Exhibit 10.39
 
SUBSCRIPTION AGREEMENT
 
SUBSCRIPTION AGREEMENT (this “Agreement”) made as of the last date set forth on
the signature page hereof between Patient Safety Technologies, Inc., a Delaware
corporation (the “Company”), and the undersigned (the “Subscriber”).
 
WITNESSETH:
 
WHEREAS, the Company is conducting a private offering (the “Offering”)
consisting of up to 1,600,000 shares (the “Shares”) of common stock, $.33 par
value per share (“Common Stock”) and five-year warrants to purchase up to
800,000 shares of Common Stock at $2.00 per share (the “Warrants,” together with
the Shares, the “Securities”), pursuant to Section 4(2) of the Securities Act of
1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder; and
 
WHEREAS, the Subscriber desires to purchase that number of Shares set forth on
the signature page hereof on the terms and conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the premises and the mutual representations
and covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
 
I.
SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY SUBSCRIBER

 
1.1 Subject to the terms and conditions hereinafter set forth and in the
Confidential Private Placement Memorandum dated February 28, 2007 (such
memorandum, together with all amendments thereof and supplements and exhibits
thereto, the “Memorandum”), the Subscriber hereby irrevocably subscribes for and
agrees to purchase from the Company such number of Shares, and the Company
agrees to sell to the Subscriber as is set forth on the signature page hereof,
at a per share price equal to $1.25 per Share. The purchase price is payable by
wire transfer of immediately available funds to:
 
Wire instructions:

Account Name:  
 
Transfer Online FBO Patient Safety Technologies, Inc.
     
Account #        
 
370151013155
     
Routing #        
 
123002011
     
Bank:             
 
KeyBank National Association
     
Address:           
 
444 SW 5th Ave
   
Portland, OR  97204

 

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1.2 The Subscriber recognizes that the purchase of the Shares involves a high
degree of risk including, but not limited to, the following: (a) the Company
will likely require substantial funds in addition to the proceeds of the
Offering; (b) an investment in the Company is highly speculative, and only
investors who can afford the loss of their entire investment should consider
investing in the Company and the Shares; (c) the Subscriber may not be able to
liquidate its investment; (d) transferability of the Shares is limited; (e) in
the event of a disposition, the Subscriber could sustain the loss of its entire
investment; and (f) the Company may issue additional securities in the future
which have rights and preferences that are senior to those of the Common Stock.
Without limiting the generality of the representations set forth in Section 1.5
below, the Subscriber represents that the Subscriber has carefully reviewed the
section of the Memorandum captioned “Risk Factors” as well as the exhibits to
the Memorandum that contain additional risk factors.
 
1.3 The Subscriber represents that the Subscriber is an “accredited investor” as
such term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated
under the Securities Act, as indicated by the Subscriber’s responses to the
questions contained in Article VII hereof, and that the Subscriber is able to
bear the economic risk of an investment in the Shares.
 
1.4 The Subscriber hereby acknowledges and represents that (a) the Subscriber
has knowledge and experience in business and financial matters, prior investment
experience, including investment in securities that are non-listed, unregistered
and/or not traded on a national securities exchange nor on the National
Association of Securities Dealers, Inc. (the “NASD”) automated quotation system
(“NASDAQ”), or the Subscriber has employed the services of a “purchaser
representative” (as defined in Rule 501 of Regulation D), attorney and/or
accountant to read all of the documents furnished or made available by the
Company both to the Subscriber and to all other prospective investors in the
Shares to evaluate the merits and risks of such an investment on the
Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative nature
of this investment; (c) the Subscriber is aware that the Company’s Common Stock
has been delisted from the American Stock Exchange (the “Amex”) and that the
appropriate steps are being taken to have the Common Stock included for
quotation on the OTC Bulletin Board but that there can be no assurance that the
Common will be so included on an expedited basis, if at all; (d) the Subscriber
understands that the Shares are a less liquid investment as a result of the
delisting from the Amex; and (e) the Subscriber is able to bear the economic
risk that the Subscriber hereby assumes.
 
1.5 The Subscriber hereby acknowledges receipt and careful review of this
Agreement, the Memorandum, including all exhibits thereto, all reports,
schedules, forms statements and other documents required to be filed by it under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the
twelve months preceding the date hereof (or such shorter period as the Company
was required by law to file such reports) (the foregoing materials being
collectively referred to herein as the “SEC Reports” and, together with the
Agreement and the Memorandum, and any documents which may have been made
available upon request as reflected therein (collectively referred to as the
“Offering Materials”) and hereby represents that the Subscriber has been
furnished by the Company during the course of the Offering with all information
regarding the Company, the terms and conditions of the Offering and any
additional information that the Subscriber has requested or desired to know, and
has been afforded the opportunity to ask questions of and receive answers from
duly authorized officers or other representatives of the Company concerning the
Company and the terms and conditions of the Offering.
 
