**Exhibit10.1**

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) ismade 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 effectiveas of June 15,  2003 (the “EffectiveDate”).

 

In considerationof the mutual covenants contained herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto agree as follows:

 

1.                                       Employment.  The Company shall employ Executive, andExecutive hereby accepts employment with the Company, upon the terms andconditions set forth in this Agreement, for the period beginning on theEffective Date and ending as provided in paragraph 4 hereof (the “EmploymentPeriod”).

 

2.                                       Positionand Duties.

 

(a)                                  Duringthe Employment Period, Executive shall serve as the Vice President, Operationsand Project Manager of the Company and shall have the normal duties,responsibilities and authority of such position.

 

(b)                                 Executiveshall report to the Company’s Chief Executive Officer and such other persons asthe board of directors (“the Board”) may direct from time to time, andExecutive shall devote his best efforts and his full business time andattention (except for permitted vacation periods and reasonable periods ofillness or other incapacity) to the business and affairs of the Company and itsSubsidiaries (as hereinafter defined). Executive shall perform his duties and responsibilities to the best ofhis abilities in a diligent, trustworthy, businesslike and efficient manner.

 

(c)                                  Forpurposes of this Agreement, “Subsidiaries” shall mean any corporation ofwhich the securities having a majority of the voting power in electingdirectors are, at the time of determination, owned by the Company, directly orthrough one of more Subsidiaries.

 

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3.                                       BaseSalary and Benefits.

 

(a)                                  Duringthe first year of the Employment Period, Executive’s base salary shall be$160,000 per annum (the “Base Salary”), which salary shall be payable inregular installments in accordance with the Company’s general payroll practicesand shall be subject to customary withholding. Thereafter, the Base Salary shall be such higher rate as the Board maydesignate from time to time.  As used inthis Agreement, the term “Base Salary” shall be deemed to include any suchincreases as may be designated from time to time by corporate management.  During the Employment Period, Executiveshall be entitled to participate in all of the Company’s employee benefitprograms for which management employees of the Company and its Subsidiaries aregenerally eligible (including the Company’s stock option program).

 

(b)                                 Inaddition 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 fiscalyear during the Employment Period upon the Company achieving certain operatingtargets as determined by the Board at the beginning of each fiscal year duringthe Employment Period.  In addition tothe Base Salary and any bonuses payable to Executive pursuant to thisparagraph, Executive shall be entitled to the following benefits during theEmployment Period:

 

(i)                                     Reimbursementfor the cost of an annual physical examination by a physician of Executive’schoice;

(ii)                                  Amaximum of fifteen days vacation each year with salary, subject to additionalvacation upon executive approval; and

(iii)                               Reimbursementfor travel, entertainment and other business expenses reasonably incurred byExecutive (including costs associated with the use of a mobile telephone); and

(iv)                              $500per month car allowance; and

(v)                                 $400per month house cleaning allowance; and

(vi)                              $1000annual tax planning allowance; and

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

(viii)                        Paid LTD;and

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

(x)                                   PaidMedical Coverage for self, spouse and dependants; and

(xi)                                Dentaland Vision coverage available

 

4.                                   Termination.

 

(a) The Employment Period shall continue until earlierof (i) the fourth anniversary of the Effective Date (the “Expiration Date”)or (ii) Executive’s resignation, death or disability or other incapacity (asdetermined by the Board in its good faith judgment) or until the Boarddetermines in its good faith judgment that termination of Executive’semployment is in the best interests of the Company.  Notwithstanding the foregoing, the Employment Period shall beautomatically extended for an additional year unless either the Company or theExecutive delivers written notice to the other within 60 days of the ExpirationDate of its or his intention not to extend the Employment Period.  In

 

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the event of Executive’sresignation of employment for any reason, (other than a breach by the Companyof paragraph 2(a)) or termination for Cause (as defined herein), Executiveshall not be entitled to receive his Base Salary or any fringe benefits for anyperiod after the termination of the Employment Period.  Upon any other termination of the EmploymentPeriod, Executive shall be entitled to receive (i) his Base Salary and healthbenefits for a period of 12 months thereafter, and (ii) following the end ofthe fiscal year in which Executive’s employment would have been entitled if heremained 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 inthe first six months of such fiscal year or (B) 100% of the Bonus Amount if suchtermination occurs in the second six months of such fiscal year.

