**Exhibit10.1**

 

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENTAGREEMENT (this “Agreement”) is made as of September 12, 2003 between 1-800CONTACTS, INC., a Utah corporation (the “Company”), and Brian Bethers(the “Executive”).  ThisAgreement shall be deemed to be effective as of July 9, 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.             Position andDuties.

 

(a)           During theEmployment Period, Executive shall serve as the Chief Financial Officer of theCompany and shall have the normal duties, responsibilities and authority ofsuch position.

 

(b)           Executive shallreport to the Company’s Chief Executive Officer and such other persons as theboard of directors (“the Board”) may direct from time to time, and Executiveshall devote his best efforts and his full business time and attention (exceptfor permitted vacation periods and reasonable periods of illness or otherincapacity) to the business and affairs of the Company and its Subsidiaries (ashereinafter defined).  Executive shallperform his duties and responsibilities to the best of his abilities in a diligent,trustworthy, businesslike and efficient manner.

 

(c)           For purposes of thisAgreement, “Subsidiaries” shall mean any corporation of which thesecurities having a majority of the voting power in electing directors are, atthe time of determination, owned by the Company, directly or through one ofmore Subsidiaries.

 

3.             Base Salary andBenefits

 

(a)           During the firstyear of the Employment Period, Executive’s base salary shall be $225,000 perannum (the “Base Salary”), which salary shall be payable in regularinstallments in accordance with the Company’s general payroll practices andshall 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).

 

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(b)           In addition to theBase Salary, the Board will award an annual bonus between 25% and 75% of theExecutive’s Base Salary with a 50% target of $112,500 to Executive followingthe end of each fiscal year during the Employment.  Executive’s bonus percentage shall be determined using thefollowing three factors: Company wide profits less advertising expenses;personal performance (mutually agreeable goals); and the discretion of theChief Executive Officer and/or Board members. In addition to the Base Salary and any bonuses payable to Executivepursuant to this paragraph, Executive shall be entitled to the following benefitsduring the Employment Period:

 

(i)            Reimbursement for the cost of anannual physical examination by a physician of Executive’s choice;

(ii)           A maximum of twenty days vacationeach 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 LifeAvailable); and

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

(xi)                                Dental and Vision coverage available; and

(xii)                             Moving expenses up to $100,000 and a relocation bonusof $35,000 after review of 2003 total bonus earnings.

 

4.             Termination.

 

(a) The Employment Period shall continue until earlier of (i) the fourthanniversary of the Effective Date (the “Expiration Date”) or (ii)Executive’s resignation, death or disability or other incapacity (as determinedby the Board in its good faith judgment) or until the Board determines in itsgood faith judgment that termination of Executive’s employment is in the bestinterests 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 the event of Executive’s resignation ofemployment for any reason, (other than a breach by the Company of paragraph2(a)) or termination for Cause (as defined herein), Executive shall not beentitled to receive his Base Salary or any fringe benefits for any period afterthe termination of the Employment Period. Upon any other termination of the Employment Period, Executive shall beentitled to receive (i) his Base Salary and health benefits for a period of 12months thereafter, and (ii) following the end of the fiscal year in whichExecutive’s employment would have been entitled if he remained employed by theCompany 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 monthsof such

 

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fiscal year or (B)100% of the Bonus Amount if such termination occurs in the second six months ofsuch fiscal year.

 

(b) Forpurposes of this Agreement, “Cause” shall mean (i) the willful and continuedfailure by Executive to perform his duties of the position set forth herein orhis continued failure to perform duties reasonably requested or reasonablyprescribed by the Board, (ii) the engaging by Executive in conduct which ismaterially monetarily injurious to the Company or any of its Subsidiaries,(iii) gross negligence or willful misconduct by Executive in the performance ofhis duties which results in, or causes, material monetary harm to the Companyor any of its Subsidiaries, or (iv) Executive’s commission of a felony or othercivil or criminal offense involving moral turpitude.  In the case of (i), (ii) and (iii) above, finding of Cause fortermination shall be made only after reasonable notice to Executive and anopportunity for Executive, together with counsel (if requested by 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,employee lists and business manuals, policies and procedures, information relatingto processes, 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;

(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 (“WorkProduct”) and belongs to the Company or such

 

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Subsidiary.