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1.6 (a) In making the decision to invest in the Shares the Subscriber has relied
solely upon the information provided by the Company in the Offering Materials.
To the extent necessary, the Subscriber has retained, at its own expense, and
relied upon appropriate professional advice regarding the investment, tax and
legal merits and consequences of this Agreement and the purchase of the Shares
hereunder. The Subscriber disclaims reliance on any statements made or
information provided by any person or entity in the course of Subscriber’s
consideration of an investment in the Shares other than the Offering Materials.
 
(b) The Subscriber represents that (i) the Subscriber was contacted regarding
the sale of the Shares by the Company (or an authorized agent or representative
thereof) with whom the Subscriber had a prior substantial pre-existing
relationship and (ii) no Shares were offered or sold to it by means of any form
of general solicitation or general advertising, and in connection therewith, the
Subscriber did not (A) receive or review any advertisement, article, notice or
other communication published in a newspaper or magazine or similar media or
broadcast over television or radio, whether closed circuit, or generally
available; or (B) attend any seminar meeting or industry investor conference
whose attendees were invited by any general solicitation or general advertising.
 
1.7 The Subscriber hereby represents that the Subscriber, either by reason of
the Subscriber’s business or financial experience or the business or financial
experience of the Subscriber’s professional advisors (who are unaffiliated with
and not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), has the capacity to protect the Subscriber’s
own interests in connection with the transaction contemplated hereby.
 
1.8 The Subscriber hereby acknowledges that the Offering has not been reviewed
by the United States Securities and Exchange Commission (the “SEC”) nor any
state regulatory authority since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act, pursuant to
Regulation D. The Subscriber understands that the Shares have not been
registered under the Securities Act or under any state securities or “blue sky”
laws and agrees not to sell, pledge, assign or otherwise transfer or dispose of
the Shares unless they are registered under the Securities Act and under any
applicable state securities or “blue sky” laws or unless an exemption from such
registration is available.
 
1.9 The Subscriber understands that the Shares have not been registered under
the Securities Act by reason of a claimed exemption under the provisions of the
Securities Act that depends, in part, upon the Subscriber’s investment
intention. In this connection, the Subscriber hereby represents that the
Subscriber is purchasing the Shares for the Subscriber’s own account for
investment and not with a view toward the resale or distribution to others. The
Subscriber, if an entity, further represents that it was not formed for the
purpose of purchasing the Shares.
 
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1.10 The Subscriber understands that, following the delisting from the Amex, the
Common Stock is not currently traded or quoted on any market and that there is
no market for the Common Stock until such time that it is included for quotation
on the OTC Bulletin Board. The Subscriber understands that even if a public
market redevelops for the Common Stock, Rule 144 (“Rule 144”) promulgated under
the Securities Act requires for non-affiliates, among other conditions, a
one-year holding period prior to the resale (in limited amounts) of securities
acquired in a non-public offering without having to satisfy the registration
requirements under the Securities Act. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register any of the
Shares under the Securities Act or any state securities or “blue sky” laws other
than as set forth in Article V.
 
1.11 The Subscriber consents to the placement of a legend on any certificate or
other document evidencing the Shares that such Shares have not been registered
under the Securities Act or any state securities or “blue sky” laws and setting
forth or referring to the restrictions on transferability and sale thereof
contained in this Agreement. The Subscriber is aware that the Company will make
a notation in its appropriate records with respect to the restrictions on the
transferability of such Shares. The legend to be placed on each certificate
shall be in form substantially similar to the following:
 
“The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of in the absence of (i) an
effective registration statement for such securities under said act or (ii) an
opinion of company counsel that such registration is not required.”

1.12 The Subscriber understands that the Company will review this Agreement and
is hereby given authority by the Subscriber to call Subscriber’s bank or place
of employment or otherwise review the financial standing of the Subscriber; and
it is further agreed that the Company, at its sole discretion, reserves the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription, to accept subscriptions for
fractional Shares and to close the Offering to the Subscriber at any time and
that the Company will issue stop transfer instructions to its transfer agent
with respect to such Shares.
 
1.13 The Subscriber hereby represents that the address of the Subscriber
furnished by Subscriber on the signature page hereof is the Subscriber’s
principal residence if Subscriber is an individual or its principal business
address if it is a corporation or other entity.
 
1.14 The Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement and
to purchase the Shares. This Agreement constitutes the legal, valid and binding
obligation of the Subscriber, enforceable against the Subscriber in accordance
with its terms.
 
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1.15 If the Subscriber is a corporation, partnership, limited liability company,
trust, employee benefit plan, individual retirement account, Keogh Plan, or
other tax-exempt entity, it is authorized and qualified to invest in the Company
and the person signing this Agreement on behalf of such entity has been duly
authorized by such entity to do so.
 
1.16 The Subscriber acknowledges that if he or she is a Registered
Representative of an NASD member firm, he or she must give such firm the notice
required by the NASD’s Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section 7.4 below.
 
