EXHIBIT
10.06

      


      SEPARATION AGREEMENT AND
GENERAL RELEASE

       

      This
Separation Agreement and General Release (“Separation Agreement”) is made by and
between David Bruce (“Executive”) and Patient Safety Technologies, Inc. (the
“Company”).  The Company and Executive are referred to individually as
the “Parties” and each individually as a “Party.”

       

      RECITALS

       

      
        	
                A.

              	
                Executive
      is employed by Company pursuant to an Agreement dated January 5, 2009 (the
      “Employment Agreement”) between Company and Executive;
  and

              


      

       

      
        	
                B.

              	
                Executive’s
      employment with Company will terminate on May 6, 2009 (the “Termination
      Date”); and

              


      

       

      
        	
                C.

              	
                The
      Parties wish to resolve any and all disputes, claims, complaints,
      grievances, charges, actions, petitions and demands that
      they  may have against each other, including, but not limited
      to, any and all claims arising or in any way relating to Executive’s
      employment with or separation from
Company.

              


      

       

      NOW
THEREFORE, in consideration of the mutual promises made herein, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:

       

      AGREEMENT

       

      
        	
                1.

              	
                Defined
      Terms.  Any
      capitalized terms not defined in this Separation Agreement shall have the
      meanings attributed to them in the Employment
  Agreement.

              


      

       

      
        	
                2.

              	
                Termination
      of Employment Agreement.  Except as provided in Section 7
      below, Company and Executive agree that the Employment Agreement is hereby
      terminated as of the Termination Date, and except as set forth in Section
      7 below, all rights and obligations of the parties pursuant to the
      Employment Agreement shall terminate as of the Termination
      Date.  Executive has separately tendered a letter resigning his
      positions as Chief Executive Officer of the Company, and as a director of
      the Company.

              


      

       

      
        	
                3.

              	
                Receipt
      of All Wages Due.  Company
      shall pay all wages and compensation due and owing to Executive as of the
      Termination Date, including, without limitation, any and all of
      Executive’s accrued but unused vacation and reimbursable business-related
      expenses supported by proper documentation and submitted pursuant to the
      Company’s expense reimbursement policy.  Company and Executive
      agree that such wages and compensation are as set forth on Exhibit 1
      attached hereto.  Executive agrees and acknowledges that, upon
      payment of such amounts, Company will have paid all wages and compensation
      due and owing to Executive as of the date
  hereof.

              


      

       

      
        	
                4.

              	
                Additional
      Separation Payment.  In
      consideration for the waivers, releases and covenants set forth herein,
      the Company will continue payment of Executive’s Annual Base Salary (as
      defined in the Employment Agreement) for a period of thirty (30) days
      following the Termination Date, in accordance with the Company’s regular
      payroll practices (pro-rated for partial periods, and setting off from the
      first payment the pro-rated May compensation paid pursuant to Section 3
      above).  For avoidance of doubt, Executive will not be eligible
      for any other additional cash compensation, whether under the Employment
      Agreement or otherwise, including without limitation any entitlement under
      any executive bonus plan or pension plan referenced in the Employment
      Agreement.

              


      

       

      
        	
                5.

              	
                No
      Equity Interest.  Executive
      acknowledges and agrees that Executive is not entitled to any equity
      interest in the Company or any option or right with respect to any such
      equity interest, notwithstanding anything to the contrary in the
      Employment Agreement or in any other agreement between the Company and
      Executive.

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      
        	
                6.

              	
                Benefits.  The
      Company will
      maintain health and medical insurance benefits for Executive and any of
      his eligible and participating dependents, pursuant to the Company’s
      health insurance plan, through the end of the month in which Executive
      resigns his employment.  Thereafter, Executive and said
      dependents shall cease to be active participants under the Company’s
      health and medical benefit plans in accordance with the terms of those
      plans, and no additional health or medical benefits shall accrue to
      Executive or his dependents.  Executive will be entitled to
      continue his and/or his eligible dependents’ current health and medical
      insurance coverage, if any, in accordance with the provisions of COBRA, as
      applicable, and will receive notice of any such COBRA continuation rights
      under separate cover.  Executive’s participation in all other
      benefits and incidents of employment will terminate on the Termination
      Date, except as required by governing
law.

              


      

       

      
        	
                7.

              	
                Nondisclosure,
      Noncompetition and Invention Assignment.  Executive
      and the Company acknowledge and agree
that:

              


      

       

      
        	
                 
      

              	
                a.

