Employment Agreement
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of July 22,
2005 and shall be effective as of August 8, 2005 (the “Effective Date”) by and
between Patient
Safety Technologies, Inc., a
Delaware corporation, with an office located at 000 Xxxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxx Xxxxxx, Xxxxxxxxxx, 00000 (the “Company”) and Xxxxx
Xxxxxxx, an
individual with an address 0000 Xxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxxx, 00000
(“Individual”).
WHEREAS,
the Company is in the business of patient safety products and content; and
WHEREAS,
Individual has had experience in the operations of businesses doing purchasing,
materials and supply chain management; and
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 the Chief
Operating Officer of the Company, 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.
2.
Duties.
Individual shall be responsible for the overall operations 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 Operating 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,
as
are customary or appropriate to this position. Individual shall diligently
and
faithfully execute and perform such duties and responsibilities, subject to
the
general supervision and control of the Company’s Chief Executive Officer.
Individual shall be responsible and report only to the Company’s Chief Executive
Officer. The Company’s Chief Executive Officer, 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
prior
written 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 Chief Executive Officer, 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 twenty-four (24) months (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 Hundred Thousand
Dollars ($100,000) during the Employment Term. The compensation of
Individual under this Section shall be paid in accordance with the
Company's usual payroll procedures.
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| (b) |
Bonus.
In
addition to the above base compensation, Individual shall be eligible
to
receive an annual bonus determined by the Chief Executive Officer and
detailed herein: Individual will be granted Fifty Thousand Dollars
($50,000) annually in restricted stock, to be vested (i) on the Effective
Date for first annual payment (August 8, 2005) and (ii) on the anniversary
of the Effective Date of the second year (August 8, 2006) Should
employment terminate under Section 12(b) prior to the first anniversary
of
the Effective Date, Individual will still be entitled to receive bonus
for
the second year.
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| (c) |
Stock
and Stock Options.
Individual shall also be eligible to 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 Chief Executive
Officer and detailed herein: Individual will be granted One Hundred
Twenty-Five Thousand (125,000) stock options, vesting quarterly over
four
(4) years at a strike price of Five Dollars
($5.00).
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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. Individual shall also receive an automobile
allowance of Six Thousand Dollars ($6,000) per year (given that Individual
adheres to Company policy on auto allowance) and use of a Company cellular
telephone, paid for by Company.
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. Individual shall receive a Relocation/Moving Expense of Eight
Thousand ($8,000).
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 Chief Executive
Officer. 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.
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11.
Non-Competition.
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
he
shall not compete directly or indirectly with the Company, either during the
Employment Term or during the one (1) year period immediately after the
termination of Individual’s employment under Section 12 and shall not, during
such period, make public statements in derogation of the Company. For the
purposes of this Section 11, competing directly or indirectly with the Company
shall mean engaging, directly or indirectly, as principle owner, officer,
partner, consultant, advisor, or otherwise, either alone or in association
with
others, in the operation of any entity engaged in a business similar to that
of
the Company’s.
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.
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| (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 after the Employment Term.
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| (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.
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| (d) |
Termination
Upon Death or for Disability.
This Agreement and Individual’s employment 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 contain
in this Agreement.
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| (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, except for those obligations set forth in Sections
10, 11 and 17 hereof. Upon such termination pursuant to Section 12(a),
all
unvested stock options and restricted stock will be forfeited. Upon
such
termination pursuant to Section 12(b), 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 twelve (12)
months
of Individual’s base salary, however if Individual is within the final
twelve (12) months of the remaining Employment Term of this Agreement,
then Individual will receive whatever base salary is remaining on the
Employment Term. 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 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.
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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
Chief Executive Officer and 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.
