1
EXHIBIT 10.34
SEVERANCE AGREEMENT
This Severance Agreement is entered into between C. Xxx Xxxxx, Xx. ("Xxxxx")
and Sharps Compliance Corp. (formerly known as U.S. Medical Systems, Inc.)
("Sharps") and sets forth the Agreement as to the terms and conditions for
severance of Xxxxx'x employment as Chief Executive Officer and President, the
termination of Xxxxx'x Employment Agreement dated August 27, 1997 and all
benefits, rights and obligations arising from this Agreement.
In consideration of the mutual promises, covenants and agreements set forth
below, the adequacy and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Xxxxx will cease employment with Sharps for all purposes
effective at the end of business July 22, 1998. Xxxxx will
submit the attached letter of resignation from his position as
Chief Executive Officer/President of Sharps. Xxxxx agrees to
be available to management for consulting on matters of Sharps
through September 5, 1998.
2. Xxxxx will receive the following compensation:
(a) All cash in U.S. Medical Systems, Inc. ("Medical") at
July 31, 1998 ("Valuation Date"), that being
approximately $50,000, after giving effect to a
$40,000 payment to Sharps.
(b) All accounts receivable in Medical at the Valuation
Date, that being approximately $14,000 and as more
specifically set forth on Schedule A attached hereto.
(c) Personal property located at the offices of Medical
in Austin at the Valuation Date and as more
specifically described on Schedule B attached hereto,
said value being approximately $4,000.
(d) All patents and trademarks of Medical as they exist
at the Valuation Date and as more specifically
described on Schedule C attached hereto, said patents
and trademarks to be conveyed to Xxxxx pursuant to
the terms of the Assignment of Patent and Trademarks
attached hereto as Exhibit 1 and incorporated herein
for all purposes.
(e) Rights to the products of Medical as they exist at
the Valuation Date and as more specifically described
on Schedule D attached hereto.
(f) Rights to the customer list as the customer list of
Medical exists at the Valuation Date and as more
specifically listed on Schedule E.
(g) Rights to the corporate name U.S. Medical Systems,
Inc.
(h) All of the capital stock of Medical Polymers, Inc.
2
The rights entitled to the cash, accounts receivable, personal
property, products, customer list and corporate name and capital stock
of Medical Polymers, Inc. will be conveyed to Xxxxx pursuant to the
terms of the Xxxx of Sale attached hereto as Exhibit 2 and
incorporated herein for all purposes.
3. Xxxxx hereby agrees to assume and pay all of the liabilities
and obligations of Medical, including existing accounts
payable and contingent liabilities of Medical as such
contingent liabilities pertain to unknown accounts payable or
contingent liabilities pertaining to products of Medical, as
such products exist at the Valuation Date, including those set
forth on Schedules F and G attached hereto.
4. After the Valuation Date, the parties agree that Sharps and
its 401(k) Retirement Plan, Executive Deferred Compensation
Plan or other existing plans have no further obligation or
liability to Xxxxx and his beneficiaries under any such plans,
any such liability or obligation being hereby expressly waived
by Xxxxx.
5. Notwithstanding anything to the contrary contained in
paragraph 3 herein, Xxxxx agrees to cooperate fully with
Sharps, its accountants and legal counsel, in investigating,
analyzing or defending any pending or future claims against or
litigation involving Sharps. Xxxxx agrees to maintain in
strict confidence any information or knowledge he has
regarding pending or future claims against or litigation
involving Sharps.
6. Subject to Xxxxx'x obligations created in Paragraph 3 herein,
Sharps hereby releases and forever discharges Xxxxx from any
and all claims or causes of action it has against or may have
against Xxxxx for his actions or failure to act while employed
in his capacity as an employee, officer and director of Sharps
occurring prior to the Valuation Date of this Agreement.
7. Xxxxx hereby releases and forever discharges Sharps and all
predecessor, related and affiliated entities and all officers,
directors, employees, representatives and agents thereof (in
all capacities, including individually) from any claims,
demands, actions or causes of action which he may have had or
now has, whether known or unknown, contingent or otherwise,
whether at law or in equity, including, without limitation,
any and all claims relating to his employment with and
separation from Sharps; any compensation or benefits relating
to his employment; any claim of discrimination based upon his
race, color, creed, sex, age, national origin, disability or
handicap, if any; any claims relating to the discussions
between Sharps and its representatives regarding elimination
of his position or any other separation of the parties'
employment relationship; any claim that Sharps has violated
any federal, state or local statute, regulation or ordinance
with respect to his employment or separation thereof,
including without limitation, Title VII of the Civil Rights
Act of 1964, the Americans With Disabilities Act or the Texas
Commission on Human Rights Act.
8. Xxxxx hereby indemnifies and holds Sharps harmless from and
against, and shall promptly reimburse Sharps for any and all
loss, expense, damage, deficiency, liability or obligation,
including investigative and settlement costs and attorney's
fees, arising out of or in connection with the loss by Sharps
of any accounts payable or liabilities associated with the
products of Medical and conveyed to Xxxxx as such payables and
contingent liabilities pertaining to the products exist at the
Valuation Date.
