AGREEMENT

THIS AGREEMENT , with Effective Date of January 5th, 2009, is made by and amongst Patient Safety Technologies, Inc., a Delaware Corporation, (the “Company”), having its principal offices at 43460 Ridge Park Drive, Suite 140, Temecula, CA 92590, and Brian Stewart (“Executive”).

WHEREAS, Executive and the Company desire to set forth the terms and conditions of Executive’s employment with the Company by entering into this Agreement regarding each parties’ respective rights and obligations as set forth herein; and

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1.            Definitions .  For purposes of this Agreement, the following terms shall have the meanings set forth below:

(a)           “ Annual Base Salary ” shall mean Executive’s rate of regular base annual compensation prior to any reduction under (i) a salary reduction agreement pursuant to Section 401(k) or Section 125 of the Code or (ii) any plan or arrangement deferring any base salary.

(b)           “ Board ” shall mean the Board of Directors of the Company.  The Board may delegate its authority to a  committee of the Board (the “Committee”), including without limitation a remuneration committee, which shall consist of outside directors as defined under Section 162(m) of the Code, and related Treasury regulations, and “non-employee directors” as defined under Rule-16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”).  Unless otherwise specified in the Agreement, the term “Board” shall include any Committee (or sub-committee) to which the Board’s authority has been delegated to.

(c)           “ Cause ” any of the following (i) conviction of Executive by a court of competent jurisdiction of any felony or a crime involving moral turpitude; (ii) Executive’s knowing failure or refusal to follow reasonable instructions of the Board or reasonable policies, standards and regulations of the Company or its affiliates; (iii) Executive’s failure or refusal to faithfully and diligently perform the usual, customary duties of his employment with the Company or its affiliates; (iv) fraudulent conduct by Executive; (v) conduct by Executive that materially discredits the Company or any affiliate or is materially detrimental to the reputation, character and standing of the Company or any affiliate, or (vi) a material breach of the terms of this Agreement, including any of the provisions in Section 5 of this Agreement.

(d)           “ Change in Control ” shall mean a determination (which may be made effective as of a particular date specified by the Board) by the Board, made by a majority vote that a change in control has occurred, or is about to occur.  Such a change shall not include, however, a restructuring, reorganization, merger or other change in capitalization in which the persons who own an interest in the Company on the date hereof (the “Current Owners”) (or any individual or entity which receives from a Current Owner an interest in the Company through will or the laws of descent and distribution) maintain more than a fifty percent (50%) interest in the resultant entity.  Regardless of the vote of the Board or whether or not the Board votes, a Change in Control will be deemed to have occurred as of the first day any one (1) or more of the following subsections shall have been satisfied:

Any Person (other than the Person in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a company owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than thirty five percent (35%) of the combined voting power of the Company’s then outstanding securities; the stockholders of the Company approve:a plan of complete liquidation of the Company;an agreement for the sale, license or disposition of all or    substantially all of the Company’s assets; or a merger, consolidation or reorganization of the Company with or involving any other company, other than a merger, consolidation or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation or reorganization

Notwithstanding the foregoing, a Change in Control as defined in subsections (i) and (ii) above shall not be deemed to have occurred unless the majority of members of the Board are replaced during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of such appointment or election.

(e)            “ Code ” shall mean the Internal Revenue Code of 1986, as amended, and, as applicable, Treasury Regulations promulgated thereunder.

(f)           “ Company ” shall mean Patient Safety, Inc. and any successor to its business and/or assets which assumes (either expressly, by operation of law or otherwise) and/or agrees to perform this Agreement by operation of law or otherwise (except in determining, under subsection (d) hereof, whether or not any Change in Control of the Company has occurred in connection with such succession).

(g)           “ Date of Termination ” shall mean with respect to any purported termination of Executive’s employment, (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated for Cause or without Cause by the Company, the date specified in the Company’s notice of termination, (iii) if Executive’s employment is terminated as a result of a Disability, the date on which it is finally determined that Executive is Disabled, and (iv) if Executive terminates his employment for Good Reason or otherwise voluntarily terminates his employment, the date specified in Executive’s notice of termination.

(h)           “ Disability ” shall mean Executive’s inability for medical reasons to perform the essential duties of Executive’s position for either ninety (90) consecutive calendar days or one hundred twenty (120) business days in a twelve month period by reason of any medically determined physical or mental impairment as determined by a medical doctor selected by written agreement of the Company and Executive upon the request of either party by notice to the other.

(i)           “ Good Reason ” shall mean a termination of employment by the Executive within two years of any of the following events:

(i)           a material change in the character or scope of Executive’s duties, Annual Base Salary, responsibilities, or authority;

(ii)          the Company’s material breach of the Agreement.

