**Exhibit10.2**

 

**EXECUTIVEEMPLOYMENT AGREEMENT**

 

THIS EMPLOYMENTAGREEMENT (“AGREEMENT), made and entered into by and between Sharps ComplianceCorporation, a Texas corporation, having its principle office at 9350 KirbyDrive, Houston, TX 77054 (hereinafter referred to as the “Company”), and RonaldE. Pierce (hereinafter referred to as the “Executive”).

 

**WITNESSETH**

 

For and inconsideration of the mutual promises and covenants herein contained, and othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Company and Executive agree as follows:

 

**ARTICLE I**

**STATEMENTOF AGREEMENT**

 

1.1                                 **DUTIES.** During the term of thisAgreement, the Company agrees to employ Executive as Chief Operating Officerfor the Company, and Executive agrees to serve the Company in such capacityupon the terms and subject to the conditions set forth in this Agreement.  Executive shall perform such duties andresponsibilities customary to the position of Chief Operating Officer,including but not limited to;

 

(a)          Lead efforts indeveloping the primary goals, business plan, operating plans, policies, andshort/long range objectives for the Company;

(b)         Implement the Company’sprimary goals, business plan, operating plans, policies, and short/long rangeobjectives subject to oversight by the Board of Directors;

(c)          Establish and directlymanage the Company’s organizational structure;

(d)         Lead the Company towardobjectives, including meeting with management, advisors and other executives toreview results of business operations;

(e)          Directly participate inmarketing the Company and revenue generation via strategic alliances and majorcustomers.

(f)            Represent the Companyto the financial community, major customers, government agencies, shareholdersand the public; and

(g)         Determine action plans tomeet the needs of stakeholders

 

1.2                                 **TERM****.** The term of this Agreement shall commence on July 14, 2003(“Start Date”) and shall continue for a period of one-year (the “InitialTerm”); unless sooner terminated in accordance with the provisions of theAgreement hereinafter set forth. The Initial Term shall automatically beextended on each anniversary of this Agreement for an additional one-year term(each a “Successor Term”) unless either party hereto notifies the other ofintent to terminate this Agreement at least 30 days prior to the anniversarydate of the Agreement.

 

**1.3****                              ****COMPENSATION AND BENEFITS****.**

 

1.3.1                        Base Salary: Company shall pay Executive a base salary of$6,538.46 per pay period, twenty six (26) pay periods per year, during thefirst year of this Agreement.  Theamount of base salary may be increased by the Company during the term of thisAgreement, but not decreased.

 

 
| July 14, 2003 |   | Sharps Compliance  Corporation |   |   |
|---------------|--------|--------------------------------|--------|--------|

 

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Sharps Executive Employment Agreement – Ronald E. Pierce

 

 

1.3.2**                        IncentiveBonus:**  In addition to the basesalary, Executive is eligible to participate in the Company’s ManagementIncentive Compensation Plan, when formally established and at the discretionand approval of the Company’s Board of Directors.  Executive’s annual incentive compensation target, as ChiefOperating Officer, is fifty percent (50%) of base salary.  In lieu of a formally established companymanagement incentive plan, and in accord with the terms of employment acceptedby Executive upon hire, Executive is eligible to receive an incentive bonus ofeighty thousand dollars ($80,000), payable as two separate bonuses based uponthe Company achieving performance targets. Executive is eligible to receive the first bonus, payable in the amountof forty thousand dollars ($40,000) immediately after the first month when thecompany reports at least $10 million in revenue and $500,000 in net profit fora trailing twelve (12) month period (as shown in the Company’s internallyaudited financial books and records and as reported to the board of directorsmonthly).  Executive is eligible toreceive the second bonus, payable in the amount of forty thousand dollars($40,000) immediately after the first month when the Company reports at least$12 million in revenue and $500,000 in net profit for a trailing twelve (12)month period (as shown in the Company’s audited financial books and records andas reported to the Company’s board of directors).  Subsequent to the achievement of the above parameters andassociated payment of the bonuses, or at the discretion of Executive upon theinitiation of a Company  Management IncentiveCompensation Plan, Executive will then be entitled to participation in theCompany’s standard Management Incentive Compensation Plan.  In no event shall Executive be entitled toparticipate in more than one incentive compensation/bonus arrangement at atime.

