Exhibit 10.6
SIGHT RESOURCE CORPORATION
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As of January 26, 1998
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Dear ▇▇. ▇▇▇▇▇▇▇▇:
This letter is to confirm our understanding with respect to (i) your
employment by Sight Resource Corporation, a Delaware corporation (the
"Company"), (ii) your agreement not to compete with the Company and (ii) your
agreement to protect and preserve information and property which is confidential
and proprietary to the Company, subject to your agreement with the terms hereof
as indicated by your execution of this letter on the final page (the terms and
conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. EMPLOYMENT. The Company will employ you, and you agree to work for
the Company, as its President and Chief Executive Officer, to have such
responsibilities, duties and authority as are customary to such positions,
including, without limitation, general supervision and control over, and
responsibility for, the general management and operation of the Company and its
subsidiaries. You will also have such other responsibilities, duties and
authority as may from time to time be assigned to you by the Board of Directors
(the "Board") that are consistent with your status as President and Chief
Executive Officer of the Company. In addition, so long as you service in such
capacities, the Company will appoint you or nominate you for election to the
Board. You will report only to the Board. You agree to devote your full business
time and energies to the business and affairs of the Company and its
subsidiaries, if any, as is necessary from time to time for your fulfillment of
your obligations to the Company hereunder; however, nothing contained in this
Paragraph 1 shall be deemed to prevent or limit your right to: (a) make passive
investments in the securities of any publicly-owned corporation, (b) make any
other passive investments with respect to which you are not obligated or
required to, and which you do not in fact, devote any substantial managerial
efforts which interfere with your fulfillment of your duties hereunder or (c)
serve as member of the board of directors of other for-profit or not-for-profit
corporations or entities, so long as such service (i) does not interfere with
the performance of your obligations hereunder or (ii) does not constitute a
violation of Section 10.
2. TERM OF EMPLOYMENT. (a) Your retention hereunder shall commence as
of the date above and will continue until the third anniversary thereof (the
"Initial Term"); provided that the Initial Term, and any succeeding two-year
period thereafter, shall automatically be renewed for a two-year period, and for
successive two-year periods, unless, not later than 6 months prior to the
expiration of the Initial Term or any such successor two-year term (or such
shorter period as may mutually be agreed by you and the Company), either you or
the Company delivers written notice to the other stating that such term shall
not be so extended or renewed Notwithstanding the foregoing, your employment
hereunder shall be terminated by the first to occur of the following:
(i) Immediately upon your death;
(ii) Upon notice from the Company following your inability,
due to illness, accident or any other physical or mental incapacity, to
perform the services provided for hereunder for an aggregate of 180
business days within any one year period during the term hereof;
(iii) By the Company upon notice, for Cause, as defined
herein, and as set forth below;
(iv) By the Company, upon notice subject to Section 3 hereof,
without Cause; or
(v) By you, upon notice to the Company, PROVIDED, that if you
do not give at least 60 days' prior written notice of your intention to
terminate your employment hereunder, you will forfeit all unused
vacation, prepaid benefits, any unused but unpaid incentive
compensation, and any stock options which have not vested as of the
date such notice is given.
The right of the Company to terminate your employment hereunder to which you
hereby agree, shall be exercisable by written notice sent to you by the Company
and shall be effective as of the date of such notice.
(b) The Company may, immediately and unilaterally, terminate your
employment hereunder for Cause at any time upon ten (10) days' advance written
notice to you. Termination of your employment by the Company shall constitute a
termination for Cause if such termination is for one or more of the following
reasons: (i) your continuing failure to render services to the Company in
accordance with your assigned duties consistent with Section 1 of this Agreement
and such failure of performance continues for a period of more than 120 days
after notice thereof has been provided to you by the Board of Directors; (ii)
your willful misconduct or gross negligence; (iii) you are convicted of a
felony, either in connection with the performance of your obligations to the
Company or which conviction materially adversely affects your ability to perform
such obligations, or materially adversely affects the business activities,
reputation, good will or image of the Company; (iv) willful disloyalty,
deliberate dishonesty, breach of fiduciary duty or breach of the terms of this
Agreement; (v) the commission by you of an act of fraud, embezzlement or
deliberate disregard of the rules or policies of the Company which results in
significant loss, damage or injury to the Company; (vi) your willful
unauthorized disclosure of any trade secret or confidential information of the
Company; or (vii) your willful commission of
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an act which constitutes unfair
competition with the Company or which induces any employee or customer of the
Company to break a contract with the Company.