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

(f) Executive shall promptly disclose such Work Product to the Boardand perform all actions reasonably requested by the Board (whether during orafter the Employment Period) to establish and confirm such ownership(including, without limitation, assignments, consents, powers of attorney andother instruments).

 

7.             Non-Compete,Non-Solicitation.

 

(a)           In furtherconsideration of the compensation to be paid to Executive hereunder, Executiveacknowledges that in the course of his employment with the Company he shall becomefamiliar with the Company’s trade secrets and with other ConfidentialInformation concerning the Company and its Subsidiaries and that his servicesshall be of special, unique and extraordinary value to the Company and itsSubsidiaries.  Therefore, Executiveagrees that, during the Employment Period and for two years thereafter (the “NoncompetePeriod”), 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 businesscompeting with the businesses of the Company or its Subsidiaries, as suchbusinesses exist or are in process on the date of the termination ofExecutive’s employment, within any geographical area in which the Company orits Subsidiaries engage or plan to engage in such businesses.  Nothing herein shall prohibit Executive frombeing a passive owner of not more than 1% 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)           During theNoncompete Period, Executive shall not directly or indirectly through anotherentity (i) hire any person who was an employee of the Company or any Subsidiaryat any time during the three-month period prior to the expiration of theEmployment 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.

 

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

 

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existing in theirfavor, apply to any court of competent jurisdiction for specific performanceand/or injunctive or other relief in order to enforce, or prevent anyviolations of, the provisions hereof (without posting a bond or othersecurity).  In addition, in the event ofan alleged breach or violation by Executive of paragraph 7, the NoncompetePeriod shall be tolled until such breach or violation has been duly cured.  Executive agrees that the restrictionscontained in paragraph 7 are reasonable.

 

9.             Other Businesses.  As long as Executive is employed by theCompany or any of its Subsidiaries, Executive agrees that he will not, exceptwith the express written consent of the Board, become engaged in, or renderservices for, any business other than the business of the Company, any of itsSubsidiaries or any corporation or partnership in which the Company or any ofits Subsidiaries have an equity interest; provided, that Executive may devote ade minimis portion of his time to engaging in, or rendering services for, anysuch business if such activities do not in any material way interfere with theperformance by Executive of his obligations hereunder and such activities donot  in any way materially and adverselyaffect the Company.  Executive shallnotify the Company prior to engaging in any such activities.  Nothing contained in this paragraph 9shall 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:

 

Notices to Executive:

 

BrianBethers

3Saddle Lane

Wayland,MA 01778

 

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Notices to the Company:

 

1-800 CONTACTS, INC.

13751 Wadsworth Park Drive, Suite D-140

Draper, Utah 84020

Attn:  Board of Directors

 

or such other address orto the attention of such other person as the recipient party shall havespecified by prior written notice to the sending party.  Any notice under this Agreement shall bedeemed 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 Agreementshall be reformed, construed and enforced in such jurisdiction as if suchinvalid, 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.           No Strict Construction.  The language used in this Agreement shall bedeemed to be the language chosen by the parties hereto to express their mutualintent, and no rule of strict construction shall be applied against any party.

 

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.           Successors andAssigns.  This Agreement is intendedto bind and inure to the benefit of and be enforceable by Executive, theCompany 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 of Law.  All issues and questions concerning theconstruction, validity, enforcement and interpretation of this Agreement andthe exhibits and schedules hereto shall be governed by, and construed inaccordance with, the laws of the State of Utah, without giving effect to anychoice of law or conflict of law rules or provisions (whether of the State ofUtah or any other jurisdiction) that would cause the application of the laws ofany jurisdiction other than the State of Utah.

 

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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.

 

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IN WITNESSWHEREOF, the parties hereto have executed this Agreement as of the EffectiveDate written above.

 

 
|   |   |   | 1-800 CONTACTS,  INC.         |
|--------|--------|--------|-------------------------------|
|   |   |   |                          |   |   |   |   |
|   |   |   | By:                           | /s/ Jonathan C. Coon |   |
|   |   |   | Name: Jonathan C. Coon        |
|   |   |   | Its: Chief Executive  Officer |
|   |   |   |                          |
|   |   |   | /s/ Brian Bethers             |   |
|   |   |   | Brian Bethers                 |
|        |        |        |                               |  |  |  |  |  |

 

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