**Exhibit10.4**

 

**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”), andMichael D. Archer (hereinafter referred to as the “Executive”).

 

**WITNESSETH**

 

For and in consideration of the mutual promises and covenants hereincontained, and other good and valuable consideration, the receipt and sufficiencyof which are hereby 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 Senior Vice President,Sales & Marketing for the Company, and Executive agrees to serve theCompany in such capacity upon the terms and subject to the conditions set forthin this Agreement.  Executive shallperform such duties and responsibilities customary to the position of SeniorVice President, Sales & Marketing, including but not limited to;

(a) Develop, manage and lead Company’s internal sales organization

(b) Direct sales organization to achieve Company’s revenue and earningstargets

(c) Develop and implement strategies to achieve market leadership forCompany’s products

(d) Develop and maintain key relationships with product distribution channelpartners

(e) Develop and maintain key relationships with strategic national accountcustomers

(f)  Lead Company activities in new product development and brandingstrategies

 

1.2                                 **TERM****.** The term of this Agreement shall commence onJuly 14, 2003****(“Start Date”) and shall continue for a period of one-year(the “Initial Term”); unless sooner terminated in accordance with theprovisions of the Agreement hereinafter set forth. The Initial Term shallautomatically be extended on each anniversary of this Agreement for anadditional one-year term (each a “Successor Term”) unless either party heretonotifies the other of intent to terminate this Agreement at least 30 days priorto the anniversary date of the Agreement.

 

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

 

1.3.1                        Base Salary: Company shall pay Executive a base salary of$5,769.23 per pay period, twenty six (26) pay periods per year, duringthe first year of this Agreement.  Theamount of base salary may be increased by the Company during the term of thisAgreement, but not decreased.

 

1.3.2**                       ****Incentive Bonus:**  Inaddition to the base salary, Executive is eligible to participate in theCompany’s Management Incentive Compensation Plan, at the discretion andapproval of the Company’s Board of Directors. Executive’s annual incentive compensation target, as Senior VicePresident, Sales and Marketing, is forty percent (40%) of base salary.

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

 

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Sharps Executive Employment Agreement – Michael D. Archer

 

 

1.3.3                        **Stock Options:** Executive is eligible toparticipate in the Company’s long-term incentive and stock option plans.  At the signing of this Agreement, and uponapproval from the Board of Directors, Executive is granted the right topurchase one hundred thousand (100,000) shares of the company’s common stock,as per the applicable Stock Option Agreement(s) summarized in Attachment A.  In the event that this Agreement isterminated, other than for reasons of voluntary termination or termination withcause as defined in Section 2.1, or in the event the Company experiences achange in control event, defined as the sale of substantially all of the assetsof the Company or change in control of forty percent (40%) of the outstandingvoting shares of the Company, all non-vested options shall immediately vest.

 

1.3.4**                       ****Benefits:** Executive shall be entitled to receive allstandard employee benefits that may, from time to time, be provided by theCompany to its employees. In addition to standard benefits, Executive shall beentitled to executive employee benefits listed in Attachment B (ExecutiveBenefits).  Executive shall also beentitled to receive liability insurance covering those acts, omissions, orother conditions specifically related to or resulting from the course and scopeof Executive’s duties as Senior Vice President, Sales & Marketing for theCompany.

 

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****:**Executive acknowledges that in and as aresult of

his employment hereunder, hewill be making use of, acquiring, and/or adding to confidential information ofa special 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) year following the term of his employment,directly or indirectly, divulge or disclose for any purpose whatsoever anyConfidential Information that has been obtained by, or disclosed to, him as aresult of his employment by the Company. In the event of a breach or threatenedbreach by Executive of any of the provisions of this paragraph, the Company, inaddition to and not in limitation of, any other rights, remedies, or damagesavailable to the Company at law or in equity, shall be entitled to a permanentinjunction in order to prevent or restrain any such breach by Executive orExecutive’s partners, agents, representatives, servants, employers, employees,and/or any and all persons directly or indirectly acting for or with him. Thissection shall not apply to the extent information divulged or accessed byExecutive (i) is already known to him at the time of disclosure, (ii) isgenerally available to the public or otherwise was part of public domain at thetime of disclosure, (iii) became generally available to the public afterdisclosure through no act or omission of Executive, (iv) was disclosed toExecutive by a third party who had no obligation to restrict disclosure, and(v) Executive can show that such information was independently developed byExecutive without use of any Confidential Information.

