Patient Safety Technologies, Inc
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v020198_ex10-1.txt
<TEXT>

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of June
13, 2005 and shall be effective as of July 5, 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 William B. Horne, an individual with an address 25946
S.E. 22nd Place, Sammamish, Washington, 98075 ("Individual").

WHEREAS, the parent Company is in the business of patient safety products and
content and the subsidiaries are in the business of investment management, real
estate, media and internet assets; and

WHEREAS, Individual has experience in the operations of businesses providing
accounting and financial services with an expertise in private equity; 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 Financial Officer of the Company and its subsidiaries, 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 finances and
accounting of the Company and its subsidiaries. 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
Financial 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 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 (following B/D reg) 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 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 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
      One Hundred Fifty Thousand Dollars ($150,000).

(b)   Stock and Stock Options. Individual shall also be eligible to receive
      shares of the Company's authorized restricted stock or stock options to
      purchase shares of the Company's authorized stock from time to time as
      determined by the board of directors, but specifically detailed hereto:
      Individual will receive One Hundred Thousand Dollars ($100,000) in
      restricted stock per each year of the Contract, vesting quarterly, for the
      length of the two (2) year term, at a strike price of the closing price of
      PST stock the day of execution. Further, Individual's first year of
      restricted stock shall be reduced by the value of unvested restricted
      stock that Individual has received.

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. Company shall pay for Individual's travel to main office
until such time as Individual relocates to Southern California.

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 and Individual.
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. Individual shall have a monthly office
expense of Five Hundred Dollars ($500) to use towards office rent, supplies or
any other related cost.

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 patient safety 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 in the patient safety area with the Company, either during the
Employment Term or during the two (2) 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, 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.

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 refusal by
            Individual to implement or adhere to lawful policies or directives
            of the Company's Chief Executive Officer or 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 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 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 pursuant to Section
            12(b) whereas the Company voluntarily terminates this Agreement, the
            Company shall (i) pay Individual a cash sum equal to (i) all accrued
            base salary through the date of termination plus all accrued
            vacation pay and cash bonuses, if any, plus (ii) as severance
            compensation, an amount equal to Individual's then base salary for
            the remaining Employment Term of this Agreement, but only through
            July 5, 2007. In addition, if Individual voluntarily terminates, all
            unvested restricted stock and stock options will be forfeited. In
            the event that the Company voluntarily terminates, Individual shall
            not receive any further restricted stock. 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.

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 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


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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.

      (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


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            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
            therefore.

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.  Individual:  William B. Horne
         100 Wilshire Blvd., Suite 1500                  25946 S.E. 22nd Place
         Santa Monica, CA 90401                          Sammamish, WA 98075
         Fax: (310) 752-1486                             Fax: (206) 262-0843
         Phone: (310) 752-1416                           Phone: (206) 769-6000

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.

                  [Remainder of page intentionally left blank.]


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the 13th day
June, 2005.


Company:   Patient Safety Technologies, Inc.    INDIVIDUAL:


By:         /s/ Milton Ault                     /s/ William B. Horne
           --------------------------------     --------------------------
Name:      Milton C. Ault, III                  William B. Horne
Title:     Chairman and CEO


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