In making any determination under this Section, the Board of Directors
shall act fairly and in utmost good faith and shall give you an opportunity to
appear and be heard at a meeting of the Board of Directors or any committee
thereof and present evidence on your behalf. For purposes of this Section, no
act, or failure to act, on your part shall be considered "willful" unless done,
or admitted to be done, by you in bad faith and without reasonable belief that
such action of omission was in the best interest of the Company.
In the event you are terminated for Cause, you shall be entitled to no
severance or other termination benefits, or any other benefits (except for any
health insurance benefits required by applicable law).
3. COMPENSATION. (a) In consideration for your services under this
Agreement, you shall be paid at the annual rate of Two Hundred and Forty Five
Thousand Dollars ($245,000), subject to increase from time to time by action of
the Board in accordance with your performance and the Company's performance
("Base Salary"), and payable at such intervals as may be agreed upon by the
Company and you, less any amounts required to be withheld under applicable law.
Such compensation will be reduced by any disability payments which you receive,
after taking into account the tax benefits (if any) of such payments. In
addition, upon commencement of your employment you will be granted options to
purchase an aggregate of 300,000 shares of the Company's Common Stock, at fair
market value on the date of grant, vesting 1/3 immediately and the remaining 2/3
in two equal annual installments thereafter, pursuant to the Company's standard
form of stock option agreement. In addition, during the first 60 days of your
employment hereunder, you will have the right to purchase from the Company
shares of the Company's Common Stock, at a purchase price equal to a 25%
discount from the fair market value of such shares on the date of purchase, such
shares to be locked up for 2 years from the date of purchase pursuant to a
lock-up agreement in form and substance reasonably satisfactory to you and the
Company.
(b) In the event your employment shall be terminated by the Company
without Cause at any time, or in the event that you terminate your employment
hereunder by reason of a material change in your duties imposed by the Board of
Directors of the Company, or by reason of any material breach by the Company of
its obligations to you, the Company shall continue to pay you your Base Salary
then in effect and the cost of your health insurance for a period (the
"Severance Period") following any such termination determined as follows:
DATE OF TERMINATION SEVERANCE PERIOD
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any time on or after the first anniversary One year
of the date of this Agreement
any time prior to the first anniversary Two years initially,
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DATE OF TERMINATION SEVERANCE PERIOD
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of the date of reduced to
this Agreement one year in 12 monthly
periodic installments
commencing on the date
of this Agreement and
ending on the first
anniversary of the
date of this
Agreement.
In the event that you are terminated by the Company without Cause, you will also
be entitled to reimbursement of reasonable outplacement expenses actually
incurred by you, not to exceed in any event an amount equal to 17% of your Base
Salary. All payments made under this Section 3(b) shall be made at the times and
at the rate specified in Section 3(a) hereof.
(c) In the event your employment shall be terminated by the Company for
Cause, no further compensation or benefits of any kind shall be payable to you
hereunder (except for any health insurance benefits required by applicable law);
provided, however, that you shall continue to be bound by the provisions of this
Agreement, other than Section 1.
4. BONUSES. Following the commencement of your employment hereunder,
you and the Compensation Committee of the Board will discuss alternatives for
determining the amount of any annual bonuses to which you will be entitled.
Following such discussions, the Compensation Committee of the Board will
establish a policy, procedure or formula for determining the amount of any
annual bonuses to which you will be entitled. Thereafter, you will be entitled
to such bonuses as are determined from time to time by the Compensation
Committee of the Board in accordance with such policy, procedure or formula.
5. EXPENSES. The Company will reimburse you for travel, entertainment
and other business expenses reasonably incurred by you in connection with the
business of the Company to the extent and in a manner consistent with then
Company policy and appropriate to someone in a position of your stature.
