SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT (this “Agreement”), dated as of June 6, 2006 (the
“Effective Date”), is made by and between Alan E. Morelli (“Senior Creditor”)
and Ault Glazer Bodnar Acquisition Fund, LLC (together with its successors and
assigns, “Subordinated Creditor”).

RECITALS

A. Patient Safety Technologies, Inc., a Delaware corporation (“Borrower”), and
Senior Creditor propose to enter into that certain Secured Convertible Note and
Warrant Purchase Agreement dated as of June 6, 2006 (as the same may be amended,
restated, or otherwise modified from time to time, the “Senior Creditor
Agreement”), pursuant to which Borrower will execute and deliver a Secured
Convertible Promissory Note in the amount of $1,100,000 (the “Senior Note”). The
funds advanced to or owed by Borrower under the Senior Note shall be referred to
collectively herein as the “Senior Loans.” To secure the Senior Loans, Borrower
will grant to Senior Creditor a security interest in certain of Borrower’s real
and personal property assets. Capitalized terms used herein without definition
have the meanings assigned thereto in the Senior Creditor Agreement.
 
B. Borrower has executed one or more promissory notes in favor of Subordinated
Creditor (the “Subordinated Notes”) and one or more security agreement,
mortgages or other agreement pursuant to which Borrower has granted a security
interest in favor of Subordinated Creditor (the “Subordinated Security
Agreements”) by and between Subordinated Creditor and Borrower.

C. Subordinated Creditor and Senior Creditor desire to establish and agree upon
their respective rights, priorities and interests governing their respective
relationships with Borrower and any collateral for the loans granted pursuant to
the Subordinated Loan Documents and the Senior Loan Documents at all times on
and after the Effective Date.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, Senior Creditor and
Subordinated Creditor hereby agree as follows:

1. DEFINITIONS

As used herein, the following terms shall have the following meanings:

“Senior Debt” means any and all indebtedness and obligations (including, without
limitation, principal, premium (if any), interest, fees, charges, expenses,
costs, professional fees and expenses, and reimbursement obligations) at any
time or from time to time owing from Borrower to Senior Creditor under the
Senior Loan Documents or otherwise, including but not limited to such amounts as
may accrue or be incurred before or after default or workout or the commencement
of any liquidation, dissolution, bankruptcy, receivership, or reorganization
case by or against Borrower, whether or not allowed by the court in any such
proceeding.

 
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“Senior Loan Documents” means the Senior Note, the Senior Creditor Agreement,
the Collateral Documents and any other security agreement, promissory note, UCC
financing statement, or any other agreement, instrument or document executed by
Borrower pursuant to or in connection with the Senior Debt or the Senior
Creditor Agreement, as any of the foregoing may from time to time be amended,
modified, supplemented, extended, renewed, restated or replaced.

“Subordinated Debt” means any and all indebtedness and obligations (including,
without limitation, principal, premium (if any), interest, fees, charges,
expenses, costs, professional fees and expenses, and reimbursement obligations)
at any time or from time to time owing from Borrower to Subordinated Creditor
under the Subordinated Loan Documents or otherwise, including but not limited to
such amounts as may accrue or be incurred before or after default or workout or
the commencement of any liquidation, dissolution, bankruptcy, receivership, or
reorganization case by or against Borrower.

“Subordinated Loan Documents” means the Subordinated Notes, the Subordinated
Security Agreements and any promissory note, loan or credit or similar
agreement, any financing statement, or any other agreement, instrument or
document executed by Borrower in favor of Subordinated Creditor, as the same may
from time to time be amended, modified, supplemented, extended, renewed,
restated or replaced.

Unless otherwise specified, all references in this Agreement to a “Section”
shall refer to the corresponding Section in or to this Agreement. Other
capitalized terms used herein and not otherwise defined herein shall have the
meaning given such terms in the Uniform Commercial Code as in effect in the
State of California, as in effect from time to time (the “UCC”).

