Exhibit
10.3


 


EXECUTIVE
EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (“AGREEMENT), made and entered into by and
between Sharps Compliance Corporation, a Texas corporation, having its
principle office at 9350 Kirby Drive, Houston, TX 77054 (hereinafter referred
to as the “Company”), and David P. Tusa (hereinafter referred to as the
“Executive”).


 


WITNESSETH


 


For and in
consideration of the mutual promises and covenants herein contained, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Executive agree as follows:


 


ARTICLE I


STATEMENT
OF AGREEMENT


 


1.1                                 DUTIES. During the term of this Agreement, the
Company agrees to employ Executive as Senior Vice President, Chief Financial
Officer for the Company, and Executive agrees to serve the Company in such
capacity upon the terms and subject to the conditions set forth in this
Agreement.  Executive shall perform such
duties and responsibilities customary to the position of Senior Vice President,
Chief Financial Officer, including but not limited to;


(a)                                  Analyze
and report Company’s financial performance


(b)                                 Develop and manage Company’s accounting and
financial reporting systems


(c)                                  Manage company financial assets, treasury
activities and banking relationships


(d)                                 Develop and audit internal financial policy,
procedure, controls and financial risk


(d)                                 Keep management and board of directors
apprised of company financial performance


(f)                                    Develop and manage Company’s SEC financial
reporting and compliance requirements


(g)                                 Manage external company relationships with
public audit firm, investor relations


 


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 “Initial Term”); unless sooner terminated in accordance with the
provisions of the Agreement hereinafter set forth. The Initial Term shall
automatically be extended on each anniversary of this Agreement for an
additional one-year term (each a “Successor Term”) unless either party hereto
notifies the other of intent to terminate this Agreement at least 30 days prior
to 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, during
the first year of this Agreement.  The
amount of base salary may be increased by the Company during the term of this
Agreement, but not decreased.


 


1.3.2                        Incentive Bonus:  In
addition to the base salary, Executive is eligible to participate in the
Company’s Management Incentive Compensation Plan, at the discretion and
approval of the Company’s Board of Directors. 
Executive’s annual incentive compensation target, as Senior Vice
President, Chief Financial Officer, is forty percent (40%) of base salary.


 


	
  July 14, 2003

  	
   

  	
  Sharps Compliance
  Corporation

  	
   

  	
   

  



 


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Sharps Executive Employment Agreement – David P. Tusa


 


 


1.3.3                        Stock Options: 
Executive is eligible to participate in the Company’s long-term
incentive and stock option plans.  At
the signing of this Agreement, and upon approval from the Board of Directors,
Executive is granted the right to purchase three hundred thousand (300,000)
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 is terminated, other than for reasons
of 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 as
the sale of substantially all of the assets of the Company or change in control
of forty percent (40%) of the outstanding voting shares of the Company, all
non-vested options shall immediately vest.


 


1.3.4                        Benefits: Executive shall be entitled to receive all
standard employee benefits that may, from time to time, be provided by the
Company to its employees. In addition to standard benefits, Executive shall be
entitled to executive employee benefits listed in Attachment B
(Executive Benefits).  Executive shall
also be entitled to receive liability insurance covering those acts, omissions,
or other conditions specifically related to or resulting from the course and
scope of Executive’s duties as Senior Vice President, Chief Financial Officer
for the Company.


 


1.4                                 EXPENSES: The Company shall reimburse Executive for
all reasonable business and business travel expenses incurred by Executive on
behalf of the Company, in accordance with the prevailing practice and policy of
the Company.


 


1.5                                 CONFIDENTIAL INFORMATION: Executive acknowledges that in and as a
result of


his employment hereunder, he
will be making use of, acquiring, and/or adding to confidential information of
a special and unique nature and value relating to such matters as the Company’s
trade secrets, systems, procedures, manuals, confidential reports, and lists of
clients, (“Confidential Information”). As a material inducement to the Company
to enter into this Agreement and to pay to Executive the compensation and
benefits stated herein, Executive covenants and agrees that he shall not, at
any time during or for one (1) year following the term of his employment,
directly or indirectly, divulge or disclose for any purpose whatsoever any
Confidential Information that has been obtained by, or disclosed to, him as a
result of his employment by the Company. In the event of a breach or 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 be entitled to a permanent
injunction in order to prevent or restrain any such breach by Executive or
Executive’s partners, agents, representatives, servants, employers, employees,
and/or any and all persons directly or indirectly acting for or with him. This
section shall not apply to the extent information divulged or accessed by
Executive (i) is already known to him at the time of disclosure, (ii) is
generally available to the public or otherwise was part of public domain at the
time of disclosure, (iii) became generally available to the public after
disclosure through no act or omission of Executive, (iv) was disclosed to
Executive by a third party who had no obligation to restrict disclosure, and
(v) Executive can show that such information was independently developed by
Executive without use of any Confidential Information.


