Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT), made and entered into by and
between Sharps Compliance Corporation, a Texas corporation, having its principle
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred
to as the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇ (hereinafter referred to as the
"Executive").
WITNESSETH
For and in consideration of the mutual promises and covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive agree as
follows:
ARTICLE I
STATEMENT OF AGREEMENT
1.1 DUTIES. During the term of this Agreement, the Company agrees to
employ Executive as Senior Vice President of Operations for the Company, and
Executive agrees to serve the Company in such capacity upon the terms and
subject to the conditions set forth in this Agreement. Executive shall perform
such duties and responsibilities customary to the position of Senior Vice
President of Operations, including but not limited to;
(a) Develop, manage and lead Company's Operations department;
(b) Direct operations organization to achieve Company's performance
targets;
(c) Develop and implement strategies to achieve improved operations
performance;
(d) Develop and maintain key relationships with vendors and customers;
(e) Direct incineration operations in order to maximize efficiency; and
(f) Assist Company activities in new product development.
1.2 TERM. The term of this Agreement shall commence on February 25,
2005 ("Start Date") and shall continue for a period of one-year (the "Initial
Term"); unless sooner terminated in accordance with the provisions of the
Agreement hereinafter set forth. The Initial Term shall automatically be
extended on each anniversary of this Agreement for an additional one-year term
(each a "Successor Term") unless either party hereto notifies the other of
intent to terminate this Agreement at least 30 days prior to the anniversary
date of the Agreement.
1.3 COMPENSATION AND BENEFITS.
1.3.1 Base Salary: Company shall pay Executive a base salary of
$4,615.38 per pay period, twenty six (26) pay periods per year, during the first
year of this Agreement. The amount of base salary may be increased by the
Company during the term of this Agreement, but not decreased.
1.3.2 Incentive Bonus: In addition to the base salary, Executive is
eligible to participate in the Company's Management Incentive Compensation Plan,
at the discretion and approval of the Company's Board of Directors. Executive's
annual incentive compensation target, as Senior Vice President of Operations, is
forty percent (40%) of base salary.
1.3.3 Stock Options: Executive is eligible to participate in the
Company's long-term incentive and stock option plans. At the signing of this
Agreement, Executive has previously been granted the right to purchase sixty
thousand (60,000) shares of the company's common stock, as per the applicable
Stock Option Agreement(s) and as summarized in Attachment A. In the event that
this Agreement is terminated, other than for reasons of voluntary termination or
termination with cause as defined in Section 2.1, or in the event the Company
experiences a change in control event, defined as the sale of substantially all
of the assets of the Company or change in control of forty percent (40%) of the
outstanding voting shares of the Company, all non-vested options shall
immediately vest.
1.3.4 Benefits: Executive shall be entitled to receive all standard
employee benefits that may, from time to time, be provided by the Company to its
employees. In addition to standard benefits, Executive shall be entitled to
executive employee benefits listed in Attachment B (Executive Benefits).
Executive shall also be entitled to receive liability insurance covering those
acts, omissions, or other conditions specifically related to or resulting from
the course and scope of Executive's duties as Senior Vice President of
Operations for the Company.
1.4 EXPENSES: The Company shall reimburse Executive for all reasonable
business and business travel expenses incurred by Executive on behalf of the
Company, in accordance with the prevailing practice and policy of the Company.
1.5 CONFIDENTIAL INFORMATION: Executive acknowledges that in and as a
result of his employment hereunder, he will be making use of, acquiring, and/or
adding to confidential information of a special and unique nature and value
relating to such matters as the Company's trade secrets, systems, procedures,
manuals, confidential reports, and lists of clients, ("Confidential
Information"). As a material inducement to the Company to enter into this
Agreement and to pay to Executive the compensation and benefits stated herein,
Executive covenants and agrees that he shall not, at any time during or for one
(1) year following the term of his employment, directly or indirectly, divulge
or disclose for any purpose whatsoever any Confidential Information that has
been obtained by, or disclosed to, him as a result of his employment by the
Company. In the event of a breach or threatened breach by Executive of any of
the provisions of this paragraph, the Company, in addition to and not in
limitation of, any other rights, remedies, or damages available to the Company
at law or in equity, shall be entitled to a permanent injunction in order to
prevent or restrain any such breach by Executive or Executive's partners,
agents, representatives, servants, employers, employees, and/or any and all
persons directly or indirectly acting for or with him. This section shall not
apply to the extent information divulged or accessed by Executive (i) is already
known to him at the time of disclosure, (ii) is generally available to the
public or otherwise was part of public domain at the time of disclosure, (iii)
became generally available to the public after disclosure through no act or
omission of Executive, (iv) was disclosed to Executive by a third party who had
no obligation to restrict disclosure, and (v) Executive can show that such
information was independently developed by Executive without use of any
Confidential Information.