 

1.3.3                        **Stock Options:**  Executive is eligible to participate in the Company’s long-termincentive and stock option plans.  Atthe signing of this Agreement, and upon approval from the Board of Directors,Executive is granted the right to purchase four hundred thousand (500,000)shares of the company’s common stock, as per the applicable Stock OptionAgreement(s) summarized in Attachment A. In the event that this Agreement is terminated, other than for reasonsof 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 asthe sale of substantially all of the assets of the Company or change in controlof forty percent (40%) of the outstanding voting shares of the Company, allnon-vested options shall immediately vest.

 

1.3.4                        **Benefits:** Executive shall be entitled toreceive all standard employee benefits that may, from time to time, be providedby the Company to its employees. In addition to standard benefits, Executiveshall be entitled to executive employee benefits listed in Attachment B(Executive Benefits).  Executive shallalso be entitled to receive liability insurance covering those acts, omissions,or other conditions specifically related to or resulting from the course andscope of Executive’s duties as Chief Operating Officer for the Company.

 

1.4                                 **EXPENSES****:** The Company shall reimburse Executive forall reasonable business and business travel expenses incurred by Executive onbehalf of the Company, in accordance with the prevailing practice and policy ofthe Company.

 

1.5                                 **CONFIDENTIAL INFORMATION:**Executiveacknowledges that in and as a result of his employment hereunder, he will bemaking use of, acquiring, and/or adding to confidential information of aspecial and unique nature and value relating to such matters as the Company’strade secrets, systems, procedures, manuals, confidential reports, and lists ofclients, (“Confidential Information”). As a material inducement to the Companyto enter into this Agreement and to pay to Executive the compensation andbenefits stated herein, Executive covenants and agrees that he shall not, atany time during or for one (1)

 

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year following the termof his employment, directly or indirectly, divulge or disclose for any purposewhatsoever any Confidential Information that has been obtained by, or disclosedto, him as a result of his employment by the Company. In the event of a breachor 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 beentitled to a permanent injunction in order to prevent or restrain any suchbreach by Executive or Executive’s partners, agents, representatives, servants,employers, employees, and/or any and all persons directly or indirectly actingfor or with him. This section shall not apply to the extent informationdivulged or accessed by Executive (i) is already known to him at the time ofdisclosure, (ii) is generally available to the public or otherwise was part ofpublic domain at the time of disclosure, (iii) became generally available tothe public after disclosure through no act or omission of Executive, (iv) wasdisclosed to Executive by a third party who had no obligation to restrictdisclosure, and (v) Executive can show that such information was independentlydeveloped by Executive without use of any Confidential Information.

 

1.6                                 **RESTRICTIVE COVENANT**. Executiveacknowledges that the services he is to render are of a special and unusualcharacter with a unique value to the Company, the loss of which cannotadequately be compensated by damages in an action at law. In view of the uniquevalue to the Company of the services of Executive for which the Company hascontracted hereunder, because of the confidential information to be obtained byor disclosed to Executive, as hereinabove set forth, and as a materialinducement to the Company to enter into this Agreement and to pay to Executivethe compensation stated herein as well as any additional benefits statedherein, Executive covenants and agrees as follows:

For the period commencingwith the date of the Agreement and ending twelve (12) months following thetermination of this Agreement (“Severance Period”), for whatever reason, theExecutive agrees that he will not directly or indirectly, for his own accountor for the account of others, whether as principal or agent or through theagency of any corporation, partnership, association or other business entity,engage in any business activity which shall be in direct competition to anymaterial business of the Company.  Forpurposes hereof, a business will be deemed, until proven otherwise, to be indirect competition if it involves the sale of products used for the disposaland 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 twelve (12) months(Severance Period) following termination of this Agreement, for whateverreason, 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 informationpertaining to them nor call on, solicit, take away, contract with, employ orhire or attempt to call on, solicit, take away, contract with, employ or hireany of the clients, customers, employees or independent contractors of theCompany, including, but not limited to, those upon whom the Executive called orwith whom he became acquainted during the performance of the services pursuantto this Agreement, whether for personal purposes or for any other person, firmor corporation. Nothing contained in this Section 1.6 shall prohibit theExecutive from purchasing and holding as an investment not more than 5% of anyclass of the issued and outstanding and publicly traded capital stock of anysuch corporation which conducts a business in competition with the business ofthe Company.   Should the foregoingcovenant not to compete be held invalid or unenforceable because of the scopeof the actions restricted thereby, or the period of time within which suchagreement is operative in the judgment of a court of competent jurisdiction,the parties agree that and hereby authorize such court to define the maximumactions subject to and restricted by this Section 1.6 and the period of timeduring which such agreement is enforceable. The provisions of this Section 1.6shall be applicable for the period indicated, regardless of termination of thisAgreement for any reason prior to expiration of such period.