 

(b) For purposes of this Agreement, “Cause” shall mean (i) the willful andcontinued failure by Executive to perform his duties of the position set forthherein or his continued failure to perform duties reasonably requested orreasonably prescribed by the Board, (ii) the engaging by Executive in conductwhich is materially monetarily injurious to the Company or any of itsSubsidiaries, (iii) gross negligence or willful misconduct by Executive in theperformance of his duties which results in, or causes, material monetary harmto the Company or any of its Subsidiaries, or (iv) Executive’s commission of afelony 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 toExecutive and an opportunity for Executive, together with counsel (if requestedby executive), to be heard before the Board.

 

5.                                       ConfidentialInformation.  Executive acknowledgesthat 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, employeelists and business manuals, policies and procedures, information relating toprocesses, technologies of theory and all other information which may bedisclosed or obtained by Executive while employed by the Company and itsSubsidiaries concerning the business or affairs of the Company or any otherSubsidiary (“Confidential Information”) are the property of the Company or suchSubsidiary.  Therefore, Executive agreesthat he shall not disclose to any unauthorized person or use for his ownpurposes any Confidential Information without the prior written consent of theBoard, unless and to the extent that the aforementioned matters becomegenerally known to and available for use by the public other than as a resultof Executive’s acts or omissions. Executive shall deliver to the Company at the termination of theEmployment Period, or at any other time the Company may request, all memoranda,notes, plans, records, reports, computer tapes, printouts and software andother documents and data (and copies or reproductions thereof) relating to theConfidential Information, Work Product (as defined below) or the business ofthe Company or any Subsidiary which he may then possess or have under hiscontrol.

 

6.                                       Inventionsand Patents.  In accordance with UCA§34-39-1 et. seq., Executive acknowledges that any invention or part thereofconceived, developed, reduced to practice, or created by Executive which is:

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

(i) within the scope ofhis employment;

 

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(ii) on Company’s or itsSubsidiaries’ time; or

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

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

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

(d) related to the current or demonstrably anticipatedbusiness, 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 registrationsrelating to them.

(f) Executive shall promptly disclose such Employmentinvention to the Board and perform all actions reasonably requested by theBoard (whether during or after the Employment Period) to establish and confirmsuch ownership (including, without limitation, assignments, consents, powers ofattorney and other instruments).

 

7.                                       Non-Compete,Non-Solicitation.

 

(a)                                  Infurther consideration of the compensation to be paid to Executive hereunder,Executive acknowledges that in the course of his employment with the Company heshall become familiar with the Company’s trade secrets and with otherConfidential Information concerning the Company and its Subsidiaries and thathis services shall be of special, unique and extraordinary value to the Companyand its Subsidiaries.  Therefore,Executive agrees that, during the Employment Period and for two years thereafter(the “Noncompete Period”), he shall not, without the express writtenconsent of the Company, directly or indirectly own any interest in, manage,control, participate in, consult with, render services for, or in any mannerengage in any business competing with the businesses of the Company or itsSubsidiaries, as such businesses exist or are in process on the date of thetermination of Executive’s employment, within any geographical area in whichthe Company or its Subsidiaries engage or plan to engage in such businesses.  Nothing herein shall prohibit Executive frombeing a passive owner of not more than 2% of the outstanding stock of any classof a corporation which is publicly traded, so long as Executive has no activeparticipation in the business of such corporation.

 

(b)                                 Duringthe Noncompete Period, Executive shall not directly or indirectly throughanother entity (i) hire any person who was an employee of the Company or anySubsidiary at any time during the three-month period prior to the expiration ofthe Employment Period or (ii) induce or attempt to induce any customer,supplier, licensee, licensor, franchisee or other business relation of theCompany or any Subsidiary to cease doing business with the Company or suchSubsidiary, or in any way interfere with the relationship between any suchcustomer, supplier, licensee or business relation and the Company or anySubsidiary (including, without limitation, making any negative statements orcommunications about the Company or its Subsidiaries) which interference causesmaterial monetary damage to the Company or its Subsidiaries.

 

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8.                                       Enforcement.  If, at the time of enforcement ofparagraph 5, 6, 7 or 8 of this Agreement, a court holds that therestrictions stated herein are unreasonable under circumstances then existing,the parties hereto agree that the maximum period, scope or geographical areareasonable under such circumstances shall be substituted for the stated period,scope or area. Because Executive’s services are unique and because Executivehas access to Confidential Information and Work Product, the parties heretoagree that money damages would not be an adequate remedy for any breach of thisAgreement.  Therefore, in the event abreach or threatened breach of this Agreement, the Company or its successors orassigns may, in addition to other rights and remedies existing in their favor,apply to any court of competent jurisdiction for specific performance and/orinjunctive 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 allegedbreach or violation by Executive of paragraph 7, the Noncompete Period shall betolled until such breach or violation has been duly cured.  Executive agrees that the restrictionscontained in paragraph 7 are reasonable.