Indemnification.
| (a) |
The
Company agrees that if Individual is made a party, or is threatened
to be
made a party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by reason of the
fact
that he is or was a director, officer or employee of the Company or
is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee
benefit plans, whether or not the basis of such Proceeding is Individual’s
alleged action in an official capacity while serving as a director,
officer, member, employee or agent, Individual shall be indemnified
and
held harmless by the Company to the fullest extent permitted or authorized
by the Company's certificate of incorporation or bylaws or, if greater,
by
the laws of the State of California, against all cost, expense, liability
and loss (including, without limitation, attorney's fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid
in
settlement) reasonably incurred or suffered by Individual in connection
therewith, and such indemnification shall continue as to Individual
even
if he has ceased to be a director, member, employee or agent of the
Company or other entity and shall inure to the benefit of Individual’s
heirs, executors and administrators. The Company shall advance to
Individual to the extent permitted by law all reasonable costs and
expenses incurred by him in connection with a Proceeding within 20
days
after receipt by the Company of a written request, with appropriate
documentation, for such advance. Such request shall include an undertaking
by Individual to repay the amount of such advance if it shall ultimately
be determined that he is not entitled to be indemnified against such
costs
and expenses.
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| (b) |
Neither
the failure of the Company (including its board of directors, independent
legal counsel or stockholders) to have made a determination prior to
the
commencement of any proceeding concerning payment of amounts claimed
by
Individual that indemnification of Individual is proper because he
has met
the applicable standard of conduct, nor a determination by the Company
(including its board of directors, independent legal counsel or
stockholders) that Individual has not met such applicable standard
of
conduct, shall create a presumption that Individual has not met the
applicable standard of conduct.
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| (c) |
The
Company agrees to continue and maintain directors' and officers' liability
insurance policy covering Individual to the extent the Company provides
such coverage for its other executive
officers.
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| (d) |
Promptly
after receipt by Individual of notice of any claim or the commencement
of
any action or proceeding with respect to which Individual is entitled
to
indemnity hereunder, Individual shall notify the Company in writing
of
such claim or the commencement of such action or proceeding, and the
Company shall (i) assume the defense of such action or proceeding,
(ii)
employ counsel reasonably satisfactory to Individual, and (iii) pay
the
reasonable fees and expenses of such counsel. Notwithstanding the
preceding sentence, Individual shall be entitled to employ counsel
separate from counsel for the Company and from any other party in such
action if Individual reasonably determines that a conflict of interest
exists which makes representation by counsel chosen by the Company
not
advisable. In such event, the reasonable fees and disbursements of
such
separate counsel for Individual shall be paid by the Company to the
extent
permitted by law.
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| (e) |
After
the termination of this Agreement and upon the request of Individual,
the
Company agrees to reimburse Individual for all reasonable travel, legal
and other out-of-pocket expenses related to assisting the Company to
prepare for or defend against any action, suit, proceeding or claim
brought or threatened to be brought against the Company or to prepare
for
or institute any action, suit, proceeding or claim to be brought or
threatened to be brought against a third party arising out of or based
upon the transactions contemplated herein and in providing evidence,
producing documents or otherwise participating in any such action,
suit,
proceeding or claim. In the event Individual is required to appear
after
termination of this Agreement at a judicial or regulatory hearing in
connection with Individual's employment hereunder, or Individual's
role in
connection therewith, the Company agrees to pay Individual a sum, to
be
mutually agreed upon by Individual and the Company, per diem for each
day
of his appearance and each day of preparation
therefore.
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18.
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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Xxxxx
Xxxxxxx
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000
Xxxxxxxx Xxxx., Xxxxx 0000
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0000
Xxxxxxxxx Xxxx
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Xxxxx
Xxxxxx, XX 00000
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Xxxxx
Xxxxx, XX 00000
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Fax:
(000) 000-0000
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Phone:
(000) 000-0000
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Phone:
(000) 000-0000
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Cell:
(000) 000-0000
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Xxxxxxx000@xxx.xxx
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19.
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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/s/
Xxxxxx Xxxx
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxxx
X. Xxxx, III
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Xxxxx
Xxxxxxx
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Title:
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Chairman
and CEO
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