 

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**ARTICLE II**

**TERMINATION**

 

2.1                                 **TERMINATION FOR CAUSE.**  Notwithstanding any other provision hereof,the Company or Executive may terminate Executive’s employment under thisAgreement 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 beevidenced by written notice thereof to the Executive, which shall specify thecause for termination.  For purposeshereof, the term “cause” shall include, without limitation, the inability ofthe Executive, through sickness or other incapacity, to perform his dutiesunder this Agreement for a period in excess of one hundred eighty (180)substantially consecutive days; conviction of a crime; or a material breach ofthis Agreement.  The Company’sobligations hereunder shall terminate upon any termination for cause pursuantto this Section 2.1; provided, however, if such termination results from death,sickness or other incapacity of Executive, the Company will extend to Executivethe same severance benefits as though the termination was effected withoutcause initiated by the Executive described in Section 2.2.2.  In the event that termination results fromthe Executive’s death, the Company will pay the Executive’s severance benefitsto his estate or legal heirs, and extend the period for executing vested stockoptions to the equivalent of Executive’s severance period, twelve (12) months.

 

2.1.2                        **Executive Initiated Termination For Cause: **Executive may terminate Executive’s employment for cause, whichshall be evidenced by written notice thereof to Company, which shall specifythe cause for termination.  For purposeshereof, the term “cause” shall include, without limitation, removal of theExecutive from the office defined herein or the material reduction inExecutive’s title, authority or responsibility, except for “cause” as definedin 2.1.1, reduction in Executive’s compensation, the requirement that Executiverelocate more than thirty-five (35) miles from the Company’s current corporateheadquarters, or the Company otherwise commits a material breach of thisAgreement.

 

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 tothis paragraph, the Company shall (i) pay Executive, twelve (12) months of hisannual base salary (ii) plus a pro rata portion of the annual bonus as ifearned, (iii) immediately accelerate vesting of all stock options or stockappreciation rights which have been granted to Executive.  Executive shall have twelve (12) months(Severance Period) past the termination date of this Agreement to exercisevested stock options.  In addition, theCompany shall extend to the Executive all benefits described in Section 1.3hereof and in Attachment B, until the earlier of the end of severance period orupon employment with another employer. Payment by the Company in accordance with this paragraph shallconstitute Executive’s full severance pay and the Company shall have no furtherobligation 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 Section2.2, or in the event of the Executive’s death, the Company’s obligation toprovide continuation of salary and benefits shall cease as of the terminationdate.  The

 

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Executive, and theExecutive’s estate in the event of death, retains the right to ownership ofstock, 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 andtitle 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) daysafter the termination date of this Agreement, but not after the date the stockoption grant expires, to exercise vested stock options or stock appreciationrights.

 

2.2.3**                        TerminationFollowing Change in Control:** Notwithstanding anything to the contrarycontained herein, should Executive at any time within twenty four (24) monthsof the occurrence of a “change of control” (as defined in 1.3.3), cease to bean employee of the Company (or its successor), by reason of (i) termination bythe 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), thenin any such event, (1) the Company shall pay Executive, within 30 days of terminationas described above, an amount equal to twelve (12) months of his annual basesalary, plus a pro rata portion of the annual bonus as if earned, and (2)immediately prior to the effective date of such termination, all outstandingstock options held by Executive, not already vested and exercisable, shallbecome fully vested, and Executive’s right to exercise such stock options shallbe extended to twenty four (24) months past the termination date.

 

**ARTICLE III**

**ARBITRATION**

 