2. SUBORDINATION

(a) On the terms and conditions set forth below, Subordinated Creditor’s right
to payment and performance of the Subordinated Debt and any and all liens and
security interests securing the Subordinated Debt are hereby subordinated to
Senior Creditor’s right to full and indefeasible payment and performance of the
Senior Debt and all liens and security interests securing the Senior Debt.
Subject to and except as set forth in Section 3, Subordinated Creditor shall not
ask, demand, sue for, take or receive from Borrower, by setoff or in any other
manner, the whole or any part of any monies which may now or hereafter be owing
by Borrower to Subordinated Creditor, or be owing by any other person to
Subordinated Creditor under a guaranty or similar instrument, on account of the
Subordinated Debt, nor any collateral security for any of the foregoing,
including, without limitation, any personal property collateral granted to
Subordinated Creditor pursuant to the Subordinated Loan Documents, unless and
until the Senior Debt shall have been fully paid in cash or converted to common
stock of Borrower pursuant to the terms of the Senior Note.
 
 
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(b) Subordinated Creditor shall not create, maintain or perfect any security
interest in or lien on any property of Borrower (other than any security
interests or liens that may exist and be perfected on the date hereof in favor
of Subordinated Creditor in certain of Borrower’s personal property under and as
described in the Subordinated Loan Documents, which liens and security interests
shall be, and hereby are agreed to be, junior and subordinated to the security
interests and liens securing the Senior Debt). If, notwithstanding the
foregoing, any lien shall be created or shall arise in favor of Subordinated
Creditor, whether by operation of law or otherwise, in or on any property of
Borrower to secure all or any portion of the Subordinated Debt, then the liens
granted by Borrower in any such property in favor of Senior Creditor to secure
the Senior Debt shall in all respects be first and senior liens, superior to
such liens that may be created or arise, and superior to any security interest
or lien that may exist on the date hereof, in either case which liens are in
favor of Subordinated Creditor securing the Subordinated Debt notwithstanding
(i) the date, manner or order of creation, attachment or perfection of any such
security interests or liens, (ii) the provisions of the UCC or any other
applicable statutes or court decisions that would provide otherwise in the
absence of this agreement, (iii) the provisions of any contract between
Subordinated Creditor and Borrower, and (iv) whether Subordinated Creditor or
any agent or bailee thereof holds possession of any part any such collateral. In
the event Subordinated Creditor shall have or obtain possession of any such
property or shall, in contravention of this agreement, foreclose upon or enforce
its security interest or lien upon any such property, whether by self-help,
judicial action or otherwise, then (i) all such property shall be immediately
delivered to Senior Creditor or, if not deliverable, all cash or non-cash
proceeds and profits of such property shall be paid over to Senior Creditor,
without any deduction or offset, and (ii) until duly deliver or paid to Senior
Creditor, any such property or cash or non-cash proceeds and profits of such
property shall be held in trust for the benefit of Senior Creditor, in the case
of each of clause (i) and clause (ii), unless and until all of the Senior Debt
shall have been paid in cash in full or converted to common stock of Borrower
pursuant to the terms of the Senior Note.

(c) The subordination contained in this Agreement is intended to define the
rights and duties of Subordinated Creditor and Senior Creditor; it is not
intended that any third party (including Borrower, any bankruptcy trustee,
receiver, or debtor-in-possession) shall benefit from it. If the effect of the
subordination contained in this Agreement would be to give any third party a
priority status to which that party would not otherwise be entitled, then that
provision shall, to the extent necessary to avoid that priority, be given no
effect and the rights and priorities of Senior Creditor and Subordinated
Creditor shall be determined in accordance with applicable law and this
Agreement.

3. ASSIGNMENT OF SUBORDINATED DEBT

Subordinated Creditor hereby covenants to Senior Creditor that prior to the
termination of this Agreement in accordance with Section 8, the entire
Subordinated Debt created in favor of Subordinated Creditor shall continue to be
owing only to Subordinated Creditor, and any collateral security therefor
(including, without limitation, any collateral security granted to Subordinated
Creditor pursuant to the Subordinated Loan Documents) shall continue to be held
solely for the benefit of Subordinated Creditor, unless assigned pursuant to an
assignment in which the assignee agrees in writing to be bound by all of the
terms and provisions of this Agreement. Any promissory note issued pursuant to
the Subordinated Loan Documents shall be legended to expressly state that it is
subject to this Agreement.
 
