EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of July
27, 2006 and shall be effective as of August 8, 2006 (the "Effective Date") by
and between Patient Safety Technologies, Inc., a Delaware corporation, with an
office located at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx
00000 (the "Company") and Xxxxxx "Xxxx" Xxxx, III, an individual, with an
address at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000
("Individual").
WHEREAS, the Company is in the business of acting as a holding company for
patient safety and certain other related and non-related businesses; and
WHEREAS, Individual has had experience in the operations of holding companies in
the types of businesses in which the Company is engaged;
WHEREAS, the Company desires to retain the services of Individual; and
WHEREAS, Individual is willing to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. Employment. Individual is hereby employed and engaged to serve the Company as
its Chief Executive Officer, or such additional titles as the Company shall
specify from time to time, and Individual does hereby accept, and Individual
hereby agrees to such engagement and employment but only on an interim basis
until a new Chief Executive Officer can be appointed.
2. Duties. Individual shall be responsible for the overall development,
operations and corporate governance of the Company. In addition, Individual's
duties shall be such duties and responsibilities as the Company shall specify
from time to time, and shall entail those duties customarily performed by the
Chief Executive Officer of a company with a sales volume and number of employees
commensurate with those of the Company. Individual shall have such authority,
discretion, power and responsibility, and shall be entitled to office,
secretarial and other facilities and conditions of employment, as are customary
or appropriate to his position. Individual shall diligently and faithfully
execute and perform such duties and responsibilities, subject to the general
supervision and control of the Company's Board of Directors. Individual shall be
responsible and report only to the Company's Board of Directors. The Company's
Board of Directors, in its sole and absolute discretion, shall determine
Individual's duties and responsibilities and may assign or reassign Individual
to such duties and responsibilities as it deems in the Company's best interest.
Individual shall devote his full-time attention, energy, and skill during normal
business hours to the business and affairs of the Company and shall not, during
the Employment Term, as that term is defined below, be actively engaged in any
other business activity, except with the consent of the Company's Board of
Directors.
Nothing in this Agreement shall preclude Individual from devoting reasonable
periods required for:
(a) serving as a director or member of a committee of any organization
or corporation involving no conflict of interest with the interests
of the Company;
(b) serving as a consultant in his area of expertise (in areas other
than in connection with the business of the Company), to government,
industrial, and academic panels where it does not conflict with the
interests of the Company; and
(c) managing his personal investments or engaging in any other
non-competing business; provided that such activities do not
materially interfere with the regular performance of his duties and
responsibilities under this Agreement as determined by the Company.
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3. Best Efforts of Individual. During his employment hereunder, Individual
shall, subject to the direction and supervision of the Company's Board of
Directors, devote his full business time, best efforts, business judgment,
skill, and knowledge to the advancement of the Company's interests and to the
discharge of his duties and responsibilities hereunder. Notwithstanding the
foregoing, nothing herein shall be construed as preventing Individual from
investing his assets in any business.
4. Employment Term. Unless terminated pursuant to Section 12 of this Agreement,
the term of this Agreement shall commence as of the Effective Date of this
Agreement and shall continue for a term of one (1) year (the "Initial Term"),
and shall be automatically renewed for successive one (1) year terms (the
"Renewal Term") unless a party hereto delivers to the other party written notice
of such party's intention not to renew at least thirty (30) days prior to the
end of the Initial Term or the applicable Renewal Term, as the case may be. (The
terms "Initial Term" and "Renewal Term" will collectively hereinafter be
referred to as the "Employment Term").
5. Compensation of Individual.
(a) Base Compensation. As compensation for the services provided by Individual
under this Agreement, the Company shall pay Individual an annual salary of
One Dollar ($1.00) during the Employment Term, renegotiable prior to the
commencement any Renewal Term. Upon each subsequent one (1) year renewal
of Individual's employment in accordance with Section 4, the Company shall
increase Individual's annual salary by no less than ten percent (10%). The
compensation of Individual under this Section shall be paid in accordance
with the Company's usual payroll procedures.
(b) Bonus. In addition to the above base compensation, Individual shall be
eligible to receive an annual bonus determined by the Board of Directors
based on the financial performance of the Company. Any bonus shall be
payable in stock and/or cash.