1.17 The Subscriber acknowledges that at such time, if ever, as the Shares are
registered (as such term is defined in Article V hereof), sales of the Shares
will be subject to state securities laws.
 
1.18 (a) The Subscriber agrees not to issue any public statement with respect to
the Subscriber’s investment or proposed investment in the Company or the terms
of any agreement or covenant between them and the Company without the Company’s
prior written consent, except such disclosures as may be required under
applicable law or under any applicable order, rule or regulation.
 
(b) The Company agrees not to disclose the names, addresses or any other
information about the Subscribers, except as required by law; provided, that the
Company may use the name of the Subscriber for any offering or in any
registration statement filed pursuant to Article V in which the Subscriber’s
shares are included.
 
1.19 The Subscriber agrees to hold the Company and its directors, officers,
employees, affiliates, controlling persons and agents and their respective
heirs, representatives, successors and assigns harmless and to indemnify them
against all liabilities, costs and expenses incurred by them as a result of (a)
any sale or distribution of the Shares by the Subscriber in violation of the
Securities Act or any applicable state securities or “blue sky” laws; or (b) any
false representation or warranty or any breach or failure by the Subscriber to
comply with any covenant made by the Subscriber in this Agreement (including the
Confidential Investor Questionnaire contained in Article VII herein) or any
other document furnished by the Subscriber to any of the foregoing in connection
with this transaction.

II.
REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 
The Company hereby represents and warrants to the Subscriber that:
 
2.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business.
 
2.2 Capitalization and Voting Rights. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Confidential Private
Placement Memorandum and all issued and outstanding shares of the Company are
validly issued, fully paid and nonassessable. Except as set forth in the
Offering Materials, there are no outstanding options, warrants, agreements,
convertible securities, preemptive rights or other rights to subscribe for or to
purchase any shares of capital stock of the Company. Except as set forth in the
Offering Materials and as otherwise required by law, there are no restrictions
upon the voting or transfer of any of the shares of capital stock of the Company
pursuant to the Company’s Certificate of Incorporation (the “Certificate of
Incorporation”), Bylaws or other governing documents or any agreement or other
instruments to which the Company is a party or by which the Company is bound.
 
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2.3 Authorization; Enforceability. The Company has all corporate right, power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. All corporate action on the part of the Company, its
directors and stockholders necessary for the (a) authorization execution,
delivery and performance of this Agreement by the Company; and (b)
authorization, sale, issuance and delivery of the Securities contemplated hereby
and the performance of the Company’s obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. The Shares, when issued and fully paid for
in accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable. The issuance and sale of the Securities contemplated
hereby will not give rise to any preemptive rights or rights of first refusal on
behalf of any person which have not been waived in connection with this
offering.
 
2.4 No Conflict; Governmental Consents.
 
(a) The execution and delivery by the Company of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
violation of any material law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority to or by
which the Company is bound, or of any provision of the Certificate of
Incorporation or Bylaws of the Company, and will not conflict with, or result in
a material breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its properties or assets is subject, nor result in the
creation or imposition of any lien upon any of the properties or assets of the
Company.
 
(b) No consent, approval, authorization or other order of any governmental
authority is required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or with the
authorization, issue and sale of the Securities, except such filings as may be
required to be made with the SEC, NASD, NASDAQ and with any state or foreign
blue sky or securities regulatory authority.
 
2.5 Licenses. Except as otherwise set forth in the Memorandum, the Company has
sufficient licenses, permits and other governmental authorizations currently
required for the conduct of its business or ownership of properties and is in
all material respects in compliance therewith.
 
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2.6 Litigation. Except as set forth in the Memorandum, the Company knows of no
pending or threatened legal or governmental proceedings against the Company
which could materially adversely affect the business, property, financial
condition or operations of the Company or which materially and adversely
questions the validity of this Agreement or any agreements related to the
transactions contemplated hereby or the right of the Company to enter into any
of such agreements, or to consummate the transactions contemplated hereby or
thereby. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality which could materially adversely affect the business, property,
financial condition or operations of the Company. There is no action, suit,
proceeding or investigation by the Company currently pending in any court or
before any arbitrator or that the Company intends to initiate.
 
2.7 Disclosure. The information set forth in the Offering Materials as of the
date hereof contains no untrue statement of a material fact nor omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
 
2.8 Brokers. Except for Ault Glazer & Co. LLC, neither the Company nor any of
the Company's officers, directors, employees or stockholders has employed or
engaged any broker or finder in connection with the transactions contemplated by
this Agreement and no fee or other compensation is or will be due and owing to
any broker, finder, underwriter, placement agent or similar person in connection
with the transactions contemplated by this Agreement. The Company is not party
to any agreement, arrangement or understanding whereby any person has an
exclusive right to raise funds and/or place or purchase any debt or equity
securities for or on behalf of the Company.
 
