Document:

Unassociated Document

    Exhibit
10.9

    

    The
warrants represented by this Warrant Certificate and the shares of Common Stock
of Aerosonic Corporation that are issuable pursuant to them have not been
registered under either the United States Securities Act of 1933 or the
securities laws of any state of the United States.  The warrants and
the shares issuable pursuant to them cannot be offered for sale or sold at any
time, as a whole or in part, unless the transaction is registered under the
United States Securities Act of 1933 and every applicable state securities law
or qualifies for an available exemption from registration under those
laws.  As a condition to allowing any transfer of the warrants and the
shares issuable pursuant to them, Aerosonic Corporation may require the
transferee or transferor to deliver to it an opinion of counsel or other
evidence satisfactory to it that confirms that the transfer has been registered
under all applicable state and federal securities laws of the United States or
is exempt from registration under those laws.

    

    FORM
OF

    

    WARRANT
CERTIFICATE

    

    
      	
              No.
      _____

            	
                ________
      Warrants

            

    

    

    AEROSONIC
CORPORATION

    

    COMMON
STOCK PURCHASE WARRANTS

    

    Void
after 5:00 P.M., New York City time, on April 10, 2015.

    

    AEROSONIC CORPORATION (the
“Company”),
a Delaware corporation, certifies that Martin L. Schaffel or
registered assigns (the “Registered
Owner”) is the owner of _____________ Common Stock Purchase Warrants
of the Company, each of which entitles the Registered Owner to purchase from the
Company pursuant to the terms and conditions of this Warrant Certificate one
share of the Common Stock of the Company at a purchase price of $.64 (the
“Warrant
Price”).  The Common Stock Purchase Warrants represented by
this Warrant Certificate (each a “Warrant”
and, collectively, the “Warrants”)
expire at 5:01 P.M., New York City time, on April 10, 2015 (the “Expiration
Date”), and are subject to the terms and conditions set forth in this
Warrant Certificate.  The Warrant Price and the amount and character
of securities issuable pursuant to the exercise of the Warrants are subject to
adjustment as provided in Sections 7, 8, and 9 of this
Warrant Certificate.  This Warrant Certificate constitutes an
agreement between the Company and the Registered Owner.

    

    1.           Separately
Transferable Warrants.

    

    The
Warrants were issued in connection with the issuance by the Company and its
subsidiaries (as co-obligors) of a 14% Subordinated Note due April 10, 2010,
(the “Subordinated
Note” and
pursuant to that certain loan agreement executed as of May 14, 2009 (the “Loan
Agreement”) with Common Stock Purchase Warrants issued to the Registered Owner
(0.25 shares of Common Stock of the Company for each $1.00 of principal amount
of Subordinated Note on the date of each Borrowing).  The Warrants
collectively evidence, as of the date when they were originally issued, as
stated at the end of this Warrant Certificate (the “Original Issue
Date”), the right to purchase up to _________ shares of Common Stock of
the Company at the Warrant Price for each share, subject to adjustment as
provided in Sections
7, 8, and 9 of this Warrant Certificate.  The Warrants are
detached and separately transferable from the Subordinated Note at any time
after the Original Issue Date.

    

    2.           Common Stock
Issuable.

    

    As used
in this Warrant Certificate, “Common
Stock” means all the authorized capital stock of the Company (however
classified or designated and whether authorized on or after the Original Issue
Date) that confers on the holders of it, as a class, the following
rights:

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              (a)

            	
              the
      right to all or a portion of the current dividends and liquidating
      distributions of the Company, without limitation as to amount, but after
      the payment of dividends and distributions on any shares of capital stock
      entitled to preference; and

            

    

    

    
      	
               
      

            	
              (b)

            	
              in
      the absence of contingencies, the right to vote for the election of a
      majority of the directors of the Company (even if those voting rights have
      been suspended by the occurrence of a
  contingency).

            

    

    

    On the
Original Issue Date, the Common Stock consisted of the Company’s $.40 par value
common stock.