6. BENEFITS. In connection with your employment hereunder, you will be
entitled during your employment to the following additional benefits:
(a) At the Company's expense, such fringe benefits as the Company may
provide from time to time for its senior management, but in any event providing
you an automobile allowance not to exceed $850 per month.
(b) You shall be entitled to no less than the number of vacation days
in each calendar year determined in accordance with the Company's vacation
policy as in effect from time to time, but not less than three (3) weeks in any
calendar year (prorated in any calendar year during which you are employed
hereunder for less than the entire such year in accordance with the number of
days in such calendar year in which you are so employed). You shall also be
entitled to all paid holidays and personal days given by the Company to its
executives.
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(c) The Company shall furnish you with office space, stenographic
assistance and such other facilities and services as shall be suitable to and
appropriate for your position and for the performance of your duties as set
forth herein.
(d) In addition to the foregoing, you shall also be entitled to
participate in any employee benefit plans which the Company provides or may
establish for the benefit of its executive employees generally.
7. TERMINATION UPON DEATH OR DISABILITY. Your employment by the Company
shall terminate upon your death, or if, by virtue of total and permanent
disability, you are unable to perform your duties hereunder.
The determination that, by virtue of total and permanent disability,
you are unable to perform your duties hereunder shall be made by a physician
chosen by the Company and reasonably satisfactory to you (or your legal
representative). The cost of such examination shall be borne by the Company.
Without limiting the generality of the foregoing, unless otherwise agreed, you
shall be conclusively presumed to be totally and permanently disabled hereunder
if for reasons involving mental or physical illness or physical injury you fail
to perform your duties hereunder for a period aggregating one hundred eighty
(180) days or more in any twelve (12) consecutive month period.
For purposes of this Paragraph 7, the termination date in the event of
death shall be the date of death and in the event of such total and permanent
disability shall be the earlier of the date of such physician's examination
pursuant to which such determination is made or the first business day after
which such 180 days has expired.
In the event of such a termination of employment as a result of your
death or total and permanent disability, the Company shall have no further
obligations hereunder except as provided in Paragraphs 3 and 9 hereof and except
as provided below in this Paragraph 7:
(a) In the event of death, the Company shall pay to your estate
amounts, at the Base Salary rate in effect on the termination date, in
monthly payments, for a period of twelve (12) months following the
termination date; and
(b) In the event of total and permanent disability, the Company shall
pay to you (or your estate) amounts, at the Base Salary rate in effect
on the termination date, payable in monthly payments, for a period of
twelve (12) months following the termination date. Amounts to which you
would otherwise be entitled under this subparagraph (b) shall be
reduced by the amount of any disability insurance proceeds actually
paid to you or paid for your benefit (or to your estate or legal
representatives) with respect to such twelve (12) months following the
termination date under any disability policy provided by the Company.
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8. CHANGE OF CONTROL. (a) In the event you, the Company, or a successor
to the Company elect to terminate your employment upon a Change of Control (as
defined in Section 8(b) below), provided that such notice of termination is
given within twenty-four (24) months of a Change of Control (a "Change of
Control Notice"), then upon such termination pursuant to this paragraph, you (or
your estate, if you die prior to receiving the payments hereinafter set forth in
this sentence) shall be entitled to receive within thirty (30) days of such
termination a lump sum payment equal to your Base Salary in effect on the date
of such termination. For the purposes of this Section 8(a), the time when a
termination occurs shall be the effective date of your termination. In addition,
in the event of such a termination pursuant to a Change of Control Notice, the
Company or a successor to the Company shall provide, and you shall continue to
be entitled to receive, such benefits you have been receiving pursuant to
Section 6(a) as of the date of your Change of Control Notice until the earlier
of (i) your full-time employment by a third-party who offers you at least
comparable benefits in the particular benefit category or (ii) two (2) years
following such date of termination. Any compensation payable under this Section
8(a) shall be paid notwithstanding your total and permanent disability or death
occurring after termination of your employment hereunder. In addition, the stock
option agreements described in Section 3(a) above shall provide for the
automatic vesting of any unvested stock options upon the occurrence of a Change
of Control.