III.
TERMS OF SUBSCRIPTION

 
3.1 All funds paid hereunder shall be deposited with Transfer Online in the
escrow account identified in Section 1.1 hereof.
 
3.2 Certificates representing the Shares and the Warrants purchased by the
Subscriber pursuant to this Agreement will be prepared for delivery to the
Subscriber within 15 business days following the closing at which such purchase
takes place. The Subscriber hereby authorizes and directs the Company to deliver
the certificates representing the Shares and the Warrants purchased by the
Subscriber pursuant to this Agreement directly to the Subscriber’s residential
or business address indicated on the signature page hereto.
 
IV.
CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS

 
4.1 The Subscriber’s obligation to purchase the Shares at the closing at which
such purchase is to be consummated is subject to the fulfillment on or prior to
such closing of the following conditions, which conditions may be waived at the
option of each Subscriber to the extent permitted by law:
 
(a) Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the date of such closing
shall have been performed or complied with in all material respects.
 
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(b) No Legal Order Pending. There shall not then be in effect any legal or other
order enjoining or restraining the transactions contemplated by this Agreement.
 
(c) No Law Prohibiting or Restricting Such Sale. There shall not be in effect
any law, rule or regulation prohibiting or restricting such sale or requiring
any consent or approval of any person, which shall not have been obtained, to
issue the Shares (except as otherwise provided in this Agreement).
 
V.
REGISTRATION RIGHTS

 
5.1 Definitions. As used in this Agreement, the following terms shall have the
following meanings.
 
(a) The term “Closing Date” shall mean the earlier of: (i) the date on which
subscriptions for Shares totaling $2,000,000 shall have been received and
accepted by the Company, or (ii) May 31, 2007
 
(b) The term “Holder” shall mean any person owning or having the right to
acquire Registrable Securities or any permitted transferee of a Holder.
 
(c) The terms “register,” “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
order of effectiveness of such registration statement or document.
 
(d) The term “Registrable Securities” shall mean the Shares; provided, however,
that securities shall only be treated as Registrable Securities if and only for
so long as they (A) have not been disposed of pursuant to a registration
statement declared effective by the SEC; (B) have not been sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act so that all transfer restrictions and restrictive legends with
respect thereto are removed upon the consummation of such sale; (C) are held by
a Holder or a permitted transferee of a Holder pursuant to Section 5.10; and (D)
may not be disposed of under Rule 144(k) under the Securities Act without
restriction.
 
5.2 Required Registration .
 
(a) As promptly as practicable after the Closing Date, but in no event later
than thirty (30) days after the Closing Date, the Company agrees to file a
Registration Statement to register the resale of all of the Shares. The Company
shall use its reasonable best efforts to cause the SEC to declare the
Registration Statement effective no later than one hundred twenty (120) days
following the Closing Date (the "Registration Deadline"). In the event that the
Registration Statement has not been filed on or prior to the Registration
Deadline, then in addition to any other rights the Holders may have hereunder or
under applicable law, for each thirty (30) day period (each, a "Liquidated
Damages Period') following such Registration Deadline until the date on which
the Registration Statement is first filed or is no longer required to be filed
pursuant to this Agreement, the Company shall issue to each Holder, as
liquidated damages and not as a penalty, warrants with a term of five (5) years
and an exercise price of $2.00 per share to purchase shares of Common Stock
equal to 2.5% of the number of shares of Common Stock purchased by such Holder.
Once the Registration Statement has been declared effective, the Company shall
thereafter maintain the effectiveness of the Registration Statement until the
earlier of: (i) such time as the Company reasonably determines, based on the
advice of counsel, that each Holder, acting independently of all other Holders,
will be eligible to sell under Rule 144 promulgated under the Securities Act all
of the Shares then owned by such Holder within the volume limitations imposed by
Rule 144(e) in the three (3) month period immediately following the termination
of the effectiveness of the Registration, or (ii) the date on which all of the
Shares held by the Holders are eligible for sale pursuant to Rule 144(k)
promulgated under the Securities Act. Notwithstanding anything herein to the
contrary, to the extent that the registration of any or all of the Shares by the
Company on the Registration Statement is prohibited (the “Non-Registered
Shares”) under Rule 415 in the opinion of the Commission, the liquidated damages
described in this Section 5.2(a) shall not be applicable to such Non-Registered
Shares, in which case the Company will file additional Registration Statements
(each, a “Subsequent Registration Statement”) each registering the
Non-Registered Shares until all of the Registrable Securities have been
registered. The Filing Date and Effective Date of each such Subsequent
Registration Statement shall be, respectively, fourteen (14) and forty-five (45)
days after the first day such Subsequent Registration Statement may be filed
without objection by the Commission under Rule 415. The Company’s failure to
meet the Filing Date and Effective Date as they relate to the Subsequent
Registration Statements shall subject it to all liquidated damage provisions set
forth in this Section 5.2(a).
 
