Employment Agreement

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of July
15, 2005 and shall be effective as of July 18, 2005 (the “Effective Date”) by
and between Patient Safety Technologies, Inc., a Delaware corporation, with an
office located at 100 Wilshire Boulevard, Suite 1500, Santa Monica, California,
90401 (the “Company”) and Richard Bertran, an individual with an address 27631
Sanderling Way, Temecula, California, 92591 (“Individual”).

WHEREAS, the Company is in the business of patient safety products and content;
and

WHEREAS, Individual has had experience in the sales and marketing of businesses
in the surgical sponge and hospital supply sales; 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 Executive Vice-President of Sales and Marketing 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 sales and marketing
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 Executive Vice-President of
Sales and Marketing 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 Chief Executive Officer and board of
directors. Individual shall be responsible and report only to the Company’s
Chief Executive Officer. The Company’s Chief Executive Officer and 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 prior written consent of the Company’s Chief
Executive Officer and 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 Chief Executive
Officer and 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 thirty-six (36) 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 at least thirty (30) days.

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 Two Hundred
Thousand Dollars ($200,000) ("Base Compensation").

 
(b)
Stock and Stock Options. Individual shall also be eligible to receive shares of
the Company’s authorized stock options to purchase shares of the Company’s
authorized stock from time to time as determined by the board of directors and
detailed herein: Individual will receive Two Hundred Thousand (200,000) stock
options, vesting equally per year over three (3) years (i.e., 66,667 shares on
July 18, 2006; 66,667 shares on July 18, 2007; and 66,666 on July 18, 2008) at a
strike price of $5.00. Further, Individual will receive Ten Thousand (10,000)
shares in a restricted stock grant as a signing bonus, payable within thirty
(30) days of the Effective Date.

 
(c)
Milestones Options. In addition to the Base Compensation, Individual shall be
eligible to receive a milestone bonus determined by the Chief Executive Officer
and board of directors, based on the performance of the Company, as detailed
herein:

 
(i)
Individual will be granted Fifty Thousand (50,000) stock options when Individual
reaches Five Million Dollars ($5,000,000) in sales for SurgiCount Medical, Inc,
vested at grant date.

 
(ii)
Individual will be granted Fifty Thousand (50,000) stock options when Individual
obtains a certain mutually agreed milestone as set by Chief Executive Officer,
Individual and Health West Marketing, together, vested at grant date.

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 $10,000 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 two (2)
weeks of paid vacation annually, 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 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.

 
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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 use his best efforts to 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 has had, and
will have, extensive contacts with customers and vendors of the Company.
Accordingly, Individual agrees that he shall not compete directly or indirectly
with the Company, set forth specifically as surgical dressings that are machine
identified, during the Employment Term 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, investor, 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. Individual further agrees that following termination of his
employment with the Company, he shall not use the Company's Confidential
Information, contacts, and vendors to compete, directly or indirectly, with the
Company or against the interests of 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.

 
(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.

 
(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 (i) refusal by Individual to implement or
adhere to a written directive of the Company’s Chief Executive Officer or board
of directors other than a directive that would result in illegal or unethical
conduct; (ii) material breach of a material term or representation of this
Agreement, (iii) Individual’s conviction of a felony, (iv) dishonesty, gross
negligence, or other act by Individual materially detrimental to the Company or
its good will, or materially damaging to its relationships with its customers,
suppliers, or employees; (v)  breach of fiduciary duty, or (vi) 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 ten (10) 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, 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.

 
(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 terminates this Agreement for cause pursuant to Section
12(c), all obligations of the Company and all duties, responsibilities and
obligations of Individual under this Agreement, except for those obligations set
forth in Sections 8, 10, 11 and 17 hereof, shall cease and all unvested stock
options and/or unearned milestone bonuses, will be forfeited.

 
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Upon termination pursuant to Section 12(b), where the Company voluntarily
terminates this Agreement, the Company shall (i) pay Individual as severance
compensation a cash sum equal to fifteen (15) months' of the Base Compensation,
plus award the milestone option grants under Section 5(c) hereof, to the extent
such milestones are met within the Employment Term, and (ii) automatically vest
all unvested stock options granted pursuant to Section 5(b) had the Agreement
not been terminated. However, if termination pursuant to Section 12(b) occurs
within the final fifteen (15) months of the Employment Term, then Individual
will receive whatever Base Compensation as would have been payable for the
remaining Employment Term of this Agreement, or through July 18, 2008.

In addition, if Individual voluntarily terminates, all unvested stock options
and/or unearned milestone bonuses, will be forfeited. In the event of a sale of
the Company, to the extent not already vested, all 200,000 of Individual’s stock
options shall automatically vest. 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.

The obligations set forth in Sections 8, 10, 11, 12 and 17 of this Agreement are
intended to survive the termination of Individual's employment with Company.

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. 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.

 
(c)
The Company agrees to continue and maintain a directors' and officers' liability
insurance policy covering Individual to the extent the Company provides such
coverage for its other executive officers.

 
(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.

 
(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 therefor.

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.
 

Company:
Patient Safety Technologies, Inc.
100 Wilshire Blvd., Suite 1500
Santa Monica, CA 90401
Fax: (310) 752-1486
Phone: (310) 752-1416
  Individual:
Richard Bertran
27631 Sanderling Way
Temecula, CA 92591
Phone: (951) 699-7255
Cell: (951) 217-8331

 
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.

 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
 

Company: Patient Safety Technologies, Inc.     INDIVIDUAL:                    
By: /s/ Milton Ault     /s/ Richard Bertran
 
Name:

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Milton C. Ault, III    

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Richard Bertran Title: Chairman and CEO      

 
 
 
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