 
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4. SENIOR CREDITOR’S PRIORITY

In the event of any distribution, division, or application, partial or complete,
voluntary or involuntary, by operation of law or otherwise, of all or any part
of the property of Borrower or the proceeds thereof to the creditors of
Borrower, or the readjustment of the Senior Debt and the Subordinated Debt,
whether by reason of liquidation, bankruptcy, arrangement, receivership,
assignment for the benefit of creditors or any other action or proceeding
involving the readjustment of all or any part of the Senior Debt or the
Subordinated Debt, or the application of the property of Borrower to the payment
or liquidation thereof, or upon the dissolution, liquidation, reorganization, or
other winding up of Borrower’s business, or upon the sale of all or any
substantial part of Borrower’s property (any of the foregoing being hereinafter
referred to as an “Insolvency Event”), then, and in any such event, Senior
Creditor shall be entitled to receive the indefeasible payment in full of the
Senior Debt before Subordinated Creditor shall be entitled to receive any
payment on account of the Subordinated Debt, and to that end and in furtherance
thereof:

(a) All payments and distributions of any kind or character, whether in cash,
property, or securities, in respect of the Subordinated Debt to which
Subordinated Creditor would be entitled if the Subordinated Debt were not
subordinated pursuant to this Agreement, shall be paid to Senior Creditor and
applied in payment of the Senior Debt;

(b) Subordinated Creditor shall file a claim or claims, on the form required in
such proceedings, on or before thirty (30) days prior to the last date such
claims or proofs of claim may be filed pursuant to law or the order of any court
exercising jurisdiction over such proceeding; and

(c) Notwithstanding the foregoing, if any payment or distribution of any kind or
character, whether in cash, properties or securities, shall be received by
Subordinated Creditor on account of the Subordinated Debt before all of the
Senior Debt has been paid, then such payment or distribution shall be received
by Subordinated Creditor in trust for and shall be immediately paid over to
Senior Creditor for application to the payments of amounts due on the Senior
Debt until the Senior Debt shall have been paid in cash in full.

This Agreement is a subordination agreement within the meaning of Section 510(a)
of the United States Bankruptcy Code and shall continue in full force and effect
after the occurrence of any Insolvency Event, including, without limitation,
after the filing of any petition by or against Borrower under the United States
Bankruptcy Code and all converted or succeeding cases in respect thereof. All
references herein to Borrower shall be deemed to apply to Borrower as
debtor-in-possession and to any trustee in any insolvency proceeding relating to
such obligor.
 
 
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5. GRANT OF AUTHORITY

In the event of the occurrence of an Insolvency Event, and to enable Senior
Creditor to enforce its rights hereunder in any of the aforesaid actions or
proceedings, Senior Creditor is hereby irrevocably authorized and empowered, in
Senior Creditor’s discretion (in its own name or in the name of Subordinated
Creditor or otherwise), but shall have no obligation (a) to demand, sue for,
collect and receive every payment or distribution referred to in Section 4, and
give acquittance therefor and (b) to file claims and proofs of claim
if Subordinated Creditor has failed to file claims or proofs of claim on or
before thirty (30) days prior to the last date such claims or proofs of claim
may be filed pursuant to law or the order of any court exercising jurisdiction
over such proceeding, and (c) to take such other action (including, without
limitation, enforcing any lien securing payment of the Subordinated Debt) as it
may deem necessary or advisable for the exercise or enforcement of any of the
rights or interests of Senior Creditor hereunder. Subordinated Creditor shall
duly and promptly take such action as Senior Creditor may reasonably request to
execute and deliver to Senior Creditor such authorizations, endorsements,
assignments, or other instruments as Senior Creditor may reasonably request in
order to enable Senior Creditor to enforce any and all claims with respect to,
and any liens securing payment of, the Subordinated Debt as such enforcement is
contemplated herein.