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(b) If the total amount of securities, including Registrable Securities,
requested by stockholders to be included in a registration statement exceeds the
amount of securities permitted to be sold under Rule 415 promulgated under the
Securities Act (“Rule 415”), then the Company shall be required to include in
the offering only that number of such securities, including Registrable
Securities, which the Company in its sole discretion determines will be
permitted to be registered without objection by the SEC under Rule 415 (the
securities so included to be apportioned pro rata among the selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders).
 
5.3 Registration Procedures. Whenever required under this Article V to include
Registrable Securities in a Company registration statement, the Company shall,
as expeditiously as reasonably possible:
 
(a) Use best efforts to (i) cause such registration statement to become
effective, and (ii) cause such registration statement to remain effective until
the earliest to occur of (A) such date as the sellers of Registrable Securities
(the “Selling Holders”) have completed the distribution described in the
registration statement and (B) such time that all of such Registrable Securities
are no longer, by reason of Rule 144(k) under the Securities Act, required to be
registered for the sale thereof by such Holders. The Company will also use its
best efforts to, during the period that such registration statement is required
to be maintained hereunder, file such post-effective amendments and supplements
thereto as may be required by the Securities Act and the rules and regulations
thereunder or otherwise to ensure that the registration statement does not
contain any untrue statement of material fact or omit to state a fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that if applicable rules under the Securities Act governing the
obligation to file a post-effective amendment permits, in lieu of filing a
post-effective amendment that (i) includes any prospectus required by Section
10(a)(3) of the Securities Act or (ii) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the Company may incorporate by reference information required to be
included in (i) and (ii) above to the extent such information is contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement.
 
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(b) Prepare and file with the SEC such amendments and supplements to such
registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
 
(c) Make available for inspection upon reasonable notice during the Company’s
regular business hours by each Selling Holder, any underwriter participating in
any distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such Selling Holder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Selling Holder, underwriter,
attorney, accountant or agent in connection with such registration statement.
 
(d) Furnish to the Selling Holders such numbers of copies of a final prospectus,
in conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.
 
(e) Use best efforts to register and qualify the securities covered by such
registration statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the Selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
 
(f) In the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each Selling Holder participating in
such underwriting shall also enter into and perform its obligations under such
an agreement.
 
(g) Notify each Holder of Registrable Securities covered by such registration
statement, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, (i) when the registration statement or any
post-effective amendment and supplement thereto has become effective; (ii) of
the issuance by the SEC of any stop order or the initiation of proceedings for
that purpose (in which event the Company shall make every effort to obtain the
withdrawal of any order suspending effectiveness of the registration statement
at the earliest possible time or prevent the entry thereof); (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iv) of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
 
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(h) Cause all such Registrable Securities registered hereunder to be listed on
each securities exchange or quotation service on which similar securities issued
by the Company are then listed or quoted or, if no such similar securities are
listed or quoted on a securities exchange or quotation service, apply for
qualification and use best efforts to qualify such Registrable Securities for
inclusion on the New York Stock Exchange, American Stock Exchange or listing on
a quotation system of the National Association of Securities Dealers, Inc.
 
(i) Cooperate with the Selling Holders and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing the
Registrable Securities to be sold, which certificates will not bear any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters, if any,
shall request at least five business days prior to any sale of the Registrable
Securities to the underwriters.
 
(j) In connection with an underwritten offering, cause the officers of the
Company to provide reasonable assistance in the preparation of, any “road show”
presentation to potential investors as the managing underwriter may determine.
 
(k) Comply with all applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 50 calendar
days after the end of any 3-month period (or 105 calendar days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or best efforts underwritten offering, and (ii) if not sold
to underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company, after the effective date of a registration
statement, which statements shall cover said period.
 
(l) If the offering is underwritten and at the request of any Selling Holder,
use its best efforts to furnish on the date that Registrable Securities are
delivered to the underwriters for sale pursuant to such registration: (i)
opinions dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters and the transfer agent for the
Registrable Securities so delivered, respectively, to the effect that such
registration statement has become effective under the Securities Act and such
Registrable Securities are freely tradable, and covering such other matters as
are customarily covered in opinions of issuer’s counsel delivered to
underwriters and transfer agents in underwritten public offerings and (ii) a
letter dated such date from the independent public accountants who have
certified the financial statements of the Company included in the registration
statement or the prospectus, covering such matters as are customarily covered in
accountants’ letters delivered to underwriters in underwritten public offerings.
 
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5.4 Furnish Information. It shall be a condition precedent to the obligation of
the Company to take any action pursuant to this Article V with respect to the
Registrable Securities of any Selling Holder that such Holder shall furnish to
the Company such information regarding the Holder, the Registrable Securities
held by the Holder, and the intended method of disposition of such securities as
shall be reasonably required by the Company to effect the registration of such
Holder’s Registrable Securities.
 
