Employment Agreement
EXHIBIT
10.1
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:
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(a)
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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;
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(b)
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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
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(c)
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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.
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(a)
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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.
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(b)
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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.
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(c)
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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.
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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.
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:
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(a)
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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.
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(b)
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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.
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(c)
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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.
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(d)
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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.
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(e)
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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,
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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.
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.
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Company:
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Individual:
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Xxxxxx
“Xxxx” Xxxx, III
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0000
Xxxxxxx Xxxx Xxxx, Xxxxx 000
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0000
Xxxxxxx Xxxx Xxxx, Xxxxx 000
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Xxx
Xxxxxxx, XX 00000
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Xxx
Xxxxxxx, XX 00000
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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.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
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COMPANY:
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INDIVIDUAL:
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By:___________________________
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_________________________
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Name:
Xxxxx Xxxxxxxxxxx
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Xxxxxx
“Xxxx” Xxxx, III
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Title:
President
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