To the extent that payments or distributions on account of the Subordinated Debt
are made in property or securities other than cash, Subordinated Creditor
authorizes Senior Creditor to sell or dispose of such property or securities on
such terms as are commercially reasonable in the situation in question.
Following full and indefeasible payment in cash of the Senior Debt and the
termination of all commitments related thereto, Senior Creditor shall remit to
the Subordinated Creditor (with all necessary endorsements), to the extent of
Subordinated Creditor’s interest therein, all payments and distributions of
cash, property, or securities paid to and held by Senior Creditor in excess of
the allowed amount of the Senior Debt.

6. PAYMENTS RECEIVED BY SUBORDINATED CREDITOR

Should any payment, distribution, or security be received by the Subordinated
Creditor upon or with respect to the Subordinated Debt in contravention of this
Agreement prior to termination of this Agreement in accordance with Section 8,
Subordinated Creditor shall receive and hold the same in trust for the benefit
of Senior Creditor and shall immediately deliver the same to Senior Creditor in
precisely the form received (except for the endorsement or assignment of
Subordinated Creditor where necessary) for application to the Senior Debt, and,
until so delivered, the same shall be held in trust by such Subordinated
Creditor for the benefit of Senior Creditor.

7. FURTHER ASSURANCES; COOPERATION

Subordinated Creditor agrees to cooperate with Senior Creditor and to take all
actions that Senior Creditor may reasonably require to enable Senior Creditor to
realize the full benefits of this Agreement.
 
 
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8. TERMINATION OR AMENDMENT OF AGREEMENT; NO AMENDMENTS

This Agreement shall be effective upon its execution by each of Senior Creditor
and Subordinated Creditor. After the Effective Date, this Agreement shall remain
in effect and shall not be revoked or amended by Subordinated Creditor, except
with the prior written consent of the Senior Creditor. Senior Creditor and
Subordinated Creditor agree that no amendment hereto shall be binding upon
Borrower unless Borrower shall have received notice of such amendment. Subject
to Section 12, this Agreement shall terminate upon the earlier to occur of the
following: (a) the date on which the Senior Debt shall have been paid in cash in
full or converted to common stock of Borrower pursuant to the terms of the
Senior Note or (b) the date on which the Subordinated Debt shall have been
either converted into common stock of Borrower or otherwise paid in cash in
full. Subordinated Creditor shall not amend, supplement or otherwise modify any
of the Subordinated Loan Documents without the written consent of Senior
Creditor.

9. ADDITIONAL AGREEMENTS FOR SENIOR CREDITOR

Senior Creditor may administer and manage its credit and other relationships
with Borrower in its own best interest, without notice to or consent of
Subordinated Creditor. At any time and from time to time, Senior Creditor may
enter into any amendment or agreement with Borrower as Senior Creditor may deem
proper, extending the time of payment of or renewing or otherwise altering the
terms of all or any of the obligations constituting Senior Debt or affecting the
collateral security for, supporting or underlying any or all of the Senior Debt,
and may exchange, sell, release, surrender or otherwise deal with any such
collateral without in any way thereby impairing or affecting this Agreement, and
all such additional agreements and amendments shall be Senior Loan Documents
evidencing the Senior Debt.

10. SUBROGATION

If cash or other property otherwise payable or deliverable to the Subordinated
Creditor or on account of the Subordinated Debt shall have been applied pursuant
to this Agreement to the payment of the Senior Debt, and if the Senior Debt
shall have been paid in cash in full, then Subordinated Creditor shall be
subrogated to any rights of Senior Creditor to receive further payments or
distributions applicable to the Senior Debt until the Subordinated Debt shall
have been fully paid. No such payments or distributions received by the
Subordinated Creditor by reason of such subrogation shall, as between Borrower
and its creditors other than Senior Creditor, on the one hand, and Subordinated
Creditor, on the other hand, be deemed to be a payment by Borrower on account of
the Subordinated Debt owed to Subordinated Creditor.

