                Dental and Vision coverage available

 

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

 

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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 health benefits for a period of 12 months
thereafter, and (ii) following the end of the fiscal year in which Executive’s
employment 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, (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 (if requested by executive), to be heard before the Board.

 

5.                                       Confidential Information.  Executive
acknowledges that the information, observations, data, strategic and development
plans, financial condition, business plans, co-developer identities, business
records, customer lists, clients and suppliers, project records, market reports,
employee lists and business manuals, policies and procedures, information
relating to processes, technologies of theory and all other information which
may be disclosed or obtained by Executive 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 or reproductions 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.  In accordance
with UCA §34-39-1 et. seq., Executive acknowledges that any invention or part
thereof conceived, developed, reduced to practice, or created by Executive which
is:

(a) conceived, developed, reduced to practice, or created by Executive:

(i) within the scope of his employment;

 

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(ii) on Company’s or its Subsidiaries’ time; or

(iii) with the aid, assistance, or use of any of Company’s or its Subsidiaries’
property, equipment, facilities, supplies, resources, or intellectual property;

(b) the result of any work, services, or duties performed by Executive for
Company or its Subsidiaries;

(c) related to the industry or trade of the Company or its Subsidiaries; or

(d) related to the current or demonstrably anticipated business, research, or
development of the Company or its Subsidiaries is an (“Employment invention”)
and belongs to the Company or such Subsidiary.

(e)  (“Intellectual property”) means any and all patents, trade secrets,
know-how, technology, confidential information, ideas, copyrights, trademarks,
and service marks and any and all rights, applications, and registrations
relating to them.

(f) Executive shall promptly disclose such Employment invention 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 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.

 

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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, (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:

 

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Notices to Executive:

 

David M. Saylor

21960 N. Harbor Road

Barrington, IL 60010

 

Notices to the Company:

 

1-800 CONTACTS, INC.

13751 Wadsworth Park Drive, Suite D-140

Draper, Utah  84020

Attn:  Board of Directors

 

with a copy to:

 

Kirkland & Ellis

200 E. Randolph Drive

Chicago, Illinois  60601

Attn:  Dennis M. Myers

 

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 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.

 

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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.

 

*    *    *    *    *

 

 

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

 

 

 

1-800 CONTACTS, INC.

 

 

 

 

 

 

 

By:

 

 

 

 

Name: Jonathan C. Coon

 

 

Its: Chief Executive Officer

 

 

 

 

 

 

 

 

David M. Saylor

 

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