Exhibit 10.1
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into by and
between
J. David Pierson (the "Executive") and
REFAC, a Delaware corporation (the
"Company") as of June 20, 2005 (the
"Commencement Date").
WHEREAS, the Company desires to provide for the service and
employment
of the Executive with the Company and the
Executive wishes to perform services
for the Company, all in accordance with the
terms and conditions provided
herein.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter
set forth, the Executive and the Company
hereby agree as follows:
Section 1. EMPLOYMENT.
The Company does hereby employ the Executive
and the Executive does hereby accept
employment as the President and Chief
Operating Officer of the Company. The
Executive shall have all the duties,
responsibilities and authority attendant to
the position of Chief Operating
Officer and shall render services
consistent with such position on the terms
set forth herein and shall report to the
Chief Executive Officer of the
Company. Such duties, responsibilities and
authority shall include and extend
to the operations of the Company and its
present or hereinafter formed or
acquired subsidiary corporations or any
other entity which it controls. In
addition, the Executive shall have such
other executive and managerial powers
and duties with respect to the Company as
may reasonably be assigned to him by
the Board of Directors (the "Board") to the
extent consistent with his position
and status as set forth herein. The
Executive agrees to devote all of his
working time and efforts to the business
and affairs of the Company, subject to
periods of vacation and sick leave to which
he is entitled, and shall not
engage in activities that substantially
interfere with such performance.
Should the Company promote the Executive to Chief Executive
Officer,
the Executive agrees to accept such
position and change in his title and
duties. In such event, the Executive will
also be elected to the Board and,
subject to the shareholder vote, shall
continue to serve on the Board during
the balance of his employment hereunder.
Executive shall not receive additional
compensation for such Board service.
Section 2. TERM OF
AGREEMENT. Subject to Section 5 hereof, the term
(the "Term") of this Agreement shall
commence on the Commencement Date and
shall continue for a period of two (2)
years (the "Initial Term"); provided
that, upon expiration of the Initial Term,
the Term shall be automatically
extended for successive one-year periods
(each such one-year period, the then
current Term) commencing in each case on
the anniversary of the Commencement
Date, unless the Executive or the Company
notifies the other in writing at
least ninety (90) days prior to the next
following anniversary of the
Commencement Date of an intention to
terminate this Agreement.
Section 3. LOCATION.
The Executive shall be based initially at the
Company's corporate offices in Fort Lee,
New Jersey. However, the Company is
presently engaged in discussions to acquire
U.S. Vision, Inc. ("USV") which has
its corporate offices in Glendora, New
Jersey and OptiCare Health Systems, Inc.
("OptiCare"), which has its corporate
offices in Waterbury, Connecticut. Both
USV and OptiCare are affiliates of the
Company. If such discussions result in
the Company's acquisition of USV, the
Executive has expressed a preference to
work out of a location near to or at USV.
The Company agrees that if such
location is consistent with its strategic
plan, as approved by the Board, the
Executive may relocate his office to such a
site provided that he shall work
out of the corporate offices in Fort Lee,
New Jersey as often as necessary to
maintain a close working relationship with
the Company's other senior executive
officers and controlling stockholder.
Section 4.
COMPENSATION.
(a) BASE SALARY. Effective as of the Commencement Date, the
Company shall pay the Executive a base
salary ("Base Salary") at an initial
rate of $350,000 per year, payable in
accordance with the Company's policies
relating to salaried employees, but no less
frequently than monthly. In the
event that the Executive is promoted to the
position of Chief Executive
Officer, then the Board shall review the
Base Salary and, in its sole and
absolute discretion, may approve such
increase (if any) as it deems
appropriate.
(b) ANNUAL BONUS.