(c) Stock and Stock Options. Individual shall also receive shares of the
Company's authorized stock and options to purchase shares of the Company's
authorized stock from time to time as determined by the Board of
Directors. For the Initial Term, under that certain Agreement Regarding
Severance or Separation dated May 24, 2006 between Individual and the
Company (the "Severance Agreement"), individual shall receive, pursuant to
an agreement to convert to restricted shares of common stock the cash
compensation that was otherwise due under the Severance Agreement, the
number of shares at $2.74 per share (the closing price on June 27, 2006)
that represent the full amount of his compensation due, which is $180,000,
less shares for the amount of that $180,000 already received, which is
$40,000. Individual shall therefore receive 51,095 shares of restricted
common stock of the Company in lieu of the cash compensation otherwise due
under the Severance Agreement.
6. Benefits. Individual shall also be entitled to participate in any and all
Company benefit plans, from time to time, in effect for employees of the
Company. Such participation shall be subject to the terms of the applicable plan
documents and generally applicable Company policies.
7. Vacation, Sick Leave and Holidays. Individual shall be entitled to three (3)
weeks of paid vacation, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. In addition,
Individual shall be entitled to such sick leave and holidays at full pay in
accordance with the Company's policies established and in effect from time to
time.
8. Business Expenses. The Company shall promptly reimburse Individual for all
reasonable out-of-pocket business expenses incurred in performing Individual's
duties and responsibilities hereunder in accordance with the Company's policies,
provided Individual promptly furnishes to the Company adequate records of each
such business expense.
9. Location of Individual's Activities. Individual's principal place of business
in the performance of his duties and obligations under this Agreement shall be
at a place to be determined by the Board of Directors, initially at the
Company's offices at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx.
Notwithstanding the preceding sentence, Individual will engage in such travel
and spend such time in other places as may be necessary or appropriate in
furtherance of his duties hereunder.
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10. Confidentiality. Individual recognizes that the Company has and will have
business affairs, products, future plans, trade secrets, customer lists, and
other vital information (collectively "Confidential Information") that are
valuable assets of the Company. Individual agrees that he shall not at any time
or in any manner, either directly or indirectly, divulge, disclose, or
communicate in any manner any Confidential Information to any third party
without the prior written consent of the Company's Board of Directors.
Individual will protect the Confidential Information and treat it as strictly
confidential.
11. Non-Solicitation. Individual acknowledges that he has gained, and will gain
extensive knowledge in the business conducted by the Company and has had, and
will have, extensive contacts with customers of the Company. Accordingly,
Individual agrees that during his employment with the Company and for a period
of one (1) year immediately following termination (voluntary or otherwise),
Individual shall not directly or indirectly solicit clients or customers of the
Company, to the extent that the existence of such clients or customers
constitute "Confidential Information" as defined in Section 10 above. In
addition, individual agrees that for a period of one (1) year immediately
following termination (voluntary or otherwise) of Individual's employment with
the Company, he shall not solicit any Company employee to leave the Company's
employ or any Company consultant to sever the consultant's relationship with the
Company.
12. Termination. Notwithstanding any other provisions hereof to the contrary,
Individual's employment hereunder shall terminate under the following
circumstances:
(a) Voluntary Termination by Individual. Individual shall have the right to
voluntarily terminate this Agreement and his employment hereunder at any
time during the Employment Term, subject to 30 days' prior written notice.
(b) Voluntary Termination by the Company. The Company shall have the right to
voluntarily terminate this Agreement and Individual's employment hereunder
at any time during the Employment Term, subject to 30 days' prior written
notice.
(c) Termination for Cause. The Company shall have the right to terminate this
Agreement and Individual's employment hereunder at any time for cause. As
used in this Agreement, "cause" shall mean refusal by Individual to
implement or adhere to lawful policies or directives of the Company's
Board of Directors, breach of this Agreement, Individual's conviction of a
felony, other conduct of a criminal nature that may have a material
adverse impact on the Company's reputation, breach of fiduciary duty or
the criminal misappropriation by Individual of funds from or resources of
the Company. Cause shall not be deemed to exist unless the Company shall
have first given Individual a written notice thereof specifying in
reasonable detail the facts and circumstances alleged to constitute
"cause" and thirty (30) days after such notice such conduct has, or such
circumstances have, as the case may be, not entirely ceased and not been
entirely remedied.