 

1.6                                 **RESTRICTIVE COVENANT**. Executive acknowledges that the services heis to render are of a special and unusual character with a unique value to theCompany, the loss of which cannot adequately be compensated by damages in anaction at law. In view of the unique value to the Company of the services ofExecutive for which the Company has contracted hereunder, because of theconfidential information to be obtained by or disclosed to Executive, ashereinabove set forth, and as a material inducement to the Company to enterinto this Agreement and to pay to Executive the compensation stated

 

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hereinas well as any additional benefits stated herein, Executive covenants andagrees as follows:

For the period commencing with the date of the Agreement and ending six(6) monthsfollowing the termination of this Agreement (“SeverancePeriod”), for whatever reason, the Executive agrees that he will not directlyor indirectly, for his own account or for the account of others, whether asprincipal or agent or through the agency of any corporation, partnership,association or other business entity, engage in any business activity whichshall be in direct competition to any material business of the Company.  For purposes hereof, a business will bedeemed, until proven otherwise, to be in direct competition if it involves thesale of products used for the disposal and destruction of medical sharpsdescribed as a “sharps return by mail” program.  Executive agrees further that, for a period commencing with thedate of this Agreement and ending six (6) months (Severance Period) followingtermination of this Agreement, for whatever reason, Executive shall not,directly or indirectly, make known to any person, firm or corporation, thenames and addresses of any clients, customers, employees or independentcontractors of the Company or any other information pertaining to them nor callon, solicit, take away, contract with, employ or hire or attempt to call on,solicit, take away, contract with, employ or hire any of the clients,customers, employees or independent contractors of the Company, including, butnot limited to, those upon whom the Executive called or with whom he becameacquainted during the performance of the services pursuant to this Agreement,whether for personal purposes or for any other person, firm or corporation.Nothing contained in this Section 1.6 shall prohibit the Executive from purchasingand holding as an investment not more than 5% of any class of the issued andoutstanding and publicly traded capital stock of any such corporation whichconducts a business in competition with the business of the Company.   Should the foregoing covenant not tocompete be held invalid or unenforceable because of the scope of the actionsrestricted thereby, or the period of time within which such agreement isoperative in the judgment of a court of competent jurisdiction, the partiesagree that and hereby authorize such court to define the maximum actionssubject to and restricted by this Section 1.6 and the period of time duringwhich such agreement is enforceable. The provisions of this Section 1.6 shallbe applicable for the period indicated, regardless of termination of thisAgreement for any reason prior to expiration of such period.

 

**ARTICLE II**

**TERMINATION**

 

2.1                                 **TERMINATION FOR CAUSE.** Notwithstanding any other provision hereof, the Company or Executive mayterminate Executive’s employment under this Agreement at any time for cause asdefined in this Section 2.1.

 

2.1.1                        **Company InitiatedTermination For Cause:** TheCompany 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, six (6) months.

 

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2.1.2                        **Executive InitiatedTermination For Cause: **Executive may terminate Executive’s employment forcause, which shall be evidenced by written notice thereof to Company, whichshall specify the cause for termination. For purposes hereof, the term “cause” shall include, without limitation,removal of the Executive from the office defined herein or the materialreduction in Executive’s title, authority or responsibility, except for “cause”as defined in 2.1.1, reduction in Executive’s compensation, the requirementthat Executive relocate more than thirty-five (35) miles from the Company’scurrent corporate headquarters, or the Company otherwise commits a materialbreach of this Agreement.

 

2.2                                 **TERMINATION WITHOUT CAUSE.** Notwithstanding any other provision hereof, the Company or Executive mayterminate this Agreement without cause upon thirty (30) days prior writtennotice thereof given to the other party hereto.

 

2.2.1**                       ****Company Initiated TerminationWithout Cause:** In the eventthe Company terminates this Agreement without cause pursuant to this paragraph,the Company shall (i) pay Executive, six (6) months of his annual base salary(ii) immediately accelerate vesting of all stock options or stock appreciationrights which have been granted to Executive. Executive shall have six (6) months (Severance Period) past thetermination date of this Agreement to exercise vested stock options.  In addition, the Company shall extend to theExecutive all benefits described in Section 1.3 hereof and in Attachment B,until the earlier of the end of severance period or upon employment withanother employer.  Payment by theCompany in accordance with this paragraph shall constitute Executive’s fullseverance pay and the Company shall have no further obligation to Executivearising out of or subsequent to such termination.