(b) As used herein a "Change of Control" shall be deemed to have
occurred if (i) any "person" (as such term is used in sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the outstanding Common Stock
of the Company, or (ii) ten (10) days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by any "person"
of twenty-five percent (25%) or more of the outstanding Common Stock of the
Company, provided, however, that at the conclusion of such ten (10) day period
such person has not discontinued or rescinded his intention to make a tender or
exchange offer or (iii) if during any consecutive twelve (12) month period
beginning on or after the date on which this Agreement is executed individuals
who at the beginning of such period were directors of the Company cease, for any
reason, to constitute at least a majority of the Board of Directors of the
Company; or (iv) if a merger of, or consolidation involving, the Company in
which the Company's stock is converted into securities of another corporation or
into cash shall be consummated, or a plan of complete liquidation of the Company
(whether or not in connection with a sale of all or substantially all of the
Company's assets) shall be adopted and consummated, or substantially all of the
Company's operating assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case a transaction solely
for the purpose of reincorporating the Company in a different jurisdiction or
recapitalizing the Company's stock.
9. ACCRUED COMPENSATION. In the event of any termination of your
employment for
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any reason, you (or your estate) shall be paid such portion of your Base Salary
and bonuses as has accrued by virtue of your employment during the period prior
to termination and has not yet been paid, together with any amounts for expense
reimbursement and similar items which have been properly incurred in accordance
with the provisions hereof prior to termination and have not yet been paid. Such
amounts shall be paid within ten (10) days of the termination date. The amount
due to you (or your estate) under this Paragraph 9 in payment of any bonus shall
be a proportionate amount of the bonus that would otherwise have been due to you
as if such termination had not occurred.
10. PROHIBITED COMPETITION. You agree and covenant that, with respect
to the business of the Company, until your termination of employment, whether or
not such termination is voluntary or involuntary, and for a period of one (1)
year following such termination, you shall not, without the prior written
consent of the Company, for yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business which is directly or
indirectly competitive with the business of the Company; PROVIDED, HOWEVER, that
nothing contained herein shall preclude you from purchasing or owning stock in
any such business if such stock is publicly traded, and provided that your
holdings do not exceed three percent (3%) of the issued and outstanding capital
stock of such business.
11. PROTECTED INFORMATION. You shall not, without the prior written
consent of the Company, use, except in the course of performance of your duties
for the Company, disclose or give to others any fact or information which was
disclosed to or developed by you during the course of performing services for or
receiving training from, the Company, and is not generally available to the
public, including but not limited to information and facts concerning business
plans, customers, prospects, client lists, or any other scientific, technical,
trade or business secret or confidential or proprietary information of the
Company.
12. OWNERSHIP OF IDEAS, COPYRIGHTS AND PATENTS. You agree that all
ideas, discoveries, creations, manuscripts and properties, innovations,
improvements, know-how, inventions, developments, apparatus, techniques,
methods, and formulae (all of the foregoing being hereinafter referred to as
"the inventions") which may be used in the business of the Company, whether
patentable, copyrightable or not, which you may conceive or develop during your
term of employment with the Company, alone or in conjunction with another, or
others, whether during or out of regular business hours, and whether at the
request, or upon the suggestion of the Company, or otherwise, shall be the sole
and exclusive property of the Company, and that you shall not publish any of the
inventions without the prior consent of the Company. You hereby assign to the
Company all of your right, title and interest in and to all of the foregoing.
You further represent and agree that to the best of your knowledge and belief
none of the inventions will violate or infringe upon any right, patent,
copyright, trademark or right of privacy, or constitute libel or slander against
or violate any other rights of any person,
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firm or corporation, and that you will use your best efforts to prevent any such
violation.
At any time during or after your term of employment with the Company,
you agree that you will fully cooperate with the Company, its attorneys and
agents, in the preparation and filing of all papers and other documents as may
be required to perfect the Company's rights in and to any of such inventions,
including, but not limited to, joining in any proceeding to obtain letters
patent, copyrights, trademarks or other legal rights of the United States and of
any and all other countries on such inventions, provided that the Company will
bear the expense of such proceedings, and that any patent or other legal right
so issued to you, personally, shall be assigned by you to the Company without
charge by you.