 


1.6                                 RESTRICTIVE COVENANT. Executive acknowledges that the services he
is to render are of a special and unusual character with a unique value to the
Company, the loss of which cannot adequately be compensated by damages in an
action at law. In view of the unique value to the Company of the services of
Executive for which the Company has contracted hereunder, because of the
confidential information to be obtained by or disclosed to Executive, as
hereinabove set forth, and as a material inducement to the Company to enter
into this Agreement and to pay to Executive the compensation stated


 


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herein
as well as any additional benefits stated herein, Executive covenants and
agrees as follows:


For the period commencing
with the date of the Agreement and ending nine (9) months  following the
termination of this Agreement (“Severance Period”), for whatever reason, the
Executive agrees that he will not directly or indirectly, for his own account
or for the account of others, whether as principal or agent or through the
agency of any corporation, partnership, association or other business entity,
engage in any business activity which shall be in direct competition to any
material business of the Company.  For
purposes hereof, a business will be deemed, until proven otherwise, to be in
direct competition if it involves the sale of products used for the disposal
and 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 nine (9)
months (Severance Period) following termination of this Agreement, for whatever
reason, 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 information
pertaining to them nor call on, 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, but not limited to, those upon whom the Executive called or
with whom he became acquainted 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 purchasing and holding as an investment not more than 5% of any
class of the issued and outstanding and publicly traded capital stock of any
such corporation which conducts a business in competition with the business of
the Company.   Should the foregoing
covenant not to compete be held invalid or unenforceable because of the scope
of the actions restricted thereby, or the period of time within which such
agreement is operative in the judgment of a court of competent jurisdiction,
the parties agree that and hereby authorize such court to define the maximum
actions subject to and restricted by this Section 1.6 and the period of time
during which such agreement is enforceable. The provisions of this Section 1.6
shall be applicable for the period indicated, regardless of termination of this
Agreement 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 may
terminate Executive’s employment under this Agreement 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 be
evidenced by written notice thereof to the Executive, which shall specify the
cause for termination.  For purposes
hereof, the term “cause” shall include, without limitation, the inability of
the Executive, through sickness or other incapacity, to perform his duties
under this Agreement for a period in excess of one hundred eighty (180)
substantially consecutive days; conviction of a crime; or a material breach of
this Agreement.  The Company’s obligations
hereunder shall terminate upon any termination for cause pursuant to this
Section 2.1; provided, however, if such termination results from death,
sickness or other incapacity of Executive, the Company will extend to Executive
the same severance benefits as though the termination was effected without
cause initiated by the Executive described in Section 2.2.2.  In the event that termination results from
the Executive’s death, the Company will pay the Executive’s severance benefits
to his estate or legal heirs, and extend the period for executing vested stock
options to the equivalent of Executive’s severance period, nine (9) months.


 


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2.1.2                        Executive Initiated
Termination For Cause:  Executive may terminate Executive’s employment for
cause, which shall be evidenced by written notice thereof to Company, which
shall 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 material reduction
in Executive’s title, authority or responsibility, except for “cause” as
defined in 2.1.1, reduction in Executive’s compensation, the requirement that
Executive relocate more than thirty-five (35) miles from the Company’s current
corporate headquarters, or the Company otherwise commits a material breach of
this Agreement.


 


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 to
this paragraph, the Company shall (i) pay Executive, nine (9) months of his annual
base salary (ii) plus a pro rata portion of the annual bonus as if earned,
(iii) immediately accelerate vesting of all stock options or stock appreciation
rights which have been granted to Executive. 
Executive shall have nine (9) months (Severance Period) past the
termination date of this Agreement to exercise vested stock options.  In addition, the Company shall extend to the
Executive all benefits described in Section 1.3 hereof and in Attachment B,
until the earlier of the end of severance period or upon employment with
another employer.  Payment by the
Company in accordance with this paragraph shall constitute Executive’s full
severance pay and the Company shall have no further obligation 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 Section
2.2, or in the event of the Executive’s death, the Company’s obligation to
provide continuation of salary and benefits shall cease as of the termination
date.  The Executive, and the
Executive’s estate in the event of death, retains the right to ownership of
stock, 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 and
title 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) days
after the termination date of this Agreement, but not after the date the stock
option grant expires, to exercise vested stock options or stock appreciation
rights.


