EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is made and entered into this
1st day of January 2001, by and between SPECIALIZED HEALTH PRODUCTS, INC., a
Utah corporation ("Corporation"), and Xxxxx X. Xxxxxxxx ("Employee").
WHEREAS, Corporation and Employee desire that the term of this
Agreement begin on January 1st, 2001 ("Effective Date").
WHEREAS, Corporation desires to employ Employee as its President, Chief
Executive Officer and Employee is willing to accept such employment by
Corporation, on the terms and subject to the conditions set forth in this
Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Duties. During the term of this Agreement, Employee agrees to be
employed by and to serve Corporation on a full time basis as its President,
Chief Executive Officer, and Corporation agrees to employ and retain Employee in
such capacities. Employee shall also be appointed to the Corporation's Executive
Committee. Employee shall report to the Corporation's Board of Directors and at
all times during the term of this Agreement shall have powers and duties at
least commensurate with his position as President, Chief Executive Officer.
Section 2. Term of Employment.
2.1 Definitions. For the purposes of this Agreement the following terms
shall have the following meanings:
2.1.1 "Termination For Cause" shall mean termination by
Corporation of Employee's employment by Corporation by reason of Employee's
willful dishonesty towards, fraud upon, or clear and deliberate injury to the
Corporation, or by reason of Employee's willful material breach of this
Agreement which has resulted in material injury to Corporation.
2.1.2 "Termination Other Than For Cause" shall mean
termination by Corporation of Employee's employment by Corporation (other than
in a Termination for Cause) and shall include constructive termination of
Employee's employment by reason of material breach of this Agreement by
Corporation, such constructive termination to be effective upon notice from
Employee to Corporation of such constructive termination.
2.1.3 "Voluntary Termination" shall mean termination by
Employee of Employee's employment by Corporation other than (i)Termination Other
Than For Cause, and (ii) termination by reason of Employee's death or disability
as described in Sections 2.5 and 2.6.
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2.2 Initial Term. The term of employment of Employee by Corporation
shall be a term of two (2) years with a rolling term of one (1) year beginning
with Effective Date ("Initial Term"), unless terminated earlier pursuant to this
Section. Rolling term shall mean that this Agreement shall continue unless
either party gives written notice to terminate. At any time prior to the
expiration of the Initial Term, Corporation and Employee may by mutual written
agreement extend Employee's employment under the terms of this Agreement for
such additional periods as they may agree.
2.3 Termination For Cause. Termination For Cause may be effected by
Corporation at any time during the term of this Agreement and shall be effected
by written notification to Employee. Upon Termination For Cause, Employee shall
promptly be paid all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan, profit sharing plan and
stock option plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which Employee is a
participant to the full extent of Employee's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but
Employee shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.
2.4 Termination Other Than For Cause. Notwithstanding anything else in
this Agreement, Corporation may effect a Termination Other Than For Cause at any
time upon giving written notice to Employee of such termination. Upon any
Termination Other Than For Cause, Employee shall promptly be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan, profit sharing plan and stock option plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Corporation in which Employee is a participant to the full
extent of Employee's rights under such plans (other than pension plan, profit
sharing plan and stock option plan benefits which will be paid in accordance
with the applicable plan), accrued vacation pay and any appropriate business
expenses incurred by Employee in connection with his duties hereunder, all to
the date of termination, with the exception of salary and medical benefits which
shall continue for two years.
2.5 Termination by Reason of Disability. If, during the term of this
Agreement, Employee, in the reasonable judgment of the Board of Directors of
Corporation, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, Corporation
shall have the right to terminate Employee's employment hereunder by written
notification to Employee and payment to Employee of all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan, profit sharing plan and stock option plan benefits which will be
paid in accordance with the applicable plan), any benefits
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under any plans of the Corporation in which Employee is a participant to the
full extent of Employee's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by Employee in connection with his duties
hereunder, all to the date of termination, with the exception of salary and
medical benefits which shall continue through the expiration of this Agreement.
2.6 Death. In the event of Employee's death during the term of this
Agreement, Employee's employment shall be deemed to have terminated as of the
last day of the month during which his death occurs and Corporation shall
promptly pay to his estate or such beneficiaries as Employee may from time to
time designate all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan, profit sharing plan and
stock option plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which Employee is a
participant to the full extent of Employee's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but
Employee's estate shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.