Any controversy ofany nature whatsoever, including but not limited to tort claims or contractdisputes, between the parties to this Agreement or between the Executive, hisheirs, executors, administrators, legal representatives, successors, andassigns and the Company and its affiliates, arising out of or related to theExecutive’s employment with the Company, any resignation from or termination ofsuch employment and/or the terms and conditions of the Agreement, including theimplementation, applicability and interpretation thereof, shall, upon thewritten request of one party served upon the other, be submitted to and settledby arbitration in accordance with the provisions of the Federal ArbitrationAct, 9 U.S.C. ~§ 1-15, as amended. Each of the parties to this Agreement shallappoint one person as an arbitrator to hear and determine such disputes, and ifthey should be unable to agree, then the two arbitrators shall choose a thirdarbitrator from a panel made up of experienced arbitrators selected pursuant tothe procedures of the American Arbitration Association (the “AAA”) and, oncechosen, the third arbitrator’s decision shall be final, binding and conclusiveupon the parties to this Agreement. Each party shall be responsible for thefees and expenses of its arbitrator and the fees and expenses of the thirdarbitrator shall be shared equally by the parties.  The terms of the commercial arbitration rules of AAA shall applyexcept to the extent they conflict with the provisions of this paragraph. It isfurther agreed that any of the parties hereto may petition the United StatesDistrict Court for the District of Houston, Texas, for a judgment to be enteredupon any award entered through such arbitration proceedings.

 

**ARTICLE IV**

**INDEMNIFICATION**

 

The Company shall indemnify and hold Executive harmless from any andall claims (whether in court or before a regulatory or administrative body),liabilities, damages and expenses, including without limitation reasonableattorneys’ fees incurred by Executive or his agents, arising out of or relatedto the acts or omissions of Executive in the provision of services orperformance of duties under this

 

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Agreement.This indemnification section shall survive and continue in full force andeffect 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 inwriting and shall be deemed to have been delivered on the date personally deliveredor on the date mailed, postage prepaid, by certified mail, return receiptrequested, or telegraphed or telexed and confirmed if addressed to therespective parties as follows:

 

If to the Executive:

Ronald E. Pierce

P.O. Box 16086

Sugar Land, TX 77496

 

 

If to the Company:

SharpsCompliance Corporation

9350Kirby Drive

Houston,TX 77054

Attn:  Chief Executive Officer

 

provided, however, that any party shall have theright to change such party’s address for notice hereunder to any location bygiving of notice to the other party in the manner set forth hereinabove.

 

4.2                                 **GOVERNING LAW****.** This Agreement shall be construed andenforced in accordance with and governed by the laws of the State of Texas and venue for any dispute arisinghereunder shall be deemed proper in Harris County, Texas.

 

4.3                                 **WAIVER****.** The waiver of any provision hereof shall notbe deemed to constitute the waiver of such provision or any other provisionshereof

 

4.4                                 **SEVERABILITY****.** Whenever possible, each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law. If any provision of this Agreement shall be prohibited byor invalid under applicable law, such provision shall be ineffective to theextent of such prohibition or invalidity, without invalidating the remainder ofsuch provision or the remaining provisions of this Agreement.

 

4.5                                 **BINDING EFFECT****.** Subject to the provisions of Section 2.2hereof, this Agreement shall be binding upon and inure to the benefit of theparties hereto and the successors and assigns of the Company and Executive.

 

4.6                                 **CAPTIONS AND HEADINGS****.** The section and paragraph headings in thisAgreement are for reference purposes only and in no way define, limit ordescribe the scope or content of this Agreement or any paragraph hereof.

 

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4.7                                 **ENTIRE AGREEMENT: AMENDMENT.** ThisAgreement represents the entire agreement by and between the parties heretorelating to the subject matter hereof this Agreement may not be changed exceptby written agreement duly executed by the parties hereto.

 

4.8                                 **SUCCESSORS AND ASSIGNS**

 

4.8.1                        **Executive Assignment:** Except as otherwise expressly providedherein, Executive agrees on behalf of his executors and administrators, heirs,legatees, distributees and any other person or persons claiming any benefitsunder his by virtue of this Agreement, that this Agreement and the rights,interests and benefits hereunder shall not be assigned, transferred, pledged orhypothecated in any way by Executive or any executor, administrator, heir,legatee, distributee or person claiming under Executive by virtue of thisAgreement and shall not be subject to execution, attachment or similarprocess.  An attempt at assignment, transfer,pledge or hypothecation or other disposition of this Agreement or of suchrights, interest and benefits contrary to the foregoing provision, or the levyof any attachment or similar process thereupon, shall be null and void andwithout effect except as provided in Section 2.2.

 

4.8.2                        **Company Assignment:** The Company shall be permitted to assignthis Agreement to its successors and assigns and all covenants and agreementshereunder shall inure to the benefit of and be enforceable by or against suchsuccessors or assigns.  The terms“successors” and “assigns” shall include any person that buys all orsubstantially all of the Company’s assets, or at least forty percent (40%) ofits voting equity, or with which the Company merges or consolidates.