              	
                Section
      5 (b) through (e) of the Employment Agreement (“Non-Disclosure,
      Inventions, Acknowledgement, and Enforceability”) will remain in effect
      following the Termination Date for the periods stated in such
      Section.  Executive shall continue to maintain the
      confidentiality of all confidential and proprietary information of the
      Company and shall continue to comply with the terms and conditions of such
      Section.

              


      

       

      
        	
                 
      

              	
                b.

              	
                Executive
      shall return all of the company’s property except laptop computer, and
      return or destroy confidential and proprietary information in executive’s
      possession to the Company by five days after the Effective Date of this
      Agreement.

              


      

       

      
        	
                 
      

              	
                c.

              	
                Section
      7(a) of the Employment Agreement (“Indemnification”) will remain in effect
      for a period of 3 years following Termination
  Date.

              


      

       

      
        	
                 8.

              	
                Release
      of Claims.  Executive
      agrees that the additional consideration provided for in this Agreement
      represents settlement in full of all outstanding obligations owed to
      Executive by the Company and/or its officers, managers, supervisors,
      members, agents and employees.  Executive, on Executive’s own
      behalf, and on behalf of Executive’s heirs, representatives, executors,
      administrators, attorneys, family members, executors, agents, successors
      in interest, and assigns, hereby fully, knowingly and forever releases the
      Company and its past, present and future owners, parents, subsidiaries,
      divisions, affiliates, related entities, joint ventures, partners and
      members, as well as each of their respective past, present and future
      directors, officers, investors, shareholders, administrators, agents,
      associates, representatives, employees, attorneys, predecessors,
      successors and assigns, and any and all of them (the “Releasees”) from any
      and all liability, actions, causes of action, claims, charges, complaints,
      demands, grievances, promises, obligations, losses, damages, injuries and
      legal responsibilities, of any type whatsoever, whether known or unknown,
      unforeseen, unanticipated, unsuspected or latent, that are based upon,
      relate to or arise out of any matters of any kind (collectively,
      “Claims”), that Executive may possess arising from any omissions, acts or
      facts that have occurred up until and including the Effective Date of this
      Agreement including, without
limitation:

              


      

       

      
        
          	
                	
                  (a)

                	
                  any
      and all claims relating to or arising from Executive’s employment
      relationship with the Company and the termination of that relationship,
      including, without limitation, Executive’s employment agreement and the
      termination of that agreement;
and

                


        

      

       

      
        
          	
                	
                  (b)

                	
                  any
      and all claims under the law of any jurisdiction including, but not
      limited to, wrongful discharge of employment, retaliation, constructive
      discharge from employment, termination in violation of public policy,
      discrimination, harassment, breach of contract (both express and implied),
      breach of a covenant of good faith and fair dealing (both express and
      implied), whistleblowing claims, promissory estoppel, negligent or
      intentional infliction of emotional distress, negligent or intentional
      misrepresentation, negligent or intentional interference with contract or
      prospective economic advantage, fraud, breach of fiduciary duty, breach of
      the duty of loyalty, unfair business practices, defamation, libel,
      slander, negligence, personal injury, assault, battery, invasion of
      privacy, false imprisonment, and conversion;
and

                


        

      

       

      
        
          	
                	
                  (c)

                	
                  any
      and all claims for violation of any federal, state or municipal statute,
      laws, or ordinances, including, but not limited to, Title VII of the Civil
      Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination
      in Employment Act of 1967, the Americans with Disabilities Act of 1990,
      the Fair Labor Standards Act, the Executive Retirement Income Security Act
      of 1974, The Worker Adjustment and Retraining Notification Act, the Older
      Workers Benefit Protection Act, the Family and Medical Leave Act, the
      California Family Rights Act, the California Fair Employment and Housing
      Act, and the California Labor Code, Section 1981 of the Civil Rights Act
      of 1866, the Equal Pay Act of 1963, the Consolidated Omnibus Budget
      Reconciliation Act of 1985 (COBRA), Executive Order 11141, the Executive
      Retirement Income Security Act  of 1974, the California Civil
      Code, the California Business & Professions Code, the Code of Federal
      Regulations, the California Code of Regulations, and any applicable
      California Industrial Welfare Commission Order;
  and

                


        

      

       

      
        
           


        

        
          -2-

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  (d)

                	
                  any
      and all claims for violation of the federal, or any state, constitution;
      and

                


        

      

       

      
        
          	
                	
                  (e)

                	
                  any
      and all claims arising out of any other laws and regulations relating to
      compensation, wages and hours of work, leaves, employment or employment
      discrimination, harassment or retaliation;
and

                


        

      

       

      
        
          	
                	
                  (f)

                	
                  any
      claim for any loss, cost, damage, or expense arising out of any dispute
      over the non-withholding or other tax treatment of any of the proceeds
      received by Executive as a result of this Agreement;
  and

                


        

      

       

      
        
          	
                	
                  (g)

                	
                  any
      claim as to any equity interest in the Company or its subsidiaries, or any
      option or right with respect thereto;
and

                


        

      

       

      
        
          	
                	
                  (h)

                	
                  any
      and all claims for attorneys’ fees and
costs.