(j)           “ Person ” shall have the meaning ascribed thereto in Section 3(a)(9) of the Exchange Act, as modified, applied and used in Sections 13(d) and 14(d) thereof; provided , however , a Person shall not include (i) the Company or any of its respective subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its respective subsidiaries (in its capacity as such), or (iii) an underwriter temporarily holding securities pursuant to an offering of such securities.

(k)           “ Release ” shall mean a general mutual release of the Company and Executive containing a mutual non-disparagement clause and mutually agreed to by the parties hereto.  The Release must be signed by Executive and returned to the Company by no later than the fifth day after the date any applicable review period has expired or if no review period applies, by no later than the twenty-sixth day after the date the Release is provided to Executive.

(l)            “Stock Option Plan” shall mean the Patient Safety, Inc. Employee Stock Option Plan.

2.            Term of this Agreement .  The term of this Agreement shall commence upon the date of this Agreement set forth above and shall continue until the second anniversary of the date of this Agreement; provided however, that the term of this Agreement shall automatically be extended for an additional term of one year on each anniversary (the “Term”) unless either party to this Agreement delivers a written notice of non-extension to the other party by at least ninety (90) days prior to the expiration of the Term.

(a)            Position and Duties .  The Company shall employ Executive in the position of Vice President of Business Development.  During the Term, beginning as of the Effective Date, Executive will devote substantially all of Executive’s business efforts and time to the Company. Executive agrees not to actively engage in any other material employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Board, which shall not be unreasonably withheld or delayed.

(b)            Annual Base Salary .  Executive’s Annual Base Salary shall equal two hundred twenty five thousand Dollars ($225,000).

(c)            Bonus .  Executive shall be eligible to participate in the Company’s executive bonus plan in accordance with the terms of the executive bonus plan which will be determined by the Chief Executive Officer.

(d)            Pension and Welfare Plans .  During the Term, Executive and Executive’s dependents, if applicable, shall be entitled to participate in all incentive, savings and retirement plans, health and welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and dismemberment and travel accident insurance plans and programs) sponsored by the Company or its affiliates on the same terms and conditions generally applicable to executives of the Company generally.

(e)            Equity Compensation Grants and Plans .

(iii)            Initial Stock Option Grant. The Company agrees to grant Executive a stock option (the “Option”) for Seven Hundred Fifty Thousand shares of common stock of the Company (“Shares”).  Upon the six month anniversary of the Effective Date of this Agreement, 93,750 Shares subject to the Option shall vest and become exercisable and thereafter the remaining Shares shall vest over a forty-two month period at the rate of 1/48 ^th of the total Shares subject to the Option per month with 100% of the Option becoming exercisable on the forty-eighth anniversary of the Effective Date of this Agreement.  Option price will be set at the average trading price of the Company’s stock on the Effective Date of the agreement.

(iv)            Equity Compensation Plans.   Executive shall be entitled to continue to participate in any stock option, restricted stock, stock appreciation rights, or any other equity compensation plan or program sponsored by the Company or its affiliates on the same terms and conditions generally applicable to executives of the Company.  Any equity interests or rights to purchase equity interests in the Company held by Executive and issued pursuant to an equity compensation plan shall be administered and subject to the terms of the plan and any amendments thereto.

(f)            Designation as Qualified Performance-Based Compensation .  The Company may determine that any bonus or equity awards issued under Sections 3(c) or 3(e) of this Agreement (“Awards”) shall be considered “qualified performance-based compensation” under Section 162(m) of the Code.  Any Awards shall be administered by the Committee in accordance with this Section 3(f).

(g)            Fringe Benefits and Prerequisites .  Executive shall be entitled to fringe benefits and prerequisites available to executives of the Company in accordance with the plans, practices, programs and policies of the Company from time to time.

(h)            Expenses .  Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the applicable policy of the Company and its affiliated companies.

(i)            Paid Time Off .  Executive shall be entitled to twenty one days per year of paid time off in accordance with the general policy of the Company.

(j)            Change in Control.   Upon Change in Control, all stock options and unvested deferred compensation will immediately vest with suitable opportunity for Executive to exercise such options, plus Executive shall receive a cash payment of two times Annual Base Salary in effect at that time, within 45 days.

4.            Termination .  If Executive’s employment shall terminate upon the occurrence of any of the events listed below after the Effective Date of this Agreement, the following provisions shall apply:

(a)            Termination Without Cause; Resignation for Good Reason .

(i)           The Company may remove Executive at any time without Cause from the position in which Executive is employed hereunder upon not less than thirty (30) days’ prior written notice of termination to Executive; provided, however, that, in the event that such notice is given, Executive shall be under no obligation to render any additional services to the Company and shall be allowed to seek other employment.  In addition, Executive may initiate termination of employment by resigning under this Section 4(a) for Good Reason.