 

2.2.2                        **Executive InitiatedTermination 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 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**                       ****Termination Following 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 oftermination as described above, an amount equal to six (6) months of his annualbase salary, 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.

 

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**ARTICLE III**

**ARBITRATION**

 

Any controversy of any nature whatsoever, including but not limited totort claims or contract disputes, between the parties to this Agreement orbetween the Executive, his heirs, executors, administrators, legalrepresentatives, successors, and assigns and the Company and its affiliates,arising out of or related to the Executive’s employment with the Company, anyresignation from or termination of such employment and/or the terms andconditions of the Agreement, including the implementation, applicability andinterpretation thereof, shall, upon the written request of one party servedupon the other, be submitted to and settled by arbitration in accordance withthe provisions of the Federal Arbitration Act, 9 U.S.C. ~§ 1-15, as amended.Each of the parties to this Agreement shall appoint one person as an arbitratorto hear and determine such disputes, and if they should be unable to agree,then the two arbitrators shall choose a third arbitrator from a panel made upof experienced arbitrators selected pursuant to the procedures of the AmericanArbitration Association (the “AAA”) and, once chosen, the third arbitrator’sdecision shall be final, binding and conclusive upon the parties to thisAgreement. Each party shall be responsible for the fees and expenses of itsarbitrator and the fees and expenses of the third arbitrator shall be sharedequally by the parties.  The terms of thecommercial arbitration rules of AAA shall apply except to the extent theyconflict with the provisions of this paragraph. It is further agreed that anyof the parties hereto may petition the United States District Court for theDistrict of Houston, Texas, for a judgment to be entered upon any award enteredthrough 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 Agreement. This indemnification section shallsurvive and continue in full force and effect after the expiration of thisAgreement.

 

**ARTICLE V**

**MISCELLANEOUS**

 

4.1                                 **NOTICES****.** All notices, requests, consents and othercommunications required or permitted hereunder shall be in writing and shall bedeemed to have been delivered on the date personally delivered or on the datemailed, postage prepaid, by certified mail, return receipt requested, ortelegraphed or telexed and confirmed if addressed to the respective parties asfollows:

 

 

If to the Executive:

Michael D. Archer

4934 Glen Hollow Street

Sugar Land, TX 77479

 

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If to the Company:

Sharps ComplianceCorporation

9350 Kirby 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 and enforcedin accordance with and governed by the laws of the State of Texas and venue forany dispute arising hereunder 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 this Agreementare for reference purposes only and in no way define, limit or describe thescope or content of this Agreement or any paragraph hereof.

 

4.7                                 **ENTIRE AGREEMENT: AMENDMENT****.** This Agreement represents the entireagreement by and between the parties hereto relating to the subject matterhereof this Agreement may not be changed except by written agreement dulyexecuted 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 similar process.  An attempt at assignment, transfer, pledgeor hypothecation or other disposition of this Agreement or of such rights,interest and benefits contrary to the foregoing provision, or the levy of anyattachment or similar process thereupon, shall be null and void and withouteffect except as provided in Section 2.2.

 

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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****.**  ThisAgreement may be executed in two or more counterparts; each of which shall bedeemed to be an original and all of which together shall be deemed to be oneand the same instrument.

 

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

 

 
|   | **EXECUTIVE:**        |                                   |
|--------|-----------------------|----------------------------------------|
|   |                  |                                   |   |
|   | /s/ Michael D. Archer |                                   |
|   | 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:

 

• 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.

 

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

 

 

**LIFEINSURANCE**

 

The Company provides fifteen thousand dollars ($15,000)of Life and Accidental Death & Dismemberment coverage to full timepermanent employees upon completion of their probationary period.  Executive may purchase additional coverage,at Executive’s expense, through the Company’s benefits Administrator.

 

 

**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.  The Companywill waive the vacation service requirement for Executive, providing Executivewith fifteen (15) days of vacation once six (6) months of service have beencompleted.  Executive may not carryforward, at any time, an accrual of more than thirty (30) days of unusedvacation.

 

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