1.6 RESTRICTIVE COVENANT. Executive acknowledges that the services he is to
render are of a special and unusual character with a unique value to the
Company, the loss of which cannot adequately be compensated by damages in an
action at law. In view of the unique value to the Company of the services of
Executive for which the Company has contracted hereunder, because of the
confidential information to be obtained by or disclosed to Executive, as
hereinabove set forth, and as a material inducement to the Company to enter into
this Agreement and to pay to Executive the compensation stated herein as well as
any additional benefits stated herein, Executive covenants and agrees as
follows: For the period commencing with the date of the Agreement and ending six
(6) months following the termination of this Agreement ("Severance Period"), for
whatever reason, the Executive agrees that he will not directly or indirectly,
for his own account or for the account of others, whether as principal or agent
or through the agency of any corporation, partnership, association or other
business entity, engage in any business activity which shall be in direct
competition to any material business of the Company. For purposes hereof, a
business will be deemed, until proven otherwise, to be in direct competition if
it involves the sale of products used for the disposal and destruction of
medical sharps described as a "sharps return by mail" program. Executive agrees
further that, for a period commencing with the date of this Agreement and ending
six (6) months (Severance Period) following termination of this Agreement, for
whatever reason, Executive shall not, directly or indirectly, make known to any
person, firm or corporation, the names and addresses of any clients, customers,
employees or independent contractors of the Company or any other information
pertaining to them nor call on, solicit, take away, contract with, employ or
hire or attempt to call on, solicit, take away, contract with, employ or hire
any of the clients, customers, employees or independent contractors of the
Company, including, but not limited to, those upon whom the Executive called or
with whom he became acquainted during the performance of the services pursuant
to this Agreement, whether for personal purposes or for any other person, firm
or corporation. Nothing contained in this Section 1.6 shall prohibit the
Executive from purchasing and holding as an investment not more than 5% of any
class of the issued and outstanding and publicly traded capital stock of any
such corporation which conducts a business in competition with the business of
the Company. Should the foregoing covenant not to compete be held invalid or
unenforceable because of the scope of the actions restricted thereby, or the
period of time within which such agreement is operative in the judgment of a
court of competent jurisdiction, the parties agree that and hereby authorize
such court to define the maximum actions subject to and restricted by this
Section 1.6 and the period of time during which such agreement is enforceable.
The provisions of this Section 1.6 shall be applicable for the period indicated,
regardless of termination of this Agreement for any reason prior to expiration
of such period.
ARTICLE II
TERMINATION
2.1 TERMINATION FOR CAUSE. Notwithstanding any other provision hereof, the
Company or Executive may terminate Executive's employment under this Agreement
at any time for cause as defined in this Section 2.1.
2.1.1 Company Initiated Termination For Cause: The Company may
terminate Executive's employment for cause, which shall be evidenced by written
notice thereof to the Executive, which shall specify the cause for termination.
For purposes hereof, the term "cause" shall include, without limitation, the
inability of the Executive, through sickness or other incapacity, to perform his
duties under this Agreement for a period in excess of one hundred eighty (180)
substantially consecutive days; conviction of a crime; or a material breach of
this Agreement. The Company's obligations hereunder shall terminate upon any
termination for cause pursuant to this Section 2.1; provided, however, if such
termination results from death, sickness or other incapacity of Executive, the
Company will extend to Executive the same severance benefits as though the
termination was effected without cause initiated by the Executive described in
Section 2.2.2. In the event that termination results from the Executive's death,
the Company will pay the Executive's severance benefits to his estate or legal
heirs, and extend the period for executing vested stock options to the
equivalent of Executive's severance period, six (6) months.
