Document:

ex1012-10k02

Exhibit 10.12

Waiver and Amendment to Loan Documents

THIS WAIVER AND AMENDMENT TO LOAN DOCUMENTS (this "Amendment") is made as of March 25, 2003, by and between INTEST CORPORATION, INTEST SUNNYVALE CORPORATION, TEMPTRONIC CORPORATION, INTEST INVESTMENTS, INC., INTEST LICENSING CORP. and INTEST IP CORP. (collectively, the "Borrowers"), and PNC BANK, NATIONAL ASSOCIATION (the "Bank").

BACKGROUND

A.The Borrowers have executed and delivered to the Bank (or a predecessor which is now known by the Bank's name as set forth above), one or more promissory notes, letter agreements, loan agreements, security agreements, mortgages, pledge agreements, collateral assignments, and other agreements, instruments, certificates and documents, some or all of which are more fully described on attached Exhibit A, which is made a part of this Amendment (collectively as amended from time to time, the "Loan Documents") which evidence or secure some or all of the Borrowers' obligations to the Bank for one or more loans or other extensions of credit (the "Obligations").

B.The Borrowers and the Bank desire to amend the Loan Documents and to waive certain defaults under the Loan Documents as provided for in this Amendment. 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

1.Certain of the Loan Documents are amended and certain defaults under the Loan Documents are waived as set forth in Exhibit A. Any and all references to any Loan Document in any other Loan Document shall be deemed to refer to such Loan Document as amended by this Amendment. This Amendment is deemed incorporated into each of the Loan Documents. Any initially capitalized terms used in this Amendment without definition shall have the meanings assigned to those terms in the Loan Documents. To the extent that any term or provision of this Amendment is or may be inconsistent with any term or provision in any Loan Document, the terms and provisions of this Amendment shall control.

2.The Borrowers hereby certify that: (a) all of their representations and warranties in the Loan Documents, as amended by this Amendment, are, except as may otherwise be stated in this Amendment: (i) true and correct as of the date of this Amendment, (ii) ratified and confirmed without condition as if made anew, and (iii) incorporated into this Amendment by reference, (b) no Event of Default or event which, with the passage of time or the giving of notice or both, would constitute an Event of Default, exists under any Loan Document which will not be cured by the execution and effectiveness of this Amendment, (c) no consent, approval, order or authorization of, or registration or filing with, any third party is required in connection with the execution, delivery and carrying out of this Amendment or, if required, has been obtained, and (d) this Amendment has been duly authorized, executed and delivered so that it constitutes the legal, valid and binding obligation of the Borrowers, enforceable in accordance with its terms. The Borrowers confirm that the Obligations remain outstanding without defense, setoff, counterclaim, discount or charge of any kind as of the date of this Amendment. 

3.The Borrowers hereby confirm that any collateral for the Obligations, including liens, security interests, mortgages, and pledges granted by the Borrowers or third parties (if applicable), shall continue unimpaired and in full force and effect, and shall cover and secure all of the Borrowers' existing and future Obligations to the Bank, as modified by this Amendment.

4.As a condition precedent to the effectiveness of this Amendment, the Borrowers shall comply with the terms and conditions (if any) specified in Exhibit A.

5.To induce the Bank to enter into this Amendment, the Borrowers waive and release and forever discharge the Bank and its officers, directors, attorneys, agents, and employees from any liability, damage, claim, loss or expense of any kind that it may have against the Bank or any of them arising out of or relating to the Obligations. The Borrowers further agree to indemnify and hold the Bank and its officers, directors, attorneys, agents and employees harmless from any loss, damage, judgment, liability or expense (including attorneys' fees) suffered by or rendered against the Bank or any of them on account of any claims arising out of or relating to the Obligations. The Borrowers further state that they have carefully read the foregoing release and indemnity, know the contents thereof and grant the same as their own free act and deed.