(i) Commencing with the Company's fiscal year ending
December 31,
2006, the Executive shall be eligible to receive a
performance-based annual cash bonus based on the achievement of
corporate
goals approved
by the Board or a committee thereof and set forth in the
Company's
strategic plan and budget, as approved by the Board (the
"Annual
Bonus"). The
Executive's target Annual Bonus shall be equal to fifty
percent (50%) of
his then current Base Salary with opportunity for an
additional
payment, as determined by the Board or a committee thereof, if
target goals are
exceeded. To the extent consistent with the Company's
compensation
policy at the time of pay-out of any annual bonus, a portion
of the
Executive's annual bonus shall be paid in the form of equity,
as
determined by
the Board in its sole discretion. Payment of any Annual
Bonus shall be
made by the Company to the Executive within thirty (30)
days after the
date on which the Company files its Form 10-K with the
Securities and
Exchange Commission.
(ii) In the event of a termination of the Executive's
employment
without Cause, for Good Reason or as a result of his death or
Disability (in
each case, as defined in Section 5 hereof), the Executive
shall be
entitled to receive a pro-rated Annual Bonus based on the
number
of days that the
Executive was employed by the Company during the fiscal
year to which
such Annual Bonus relates; provided, however, that the Board
may, in its sole
discretion, adjust the amount payable to the Executive
based on its
assessment of the Executive's contribution to the achievement
of target
performance during such fiscal year. Subject to the discretion
of the Board,
payment by the Company of any Annual Bonus shall be made to
the Executive
within thirty (30) days after the date on which the Company
files its Form
10-K with the Securities and Exchange Commission,
irrespective of
whether the Executive is then employed by the Company at
such time.
(c) SIGNING BONUS. The Company shall pay the Executive
$7,000 as a signing bonus.
(d)
EQUITY PARTICIPATION. As of the Commencement Date, the
Executive shall be granted options to
purchase 150,000 shares of Company common
stock (the "Options") governed by the terms
and provisions of the Company's
2003 Stock Incentive Plan (the "Plan") and
a stock option agreement to be
entered into by and between the Company and
the Executive (the "Stock Option
Agreement") in accordance with the terms
set forth in this Agreement. The
Options shall have an exercise price equal
to fair market value of the
Company's common stock on the Commencement
Date and shall vest and become
exercisable with respect to one-third of
the Options on each of the
Commencement Date and the first and second
anniversaries of the Commencement
Date, subject to accelerated vesting and
forfeiture as set forth in this
Agreement, the Option Agreement and the
Plan. The Options shall have a term of
five (5) years unless terminated earlier as
set forth in this Agreement, the
Option Agreement and the Plan. The Options
are intended to qualify as an
incentive stock options within the meaning
of the Internal Revenue Code of
1986, as amended (the "Code"), to the
maximum extent permitted under the Code.
(e) FRINGE BENEFITS.
(i) General. The Executive shall be entitled to participate
in or receive
benefits under any employee benefit plan or arrangement now
or in the future
made available by the Company generally to its executive
employees,
subject to and on a basis consistent with the terms, conditions
and overall
administration of such plans and arrangements, including but
not limited to
health insurance and life insurance benefits. During the
Term, the
Company shall provide the Executive with an automobile with a
maximum monthly
lease payment of $900.
(ii) Vacation. The Executive shall be entitled to take four
(4) weeks of
paid vacation per calendar year, prorated for any portion
thereof, and to
all paid holidays given by the Company in accordance with
the Company's
regular paid holidays policy.
(iii) Temporary Housing. The Executive currently resides in
St. Louis,
Missouri area and until such time as the Executive has
relocated, but,
in no event more than six (6) months, the Company shall
provide the
Executive with corporate housing in New Jersey as mutually
agreed upon
between the parties within a reasonable commuting distance to
the Company's
corporate office in Fort Lee, New Jersey.
(f)
REIMBURSEMENTS.
(i) Business Expenses. The Company shall promptly reimburse
the Executive
for all direct expenses incurred by the Executive in the
performance of
his duties under this Agreement, including all reasonable
travel expenses,
provided that such expenses are incurred and accounted
for in
accordance with the Company's policies and procedures.
(ii) Relocation Costs. The Company shall reimburse the
Executive for
actual costs directly related to his relocation from the
greater St.