 


2.2.3                        Termination Following Change in Control: Notwithstanding anything to the contrary
contained herein, should Executive at any time within twenty four (24) months
of the occurrence of a “change of control” (as defined in 1.3.3), cease to be
an employee of the Company (or its successor), by reason of (i) termination by
the 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), then
in any such event, (1) the Company shall pay Executive, within 30 days of
termination as described above, an amount equal to nine (9) months of his
annual base 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
outstanding stock options held by Executive, not already vested and exercisable,
shall become fully vested, and Executive’s right to exercise such stock options
shall be 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 to
tort claims or contract disputes, between the parties to this Agreement or
between the Executive, his heirs, executors, administrators, legal
representatives, successors, and assigns and the Company and its affiliates,
arising out of or related to the Executive’s employment with the Company, any
resignation from or termination of such employment and/or the terms and
conditions of the Agreement, including the implementation, applicability and
interpretation thereof, shall, upon the written request of one party served
upon the other, be submitted to and settled by arbitration in accordance with
the 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 arbitrator
to 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 up
of experienced arbitrators selected pursuant to the procedures of the American
Arbitration Association (the “AAA”) and, once chosen, the third arbitrator’s
decision shall be final, binding and conclusive upon the parties to this
Agreement. Each party shall be responsible for the fees and expenses of its
arbitrator and the fees and expenses of the third arbitrator shall be shared
equally by the parties.  The terms of
the commercial arbitration rules of AAA shall apply except to the extent they
conflict with the provisions of this paragraph. It is further agreed that any
of the parties hereto may petition the United States District Court for the
District of Houston, Texas, for a judgment to be entered upon any award entered
through such arbitration proceedings.


 


 


ARTICLE IV


INDEMNIFICATION


 


The Company shall indemnify and hold Executive harmless from any and
all claims (whether in court or before a regulatory or administrative body),
liabilities, damages and expenses, including without limitation reasonable
attorneys’ fees incurred by Executive or his agents, arising out of or related
to the acts or omissions of Executive in the provision of services or
performance of duties under this Agreement. This indemnification section shall
survive and continue in full force and effect 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 in writing and shall be
deemed to have been delivered on the date personally delivered or on the date
mailed, postage prepaid, by certified mail, return receipt requested, or
telegraphed or telexed and confirmed if addressed to the respective parties as
follows:


 


 


If to the Executive:


David P. Tusa


c/o Sharps Compliance Corp.


9350 Kirby Drive, #300


Houston, TX 77054


 


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If to the Company:


Sharps Compliance
Corporation


9350 Kirby Drive


Houston, TX 77054


Attn:  Chief Executive Officer


 


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


 


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


 


4.3                                 WAIVER. The waiver of any provision hereof shall not
be deemed to constitute the waiver of such provision or any other provisions
hereof


 


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


 


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


 


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


 


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


 


4.8                                 SUCCESSORS AND ASSIGNS


 


4.8.1                        Executive Assignment: Except as otherwise expressly provided
herein, Executive agrees on behalf of his executors and administrators, heirs,
legatees, distributees and any other person or persons claiming any benefits
under his by virtue of this Agreement, that this Agreement and the rights,
interests and benefits hereunder shall not be assigned, transferred, pledged or
hypothecated in any way by Executive or any executor, administrator, heir,
legatee, distributee or person claiming under Executive by virtue of this
Agreement and shall not be subject to execution, attachment or similar
process.  An attempt at assignment,
transfer, pledge or hypothecation or other disposition of this Agreement or of
such rights, interest and benefits contrary to the foregoing provision, or the
levy of any attachment or similar process thereupon, shall be null and void and
without effect except as provided in Section 2.2.


 


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


 


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


 


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


 


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


 


	
   

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ David P. Tusa

  	
   

  
	
   

  	
  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:


 


•                  150,000 issued
on March 12, 2003, exercise price of $1.12, vesting 50,000 on March 12, 2003,
50,000 on September 12, 2003 and 50,000 on September 12, 2004; and


•                  150,000 issued on July 14, 2003, exercise
price of $0.84, standard three year vesting.


 


In addition to the employee options noted above, Executive has
previously been granted the following options:


 


•                  10,000 issued on October 11, 2001, exercise
price of $1.10, fully vested; and


•                  45,000 issued on July 18, 2002, exercise
price of $1.05, fully vested.


 


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ATTACHMENT “B”


 


EXECUTIVE BENEFITS


 


 


MEDICAL
INSURANCE


 


 


Eligibility - The Company will
provide Executive, and dependents, with paid group health insurance coverage,
effective as of the Start Date.


 


Application - The Company’s
medical insurance plan coverage is in effect as of Start Date.  However, the Company and its benefits
administrator Administaff require that Executive complete and submit all
pertinent forms and applications for plan coverage within thirty (30) days of
Start Date.


 


 


LIFE
INSURANCE


 


The Company provides
fifteen thousand dollars ($15,000) of Life and Accidental Death &
Dismemberment coverage to full time permanent 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 time employees with paid vacation so that they may take time
off for rest and relaxation.  Vacation
time is earned according 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 with over seven (7) years of service.  The Company will waive the vacation service requirement for
Executive, providing Executive with fifteen (15) days of vacation once six (6)
months of service have been completed. 
Executive may not carry forward, at any time, an accrual of more than
thirty (30) days of unused vacation.


 


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