6.This Amendment may be signed in any number of counterpart copies and by the parties to this Amendment on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Amendment by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

7.This Amendment will be binding upon and inure to the benefit of the Borrowers and the Bank and their respective heirs, executors, administrators, successors and assigns.

8.This Amendment has been delivered to and accepted by the Bank and will be deemed to be made in the State where the Bank's office indicated in the Loan Documents is located. This Amendment will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State where the Bank's office indicated in the Loan Documents is located, excluding its conflict of laws rules.

9.Except as amended hereby, the terms and provisions of the Loan Documents remain unchanged, are and shall remain in full force and effect unless and until modified or amended in writing in accordance with their terms, and are hereby ratified and confirmed. Except as expressly provided herein, this Amendment shall not constitute an amendment, waiver, consent or release with respect to any provision of any Loan Document, a waiver of any default or Event of Default under any Loan Document, or a waiver or release of any of the Bank's rights and remedies (all of which are hereby reserved). The Borrowers expressly ratify and confirm the confession of judgment (if applicable) and waiver of jury trial provisions contained in the Loan Documents.

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WITNESS the due execution of this Amendment as a document under seal as of the date first written above.
INTEST CORPORATION

INTEST SUNNYVALE CORPORATION

TEMPTRONIC CORPORATION

INTEST INVESTMENTS, INC.

INTEST LICENSING CORP.

INTEST IP CORP.

By: /s/ Hugh T. Regan, Jr.

     Hugh T. Regan, Jr.

     Secretary and Treasurer

 

Attest: /s/ Susan Dawson

Print Name: Susan Dawson

Title:___________________ 

(Include title only if an officer of entity signing to the right)
PNC BANK, NATIONAL ASSOCIATION

By: /s/ Gary R. Martz

     Gary R. Martz

     Vice President

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EXHIBIT A TO

WAIVER AND AMENDMENT TO LOAN DOCUMENTS

DATED AS OF MARCH 25, 2003 

A.The "Loan Documents" that are the subject of this Amendment include the following (as any of the foregoing have previously been amended, modified or otherwise supplemented):

	Letter Agreement dated May 29, 2002 (the "Letter Agreement")
	$5,000,000 Amended and Restated Committed Line of Credit Note (the "Existing Note")
	Security Agreement dated May 29, 2002
	Borrowing Base Rider dated May 29, 2002
	All other documents, instruments, agreements, and certificates executed and delivered in connection with the Loan Documents listed in this Section A.

B.The Borrowers have acknowledged and agreed with the Bank that the Borrowers failed to comply with the provisions of Section B(3) of the Financial Covenants section contained in Exhibit A to the Letter Agreement for the period ended December 31, 2002. The Borrowers' failure to comply with the foregoing section of the Letter Agreement constitutes an Event of Default under the Loan Documents. The Borrowers have requested that the Bank waive this Event of Default. In reliance upon the Borrowers' representations and warranties and subject to the terms and conditions herein set forth, the Bank agrees to grant a waiver of Borrowers' non-compliance with the foregoing section of the Letter Agreement and of the Event of Default that would otherwise result from a violation of such section, solely for the period ended as of December 31, 2002. The Borrowers agree that they will hereafter comply fully with this and all other provisions of the Loan Documents, which remain in full force and effect. Except as expressly described above, this waiver shall not constitute (a) a modification or an alteration of the terms, conditions or covenants of the Loan Documents or (b) a waiver, release or limitation upon the Bank's exercise of any of its rights and remedies thereunder, which are hereby expressly reserved. This waiver shall not relieve or release the Borrowers or any guarantor in any way from any of their respective duties, obligations, covenants or agreements under the Loan Documents or from the consequences of any Event of Default thereunder, except as expressly described above. This waiver shall not obligate the Bank, or be construed to require the Bank, to waive any other Events of Default or defaults, whether now existing or which may occur after the date of this waiver.