2.1.2 Executive Initiated Termination For Cause: Executive may
terminate Executive's employment for cause, which shall be evidenced by written
notice thereof to Company, which shall specify the cause for termination. For
purposes hereof, the term "cause" shall include, without limitation, removal of
the Executive from the office defined herein or the material reduction in
Executive's title, authority or responsibility, except for "cause" as defined in
2.1.1, reduction in Executive's compensation, the requirement that Executive
relocate more than thirty-five (35) miles from the Company's current corporate
headquarters, or the Company otherwise commits a material breach of this
Agreement.
2.2 TERMINATION WITHOUT CAUSE. Notwithstanding any other provision hereof,
the Company or Executive may terminate this Agreement without cause upon thirty
(30) days prior written notice thereof given to the other party hereto.
2.2.1 Company Initiated Termination Without Cause: In the event the
Company terminates this Agreement without cause pursuant to this paragraph, the
Company shall (i) pay Executive, six (6) months of his annual base salary (ii)
immediately accelerate vesting of all stock options or stock appreciation rights
which have been granted to Executive. Executive shall have six (6) months
(Severance Period) past the termination date of this Agreement to exercise
vested stock options. In addition, the Company shall extend to the Executive all
benefits described in Section 1.3 hereof and in Attachment B, until the earlier
of the end of severance period or upon employment with another employer. Payment
by the Company in accordance with this paragraph shall constitute Executive's
full severance pay and the Company shall have no further obligation to Executive
arising out of or subsequent to such termination.
2.2.2 Executive Initiated Termination Without Cause: In the event the
Executive terminates this Agreement pursuant to this Section 2.2, or in the
event of the Executive's death, the Company's obligation to provide continuation
of salary and benefits shall cease as of the termination date. The Executive,
and the Executive's estate in the event of death, retains the right to ownership
of stock, stock options and stock appreciation rights which have been purchased,
vested or for which the Company's repurchase rights have expired. Executive
immediately forfeits all right and title to stock options or other equity which
has not been previously purchased, vested, or for which the Company's repurchase
rights have not expired. The Executive, has up to sixty (60) days after the
termination date of this Agreement, but not after the date the stock option
grant expires, to exercise vested stock options or stock appreciation rights.
2.2.3 Termination Following Change in Control: Notwithstanding
anything to the contrary contained herein, should Executive at any time within
twenty four (24) months of the occurrence of a "change of control" (as defined
in 1.3.3), cease to be an employee of the Company (or its successor), by reason
of (i) termination by the Company (or its successor) other than for "cause"(as
defined in 2.1.1) or (ii) voluntary termination by Executive for "cause" (as
defined in 2.1.2), then in any such event, (1) the Company shall pay Executive,
within 30 days of termination as described above, an amount equal to six (6)
months of his annual base salary, plus a pro rata portion of the annual bonus as
if earned, and (2) immediately prior to the effective date of such termination,
all outstanding stock options held by Executive, not already vested and
exercisable, shall become fully vested, and Executive's right to exercise such
stock options shall be extended to twenty four (24) months past the termination
date.
ARTICLE III
ARBITRATION
Any controversy of any nature whatsoever, including but not limited to
tort claims or contract disputes, between the parties to this Agreement or
between the Executive, his heirs, executors, administrators, legal
representatives, successors, and assigns and the Company and its affiliates,
arising out of or related to the Executive's employment with the Company, any
resignation from or termination of such employment and/or the terms and
conditions of the Agreement, including the implementation, applicability and
interpretation thereof, shall, upon the written request of one party served upon
the other, be submitted to and settled by arbitration in accordance with the
provisions of the Federal Arbitration Act, 9 U.S.C. ~ss. 1-15, as amended. Each
of the parties to this Agreement shall appoint one person as an arbitrator to
hear and determine such disputes, and if they should be unable to agree, then
the two arbitrators shall choose a third arbitrator from a panel made up of
experienced arbitrators selected pursuant to the procedures of the American
Arbitration Association (the "AAA") and, once chosen, the third arbitrator's
decision shall be final, binding and conclusive upon the parties to this
Agreement. Each party shall be responsible for the fees and expenses of its
arbitrator and the fees and expenses of the third arbitrator shall be shared
equally by the parties. The terms of the commercial arbitration rules of AAA
shall apply except to the extent they conflict with the provisions of this
paragraph. It is further agreed that any of the parties hereto may petition the
United States District Court for the District of Houston, Texas, for a judgment
to be entered upon any award entered through such arbitration proceedings.