(d) Termination Upon Death or for Disability. This Agreement and Individual's
employment hereunder, and all amounts and benefits due Individual
hereunder, shall automatically terminate upon Individual's death or upon
written notice to Individual and certification of Individual's disability
by a qualified physician or a panel of qualified physicians if Individual
becomes disabled beyond a period of twelve (12) months and is unable to
perform the duties contained in this Agreement.
(e) Effect of Termination. In the event that this Agreement and Individual's
employment is voluntarily terminated by Individual pursuant to Section
12(a), or in the event the Company voluntarily terminates this Agreement
pursuant to Section 12(b) or for cause pursuant to Section 12(c), all
obligations of the Company and all duties, responsibilities and
obligations of Individual under this Agreement shall cease. Upon such
termination, the Company shall (i) pay Individual a cash lump sum equal to
(x) all accrued base salary through the date of termination plus all
accrued vacation pay and bonuses, if any, plus (y) as severance
compensation, an amount equal to the greater of (A) twelve (12) months of
Individual's base salary (at the highest rate in effect during the
Employment Term of this Agreement), or (B) Individual's then base salary
for the remaining Employment Term of this Agreement. In the event of a
merger, consolidation, sale, or change of control, the Company's rights
hereunder shall be assigned to the surviving or resulting company, which
company shall then be obligated to honor this Agreement with Individual.
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13. Resignation as Officer. In the event that Individual's employment with the
Company is terminated for any reason whatsoever, Individual agrees to
immediately resign as an Officer and/or Director of the Company, if applicable,
and any related entities. For the purposes of this Section 13, the term the
"Company" shall be deemed to include subsidiaries, parents, and affiliates of
the Company.
14. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of California without
giving effect to any applicable conflicts of law provisions.
15. Business Opportunities. During the Employment Term Individual agrees to
bring to the attention of the Company's Board of Directors all written business
proposals that come to Individual's attention and all business or investment
opportunities of whatever nature that are created or devised by Individual and
that relate to areas in which the Company conducts business and might reasonably
be expected to be of interest to the Company or any of its subsidiaries.
16. Employee's Representations and Warranties. Individual hereby represents and
warrants that he is not under any contractual obligation to any other company,
entity or individual that would prohibit or impede Individual from performing
his duties and responsibilities under this Agreement and that he is free to
enter into and perform the duties and responsibilities required by this
Agreement. Individual hereby agrees to indemnify and hold the Company and its
officers, directors, employees, shareholders and agents harmless in connection
with the representations and warranties made by Individual in this Section 16.
17. Notices. All demands, notices, and other communications to be given
hereunder, if any, shall be in writing and shall be sufficient for all purposes
if personally delivered, sent by facsimile or sent by United States mail to the
address below or such other address or addresses as such party may hereafter
designate in writing to the other party as herein provided.
Company: Individual:
Patient Safety Technologies, Inc. Xxxxxx "Xxxx" Xxxx, III
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
18. Entire Agreement. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement,
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties. This Agreement may be modified or amended, if
the amendment is made in writing and is signed by both parties. This Agreement
is for the unique personal services of Individual and is not assignable or
delegable, in whole or in part, by Individual. This Agreement may be assigned or
delegated, in whole or in part, by the Company and, in such case, shall be
assumed by and become binding upon the person, firm, company, corporation or
business organization or entity to which this Agreement is assigned. The
headings contained in this Agreement are for reference only and shall not in any
way affect the meaning or interpretation of this Agreement. If any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, the
remaining provisions shall continue to be valid and enforceable. The failure of
either party to enforce any provision of this Agreement shall not be construed
as a waiver or limitation of that party's right to subsequently enforce and
compel strict compliance with every provision of this Agreement. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument
and, in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
COMPANY: INDIVIDUAL:
Patient Safety Technologies, Inc.
By: ___________________________ _________________________
Name: Xxxxx Xxxxxxxxxxx Xxxxxx "Xxxx" Xxxx, III
Title: President
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