5.5 Registration Expenses. The Company shall bear and pay all registration
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registrations hereto for each Holder,
but excluding underwriting discounts and commissions relating to Registrable
Securities and excluding any professional fees or costs of accounting, financial
or legal advisors to any of the Holders.
 
5.6 Underwriting Requirements. In connection with any offering involving an
underwriting of shares of the Company’s capital stock, the Company shall not be
required to include any of the Holders’ Registrable Securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders).
For purposes of the preceding parenthetical concerning apportionment, for any
selling stockholder who is a holder of Registrable Securities and is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single “selling stockholder,” and any pro-rata reduction with
respect to such “selling stockholder” shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such “selling stockholder,” as defined in this sentence.
 
5.7 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Article.
 
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5.8 Indemnification. In the event that any Registrable Securities are included
in a registration statement under this Article V:
 
(a) To the extent permitted by law, the Company will indemnify and hold harmless
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, or the Exchange Act, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a “Violation”): (i) any untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
(ii) the omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, or (iii)
any violation by the Company of the Securities Act, the Exchange Act, or any
rule or regulation promulgated under the Securities Act, or the Exchange Act,
and the Company will pay to each such Holder, underwriter or controlling person,
as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 5.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
 
(b) To the extent permitted by law, each Selling Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers, each person,
if any, who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, or the Exchange
Act, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.8(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 5.8(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, further,
that, in no event shall any indemnity under this Section 5.8(b) exceed the
greater of the cash value of the (i) gross proceeds from the Offering received
by such Holder or (ii) such Holder’s investment pursuant to this Agreement as
set forth on the signature page attached hereto.
 
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(c) Promptly after receipt by an indemnified party under this Section 5.8 of
notice of the commencement of any action (including any governmental action),
such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 5.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose approval shall
not be unreasonably withheld); provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.8.
 
(d) If the indemnification provided for in this Section 5.8 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportSharey to correct or prevent such statement or omission.
 
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in an underwriting agreement entered
into in connection with an underwritten public offering are in conflict with the
foregoing provisions, the provisions in such underwriting agreement shall
control.
 
(f) The obligations of the Company and Holders under this Section 5.8 shall
survive the completion or termination of the Offering.
 
5.9 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3 (or other applicable form), the Company agrees to:
 
(a) file with the SEC all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
 
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(b) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (ii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
 
5.10 Permitted Transferees. The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Article
V may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities if: (a) such Holder gives prior written
notice to the Company; (b) such transferee agrees to comply with the terms and
provisions of this Agreement; (c) such transfer is otherwise in compliance with
this Agreement; and (d) such transfer is otherwise effected in accordance with
applicable securities laws. Except as specifically permitted by this Section
5.10, the rights of a Holder with respect to Registrable Securities as set out
herein shall not be transferable to any other Person, and any attempted transfer
shall cause all rights of such Holder therein to be forfeited.
 
5.11 Termination of Registration Rights The right of any Holder to request
inclusion in any registration pursuant to Section 5.3 shall terminate if all
shares of Registrable Securities held by such Holder may immediately be sold
under Rule 144(k).
 
VI.
ADDITIONAL RIGHTS

 
6.1 Right of First Refusal. Until 270 days from the Closing Date, the Subscriber
shall be given not less than ten (10) Business Days prior written notice of any
proposed sale by the Company of its Common Stock or other equity securities,
except in connection with (i) full or partial consideration in connection with a
strategic merger, acquisition, consolidation or purchase of substantially all of
the securities or assets of corporation or other entity which holders of such
securities or debt are not at any time granted registration rights, (ii) the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital and which holders of such securities or debt are not
at any time granted registration rights, or (iii) the Company’s issuance of
Common Stock or the issuances or grants of options to purchase Common Stock
pursuant to stock option plans and employee stock purchase plans at prices equal
to or higher than the closing price of the Common Stock on the issue date of any
of the foregoing (each, an “Exempt Issuance”). The Subscriber who exercises its
rights pursuant to this Section 6.1 shall have the right during the ten (10)
Business Days following receipt of the notice to purchase such offered Common
Stock, debt or other securities in accordance with the terms and conditions set
forth in the notice of sale in the same proportion to purchase of Shares in this
Offering. In the event such terms and conditions are modified during the notice
period, the Subscriber shall be given prompt notice of such modification and
shall have the right during the ten (10) Business Days following the notice of
modification to exercise such right. With respect to the issuance of Shares in
this Offering, prior written notice need not be given more than five business
days prior to such issuance.
 
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6.2 Participation in Future Financing.
 
(a) From the date hereof until the date that is the 9 month anniversary of the
Closing Date, upon any issuance by the Company of Common Stock or Common Stock
Equivalents for cash consideration (a “Subsequent Financing”), the Subscriber
shall have the right to participate in up to an amount of the Subsequent
Financing equal to 100% of the Subsequent Financing (the “Participation
Maximum”) on the same terms, conditions and price provided for in the Subsequent
Financing. 
 