Page 2
3
9. This Agreement shall be governed by the substantive laws of
the State of Texas without regard to conflict of laws
principles. If any provision is determined to be invalid or
unenforceable by a court of competent jurisdiction, the
remaining provisions shall continue in full force and effect.
10. Any dispute between the parties concerning the interpretation,
application or claimed breach of this Agreement shall be
submitted to confidential, binding arbitration in Xxxxxx
County, Texas, before an arbitrator appointed by the American
Arbitration Association in accordance with its published rules
and regulations. Prior to submitting the matter to
arbitration, the parties shall first attempt to resolve the
matter by the claimant notifying the other party in writing of
the claim, by giving the other party the opportunity to
respond in writing to the claim within ten (10) days of
receipt of the claim, and by giving the other party the
opportunity to meet and confer. If the matter is not resolved
in this manner, the dispute then may proceed to arbitration at
the request of either party. The parties shall bear equally
the arbitrator's fees and expenses, as well as the
administrative costs assessed by the American Arbitration
Association. The prevailing party shall be entitled to
reasonable actual damages, specific performance, costs and
attorney's fees. This agreement to arbitrate and the
arbitrator's award shall be enforceable in any court of
competent jurisdiction pursuant to the Texas General
Arbitration Act.
11. In entering into the Severance Agreement, both parties have
relied on the valuation appraisal opinion of CFO Services,
Inc., dated March 20, 1998, as such opinion pertained to the
valuation of the products of Medical, a copy of which is
attached hereto as Exhibit 3.
12. Xxxxx'x right, title and interest in and under this Agreement
and all transaction documents may be subsequently assigned
and/or conveyed by Xxxxx.
13. The Closing of this transaction shall take place at the office
of the Company on or after September 2, 1998.
SHARPS COMPLIANCE CORP.
(Formerly known as U.S. Medical Systems, Inc.)
By: /s/ XXXX XXXXX /s/ C. XXX XXXXX, XX.
---------------------------------- ------------------------------
Xxxx Xxxxx C. Xxx Xxxxx, Xx.
Chairman of the Board Date: 9-14-98
and Chief Executive Officer ------------------------
Date: 9-8-98
---------------------------------
Page 3
4
Schedule A
-------------------
Accounts Receivable
7/31/98
Albertsons $ 3,627.88
American Sales 1,365.12
Bathurst Sales 3,724.80
Xxxxxxx Companies, Inc. 2,398.56
Xxxxxxxx Drugs 1,128.96
H.E. Butt Grocery Co. 1,893.60
----------
Total 14,138.92
5
Schedule B
--------------------
Real Property Assets
Book Value
----------
AT&T Phone System 1,962.86
Printing Dies - Miracle Grip(2) 492.95
Rotary Dies - Xxxx Xxxx 298.33
Art Work - Miracle Grip 1,631.37
----------
Total $ 4,385.51
6
Schedule C
------------------
Patents/Trademarks
Patents
Patent Date of
Name Number Patent
---- ------ -------
1. Disinfectant Mixture Containing 5,326,492 July 5, 1994
Water Soluble Lubricating and
Cleaning Agents and Methods
2. Water-Based Human Tissue 5,342,617 Aug 30, 1994
Lubricant
3. Polymer-Based Cleaning and 5,348,678 Sept 20, 1994
Lubricating Composition
4. Stick Formulations for 5,597,849 January 28, 1997
Topical Drug Delivery of
Therapeutic Agents and Uses
Thereof
5. Stick Formulations for 5,622,993 Apr 22, 1997
Topical Drug Delivery of
Therapeutic Agents and Uses
Thereof
Registration Date of
Trademark Number Registration
--------- ------------ -------------
1. PDS 1,912,066 Aug 15, 1995
2. Miracle Grip 2,018,144 Nov 19, 1996
7
Schedule D
------------------------
Product Description
(commercial products)
1. PDS Clean, a dental handpiece cleaner.
2. Miracle Grip, a polymer-based denture adhesive.
3. QUITCH, a 1% hydrocortisone Anti-Itch product.
4. QUITCH-D, a 2% diphenhydramine itch and pain relief product.
8
Schedule E
--------------
Customer Lists
Midwest Dental Products, Inc
Albertsons, Inc
H.E. Butts Grocery Co
American Sales Stores
Bathurst Sales (Canada)
Xxxxxxx Companies, Inc.
