EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is made and entered into as
of November 2, 2005 and shall be effective as of August 8, 2005
(the “Effective Date”) by and between
SurgiCount Medical, Inc. (the
“Company”) , a California corporation
and wholly owned subsidiary of Patient Safety Technologies,
Inc. (“Parent”), a Delaware corporation, both
with offices located at 100 Wilshire Boulevard, Suite 1750, Santa
Monica, California, 90401, and James Schafer, an
individual with an address 35864 Carlton Road, Wildomar,
California, 92595 (“Individual”). This Agreement
replaces and supercedes that certain Employment Agreement entered
into as of July 22, 2005 by and between Parent and Individual, in
its entirety.
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
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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”).
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5.
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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
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)
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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 of Parent, to be
vested (i) on the Effective Date for first annual payment (August
8, 2005) and (ii) on the anniversary of the
Effective
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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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Stock and Stock
Options. Individual
shall also be eligible to receive shares of Parent’s
authorized stock and options to purchase shares of Parent’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.
11. Non-Competition.
Individual acknowledges that he has gained, and
will gain extensive knowledge in the business conducted by the
Company and ha