(b) At least 5 Trading Days prior to the closing of the Subsequent Financing,
the Company shall deliver to each Subscriber in the Offering a written notice of
its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice
shall ask such Purchaser if it wants to review the details of such financing
(such additional notice, a “Subsequent Financing Notice”).  Upon the request of
the Subscriber, and only upon a request by the Subscriber, for a Subsequent
Financing Notice, the Company shall promptly, but no later than 1 Trading Day
after such request, deliver a Subsequent Financing Notice to such Purchaser. 
The Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder, the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected, and attached to which shall be a term sheet or
similar document relating thereto.   
 
(c) Any Subscriber desiring to participate in such Subsequent Financing must
provide written notice to the Company by not later than 5:30 p.m. (New York City
time) on the 5th Trading Day after all of the Purchasers have received the
Pre-Notice that the Purchaser is willing to participate in the Subsequent
Financing, the amount of the Purchaser’s participation, and that the Subscriber
has such funds ready, willing, and available for investment on the terms set
forth in the Subsequent Financing Notice. If the Company receives no notice from
a Subscriber as of such 5th Trading Day, such Subscriber shall be deemed to have
notified the Company that it does not elect to participate. 
 
(d) If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the
Subscribers have received the Pre-Notice, notifications by the Subscribers of
their willingness to participate in the Subsequent Financing (or to cause their
designees to participate) is, in the aggregate, less than the total amount of
the Subsequent Financing, each Subscribers shall be deemed to have notified the
Company that it does not elect to participate and the Company may effect the
Subsequent Financing on the terms and with the Subscribers set forth in the
Subsequent Financing Notice. 
 
(e) If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the
Subscribers have received the Pre-Notice, the Company receives responses to a
Subsequent Financing Notice from Subscribers seeking to purchase more than the
aggregate amount of the Participation Maximum, each such Subscriber shall have
the right to purchase the greater of (a) their Pro Rata Portion (as defined
below) of the Participation Maximum and (b) the difference between the
Participation Maximum and the aggregate amount of participation by all other
Purchasers.  “Pro Rata Portion” is the ratio of (x) the Subscription Amount of
Securities purchased on the Closing Date by a Purchaser participating under this
Section 4.13 and (y) the sum of the aggregate Subscription Amounts of Securities
purchased on the Closing Date by all Purchasers participating under this Section
4.13.
 
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(f) The Company must provide the Subscribers with a second Subsequent Financing
Notice, and the Subscribers will again have the right of participation set forth
above in this Section 4.13, if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within 60 Trading Days after the date
of the initial Subsequent Financing Notice.
 
(g) Notwithstanding the foregoing, this Section 6.2 shall not apply in respect
of an underwritten public offering of Common Stock. In addition, with respect to
the issuance of Shares in this Offering, prior written notice need not be given
more than five business days prior to such issuance.

VII.
MISCELLANEOUS

 
7.1 Any notice or other communication given hereunder shall be deemed sufficient
if in writing and sent by registered or certified mail, return receipt
requested, or delivered by hand against written receipt therefor, addressed as
follows:
 
if to the Company, to:
 
Patient Safety Technologies, Inc.
c/o William B. Horne
1800 Century Park East
Suite 200
Los Angeles, CA 90067
 
With a copy to (which shall not constitute notice):

Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, NY 10018
Attn: Marc Ross, Esq.

if to the Subscriber, to the Subscriber’s address indicated on the signature
page of this Agreement.
 
Notices shall be deemed to have been given or delivered on the date of mailing,
except notices of change of address, which shall be deemed to have been given or
delivered when received.
 
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7.2 Except as otherwise provided herein, this Agreement shall not be changed,
modified or amended except by a writing signed by the parties to be charged, and
this Agreement may not be discharged except by performance in accordance with
its terms or by a writing signed by the party to be charged.
 
7.3 Subject to the provisions of Section 5.11, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and assigns. This Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
 
7.4 Upon the execution and delivery of this Agreement by the Subscriber, this
Agreement shall become a binding obligation of the Subscriber with respect to
the purchase of Shares as herein provided, subject, however, to the right hereby
reserved by the Company to enter into the same agreements with other subscribers
and to add and/or delete other persons as subscribers.
 
7.5 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE
PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS
HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF
LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR
RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE COURTS
STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES OR THE FEDERAL COURTS
FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY
IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
 
7.6 In order to discourage frivolous claims the parties agree that unless a
claimant in any proceeding arising out of this Agreement succeeds in
establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.
 
7.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
 
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7.8 It is agreed that a waiver by either party of a breach of any provision of
this Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
 
7.9 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
 
7.10 This Agreement may be executed in two or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
 
7.11 Nothing in this Agreement shall create or be deemed to create any rights in
any person or entity not a party to this Agreement, except for the holders of
Registrable Securities.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
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VIII.
CONFIDENTIAL INVESTOR QUESTIONNAIRE

 
8.1 The Subscriber represents and warrants that he, she or it comes within one
category marked below, and that for any category marked, he, she or it has
truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.
 