 

4.9                                 **THIRD PARTY BENEFICIARIES****.**  ThisAgreement does not create, and shall not be construed as creating, any rightsenforceable by any person or entity not a party to this Agreement (except asprovided in Sections 2.2 and 4.8).

 

4.10                           **COUNTERPARTS.**  This Agreement may be executed in two or more counterparts; eachof which shall be deemed to be an original and all of which together shall bedeemed to be one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Agreement the dayand year first above written.

 
|   | **EXECUTIVE:**       |                                   |   |
|--------|----------------------|----------------------------------------|--------|
|   |                 |                                   |   |
|   | /s/ Ronald E. Pierce |                                   |
|   | Executive            |                                   |   |
|   |                 |                                   |   |
|   | July 14, 2003        |                                   |
|   | Date                 |                                   |   |
|   |                 |                                   |   |
|   |                 |                                   |   |
|   | **COMPANY:**         |                                   |   |
|   |                 |                                   |   |
|   | By:                  | /s/ Burton J. Kunik                    |   |
|   | Name:                | Burton J. Kunik                        |   |
|   | Title:               | Chairman & Chief Executive Officer |
|   | Date:                | July 14, 2003                          |   |
|        |                      |                                        |        |  |

 

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**ATTACHMENT “A”**

 

**STOCK OPTIONS**

 

 

Summary of Stock Options as Follows:

 

• 400,000 issued on October 23,2002, exercise price of $1.40, standard three year vesting; and

• 100,000 issued on July 14,2003, exercise price of $0.84, standard three year vesting.

 

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**ATTACHMENT “B”**

 

**EXECUTIVE BENEFITS**

 

 

**MEDICALINSURANCE**

**Eligibility** - The Company willprovide Executive, and dependents, with paid group health insurance coverage,effective as of the Start Date, and throughout any severance period defined bythis agreement.

 

**Application** - The Company’smedical insurance plan coverage is in effect as of Start Date.  However, the Company and its benefitsadministrator Administaff require that Executive complete and submit allpertinent forms and applications for plan coverage within thirty (30) days ofStart Date.

 

**ADDITIONALBENEFITS COVERAGE**

By electing medical benefits coverage, Administaff, theCompany’s benefits administrator, provides employees with basic term life andpersonal accident insurance at no cost to employees.  The standard coverage level for life and personal accidentinsurance is one times (1x) basic annual earnings (Executive Salary).  In addition to the standard level ofcoverage provided for all employees, the Company will provide Executive, at nocost to Executive, additional coverage, to the maximum allowable under thelife, disability and personal accident provisions of the company’s benefitsadministrator’s (Administaff) benefits plan.

 

**LIFE INSURANCE**

The Company will provide Executive, at no cost toExecutive, with life insurance to the highest level of coverage allowed andavailable, currently five times (5x) basic annual earnings,  through its benefits administratorAdministaff.  Cost of benefit will bepaid by Executive through payroll deduction. Company will gross up Executive’s salary to offset cost of benefit.  Executive recognizes that additional lifeinsurance coverage may require evidence of insurability (EOI), including amedical examination.

 

**PERSONALACCIDENT INSURANCE**

The Company will provide Executive, at no cost toExecutive, with personal accident insurance to the highest coverage levelallowed and available, currently five times (5x) basic annual earnings, throughits benefits administrator, Adminstaff. Cost of benefit will be paid by Executive through payrolldeduction.  Company will gross upExecutive’s salary to offset cost of benefit.

 

**DISABILITYINSURANCE**

The Company will provide to Executive, at no cost toExecutive, with short-term and long-term disability insurance, through itsbenefits administrator Adminstaff, to the highest coverage level allowed andavailable (currently replacement of 60% of Executive’s salary, up to a maximumof $10,000 monthly) in the event Executive is unable to work and perform hisduties on behalf of Company.  Cost ofbenefit will be paid by Executive through payroll deduction.  Company will gross up Executive’s salary tooffset cost of benefit.

 

**VACATION**

It is the policy of the Company to provide full timeemployees with paid vacation so that they may take time off for rest andrelaxation.  Vacation time is earnedaccording 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 withover seven (7) years of service.  TheCompany will waive the vacation service requirement for Executive, providingExecutive with fifteen (15) days of vacation once six (6) months of service havebeen completed.  Executive may not carryforward, at any time, an accrual of more than thirty (30) days of unusedvacation.

 

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