C.The Loan Documents are amended as follows:

	Section 1 of the Letter Agreement is hereby amended and restated in its entirety to read in full as follows:

"1. Facility and Use of Proceeds. This is a committed revolving line of credit under which the Borrowers may request and the Bank, subject to the terms and conditions of this Letter Agreement, will make advances to the Borrowers from time to time until the Expiration Date, in an amount in the aggregate at any time outstanding not to exceed $200,000 (the "Line of Credit" or the "Loan"). The "Expiration Date" means September 30, 2004, or such later date as may be designated by the Bank by written notice to the Borrowers. Advances under the Line of Credit will be used for working capital or other general business purposes of the Borrowers.

A-1

 

The Borrowers may request that the Bank, in lieu of cash advances, issue standby letters of credit (individually, a "Letter of Credit" and collectively the "Letters of Credit") under the Line of Credit having expiration dates not to exceed one (1) year from the date of issuance. The availability of advances under the Line of Credit shall be reduced by the face amount of each Letter of Credit issued and outstanding (whether or not drawn). Each payment by the Bank under a Letter of Credit shall in the Bank's discretion constitute an advance of principal under the Line of Credit and shall be evidenced by the Note (as defined below). The Letters of Credit shall be governed by the terms of this letter and by one or more reimbursement agreements, in form and content satisfactory to the Bank, executed by the Borrowers in favor of the Bank (collectively, the "Reimbursement Agreement"). Each request for the issuance of a Letter of Credit must be accompanied by the Borrowers' execution of an application on the Bank's standard forms (each, an "Application"), together with all supporting documentation. Each Letter of Credit will be issued in the Bank's sole discretion and in a form acceptable to the Bank. The Borrowers shall pay to Bank a Letter of Credit fee in an amount equal to 2.25% per annum of the face amount of each Letter of Credit, which fee shall be payable quarterly in arrears on the first day of each calendar quarter, together with such other customary fees, commissions and expenses therefor as shall be required by the Bank. This letter is not a pre-advice for the issuance of a letter of credit and is not irrevocable."

	Sections A(1)(d) and A(1)(e) of the Financial Reporting Covenants section contained in Exhibit A to the Letter Agreement are hereby deleted in their entirety.
	Section B of Exhibit A to the Letter Agreement is hereby amended and restated in its entirety to read in full as follows:

"B. FINANCIAL COVENANTS:

1. The Borrowers shall have at all times unencumbered cash and cash equivalents satisfactory to Bank with a value of at leas $200,000, maintained with financial institutions or brokerage firms in one or more accounts located in the United States of America (the "Liquidity Covenant")."

	Concurrently with the execution and delivery of this Amendment, the Borrowers shall execute and deliver to the Bank a second amended and restated committed line of credit note (the "Restated Note") evidencing the Line of Credit in the principal amount of $200,000. Upon receipt by Bank of the Restated Note, the Existing Note shall be cancelled and returned to the Borrowers; the Line of Credit and all accrued and unpaid interest on the Existing Note shall thereafter be evidenced by the Restated Note; and all references to the "Note" evidencing the Line of Credit in any documents relating thereto shall thereafter be deemed to refer to the Restated Note. Without duplication, the Restated Note shall not constitute a novation and shall in no way extinguish the Borrowers' unconditional obligation to repay all indebtedness, including accrued and unpaid interest, evidenced by the Existing Note.

A-2

 

D.Conditions to Effectiveness of Amendment: The Bank's willingness to agree to the waivers and amendments set forth in this Amendment is subject to the :execution by all parties and delivery to the Bank of the following:

	This Amendment; and
	The Restated Note.

A-3EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

         This employment agreement ("Agreement") is made and entered into this
___ day of November, 2002, by and between SPECIALIZED HEALTH PRODUCTS, INC., a
Utah corporation ("Corporation"), and Larry D. Sheldon ("Employee").

         WHEREAS, Corporation and Employee desire that the term of this
Agreement begin on November 18, 2002 ("Effective Date").

         WHEREAS, Corporation desires to employ Employee as its Vice President
Sales and Marketing, and Employee is willing to accept such employment by
Corporation, on the terms and subject to the conditions set forth in this
Agreement.

