EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is made and entered into this
12th day of June, 2000, by and between SPECIALIZED HEALTH PRODUCTS, INC., a Utah
corporation ("Corporation"), and Xxxx Xxxxx ("Employee").
WHEREAS, Corporation and Employee desire that the term of this
Agreement begin on June 12, 2000 ("Effective Date").
WHEREAS, Corporation desires to employ Employee as its Vice President
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 as its Vice President and General Counsel,
and Corporation agrees to employ and retain Employee in such capacities.
Employee shall devote a substantial portion of his business time, energy, and
skill to the affairs of the Corporation as 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 Vice President and General Counsel. Notwithstanding the foregoing or anything
to the contrary contained herein, Employee will work for the Corporation on a
part time basis from the date hereof through August 21, 2000 after which
Employee will work for the Company on a full time basis.
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.
-1-
2.2 Initial Term. The term of employment of Employee by Corporation
shall be for a period of three (3) years beginning with Effective Date ("Initial
Term"), unless terminated earlier pursuant to this Section. 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 through the expiration of this Agreement.
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
-2-
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 Voluntary Termination. In the event of a Voluntary Termination,
Corporation shall promptly pay 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 no other compensation or reimbursement of any kind.
2.8 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 may effect a
termination of this Agreement pursuant to the provisions of this Section upon
giving thirty (30) days' written notice to Corporation 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 $165,000 per annum
payable in no fewer than 12 equal monthly installments of $13,750.
Notwithstanding the foregoing, Employee's monthly salary shall be $10,000 per
month from the date hereof through August 21, 2000. 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
-3-
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.
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 executive
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 eligible for 20 days
vacation per year. Vacation pay is earned at the time the vacation days are
actually taken. To be eligible for vacation pay, you must work your last
scheduled day before the vacation and the first scheduled day after the
vacation. You will be required to take at least 5 days of vacation each year.
Unused vacation time at the end of a calendar year will be
carried over to the subsequent year and shall be accumulated up to a maximum of
20 days at which time such accrual shall cease. As vacation time is subsequently
used and earned, the accrual will be adjusted accordingly, but under no
circumstances shall such accrual exceed the 20 day limitation. However, at the
time of Employee's termination of employment, for any reason whatsoever, accrued
and unused vacation time shall be paid to the Employee. The Corporation shall,
however, have the right to set-off any amounts owing by Employee to the
Corporation from such payment.
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 $200,000.
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 Stock Options. Employee shall be granted stock options
to acquire 100,000 shares of the Corporation's common stock which stock options
shall be fully vested within one year from the date hereof and shall otherwise
be upon the terms and conditions as set forth in such grant of even date
herewith.
-4-
3.3.6 Issuance of Stock. As an incentive for entering into
this Agreement, Corporation shall issue to Employee 25,000 shares of the
Corporation's common stock (the "Shares"). In connection with the issuance of
said stock, the Employee respresents and warrants to the Corporation as follows:
3.3.6.1 Employee will not sell the Shares without
registration under applicable securities acts or a proper exemption from such
registration.
3.3.6.2 The Shares are being acquired for the
Employee's own account and risk, for investment purposes, and not on behalf of
any other person or with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933. The
Employee is aware that there are substantial restrictions on the transferability
of the Shares.
3.3.6.3. Employee has had access to any and all
information concerning the Corporation that the Employee and the Employee's
financial, tax and legal advisors required or considered necessary to make a
proper evaluation of this investment. In making the decision to purchase the
Shares herein subscribed for, the Employee and his advisers have relied solely
upon their own independent investigations, and fully understand that there are
no guarantees, assurances or promises in connection with any investment
hereunder and understand that the particular tax consequences arising from this
investment in the Corporation will depend upon the individual circumstances of
the Employee.
3.3.6.4. Employee also understands and agrees that
stop transfer instructions relating to the Shares will be placed in the
Corporation's stock transfer ledger, and that the certificates evidencing the
Shares sold will bear legends in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The securities may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company.
-5-
Section 4. Payment Obligations. Corporation's obligation to pay Employee the
compensation and to make the arrangements provided herein shall be
unconditional, and Employee shall have no obligation whatsoever to mitigate
damages hereunder.
Section 5. Confidentiality. Employee agrees that all confidential and
proprietary information relating to the business of Corporation shall be kept
and treated as confidential both during and after the term of this Agreement,
except as may be permitted in writing by Corporation's Board of Directors or as
such information is within the public domain or comes within the public domain
without any breach of this Agreement.
Section 6 Covenant Not to Compete. For a period of twelve (12) months following
the termination of your employment, you may not compete with employer by
engaging in the business of developing, designing, manufacturing or producing
safety health care products.
Section 7. 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 8. 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 9. 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 Xxxxxxxx Xx.
Xxxxxxxxxx, Xxxx 00000
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section.
-6-
Section 10. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
Section 7. 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 8. 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 9. Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
Section 10. 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 11. 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 12. 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 13. 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 14. 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 15. 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.
-7-
Section 16. 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/ Xxxxx X. Xxxxxxxx /s/ Xxxx Xxxxx
---------------------------- --------------------------
Xxxxx X. Xxxxxxxx, President Xxxx Xxxxx
-8-