                


        

      

       

      The
Company and Executive agree that the release set forth in this section shall be
and remain in effect in all respects as a complete general release as to the
matters released.  This release does not extend to any obligations
incurred under this Agreement.

       

      
        	
                9.

              	
                Acknowledgement
      of Waiver of Claims Under ADEA.  Executive
      acknowledges that Executive is waiving and releasing any rights Executive
      may have under the Age Discrimination in Employment Act of 1967 (“ADEA”)
      and that this waiver and release is knowing and
      voluntary.  Executive and the Company agree that this waiver and
      release does not apply to any rights or claims that may arise under ADEA
      after the Effective Date of this Agreement.  Executive
      acknowledges that the consideration given for this waiver and release
      Agreement is in addition to anything of value to which Executive was
      already entitled.  Executive further acknowledges that Executive
      has been advised by this writing
that:

              


      

       

      
        
          	
                	
                  (a)

                	
                  he
      should consult with an attorney prior to executing this Agreement;
      and

                


        

      

       

      
        
          	
                	
                  (b)

                	
                  he
      has up to twenty-one (21) days within which to consider this Agreement;
      and

                


        

      

       

      
        
          	
                	
                  (c)

                	
                  to
      the extent that Executive takes less than twenty-one (21) days to consider
      this Agreement prior to execution, Executive acknowledges that Executive
      had sufficient time to consider this Agreement and that Executive
      expressly, voluntarily and knowingly waives any additional time,
      and

                


        

      

       

      
        
          	
                	
                  (d)

                	
                  he
      has seven (7) days following Executive’s execution of this Agreement to
      revoke the Agreement; and

                


        

      

       

      
        
          	
                	
                  (e)

                	
                  this
      Agreement shall not be effective until the revocation period has expired;
      and

                


        

      

       

      
        
          	
                	
                  (f)

                	
                  nothing
      in this Agreement prevents or precludes Executive from challenging or
      seeking a determination in good faith of the validity of this waiver under
      the ADEA, nor does it impose any condition precedent, penalties or costs
      from doing so, unless specifically authorized by federal
    law.

                


        

      

       

      Any
revocation of this agreement under paragraph 9(d) must be in writing and sent
within the stated time period to Patient Safety Technologies, Inc., 43460 Ridge
Park Drive, Suite 140, Temecula, CA 92591, Attn.: President.

       

      
        	
                10.

              	
                Civil
      Code Section 1542.  Executive
      represents that Executive is not aware of any claim by Executive’s other
      than the claims that are released by this Agreement.  Executive
      acknowledges that Executive has had the opportunity to be advised by legal
      counsel and is familiar with the provisions of California Civil Code
      Section 1542, which provides as
follows:

              


      

       

      
        
           


        

        
          -3-

          
            

          

        

        
           


        

      

       

      A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.

       

      Executive,
being aware of said code section, agrees to expressly waive any rights Executive
may have thereunder, as well as under any other statute or common law principles
of similar effect.

       

      
        	
                11.

              	
                No
      Pending or Future Lawsuits.  Executive
      represents that Executive has no lawsuits, Claims, or actions pending in
      Executive’s name, or on behalf of any other person or entity, against the
      Company or any other person or entity referred to
      herein.  Executive also represents that Executive will not bring
      any Claims on Executive’s own behalf or on behalf of any other person or
      entity against the Company, the Releasees, or any other person or entity
      referred to herein.

              


      

       

      
        	
                12.

              	
                Confidentiality.  The Parties
      acknowledge that Executive’s agreement to keep the terms and conditions of
      this Agreement confidential, and to refrain from any defamation or
      disparagement of the Company, its officers and directors, is a material
      factor on which all Parties relied in entering into this
      Agreement.  Executive hereto agrees to use Executive’s best
      efforts to maintain in confidence the existence of this Agreement, the
      contents and terms of this Agreement, and the consideration for this
      Agreement (hereinafter collectively referred to as “Severance
      Information”).  Executive agrees to take every reasonable
      precaution to prevent disclosure of any Severance Information to third
      parties, and agrees that there will be no publicity, directly or
      indirectly, concerning any Severance Information.  Executive
      agrees to take every precaution to disclose Severance Information only to
      those attorneys, accountants, governmental entities, and family members
      who have a reasonable need to know of such Severance
      Information.