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

         Section 1. Duties. During the term of this Agreement, Employee agrees
to be employed by and to serve Corporation on a full time basis as its Vice
President Sales and Marketing, and Corporation agrees to employ and retain
Employee in such capacities. Employee shall also be appointed to the
Corporation's Executive Committee. Employee shall report to the Corporation's
President and Chief Executive Officer and at all times during the term of this
Agreement shall have powers and duties at least commensurate with his position
as Vice President Sales and Marketing.

         Section 2. Term of Employment.

         2.1 Definitions. For the purposes of this Agreement the following terms
shall have the following meanings:

                  2.1.1 "Termination For Cause" shall mean termination by
Corporation of Employee's employment by Corporation by reason of (i) Employee's
willful dishonesty towards, fraud upon, or deliberate injury or attempted injury
to the Company, (ii) Employee's material breach of this Agreement, including
failure to relocate to the Salt Lake City area by November 31, 2004 (iii) the
commission by Employee of an act that under U.S. law that would constitute a
felony and Employee's conviction thereof, or (iv) Employee's failure to honor
his fiduciary duties to the Company.

                  2.1.2 "Termination Other Than For Cause" shall mean
termination by Corporation of Employee's employment by Corporation (other than
in a Termination for Cause) and shall include constructive termination of
Employee's employment by reason of material breach of this Agreement by
Corporation, such constructive termination to be effective upon notice from
Employee to Corporation of such constructive termination.

                  2.1.3 "Voluntary Termination" shall mean termination by
Employee of Employee's employment by Corporation other than (i)Termination Other
Than For Cause, and (ii) termination by reason of Employee's death or disability
as described in Sections 2.5 and 2.6.

         2.2 Term. The employment of Employee by Corporation shall be "at will".

         2.3 Termination For Cause. Termination For Cause may be effected by
Corporation at any time during the term of this Agreement and shall be effected
by written notification to Employee. Upon Termination For Cause, Employee shall
promptly be paid all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan, profit sharing plan and
stock option plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which Employee is a
participant to the full extent of Employee's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but
Employee shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation.

<PAGE>

         2.4 Termination Other Than For Cause. Notwithstanding anything else in
this Agreement, Corporation may effect a Termination Other Than For Cause at any
time upon giving written notice to Employee of such termination. Upon any
Termination Other Than For Cause, Employee shall promptly be paid all accrued
salary, bonus compensation to the extent earned, vested deferred compensation
(other than pension plan, profit sharing plan and stock option plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Corporation in which Employee is a participant to the full
extent of Employee's rights under such plans (other than pension plan, profit
sharing plan and stock option plan benefits which will be paid in accordance
with the applicable plan), accrued vacation pay and any appropriate business
expenses incurred by Employee in connection with his duties hereunder, all to
the date of termination, with the exception of salary and medical benefits which
shall continue for a period of six (6) months, so long as Employee complies with
the provisions of Sections 5 through 8. In the event of a merger, acquisition,
or substantial sale of Corporation's controlling shares, if Employee is not
offered an equivalent position, Employee shall be entitled to severance pay and
medical benefits for a period of six (6) months, so long as Employee complies
with the provisions of Sections 5 through 8. In the event Employee is not
employed at the end of the six (6) month period following termination other than
for cause or failure to be offered an equivalent position after a merger,
acquisition, or substantial sale of Corporation's controlling shares, Employee
shall be entitled to additional severance pay and medical benefits for up to an
additional period of six (6) months until alternate employment or a consulting
engagement is obtained, so long as Employee complies with the provisions of
Sections 5 through 8.

         2.5 Termination by Reason of Disability. If, during the term of this
Agreement, Employee, in the reasonable judgment of the Board of Directors of
Corporation, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than six (6) consecutive months, Corporation
shall have the right to terminate Employee's employment hereunder by written
notification to Employee and payment to Employee of all accrued salary, bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan, profit sharing plan and stock option plan benefits which will be
paid in accordance with the applicable plan), any benefits under any plans of
the Corporation in which Employee is a participant to the full extent of
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by Employee in connection with his duties hereunder,
all to the date of termination.