Category A  ___
 
The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000.
         
Explanation. In calculating net worth you may include equity in personal
property and real estate, including your principal residence, cash, short-term
investments, stock and securities. Equity in personal property and real estate
should be based on the fair market value of such property less debt secured by
such property.
     
Category B  ___
 
The undersigned is an individual (not a partnership, corporation, etc.) who had
an income in excess of $200,000 in each of the two most recent years, or joint
income with his or her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year.
     
Category C  ___
 
The undersigned is a director or executive officer of the Company which is
issuing and selling the Shares.
     
Category D  ___
 
The undersigned is a bank; a savings and loan association; insurance company;
registered investment company; registered business development company; licensed
small business investment company (“SBIC”); or employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan association, insurance
company or registered investment advisor, or (b) the plan has total assets in
excess of $5,000,000 or (c) is a self directed plan with investment decisions
made solely by persons that are accredited investors. (describe entity)
                 
Category E  ___
 
The undersigned is a private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940. (describe entity)
           

 
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Category F  ___
 
The undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the
Internal Revenue Code, in each case not formed for the specific purpose of
acquiring the Shares and with total assets in excess of $5,000,000. (describe
entity)
                 
Category G  ___
 
The undersigned is a trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Shares, where the purchase is directed
by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the
Act.
     
Category H  ___
 
The undersigned is an entity (other than a trust) in which all of the equity
owners are “accredited investors” within one or more of the above categories. If
relying upon this Category alone, each equity owner must complete a separate
copy of this Agreement. (describe entity)
                 
Category I  ___
 
The undersigned is not within any of the categories above and is therefore not
an accredited investor.
         
The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the closing in the event that the representations and warranties
in this Agreement shall cease to be true, accurate and complete.

 
8.2 SUITABILITY (please answer each question)
 
(a) For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:
 

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(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
 

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(c) For all Subscribers, please list types of prior investments:
 

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(d) For all Subscribers, please state whether you have participated in other
private placements before:
 
YES _______   NO _______
 
(e) If your answer to question (d) above was “YES”, please indicate frequency of
such prior participation in private placements of:
 

   
 
Public
Companies
 
 
Private
Companies
 
Public or Private Companies
with no, or insignificant,
assets and operations
 
Frequently
                   
Occasionally
                   
Never
                   

(f) For individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:
 
YES _______   NO _______
 
(g) For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future:
 
YES _______   NO _______
 
(h) For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:
 
YES _______   NO _______
 
(i) For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?
 
YES _______   NO _______
 
(j)  For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
 
YES _______   NO _______
 
8.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)
 
(a) Individual Ownership
 
(b) Community Property
 
(c) Joint Tenant with Right of Survivorship (both parties must sign)
 
(d) Partnership*
 
(e) Tenants in Common
 
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(f) Company*
 
(g) Trust*
 
(h) Other*
 
*If Securities are being subscribed for by an entity, the attached Certificate
of Signatory must also be completed.
 
8.4 NASD AFFILIATION.
 
Are you affiliated or associated with an NASD member firm (please check one):
 
Yes _________  No __________
 
If Yes, please describe:
 

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*If Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
 
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
 
_________________________________
Name of NASD Member Firm

                By:    

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Authorized Officer
            Date:      

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8.5 The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Article VII and such answers have been provided
under the assumption that the Company will rely on them.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
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NUMBER OF SHARES _________ X $1.25 = $_________ (the “Purchase Price”) 

    
 
Signature
 
Signature (if purchasing jointly)
    
 
Name Typed or Printed
 
Name Typed or Printed
    
 
Title (if Subscriber is an Entity)
 
Title (if Subscriber is an Entity)
    
 
Entity Name (if applicable)
 
Entity Name (if applicable
               
Address
 
Address
    
 
City, State and Zip Code
 
City, State and Zip Code
    
 
Telephone-Business
 
Telephone-Business
    
 
Telephone-Residence
 
Telephone-Residence
    
 
Facsimile-Business
 
Facsimile-Business
    
 
Facsimile-Residence
 
Facsimile-Residence
    
 
Tax ID # or Social Security #
 
Tax ID # or Social Security #
     
Name in which securities should be issued:
    

 
Dated: ________________ , 2007

This Subscription Agreement is agreed to and accepted as of ________________,
2007.

        PATIENT SAFETY TECHNOLOGIES, INC.  
   
   
  By:    

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Name: William B. Horne  
Title: Chief Executive Officer

 
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CERTIFICATE OF SIGNATORY

(To be completed if Shares are
being subscribed for by an entity)

I, ____________________________, am the ____________________________ of
__________________________________________ (the “Entity”).

I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Shares, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.

IN WITNESS WHEREOF, I have set my hand this ________ day of _________________,
2007

               

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(Signature)

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