ARTICLE IV
INDEMNIFICATION
The Company shall indemnify and hold Executive harmless from any and
all claims (whether in court or before a regulatory or administrative body),
liabilities, damages and expenses, including without limitation reasonable
attorneys' fees incurred by Executive or his agents, arising out of or related
to the acts or omissions of Executive in the provision of services or
performance of duties under this Agreement. This indemnification section shall
survive and continue in full force and effect after the expiration of this
Agreement.
ARTICLE V
MISCELLANEOUS
4.1 NOTICES. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been delivered on the date personally delivered or on the date mailed, postage
prepaid, by certified mail, return receipt requested, or telegraphed or telexed
and confirmed if addressed to the respective parties as follows:
If to the Executive:
▇▇▇▇ ▇. ▇▇▇▇
10243 Shipmens Landing
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
Sharps Compliance Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
provided, however, that any party shall have the right to change such party's
address for notice hereunder to any location by giving of notice to the other
party in the manner set forth hereinabove.
4.2 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas and venue for any
dispute arising hereunder shall be deemed proper in ▇▇▇▇▇▇ County, Texas.
4.3 WAIVER. The waiver of any provision hereof shall not be deemed to
constitute the waiver of such provision or any other provisions hereof
4.4 SEVERABILITY. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law.
If any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
4.5 BINDING EFFECT. Subject to the provisions of Section 2.2 hereof, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and the successors and assigns of the Company and Executive.
4.6 CAPTIONS AND HEADINGS. The section and paragraph headings in this
Agreement are for reference purposes only and in no way define, limit or
describe the scope or content of this Agreement or any paragraph hereof.
4.7 ENTIRE AGREEMENT: AMENDMENT. This Agreement represents the entire
agreement by and between the parties hereto relating to the subject matter
hereof this Agreement may not be changed except by written agreement duly
executed by the parties hereto.
4.8 SUCCESSORS AND ASSIGNS
4.8.1 Executive Assignment: Except as otherwise expressly provided
herein, Executive agrees on behalf of his executors and administrators, heirs,
legatees, distributees and any other person or persons claiming any benefits
under his by virtue of this Agreement, that this Agreement and the rights,
interests and benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by Executive or any executor, administrator, heir,
legatee, distributee or person claiming under Executive by virtue of this
Agreement and shall not be subject to execution, attachment or similar process.
An attempt at assignment, transfer, pledge or hypothecation or other disposition
of this Agreement or of such rights, interest and benefits contrary to the
foregoing provision, or the levy of any attachment or similar process thereupon,
shall be null and void and without effect except as provided in Section 2.2.
4.8.2 Company Assignment: The Company shall be permitted to assign this
Agreement to its successors and assigns and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by or against such
successors or assigns. The terms "successors" and "assigns" shall include any
person that buys all or substantially all of the Company's assets, or at least
forty percent (40%) of its voting equity, or with which the Company merges or
consolidates.
4.9 THIRD PARTY BENEFICIARIES. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person or entity not
a party to this Agreement (except as provided in Sections 2.2 and 4.8).
4.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts; each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
EXECUTIVE:
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Executive
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Date
COMPANY:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
Date: February 25, 2005
ATTACHMENT "A"
STOCK OPTIONS
Summary of Stock Options as Follows:
- 25,000 options issued on May 20, 2003, exercise price of $0.80, standard
three year vesting;
- 10,000 options issued on July 14, 2003, exercise price of $0.84, standard
thee year vesting; and
- 25,000 options issued on June 28, 2004, exercise price of $0.70, standard
three year vesting.
ATTACHMENT "B"
EXECUTIVE BENEFITS
MEDICAL INSURANCE
The Company will provide Executive, and dependents, with paid group health
insurance coverage, effective as of the Start Date.
VACATION
It is the policy of the Company to provide full time employees with paid
vacation so that they may take time off for rest and relaxation. Vacation time
is earned according to the following; ten (10) vacation days for employees with
one (1) to seven (7) years of service and fifteen (15) vacation days to
employees with over seven (7) years of service. The Company will waive the
vacation service requirement for Executive, providing Executive with fifteen
(15) days of vacation once six (6) months of service have been completed.
Executive may not carry forward, at any time, an accrual of more than thirty
(30) days of unused vacation.