Louis, Missouri area to either the Fort Lee or the greater
Philadelphia
area, as the case may be, in an amount up to $75,000,
provided that
such expenses are accounted for in accordance with the
Company's
policies and procedures. The Company agrees to treat the moving
reimbursement as
a tax-free fringe benefit to the extent permitted under
Section 132 of
the Code.
Section 5.
TERMINATION.
(a) NOTICE OF TERMINATION.
(i) "Notice of Termination" shall mean a notice that shall
indicate the
specific termination provision in this Agreement relied upon
and shall set
forth in reasonable detail the facts and circumstances
claimed to
provide a basis for termination of the Executive's employment
under the
provisions so indicated.
(ii) Any purported termination of the Executive's employment
by the Company
or by the Executive shall be communicated by written Notice
of Termination
to the other party hereto in accordance with Section 9
hereof.
(b) DATE OF TERMINATION. Upon the Date of Termination, the Term
shall expire. "Date of Termination" shall
mean:
(i) if the Executive's employment is terminated because of
death, the date
of the Executive's death, or
(ii) if the Executive's employment is terminated for any
other reason,
the date specified in the Notice of Termination, which shall
not be a date
prior to the date such Notice of Termination is given or the
expiration of
any required notice period.
(c) ACCRUED AND UNPAID BENEFITS. Following the termination of
the
Executive's employment with the Company for
any reason, the Executive shall
receive:
(i) any earned, but unpaid, Base Salary,
(ii) any earned, but unpaid, bonus,
(iii) the cash equivalent of any accrued, but unused,
vacation and
(iv) any accrued and vested employee benefits, subject to
the terms of the
applicable employee benefit plans.
The amounts payable under subparagraphs 5(c)(i), (ii) and (iii)
shall be paid within thirty (30) days
following the Date of Termination, except
that with respect to payment of any Annual
Bonus, such amount shall be paid in
accordance with Section 4(b) hereof.
(d) DEATH OR DISABILITY. In the event that the Executive's
employment hereunder is terminated by
reason of the Executive's death or
Disability (as defined below), the Company
shall pay the amounts described in
Section 5(c) above. All outstanding stock
options, whether vested or unvested,
exercisable or not exercisable, shall as of
the Date of Termination, vest and
become exercisable and, subject to the
terms of any plan or agreement governing
such stock options, shall remain
exercisable by the Executive or the
Executive's legal representative for the
remainder of the term of such stock
options and shall thereafter expire. For
the purposes of this Agreement,
Disability means the Executive's inability,
by virtue of physical or mental
illness or injury, to perform his regular
duties on a full-time, continuous
basis for 120 consecutive days. The
Executive's Disability will be established
if a qualified medical doctor selected by
the parties so certifies in writing.
If the parties are unable to agree on the
selection of such a doctor, each
party will designate a qualified medical
doctor who together will select a
third doctor who will make the
determination. The Executive will make himself
available for an examination by a doctor
selected in accordance with this
paragraph (d).
(e) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment under this Agreement
for Cause (as defined below) at any
time, in which event any rights of the
Executive to continued employment under
the Agreement shall thereupon cease, and if
the Executive shall then be a
member of the Board, he shall immediately
resign from such position. Upon a
termination for Cause, the Company shall
pay to the Executive the amounts
described in Section 5(c) above. As of the
Date of Termination, all outstanding
unvested options to purchase Company common
stock held by the Executive shall
terminate immediately.
(i) As used herein, termination for "Cause" shall mean the
occurrence of
any of the following:
(A) the Executive shall have been convicted of, or
pleads guilty or
nolo contendere to, a misdemeanor involving theft or
moral turpitude or any felony;
(B) the Executive shall have engaged in conduct that
constitutes gross neglect or willful gross misconduct
(including
misappropriation or embezzlement of property of, or fraud with
respect to, the Company or its subsidiaries or their affiliates)
with
respect to Executive's employment duties; provided, however, that
for
purposes of determining whether conduct constitutes willful
gross
misconduct, no act on Executive's part shall be considered
"willful"
unless it is done by Executive in bad faith and without
reasonable
belief that his action was in the best interests of the Company;
or
(C) the Executive violates any material provision