    

    3.           Exercise of
Warrants.

    

    The
Warrants are exercisable by the Registered Owner, as a whole, in part, or in
increments at any time or from time to time during the period beginning on the
one-year anniversary of the Original Issue Date and ending on the Expiration
Date. To validly
exercise a Warrant, the Registered Owner must deliver to the Company at its
principal office at 1212 North Hercules Avenue, Clearwater, Florida 33765, this
Warrant Certificate and a Subscription Notice in substantially the form appended
to this Warrant Certificate, duly executed by the Registered Owner or a duly
authorized attorney-in-fact for the Registered Owner, and full payment of the
Warrant Price for each share of Common Stock to be purchased pursuant to the
exercise of the Warrant. The Registered Owner may pay the aggregate Warrant
Price for the shares of Common Stock to be purchased pursuant to the exercise of
any of the Warrants by any combination of the following methods:

    

    
      	
               
      

            	
              (a)

            	
              delivery
      to the Company of a bank draft, official bank check, or personal or
      corporate check payable to the order of the
  Company;

            

    

    

    
      	
               
      

            	
              (b)

            	
              transfer
      to the Company of outstanding shares of Common Stock at the then current
      market price of the Common Stock on the date of the exercise of the
      Warrants (calculated based upon the volume weighted average sales price of
      a share of Common Stock for the five-trading days preceding the date of
      the exercise of the Warrants);

            

    

    

    
      	
               
      

            	
              (c)

            	
              delivery
      to the Company of the Registered Owner’s written election to withhold a
      portion of the shares of Common Stock otherwise issuable pursuant to the
      exercise of the Warrants; or

            

    

    

    
      	
               
      

            	
              (d)

            	
              delivery
      to the Company of a copy of irrevocable instructions that have been
      provided by the Registered Owner to a financial institution or a
      securities broker-dealer to pay promptly to the Company all or a portion
      of the proceeds from either a sale of the shares of Common Stock to be
      purchased pursuant to the exercise of the Warrants or a loan to be secured
      by a pledge of all or a portion of those
shares.

            

    

    

    Shares of
Common Stock that are withheld by the Company or delivered to the Company by the
Registered Owner in payment of all or any portion of the aggregate Warrant Price
will be valued for purposes of the payment at their Market Value on the exercise
date of the Warrants, as determined in accordance with Section 4 of this
Warrant Certificate.  The date when the Registered Owner has satisfied
all the preceding requirements will constitute the exercise date of the
Warrants.  If the Registered Owner exercises fewer than all the
Warrants and the Warrants have not expired, the Company promptly shall reissue
and deliver to the Registered Owner at the Company’s sole expense, in exchange
and substitution for this Warrant Certificate, a new Warrant Certificate of like
tenor in the name of the Registered Owner (or as the Registered Owner otherwise
directs) that specifies on its face the number of Warrants that remain
exercisable.

    

    4.           Delivery
of Stock Certificates.

    

    Upon the
exercise of any of the Warrants, the Company shall issue and deliver to the
Registered Owner within five (5) calendar days after the exercise date one or
more stock certificates in the name of the Registered Owner or its assigns for
that number of fully paid and non-assessable shares of Common Stock that the
Registered Owner purchased pursuant to the exercise of the Warrants, plus,
instead of any fractional share of Common Stock to which the Registered Owner
otherwise would be entitled, a cash sum equal to the product of (a) that
fraction, multiplied by (b) the “Market Value” of one full share of Common Stock
as of the exercise date of the Warrants.  The Company shall pay all
costs and taxes associated with the issuance of every stock
certificate.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    For purposes of the Warrants and this
Warrant Certificate, the “Market
Value” of one full share of Common Stock on the exercise date of a
Warrant means: (i) the volume weighted average sales price of a share of Common
Stock on the NYSE Amex or other principal national securities exchange on which
the Common Stock is then traded for the five consecutive trading days preceding
the exercise date of the Warrant, or (ii) if the Common Stock is not traded on a
national securities exchange, the mean arithmetic average of the high bid and
the low asked quotations for a share of Common Stock in the “over-the-counter”
market, as reported on the OTC Bulletin Board or, if quotations are not
available on the OTC Bulletin Board, as reported in the “pink sheets” compiled
by Pink Sheets, LLC, for the five consecutive trading days preceding the
exercise date of the Warrant.  If the Common Stock is not publicly
traded, the “Market Value” of one full share of Common Stock on the exercise
date of a Warrant will be its fair market value, as determined in good faith by
an independent appraisal or by agreement between the Company and the Registered
Owner.

    

    5.           Exchange or Transfer of
Warrants.

    

    Subject
to the transfer restrictions set forth in Section 6 of this
Warrant Certificate, the Warrants are transferable at any time and from time to
time, as a whole or in part, but only on the books of the Company and only by
the Registered Owner or the duly authorized attorney-in-fact of the Registered
Owner.  The Company may treat the Registered Owner as the absolute
owner of the Warrants for all purposes, notwithstanding any notice to the
contrary.  If the Registered Owner properly endorses and surrenders
this Warrant Certificate to the Company for exchange, the Company shall issue
and deliver to, or on the order of, the Registered Owner one or more new Warrant
Certificates of like tenor in the name of the Registered Owner (or as the
Registered Owner otherwise directs) that specify on their face the aggregate
number of Warrants that remain exercisable.  The Company shall pay all
costs and taxes associated with the exchange or transfer of the
Warrants.