Xxxxxxxx Drug Stores
McKeeson Drug Company
Texas A&M University
9
Schedule F
----------------------
CONTINGENT LIABILITIES
7/31/98
American Drug Stores $ 14,500.00
Eckerd Drug Stores $ 38,418.00
Walgreens Drug Stores $ 20,000.00
Shop-N-Save $ 3,400.00
Phar-Mor Drug Stores $ 700.00
Wal-Mart $ 6,800.00
Bank One $ 1,600.00
Sharps Compliance $ 40,000.00
Pitney Xxxxx Credit Corp. $ 398.00
Xxxxxx Drug Stores $ 2,200.00
Payco $ 700.00
TOTAL $128,716.00
10
Schedule G
-------------------------------
Operational Payables at 7/31/98
Vendor Balance Due
------ -----------
Ameripac $ 822.80
Bank One 1,623.75
Burnet Storage 130.00
Xxxxxx Xxxx (Accounting) 1,155.00
Xxxxxx Industries, Inc 81.19
Xxxxx, Lay & Co, LLP. 604.00
Fedex 186.64
Gold Family Trust (Royalty) 3,675.11
Xxxxxx Xxxxx (Royalty) 3,675.11
Xxxxx Label 1,000.00
Xxxxxxxx Xxxx (Office Mgr) 784.00
Phoenix Home Life 398.20
TX Workers Compensation Fund 590.00
USLD Communications 141.72
----------
Total $14,867.32
00
XXXX XX XXXX
XXX XXXXX XX XXXXX )
) KNOW ALL MEN BY THESE PRESENTS
COUNTY OF XXXXXX )
THAT SHARPS COMPLIANCE CORP. (formerly U.S. Medical Systems, Inc.), a
Delaware corporation ("Seller"), for and in consideration of the purchase price
provided for in, and the other terms and conditions of, that certain Severance
Agreement dated September 2, 1998, by and between C. XXX XXXXX, XX. ("Buyer")
and Seller (the "Agreement") (capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Agreement) has bargained
and sold, and by these presents Seller does sell, assign, transfer and convey
unto Buyer all of Seller's right, title and interest in the following
(collectively, the "Assets"):
(a) All cash in U.S. Medical Systems, Inc. ("Medical") at July 31,
1998, (the "Valuation Date"), after giving effect to a $40,000
payment to Seller.
(b) All accounts receivable in Medical at the Valuation Date, as
more specifically set forth on Schedule A attached hereto.
(c) Personal property located at the offices of Medical in Austin
at the Valuation Date and as more specifically described on
Schedule B attached hereto.
(d) All patents and trademarks of Medical as they exist at the
Valuation Date and as more specifically described on Schedule
C attached hereto, said patents and trademarks to be conveyed
to Buyer pursuant to the terms of the Assignment of Patent and
Trademarks attached hereto as Exhibit 1 and incorporated
herein for all purposes.
(e) Rights to the products of Medical as they exist at the
Valuation Date and as more specifically described on Schedule
D attached hereto.
(f) Rights to the customer list as the customer list of Medical
exists at the Valuation Date and as more specifically listed
on Schedule E.
(g) Rights to the corporate name U.S. Medical Systems, Inc.
(h) All of the capital stock of Medical Polymers, Inc.
Seller hereby acknowledges and agrees that this Xxxx of Sale is made
pursuant to and subject to all the terms and conditions of the Agreement,
including without limitation, Buyer's rights of indemnification under the
Agreement.
12
ASSIGNMENT OF PATENTS AND TRADEMARKS
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
WHEREAS, SHARPS COMPLIANCE CORP. (formerly U.S. Medical Systems,
Inc.), a Delaware corporation with offices at 0000 Xxxxx, Xxxxxxx, Xxxxx 00000
("Seller"), is the owner of the entire right, title and interest to United
States Patent Nos. 5,326,492 registered July 5, 1994; 5,342,617 registered
August 30, 1994; 5,348,678 registered September 20, 1994; 5,597,849 registered
January 28, 1997; and 5,622,993 registered April 22, 1997 (the "Patents"), the
inventions covered by the Patents (the "Inventions") and United States
Trademark Nos. 1,912,066 registered August 15, 1995 and 2,018,144 registered
November 19, 1996 (the "Trademarks") and Internet copyrights related to the
Trademarks; and
WHEREAS, C. XXX XXXXX, XX., a resident of Xxxxxx, Xxxxxx County, Texas
whose mailing address is Post Xxxxxx Xxx 00000, Xxxxxx, Xxxxx 00000
("Assignee"), is desirous of acquiring the entire right, title and interest in
and to the Patents, Inventions and Trademarks;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, Assignor hereby assigns and transfers to Assignee the entire right,
title and interest in and to the Patents, Inventions and Trademarks, including
but not limited to all reissues, divisions, continuations and extensions of the
Patents and Trademarks, all rights of action arising from the Patents and
Trademarks, all claims for damages by reason of past infringement of the
Patents and Trademarks and the right to xxx and collect damages for such
infringement, to be held and enjoyed by the Assignee for his own use and
benefit and for his successors and assigns as the same would have been held by
Assignor had this assignment not been made.
DATED this 8th day of September, 1998.
ASSIGNOR:
SHARPS COMPLIANCE CORP.
a Delaware corporation
By: /s/ XXXX XXXXX
---------------------------
Xxxx Xxxxx
Chairman of the Board
and Chief Executive Officer
SUBSCRIBED and SWORN TO before me this 8th day of September, 1998.
/s/ XXXXXXX X. XXXX
--------------------------------
[NOTARY]