         2.6 Death. In the event of Employee's death during the term of this
Agreement, Employee's employment shall be deemed to have terminated as of the
last day of the month during which his death occurs and Corporation shall
promptly pay to his estate or such beneficiaries as Employee may from time to
time designate all accrued salary, bonus compensation to the extent earned,
vested deferred compensation (other than pension plan, profit sharing plan and
stock option plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which Employee is a
participant to the full extent of Employee's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but
Employee's estate shall not be paid any other compensation or reimbursement of
any kind, including without limitation, severance compensation.

         2.7 Notice of Termination. Corporation may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to Employee of such termination.

<PAGE>

         Section 3. Salary, Benefits and Bonus Compensation.

         3.1 Base Salary. As payment for the services to be rendered by Employee
as provided in Section 1 and subject to the terms and conditions of Section 2,
Corporation agrees to pay to Employee a "Base Salary" for the twelve (12)
calendar months beginning the Effective Date at the rate of $180,000 per annum
payable in no fewer than 12 equal monthly installments of $15,000. Employee's
Base Salary shall be reviewed annually by the Compensation Committee of the
Board of Directors ("Compensation Committee"), and the Base Salary for each year
(or portion thereof) shall be determined by the Compensation Committee which
shall authorize an increase in Employee's Base Salary for such year in an amount
which, at a minimum, shall be equal to the cumulative cost-of-living as
determined by the Corporation's board of directors.

         3.2 Bonuses. Beginning in the year 2003, Employee shall be eligible to
receive a discretionary bonus for each year (or portion thereof) during the term
of this Agreement and any extensions thereof, with the actual amount of any such
bonus to be determined in the sole discretion of the Board of Directors based
upon its evaluation of Employee's performance during such year.

         3.3 Additional Benefits. During the term of this Agreement, Employee
shall be entitled to the following fringe benefits:

                  3.3.1 Employee Benefits. Employee shall be eligible to
participate in such of Corporation's benefits and deferred compensation plans as
are now generally available or later made generally available to the officers of
the Corporation.

                  3.3.2 Vacation. Employee shall be entitled to four (4) weeks
of paid vacation during each year during the term of this Agreement and any
extensions thereof, prorated for partial years. Vacation time may be accrued.

                  3.3.3 Life Insurance. For the term of this Agreement and any
extensions thereof, Corporation shall at its expense procure and keep in effect
term life insurance on the life of Employee payable to the Employee's designee
in the aggregate amount of twice Employee's base annual salary.

                  3.3.4 Reimbursement for Expenses. During the term of this
Agreement, Corporation shall reimburse Employee for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by
Employee in connection with his duties under this Agreement.

                  3.3.5 Stock Options. Employee shall be granted stock options
to acquire 500,000 shares of the Corporation's common stock over a four-year
period at the greater of market price on the date of grant or one dollar per
share, which stock options shall become vested in four (4) annual installments
commencing on the first anniversary of the grant date, in cumulative fashion,
with stock options vesting on a monthly basis after the initial year, and shall
otherwise be upon the terms and conditions as set forth in such grant of even
date herewith and the Corporation's stock option plan. Notwithstanding the
foregoing, if one or more investors acting in concert, directly or indirectly
acquire more than 50% of the outstanding common equity of the Company within a
three-month period, vesting of all shares shall occur immediately. If Employee
is terminated other than for cause during the first year, Employee's stock
options that would vest on the 12 month anniversary shall be deemed to have
vested in equal monthly installments.

                  3.3.6 Relocation. Corporation will reimburse Employee for
reasonable relocation expenses, which shall include travel and lodging in Salt
Lake City, temporary lodging for Employee's family for up to 3 months, and
household moving expenses. The total relocation expenses for which Employee may
receive reimbursement for shall not exceed $50,000. Employee is required to
relocate to the Salt Lake City area by November 31, 2004.