11. SUBORDINATED CREDITOR’S WAIVERS AND COVENANTS

(a) Without limiting the generality of any other waiver made by Subordinated
Creditor in this Agreement, Subordinated Creditor hereby expressly waives (i)
reliance by Senior Creditor upon the subordination and other agreements herein
provided, (ii) any and all rights to require Senior Creditor to marshal any
property or assets of Borrower or to resort to any of the property or assets of
Borrower in any particular order or manner, (iv) any and all rights to bring any
action to contest the validity, legality, enforceability, perfection, priority
or avoidability of any of the obligations under any or all of the Senior Loan
Documents or any of the security interest and/or liens of the Senior Creditor in
or on any of the collateral for the Senior Debt and (v) any claim that
Subordinated Creditor may now or hereafter have against Senior Creditor arising
out of any and all actions that Senior Creditor, in good faith, takes or omits
to take (A) with respect to the creation, perfection or continuation of liens in
or on any collateral security for the Senior Debt, (B) with respect to the
foreclosure upon, sale, release, or depreciation of, or failure to realize upon,
any of the collateral security for the Senior Debt, (C) with respect to the
collection of any claim for all or any part of the Senior Debt from any account
debtor, guarantor or any other third party and (D) with respect to the
valuation, use, protection or release of any collateral security for the Senior
Debt.

 
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(b) Without limiting the generality of any other covenant or agreement made by
Subordinated Creditor in this Agreement, Subordinated Creditor hereby covenants
and agrees that (i) Senior Creditor has not made any warranties or
representations with respect to the due execution, legality, validity,
completeness or enforceability of the Senior Creditor Agreement or any of the
other Senior Loan Documents, or the collectibility of the Senior Debt; and
(ii) Subordinated Creditor will not interfere with or in any manner oppose a
disposition of any collateral security for the Senior Debt by Senior Creditor.

12. DEFAULTS ON SUBORDINATED NOTES

If a default occurs under the Subordinated Notes or, until such time as the
Senior Debt is paid in full in cash or converted to common stock of Borrower
pursuant to the terms of the Senior Note: (a) the Subordinated Creditor shall
not take any action in connection with the foreclosure of the Subordinated
Notes, and (b) the Subordinated Creditor shall not exercise or enforce, by
subrogation or otherwise, any lien, estate, right or other interest that the
Subordinated Creditor may have or obtain pursuant to the exercise of any right
or remedy under the Subordinated Notes (including, without limitation, its right
to cure defaults of Borrower or pay or satisfy liens which Borrower is otherwise
required to pay or satisfy) which is or may be prior in right or in lien to the
rights under the Senior Loan Documents. The foregoing provisions are solely for
the benefit of the Senior Creditor, and Borrower shall not be entitled to rely
thereon or be entitled to the benefit thereof. Borrower shall promptly give
Senior Creditor written notice of any default under the Subordinated Notes.

13. REINSTATEMENT OF SENIOR DEBT

To the extent that Senior Creditor receives payments on or in respect of the
Senior Debt or proceeds of any collateral security for the Senior Debt, which
payments or proceeds are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law, or
equitable cause, then, to the extent of such payments or proceeds invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid,
the Senior Debt, or part thereof, intended to be satisfied shall be revived and
continue in full force and effect as if such payments or proceeds had not been
received by Senior Creditor.
 
 
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14. NO WAIVERS

Senior Creditor shall not be prejudiced in its rights under this Agreement by
any act or failure to act of Borrower or Subordinated Creditor or any
noncompliance of Borrower or Subordinated Creditor with any agreement or
obligation, regardless of any knowledge thereof which Senior Creditor may have,
or with which Senior Creditor may be charged; no action permitted hereunder that
has been taken by Senior Creditor shall in any way affect or impair the rights
or remedies of Senior Creditor in the exercise of any other right or remedy or
shall operate as a waiver thereof; no single or partial exercise by Senior
Creditor of any right or remedy shall preclude any other or further exercise
thereof; and no modification or waiver of any of the provisions of this
Agreement shall be binding upon Senior Creditor, in each case except as
expressly set forth in a writing duly signed and delivered by Senior Creditor.