              


      

       

      
        	
                13.

              	
                No
      Cooperation.  Executive
      agrees Executive will not act in any manner that might damage the business
      of the Company.  Executive agrees that Executive will not
      encourage, counsel or assist any attorneys or their clients in the
      presentation or prosecution of any disputes, differences, grievances,
      claims, charges, or complaints by any third party against any of the
      Releasees, unless under a subpoena or other court order to do
      so.  Executive shall inform the Company in writing within three
      (3) days of receiving any such subpoena or other court
    order.

              


      

       

      
        	
                14.

              	
                Mutual
      Non-Disparagement Commitment.  Each of
      Executive and the Company agrees to refrain from any defamation, libel or
      slander of the other Party and/or the Releasees, and any tortious
      interference with the contracts, relationships and prospective economic
      advantage of the other Party and/or the Releasees.   The
      Company shall only provide dates of employment, title and salary
      information to potential future employers of Executive, unless otherwise
      mutually agreed.

              


      

       

      
        	
                15.

              	
                Breach.  Executive
      acknowledges and agrees that any breach of any provision of this
      Agreement, except as permitted by Paragraph 9(f), shall constitute a
      material breach of this Agreement and shall entitle the Company
      immediately to recover and/or cease the severance benefits provided to
      Executive under this Agreement and will further entitle the Company and/or
      its officers and/or its directors to recover any additional damages,
      including attorney’s fees and costs, allowed by law.  Executive
      shall also be responsible to the Company and/or its officers and/or its
      directors for all costs, attorneys’ fees and any and all damages incurred
      by the Company (a) enforcing the obligation, including the bringing
      of any suit to recover the monetary consideration, and (b) defending
      against a claim or suit brought or pursued by Executive in violation of
      this Agreement.

              


      

       

      
        	
                16.

              	
                No
      Admission of Liability.  The Parties
      understand and acknowledge that this Agreement constitutes a compromise
      and settlement of actual or potential disputed claims.  No
      action taken by the Parties hereto, or either of them, either previously
      or in connection with this Agreement shall be deemed or construed to
      be:

              


      

       

      
        
          	
                	
                  (a)

                	
                  an
      admission of the truth or falsity of any claims made or any potential
      claims; or

                


        

      

       

      
        
           


        

        
          -4-

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  (b)

                	
                  an
      acknowledgment or admission by either party of any fault or liability
      whatsoever to the other party or to any third
  party.

                


        

      

       

      
        	
                17.

              	
                Costs.  The Parties
      shall each bear their own costs, expert fees, attorneys’ fees and other
      fees incurred in connection with this Agreement, except as provided
      herein.

              


      

       

      
        	
                18.

              	
                Arbitration.  The Parties
      agree that any and all disputes arising out of the terms of this
      Agreement, their interpretation, and any of the matters herein released,
      shall be subject to binding arbitration in Los Angeles County before the
      American Arbitration Association under its National Rules for the
      Resolution of Employment Disputes, supplemented by the California Code of
      Civil Procedure.  The Parties agree that the prevailing party in
      any arbitration shall be entitled to injunctive relief in any court of
      competent jurisdiction to enforce the arbitration award.  The
      Parties agree that the prevailing party in any arbitration shall be
      awarded its reasonable attorneys’ fees and costs.  The Parties hereby agree to
      waive their right to have any dispute between them resolved in a court of
      law by a judge or jury.  This Paragraph will not prevent
      either party from seeking injunctive relief (or any other provisional
      remedy) from any court having jurisdiction over the Parties and the
      subject matter of their dispute relating to the obligations of either of
      the Parties under this Agreement and the Employment
    Agreement.

              


      

       

      
        	
                19.

              	
                Authority.  Each of the
      Company and Executive represents and warrants that they have the capacity
      to act on their own behalf and on behalf of all who might claim through
      them and to bind them to the terms and conditions of this
      Agreement.  Each party warrants and represents that there are no
      liens or claims of lien or assignments in law or equity or otherwise of or
      against any of the Claims or causes of action released
    herein.

              


      

       

      
        	
                20.