<PAGE>

                  3.3.7 Apartment/Commuting Expenses. For a period of two years
from the effective date of this Agreement, Corporation shall reimburse Employee
for reasonable and properly documented out-of-pocket expenses incurred by
Employee in connection with commuting from New Jersey to Utah and renting a
furnished one-bedroom apartment in the Salt Lake City area.

         Section 4. Ownership of Work Product. Work Product shall include all
copyrights, patents, trade secrets, or other intellectual property rights
associated with any ideas, concepts, techniques, inventions, processes, or works
of authorship developed or created by Employee during the course of performing
work for SHP, whether or not during normal hours of employment, which relate to
the actual or anticipated business of SHP at the time of such development or
creation, or related to actual or anticipated research and development
(collectively, the "Work Product"). Work product excludes ideas, concepts,
techniques, inventions, processes, or works of authorship developed or created
by Employee (collectively, "New Product Idea") reduced to writing and witnessed
before SHP is in a business related to the New Product Idea and any previous
contracts or licensing arrangements and personal property of Employee at the
time of employment listed on the attached statement, affixed hereto, if any. Any
exceptions must be reviewed and found to be not related to any business that SHP
anticipates or is already engaged and subsequently approved by the Executive
Committee. Work Product shall belong exclusively to SHP. Employee automatically
assigns, at the time of creation of the Work Product, without any requirement of
further consideration, any title, or interest it or they may have in such Work
Product, including any copyrights or other intellectual property rights
pertaining thereto, all such Work Product. Upon request of SHP, Employee shall
take such further actions including execution and delivery of instruments of
conveyance, as may be appropriate to give full and proper effect to such
assignment.

         Section 5. Non-Compete. In recognition and consideration of Employee's
employment, compensation and benefits, the training in and information regarding
SHP's business which SHP will give Employee, Employee's introduction to SHP's
customers, and the carefully guarded methods of doing business which SHP
utilizes and deems crucial to the success of its business, Employee shall not
during the term of this Agreement, and for a period of twelve (12) months
following the termination of Employee's employment with SHP, regardless of the
reason for termination, either directly or indirectly, engage in the business of
developing, marketing, distributing, licensing, and/or selling products or
services having any function similar to, competitive with, or substitutable for,
SHP's products or services which are in the research and/or development stage
and/or for which development has been completed (collectively and individually,
the "Products"), anywhere in the United States, except with SHP's consent (which
may be withheld in SHP's sole discretion). In addition, Employee shall not
engage in any such activity, directly or indirectly, on Employee's own behalf or
in the service of or on behalf of others. Employee acknowledges and agrees that
the current market for the Products extends throughout the entire United States,
and it is therefore reasonable to prohibit Employee from competing with SHP
anywhere in the United States.

         Section 6. Confidentiality. Employee will hold in a fiduciary capacity
for the benefit of Corporation, its affiliates, subsidiaries, related entities,
and designees, and shall not disclose to any person or entity other than
Corporation or persons or entities designated by Corporation, any secret,
confidential or proprietary information, knowledge, data and/or information,
patents, trade secrets, customer identities, marketing and other business
methods, techniques, processes, practices, procedures, plans and strategies
regarding Corporation, its subsidiaries and affiliated corporations or business

<PAGE>

enterprises, and their customers obtained by Employee in the course of
Employee's employment with Corporation, and any other secret, confidential or
proprietary information pertaining to Corporation, its parent, subsidiaries and
affiliated corporations or business enterprises, and their customers, during the
term of this Agreement and five (5) years after Employee's termination of
employment with Corporation, unless Corporation in writing consents to the
contrary. Notwithstanding the foregoing, Employee shall have no confidentiality
obligation with respect to information that: (a) was legally in the public
domain prior to the time of disclosure to the Employee, (b) is now or
subsequently becomes generally available to the public through no fault of
Employee; or (c) is required by law, regulation, rule, act, or order of any
governmental authority or agency to be disclosed by the Employee.

