Exhibit
10.2


 


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 Ronald
E. Pierce (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 Chief Operating 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 Chief Operating Officer,
including but not limited to;


 


(a)          Lead efforts in
developing the primary goals, business plan, operating plans, policies, and
short/long range objectives for the Company;


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


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


(d)         Lead the Company toward
objectives, including meeting with management, advisors and other executives to
review results of business operations;


(e)          Directly participate in
marketing the Company and revenue generation via strategic alliances and major
customers.


(f)            Represent the Company
to the financial community, major customers, government agencies, shareholders
and the public; and


(g)         Determine action plans to
meet 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 “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
$6,538.46 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.


 


 


	
  July 14, 2003

  	
   

  	
  Sharps Compliance
  Corporation

  	
   

  	
   

  



 


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Sharps Executive Employment Agreement – Ronald E. Pierce


 


 


1.3.2                        Incentive
Bonus:  In addition to the base
salary, Executive is eligible to participate in the Company’s Management
Incentive Compensation Plan, when formally established and at the discretion
and approval of the Company’s Board of Directors.  Executive’s annual incentive compensation target, as Chief
Operating Officer, is fifty percent (50%) of base salary.  In lieu of a formally established company
management incentive plan, and in accord with the terms of employment accepted
by Executive upon hire, Executive is eligible to receive an incentive bonus of
eighty thousand dollars ($80,000), payable as two separate bonuses based upon
the Company achieving performance targets. 
Executive is eligible to receive the first bonus, payable in the amount
of forty thousand dollars ($40,000) immediately after the first month when the
company reports at least $10 million in revenue and $500,000 in net profit for
a trailing twelve (12) month period (as shown in the Company’s internally
audited financial books and records and as reported to the board of directors
monthly).  Executive is eligible to
receive 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 and
as reported to the Company’s board of directors).  Subsequent to the achievement of the above parameters and
associated payment of the bonuses, or at the discretion of Executive upon the
initiation of a Company  Management Incentive
Compensation Plan, Executive will then be entitled to participation in the
Company’s standard Management Incentive Compensation Plan.  In no event shall Executive be entitled to
participate in more than one incentive compensation/bonus arrangement at a
time.


 


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 four hundred thousand (500,000)
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 Chief Operating 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)


 


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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 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 twelve (12) 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 twelve (12) 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.


 


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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 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, twelve (12) months.


 


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, twelve (12) 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 twelve (12) 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


 


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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 twelve (12) 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.


 


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


 


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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:


Ronald E. Pierce


P.O. Box 16086


Sugar Land, TX 77496


 


 


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.


 


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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.


 


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/ 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


 


 


MEDICAL
INSURANCE


Eligibility - The Company will
provide Executive, and dependents, with paid group health insurance coverage,
effective as of the Start Date, and throughout any severance period defined by
this agreement.


 


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.


 


ADDITIONAL
BENEFITS COVERAGE


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


 


LIFE INSURANCE


The Company will provide Executive, at no cost to
Executive, with life insurance to the highest level of coverage allowed and
available, currently five times (5x) basic annual earnings,  through its benefits administrator
Administaff.  Cost of benefit will be
paid by Executive through payroll deduction. 
Company will gross up Executive’s salary to offset cost of benefit.  Executive recognizes that additional life
insurance coverage may require evidence of insurability (EOI), including a
medical examination.


 


PERSONAL
ACCIDENT INSURANCE


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


 


DISABILITY
INSURANCE


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


 


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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