2.7 Notice of Termination. Corporation may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to Employee of such termination. Employee shall not effect
a Voluntary Termination during the term of this Agreement.
Section 3. Salary, Benefits and Bonus Compensation.
3.1 Base Salary. As payment for the services to be rendered by Employee
as provided in Section 1 and subject to the terms and conditions of Section 2,
Corporation agrees to pay to Employee a "Base Salary" for the twelve (12)
calendar months beginning the Effective Date at the rate of $190,000 per annum
payable in no fewer than 12 equal monthly installments of $15,833.33. Employee's
Base Salary shall be reviewed annually by the Compensation Committee of the
Board of Directors ("Compensation Committee"), and the Base Salary for each year
(or portion thereof) shall be determined by the Compensation Committee which
shall authorize an increase in Employee's Base Salary for such year in an amount
which, at a minimum, shall be equal to the cumulative cost-of-living as
determined by the Corporation's board of directors.
3.2 Bonuses. Employee shall be eligible to receive a discretionary
bonus for each year (or portion thereof) during the term of this Agreement and
any extensions thereof, with the actual amount of any such bonus to be
determined in the sole discretion of the Board of Directors based upon its
evaluation of Employee's performance during such year. All such bonuses shall be
reviewed annually by the Compensation Committee.
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3.3 Additional Benefits. During the term of this Agreement, Employee
shall be entitled to the following fringe benefits:
3.3.1 Employee Benefits. Employee shall be eligible to
participate in such of Corporation's benefits and deferred compensation plans as
are now generally available or later made generally available to the officers of
the Corporation. For purposes of establishing the length of service under any
benefit plans or programs of Corporation.
3.3.2 Vacation. Employee shall be entitled to four (4) weeks
of vacation during each year during the term of this Agreement and any
extensions thereof, prorated for partial years. Vacation time may be accrued.
3.3.3 Reimbursement for Expenses. During the term of this
Agreement, Corporation shall reimburse Employee for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by
Employee in connection with his duties under this Agreement.
Section 4. Ownership of Work Product. All copyrights, patents, trade secrets, or
other intellectual property rights associated with any ideas, concepts,
techniques, inventions, processes, or works of authorship developed or created
by Employee during the course of performing work for Corporation which relate to
the business of Corporation at the time of such development or creation
(collectively, the "Work Product"), but excludes ideas, concepts, techniques,
inventions, processes, or works of authorship developed or created by Employee
(collectively, "New Product Idea") reduced to writing and witnessed before
Corporation is in a business related to the New Product Idea and any previous
contracts or licensing arrangements and personal property of Employee at the
time of employment listed on the attached statement, affixed hereto, if any.
Work Product shall belong exclusively to Corporation. Employee automatically
assigns, at the time of creation of the Work Product, without any requirement of
further consideration, any title, or interest it or they may have in such Work
Product, including any copyrights or other intellectual property rights
pertaining thereto, all such Work Product. Upon request of Corporation, Employee
shall take such further actions including execution and delivery of instruments
of conveyance, as may be appropriate to give full and proper effect to such
assignment.
Section 5. Non-Compete. In recognition and consideration of Employee's
employment, compensation and benefits, the training in and information regarding
Corporation's business which Corporation will give Employee, Employee's
introduction to Corporation's customers, and the carefully guarded methods of
doing business which Corporation utilizes and deems crucial to the success of
its business, Employee shall not during the term of this Agreement, and for a
period of one (1) year following the termination of Employee's employment by
Corporation, regardless of the
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reason for termination, either directly or indirectly, engage in the business of
developing, marketing, distributing, licensing, and/or selling safety medical
products having any function similar to, competitive with, or substitutable for,
Corporation's safety medical products which are in the research and/or
development stage and/or for which development has been completed (collectively
and individually, the "Products"), anywhere in the United States, except with
Corporation's consent (which may be Corporation 's sole discretion). In
addition, Employee shall not engage in any such activity, directly or
indirectly, on Employee's own behalf or in the service of or on behalf of
others. Employee acknowledges and agrees that the current market for the
Products extends throughout the entire United States, and it is therefore
reasonable to prohibit Employee from competing with Corporation anywhere in the
United States. Employee further acknowledges and agrees that the foregoing
prohibition will have no impact on the business and employment prospects of the
Employee, is fair and reasonable and is reasonably required for the protection
of Corporation and the goodwill associated with the business of Corporation.