         Section 7. Return of Materials. Immediately upon notice of termination
of employment, Employee shall give to Corporation the originals and all copies
of all documents, correspondence, memoranda, records, notes, manuals, materials,
customer and prospective customer lists and information, including without
limitation computer data, and other things relating to Corporation's business,
including, but not limited to, secret, confidential or proprietary information,
in Employee's possession, custody or control, unless otherwise agreed to by
Corporation.

         Section 8. Non-Solicitation. Employee shall not during the term of this
Agreement, and for a period of twelve (12) months following termination of
employment with Corporation, employ, solicit for employment, or advise or
recommend to any other person that they employ or solicit for employment or
retention as a consultant, any person who is, or was at any time within one (1)
year prior to the Employee's date of termination of employment with Corporation,
an employee of, or exclusive consultant to, Corporation.

         Section 9. Avoidance of Conflict of Interest. While employed by
Corporation and for a period of twelve (12) months following termination of
employment with Corporation, Employee shall not engage in any other business
activity that conflicts with Employee's duties to Corporation. Under no
circumstances may Employee work for any competitor or have any financial
interest in any competitor of Corporation; provided, however, that this
Agreement does not prohibit investment of a reasonable part of Employee's assets
in the stock or securities of any competitor whose stock or securities are
traded on a national exchange.

         Section 10. Withholdings. All compensation and benefits to Employee
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.

         Section 11. Indemnification. In addition to any rights to
indemnification to which Employee is entitled to under the Corporation's
Articles of Incorporation and Bylaws, Corporation shall indemnify Employee at
all times during and after the term of this Agreement to the maximum extent
permitted under Utah Revised Business Corporation Act or any successor provision
thereof and any other applicable state law, and shall pay Employee's expenses in
defending any civil or criminal action, suit, or proceeding in advance of the
final disposition of such action, suit or proceeding, to the maximum extent
permitted under such applicable state laws.

         Section 12. Notices. Any notices permitted or required under this
Agreement shall be deemed given upon the date of personal delivery or
forty-eight (48) hours after deposit in the United States mail, postage fully
prepaid, return receipt requested, addressed to the Corporation at:

         585 West 500 South
         Bountiful, Utah 84010

         addressed to the Employee at:

         7 Twin Oaks Court
         Sewell, N.J. 08080

or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section.

<PAGE>

         Section 13. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah.

         Section 14. Titles and Captions. All section titles or captions
contained in this Agreement are for convenience only and shall not be deemed
part of the context nor effect the interpretation of this Agreement.

         Section 15. Entire Agreement. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement.

         Section 16. Agreement Binding. This Agreement shall be binding upon the
heirs, executors, administrators, successors and assigns of the parties hereto.

         Section 17. Attorney Fees. In the event an arbitration, suit or action
is brought by any party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall be entitled
to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.

         Section 18. Computation of Time. In computing any period of time
pursuant to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period shall begin to
run on the next day which is not a Saturday, Sunday, or legal holiday, in which
event the period shall run until the end of the next day thereafter which is not
a Saturday, Sunday, or legal holiday.

         Section 19. Pronouns and Plurals. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular,
or plural as the identity of the person or persons may require.

         Section 20. Presumption. This Agreement or any section thereof shall
not be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.

         Section 21. Further Action. The parties hereto shall execute and
deliver all documents, provide all information and take or forbear from all such
action as may be necessary or appropriate to achieve the purposes of the
Agreement.

         Section 22. Parties in Interest. Nothing herein shall be construed to
be to the benefit of any third party, nor is it intended that any provision
shall be for the benefit of any third party.

         Section 23. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.

<PAGE>

         IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed.

         /s/ Jeffrey M. Soinski                             /s/ Larry D. Sheldon
         -------------------------------------              --------------------
         Jeffrey M. Soinski, President and CEO              Larry D. Sheldon

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