 

9.                                       OtherBusinesses.  As long as Executive isemployed by the Company or any of its Subsidiaries, Executive agrees that hewill not, except with the express written consent of the Board, become engagedin, or render services for, any business other than the business of theCompany, any of its Subsidiaries or any corporation or partnership in which theCompany or any of its Subsidiaries have an equity interest; provided, that Executivemay devote a de minimis portion of his time to engaging in, or renderingservices for, any such business if such activities do not in any material wayinterfere with the performance by Executive of his obligations hereunder andsuch activities do not  in any waymaterially and adversely affect the Company. Executive shall notify the Company prior to engaging in any suchactivities.  Nothing contained in thisparagraph 9 shall limit the provisions of paragraph 7 above.

 

10.                                 Executive’sRepresentations.  Executive herebyrepresents and warrants to the Company that (i) the execution, delivery andperformance 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 isbound, (ii) Executive is not a party to or bound by any employmentagreement, noncompete agreement or confidentiality agreement with any otherperson or entity and (iii) upon the execution and delivery of this Agreement bythe Company, this Agreement shall be the valid and binding obligation ofExecutive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents that he fullyunderstands the terms and conditions contained herein.

 

11.                                 Survival.  Paragraphs 5, 6, and 7 andparagraphs 11 through 19 shall survive and continue in full force inaccordance with their terms notwithstanding any termination of the EmploymentPeriod.

 

12.                                 Notices.  Any notice provided for in this Agreementshall be in writing and shall be either personally delivered, or mailed byfirst class mail, return receipt requested, to the recipient at the addressbelow 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 therecipient party shall have specified by prior written notice to the sendingparty.  Any notice under this Agreementshall be deemed to have been given when so delivered or mailed.

 

13.                                 Severability.  Whenever possible, each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but if any provision of this Agreement is held to beinvalid, illegal or unenforceable in any respect under any applicable law orrule in any jurisdiction, such invalidity, illegality or unenforceability shallnot affect any other provision or any other jurisdiction, but this Agreement shallbe reformed, construed and enforced in such jurisdiction as if such invalid,illegal or unenforceable provision had never been contained herein.

 

14.                                 CompleteAgreement.  This Agreement, thosedocuments expressly referred to herein and other documents of even dateherewith embody the complete agreement and understanding among the parties andsupersede and preempt any prior understandings, agreements or representationsby or among the parties, written or oral, which may have related to the subjectmatter hereof in any way.

 

15.                                 NoStrict Construction.  The languageused in this Agreement shall be deemed to be the language chosen by the partieshereto to express their mutual intent, and no rule of strict construction shallbe applied against any party.

 

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16.                                 Counterparts.  This Agreement may be executed in separatecounterparts, each of which is deemed to be an original and all of which takentogether constitute one and the same agreement.

 

17.                                 Successorsand Assigns.  This Agreement isintended to bind and inure to the benefit of and be enforceable by Executive,the Company and their respective heirs, successors and assigns, except thatExecutive may not assign his rights or delegate his obligations hereunderwithout the prior written consent of the Company.

 

18.                                 **Choice ofLaw.**  **All issuesand questions concerning the construction, validity, enforcement andinterpretation of this Agreement and the exhibits and schedules hereto shall begoverned 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 orprovisions (whether of the State of Utah or any other jurisdiction) that wouldcause the application of the laws of any jurisdiction other than the State ofUtah.**

 

19.                                 Amendmentand Waiver.  The provisions of thisAgreement may be amended or waived only with the prior written consent of theCompany and Executive, and no course of conduct or failure or delay inenforcing the provisions of this Agreement shall affect the validity, bindingeffect or enforceability of this Agreement.

 

*    *   *    *    *

 

 

IN WITNESSWHEREOF, the parties hereto have executed this Agreement as of the date firstwritten above.

 

 
|   | 1-800 CONTACTS, INC. |
|--------|----------------------|
|   |                 |   |
|   |                 |   |
|   | By:                  |   |   |
|   |                 | Name: Jonathan C. Coon |
|   |                 | Its: Chief Executive Officer |
|   |                 |   |
|   |                 |   |
|   |                 | David M. Saylor |
|        |                      |  |  |  |

 

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