Section 6. Confidentiality. Employee will hold in a fiduciary capacity for the
benefit of Corporation, its affiliates, subsidiaries, related entities, and
designees, and shall not disclose to any person or entity other than Corporation
or persons or entities designated by Corporation, any secret, confidential or
proprietary information, knowledge, data and/or information, patents, trade
secrets, customer identities, marketing and other business methods, techniques,
processes, practices, procedures, plans and strategies regarding Corporation,
its subsidiaries and affiliated corporations or business enterprises, and their
customers obtained by Employee in the course of Employee's employment with
Corporation, and any other secret, confidential or proprietary information
pertaining to Corporation, its parent, subsidiaries and affiliated corporations
or business enterprises, and their customers, during the term of this Agreement
and five (5) years after Employee's termination of employment with Corporation,
unless Corporation in writing consents to the contrary. Notwithstanding the
foregoing, Employee shall have not confidentiality obligation with respect to
information that: (a) was legally in the public domain prior to the time of
disclosure to the Employee, (b) is now or subsequently becomes generally
available to the public through no fault of Employee; or (c) is required by law,
regulation, rule, act, or order of any governmental authority or agency to be
disclosed by the Employee.
Section 7. Return of Materials. Immediately upon notice of termination of
employment, Employee shall give to Corporation the originals and all copies of
all documents, correspondence, memoranda, records, notes, manuals, materials,
customer and prospective customer lists and information, including without
limitation computer data, and other things relating to Corporation's business,
including, but not limited to, secret, confidential or proprietary information,
in Employee's possession, custody or control, unless otherwise agreed to by
Corporation.
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Section 8. Non-Solicitation. Employee shall not employ, solicit for employment,
or advise or recommend to any other person that they employ or solicit for
employment or retention as a consultant, any person who is, or was at any time
within one (1) year prior to the Employee's date of termination of employment
with Corporation, an employee of, or exclusive consultant to, Corporation.
Section 9. Avoidance of Conflict of Interest. While employed by Corporation,
Employee shall not engage in any other business activity that conflicts with
Employee's duties to Corporation. Under no circumstances may Employee work for
any competitor or have any financial interest in any competitor of Corporation;
provided, however, that this Agreement does not prohibit investment of a
reasonable part of Employee's assets in the stock or securities of any
competitor whose stock or securities are traded on a national exchange.
Section 10. Withholdings. All compensation and benefits to Employee hereunder
shall be reduced by all federal, state, local and other withholdings and similar
taxes and payments required by applicable law. Section 11. Indemnification. In
addition to any rights to indemnification to which Employee is entitled to under
the Corporation's Articles of Incorporation and Bylaws, Corporation shall
indemnify Employee at all times during and after the term of this Agreement to
the maximum extent permitted under Utah Revised Business Corporation Act or any
successor provision thereof and any other applicable state law, and shall pay
Employee's expenses in defending any civil or criminal action, suit, or
proceeding in advance of the final disposition of such action, suit or
proceeding, to the maximum extent permitted under such applicable state laws.
Section 12. Notices. Any notices permitted or required under this Agreement
shall be deemed given upon the date of personal delivery or forty-eight (48)
hours after deposit in the United States mail, postage fully prepaid, return
receipt requested, addressed to the Corporation at:
000 Xxxx 000 Xxxxx
Xxxxxxxxx, Xxxx 00000
addressed to the Employee at:
0000 Xxxxx Xxxx Xxxxxx Xxx
Xxxxxxxxx, Xxxx 00000
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section.
Section 13. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
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Section 14. Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
Section 15. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
Section 16. Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
Section 17. Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
Section 48. Computation of Time. In computing any period of time pursuant to
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall be included, unless it is a Saturday, Sunday,
or a legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
Section 19. Pronouns and Plurals. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or plural as
the identity of the person or persons may require.
Section 20. Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
Section 21. Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
Section 22. Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
Section 23. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed.
SPECIALIZED HEALTH PRODUCTS, INC. EMPLOYEE
By: /s/ Xxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxxx
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Its: Vice President Xxxxx X. Xxxxxxxx
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