15. INFORMATION CONCERNING BORROWER; CREDIT ADMINISTRATION

Subordinated Creditor hereby assumes responsibility for keeping itself informed
of the financial condition of Borrower, its subsidiaries and affiliates, any and
all endorsers and any and all guarantors of the Senior Debt and of all other
circumstances bearing upon the risk of nonpayment of the Senior Debt or the
Subordinated Debt that diligent inquiry would reveal, and Subordinated Creditor
hereby agrees that Senior Creditor shall not have any duty to advise the
Subordinated Creditor of information known to Senior Creditor regarding such
condition.

16. NOTICES

Except as otherwise provided herein, all notices and service of process
required, contemplated, or permitted hereunder or with respect to the subject
matter hereof shall be in writing, and shall be deemed to have been validly
served, given or delivered upon the earlier of: (i) the first business day after
transmission by facsimile or hand delivery or deposit with an overnight express
service or overnight mail delivery service; or (ii) the third business day after
deposit in the United States mails, with proper first class postage prepaid, and
shall be addressed to the party to be notified as follows:

If to Senior Creditor:

Alan E. Morelli
225 Mantau Road
Pacific Palisades, CA 90272
Facsimile: (310) 231-5520

If to Subordinated Creditor:

Ault Glazer Bodnar Acquisition Fund, LLC
1800 Century Park East, Suite 200
Los Angeles, CA 90067
Attention: __________________________
Facsimile: __________________________

 
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17. SEVERABILITY

Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

18. GOVERNING LAW

This Agreement shall be governed by and interpreted in accordance with the laws
of the State of California without regard to principles of conflict of laws that
would cause the application of laws of any other jurisdiction.

19. ASSIGNMENT

This Agreement shall be binding upon Subordinated Creditor and its respective
successors and assigns, and shall inure to the benefit of and be enforceable by
Senior Creditor and its successors and assigns.

20. MUTUAL WAIVER OF JURY TRIAL

EACH OF SUBORDINATED CREDITOR AND SENIOR CREDITOR SPECIFICALLY WAIVES ITS RIGHT
TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD
PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER,
SUBORDINATED CREDITOR, OR SENIOR CREDITOR AGAINST THE OTHER PARTY OR PARTIES TO
THIS AGREEMENT. This waiver extends to all such claims, including, without
limitation, claims which involve persons or entities other than Borrower, the
Subordinated Creditor, and Senior Creditor; claims which arise out of or are in
any way connected to the relationships between or among Borrower, the
Subordinated Creditor, and Senior Creditor; and any claims for damages, breach
of contract, specific performance, or any equitable or legal relief of any kind.

21. COUNTERPARTS

This Agreement and any amendments, waivers, consents or supplements hereto may
be executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.
 
 
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.

SENIOR CREDITOR:
 
 
 
Signature:    /s/ Alan E. Morelli                              
Print Name:  ALAN E. MORELLI
Title:             ___________________________
SUBORDINATED CREDITOR:
 
AULT GLAZER BODNAR ACQUISITION FUND, LLC
 
By: Ault Glazer Bodnar Investment Management LLC
 
Signature:    /s/ Milton C. Ault III                
Print Name:  Milton C. Ault III                     
Title:              Managing Member                 

The undersigned hereby accepts and consents to the foregoing Agreement and
agrees to be bound by all of the provisions thereof and to recognize all
priorities and other rights granted by Subordinated Creditor thereby or
thereunder to Senior Creditor and to pay Senior Creditor in accordance
therewith.

BORROWER:
 
PATIENT SAFETY TECHNOLOGIES, INC.
 
By:/s/ Lynne Silverstein                                   
Name:Lynne Silverstein                                    
Title: President                                                    
 
 
 
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