13. PARTIES. This Agreement is personal and shall in no way be subject
to assignment by you except as contemplated hereby. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns either by merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the business of the Company
and shall be binding upon and shall inure to the benefit of you, your heirs,
executors, administrators, personal and legal representatives, distributees,
devisees, legatees, successors and permitted assigns. If you should die while
any amounts would still be payable to you hereunder if you had continued to live
(other than amounts to which you would be entitled by reason of continued
employment), all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisees, legatees or
other designees or, if there be no such designee, to your estate. The Company
agrees that a successor in interest by merger, operation of law, consolidation,
assignment, purchase or otherwise of a controlling interest in the business of
the Company will be informed prior to such event of the existence of this
Agreement. The Company will require any successor (whether direct or indirect,
by purchase, merger, operation of law, consolidation, assignment or otherwise of
a controlling interest in the business, stock or other assets of the Company) to
assume expressly and agree to perform this Agreement. As used in this Agreement,
"the Company" shall mean the Company as hereinbefore defined and any successor
as aforesaid.
14. INVALIDITY. We intend this Agreement to be enforced as written.
However, if any term or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a duly authorized court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
term or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, each term and
provision of this Agreement shall be valid and be enforceable to the fullest
extent permitted by law and the illegal or unenforceable term or provision shall
be deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
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15. NOTICES. All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by certified or
registered mail, return receipt requested, postage prepaid, or by delivery by
overnight courier, with a receipt obtained therefor, as follows:
If sent to the Company: Sight Resource Corporation
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or such other address as either party furnishes to the other by like notice,
provided, however, that any notice of a change of address shall be effective
only upon receipt.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between us in relation to the subject matter hereof and there are
no promises, representations, conditions, provisions or terms related thereto
other than those set forth or referred to in this Agreement and the exhibits
hereto. This Agreement supersedes all previous understandings, agreements and
representations between the Company and you regarding your employment by the
Company, whether written or oral.
17. HEADINGS. All captions in this Agreement are intended solely for
the convenience of the parties, and none shall be deemed to affect the meaning
or construction of any provision hereof.
18. WAIVER. No failure of the Company or you to exercise any power
reserved to it or you, respectively, by this Agreement, or to insist upon strict
compliance by you or the Company, respectively, with any obligation or condition
hereunder, and no custom or practice of the parties at variance with the terms
hereof, shall constitute a waiver of the Company's or your right, as the case
may be, to demand exact compliance with any of the terms hereof. Waiver by
either party of any particular default by the other party hereto shall not
affect or impair the waiving party's rights with respect to any subsequent
default of the same, similar or different nature, nor shall any delay,
forbearance or omission of either party to exercise any power or right arising
out of any breach or default by the other party of any of the terms, provisions
or covenants hereof, affect or impair our or your right to exercise the same,
nor shall such constitute a waiver by the Company or you, as the case may be, of
any right hereunder, or the right to declare any subsequent breach or default
and to terminate this Agreement prior to the expiration of its term.
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19. SUBSIDIARIES. As used herein, the term "Subsidiaries" shall mean
all corporations a majority of the capital stock of which entitling the holder
thereof to vote is owned by the Company or a Subsidiary.
20. GOVERNING LAW. This Agreement shall be construed under and be
governed in all respects by the law of the Commonwealth of Massachusetts.
21. EXCISE TAX. In the event you are subject to any excise tax ("Excise
Tax") on your compensation by the Company or any of its Affiliates (including
but not limited to excise taxes imposed under Section 4999 of the Internal
Revenue Code), the Company agrees that it will then "gross-up" your compensation
by making an additional payment to you in an amount which, after reduction for
any income or excise taxes payable as a result of receiving such additional
payment, is equal to the Excise Tax.
22. MITIGATION. You shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor, other than as provided in Section 7(a) hereof, shall the amount of any
payment or benefit provided for herein be reduced by any compensation or
benefits earned by you as the result of employment by another employer after the
date of your termination by the Company.
23. AMENDMENT. No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original and such
counterparts together constituting one agreement.
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If you agree with the terms of your employment as set forth in this
Agreement, please execute the duplicate copy hereof in the space provided below.
SIGHT RESOURCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman, Board of Directors
ACCEPTED AND AGREED as of the date above:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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