              	
                No
      Representations.  Each party
      represents that it has had the opportunity to consult with an attorney,
      and has carefully read and understands the scope and effect of the
      provisions of this Agreement.  In entering into this Agreement,
      neither party has relied upon any representations or statements made by
      the other party hereto which are not specifically set forth in this
      Agreement.  Further, Executive acknowledges and agrees that
      Executive has made such investigation of the facts pertaining to this
      Agreement and all matters contained herein as Executive deems necessary,
      desirable or appropriate and agrees that the release provided for herein
      shall remain in all respects effective and enforceable and not subject to
      termination or rescission by reason of any later discovery of new,
      different or additional facts.

              


      

       

      
        	
                21.

              	
                Severability.  In the
      event that any provision, or any portion thereof, becomes or is declared
      by a court of competent jurisdiction to be illegal, unenforceable or void,
      this Agreement shall continue in full force and effect without said
      provision or portion of said
provision.

              


      

       

      
        	
                22.

              	
                Entire
      Agreement.  This
      Agreement represents the entire agreement and understanding between the
      Company and Executive concerning the subject matter of this Agreement and
      Executive’s relationship with the Company, and supersedes and replaces any
      and all prior agreements and understandings between the Parties concerning
      the subject matter of this Agreement and Executive’s relationship with the
      Company, with the exception of Section 5 of the Employment
      Agreement.

              


      

       

      
        	
                23.

              	
                No
      Waiver.  The failure
      of the Company to insist upon the performance of any of the terms and
      conditions in this Agreement, or the failure to prosecute any breach of
      any of the terms and conditions of this Agreement, shall not be construed
      thereafter as a waiver of any such terms or conditions.  This
      entire Agreement shall remain in full force and effect as if no such
      forbearance or failure of performance had
  occurred.

              


      

       

      
        	
                24.

              	
                No
      Oral Modification.  This
      Agreement may only be amended in a writing signed by Executive and the
      Company.

              


      

       

      
        	
                25.

              	
                Governing
      Law.  This
      Agreement shall be construed, interpreted, governed, and enforced in
      accordance with the laws of the State of California, without regard to
      choice-of-law provisions.  Executive hereby consents to personal
      and exclusive jurisdiction and venue in the State of
      California.

              


      

       

      
        	
                26.

              	
                Effective
      Date. This
      Agreement will become effective seven (7) days after the date on which it
      is last signed below (the “Effective Date”), unless revoked in writing by
      Executive prior to that time.

              


      

       

      
        
           


        

        
          -5-

          
            

          

        

        
           


        

      

       

      
        	
                27.

              	
                Counterparts.  This
      Agreement may be executed in counterparts, and each counterpart shall have
      the same force and effect as an original and shall constitute an
      effective, binding agreement on the part of each of the
      undersigned.

              


      

       

      
        	
                28.

              	
                Voluntary
      Execution of Agreement.  This
      Agreement is executed voluntarily and without any duress or undue
      influence on the part or behalf of the Parties hereto, with the full
      intent of releasing all claims.  The Parties acknowledge
      that:

              


      

       

      
        
          	
                	
                  (a)

                	
                  They
      have read this Agreement, and have had a full and ample opportunity to
      study this Agreement; and

                


        

      

       

      
        
          	
                	
                  (b)

                	
                  They
      have been represented in the preparation, negotiation, and execution of
      this Agreement by legal counsel of their own choice or that they have
      voluntarily declined to seek such counsel;
and

                


        

      

       

      
        
          	
                	
                  (c)

                	
                  They
      understand the terms and consequences of this Agreement and of the
      releases it contains; and

                


        

      

       

      
        
          	
                	
                  (d)

                	
                  They
      are fully aware of the legal and binding effect of this
      Agreement.

                


        

      

       

      IN
WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

       

      
        
          
            
              	
                      PATIENT
      SAFETY TECHNOLOGIES, INC.

                    	
                      DAVID
      I. BRUCE

                    
	 
      	 
      
	
                      Dated:
      May 6, 2009

                    	
                      Dated:
      May 6, 2009

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Steven H. Kan

                    	 
      	
                      By:

                    	
                      /s/ David I. Bruce

                    
	 
      	
                      Steven
      H. Kane, Chairman

                    	 
      


            

          

        

      

       

      Exhibit
1

      


      Compensation
Payable to Executive

      


      Company
agrees to pay all Patient Safety Technologies, Inc. and SurgiCount Medical, Inc.
expense incurred by David Bruce through May 5, 2009.  Expenses will be
paid upon receipt of expense report.

      


      Accrued
Vacation Time:  $8,750.00  (Eight thousand seven
hundred-fifty and no/l00)

      


      May 2008
Base Salary (pro-rated through Termination Date): $1,814.40 (One thousand eight
hundred fourteen and 40/100)



      
        
           


        

        
          -6-