Exhibit 10.39
EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is made and entered into this
23rd day of August 2006, by and between SPECIALIZED HEALTH PRODUCTS, INC., a
Utah corporation ("Corporation"), and Xxxxx X. Xxxxx ("Employee").
WHEREAS, Corporation and Employee desire that the term of this
Agreement begin on September 1, 2006 ("Effective Date").
WHEREAS, Corporation desires to employ Employee as its Chief Financial
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 Chief
Financial 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 President and Chief
Executive Officer and at all times during the term of this Agreement shall have
powers and duties at least commensurate with his position as Chief Financial
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 deliberate injury or attempted injury
to, 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.
2.2 Term. The employment of Employee by Corporation shall be "at will".
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 a period of three (3) months, so long as Employee complies
with the provisions of Sections 5 through 8. In the event of a merger,
acquisition, or substantial sale of Corporation's controlling shares wherein the
Corporation is no longer the controlling entity, if Employee is not offered an
equivalent position, Employee shall be entitled to severance pay and medical
benefits for a period of six (6) months, so long as Employee complies with the
provisions of Sections 5 through 8.
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 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.
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.
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. Beginning in the year 2007, Employee shall be eligible to
participate in the Corporation's executive bonus plan and 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.
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.
3.3.2 Vacation. Employee shall be entitled to four (4) weeks
of paid vacation during each year during the term of this Agreement and any
extensions thereof, prorated for partial years.
3.3.3 Life Insurance. For the term of this Agreement and any extensions
thereof, Corporation shall at its expense procure and keep in effect term life
insurance on the life of Employee payable to the Employee's designee in the
aggregate amount of twice Employee's base annual salary.
3.3.4 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.
3.3.5 Restricted Stock. Subject to execution of a Restricted
Stock Agreement under the Company's 2004 Stock Incentive Plan, employee shall be
granted 200,000 shares of restricted stock which will vest over three years,
with 33.3% of the restricted stock vesting on the annual anniversary of the date
on which the restricted stock is issued to Employee. Notwithstanding the
foregoing, 50% of the restricted stock will immediately vest in full in the
event of a merger, acquisition, or substantial sale of Corporation's controlling
shares wherein the Corporation is no longer the controlling entity. In such
case, the remaining 50% of the restricted stock will vest according to the
original vesting schedule so long as Employee continues to be employed by the
Corporation or upon termination or constructive termination (whereby Employee is
not offered an equivalent position or is asked to move more than 75 miles for
the equivalent position or Termination Other Than For Cause) within twelve
months of the merger, acquisition, or substantial sale of Corporation's
controlling shares wherein the Corporation is no longer the controlling entity.
Employee shall be eligible for additional grants of restricted stock during the
term of this Agreement, with the actual amount of any such additional grant of
restricted stock to be determined in the sole discretion of the Board of
Directors.
3.3.6 Relocation. Corporation will reimburse Employee for
reasonable relocation expenses, which shall include travel and lodging in Salt
Lake City, temporary lodging for Employee's family for up to 4 months, and
household moving expenses. The total relocation expenses for which Employee may
receive reimbursement for shall not exceed $50,000. Employee is required to
relocate to the Salt Lake City area by no later than January 2007.
Section 4. Ownership of Work Product. Work Product shall include 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 SHP, whether or not during normal hours of employment, which relate to
the actual or anticipated business of SHP at the time of such development or
creation, or related to actual or anticipated research and development
(collectively, the "Work Product"). Work Product 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 SHP 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. Any
exceptions must be reviewed and found to be not related to any business that SHP
anticipates or is already engaged and subsequently approved by the Executive
Committee. Work Product shall belong exclusively to SHP. 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 SHP, 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
SHP's business which SHP will give Employee, Employee's introduction to SHP's
customers, and the carefully guarded methods of doing business which SHP
utilizes and deems crucial to the success of its business, Employee shall not
during the term of this Agreement, and during the period for which Employee
receives severance payments following the termination of Employee's employment
with SHP, regardless of the reason for termination, either directly or
indirectly, engage in the business of developing, marketing, distributing,
licensing, and/or selling products or services having any function similar to,
competitive with, or substitutable for, SHP's products or services 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 SHP's consent (which may be withheld in SHP'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 SHP anywhere in the United
States.
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 no 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.
Section 8. Non-Solicitation. Employee shall not during the term of this
Agreement, and for a period of twelve (12) months following termination of
employment with Corporation, 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 and during the period for which Employee receives severance payments
following termination of employment with 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:
====================
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.
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 18. 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.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed.
SPECIALIZED HEALTH PRODUCTS, INC. EMPLOYEE
By: /s/ Xxxx Xxxxxxx /s/ Xxxxx X. Xxxxx
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Its: President Xxxxx X. Xxxxx