    

    6.           Transfer
Restrictions.

    

    (a)           General
Restrictions.  The Registered
Owner is permitted to transfer all or any portion of the Warrants to an
affiliate (as defined below).  For purposes of this Warrant
Certificate, “affiliate”
means: (a) a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
the Registered Owner, (b) a spouse or lineal descendant of the Registered Owner,
or (c) any trust principally for the benefit of the Registered Owner or any
person described in the preceding clauses (a) or  (b).

    

    (b)           Securities
Law Restrictions.  The Warrants and
the shares of Common Stock issuable pursuant to the exercise of the Warrants
were not registered under the United States Securities Act of 1933 or the
securities laws of any state of the United States when the Warrants were
originally issued.  Consequently, the Warrants and the shares of
Common Stock that are issued on exercise of the Warrants without registration
under the United States Securities Act of 1933 cannot be offered for sale, sold,
assigned, or otherwise transferred at any time, unless the transaction is
registered under the United States Securities Act of 1933 and any applicable
state securities laws or qualifies for an available exemption from registration
under those laws.  Each Warrant Certificate issued in exchange or
substitution for this Warrant Certificate will bear a legend substantially
identical to the one appearing on the face of this Warrant
Certificate.  In addition, the stock certificate representing any
shares of Common Stock that are issued pursuant to the exercise of the Warrants
will bear the following legend, unless those shares are registered under the
United States Securities Act of 1933 when issued:

    

    The
shares of common stock of Aerosonic Corporation that are represented by this
certificate have not been registered under the United States Securities Act of
1933 or the securities laws of any state of the United States.  The
shares cannot be offered for sale or sold at any time, as a whole or in part,
unless the transaction is registered under the United States Securities Act of
1933 and every applicable state securities law or qualifies for an available
exemption from registration under those laws.  As a condition to
allowing any transfer of the shares, Aerosonic Corporation may require the
transferee or transferor to deliver to it an opinion of counsel or other
evidence satisfactory to it that confirms that the transfer has been registered
under all applicable state and federal securities laws of the United States or
is exempt from registration under those laws.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    The
Company may require, as a condition to allowing any exercise, exchange, or
transfer of a Warrant or any shares of Common Stock previously issued pursuant
to the exercise of the Warrant (and not registered under the United States
Securities Act of 1933 when issued) that the transferee or the Registered Owner
(as the case might be) deliver to the Company either (a) evidence that the
exercise, exchange, or transfer has been registered under the United States
Securities Act of 1933 and every applicable state securities law or (b) an
opinion of legal counsel or other evidence satisfactory to the Company that the
transaction is exempt from registration under those laws.  The first
Registered Owner of the Warrants represents to the Company that it is acquiring
the Warrants for its own account, as principal, with the intent of holding the
Warrants for investment, and is not acquiring the Warrants as an agent, nominee,
or representative for the account and benefit of another person or with the
intent of participating directly or indirectly in any distribution or
underwriting of the Warrants or the shares of Common Stock issuable on exercise
of the Warrants in contravention of the registration requirements of the state
and federal securities laws of the United States.

    

    7.           Anti-Dilution.

    

    If the
Company does any of the following dilutive acts (a “Dilutive
Event”) at any time before the exercise or expiration of the
Warrants:

    

    
      	
               
      

            	
              (a)

            	
              declares
      or distributes to all the holders of Common Stock a dividend payable in
      shares of Common Stock;

            

    

    

    
      	
               
      

            	
              (b)

            	
              subdivides
      the number of outstanding shares of Common Stock into a greater number of
      shares of Common Stock pursuant to a stock
  split;

            

    

    

    
      	
               
      

            	
              (c)

            	
              contracts
      the number of outstanding shares of Common Stock into a fewer number of
      shares of Common Stock pursuant to a reverse stock
  split;

            

    

    

    
      	
               
      

            	
              (d)

            	
              makes
      a distribution of cash, property, or securities (other than Common Stock)
      to all the holders of Common Stock as a return of capital or as a partial
      or complete liquidation;

            

    

    

    
      	
               
      

            	
              (e)

            	
              reclassifies
      all the outstanding shares of Common Stock into the same or a different
      number of shares of Common Stock, with or without par value, or into
      shares of any other class or classes of
stock;

            

    

    

    
      
        	
                
                

              	
                (f)

              	
                becomes
      a subsidiary of any other entity pursuant to a tender offer or exchange
      offer, or merges into, consolidates with, effects a share exchange with,
      or transfers all or substantially all its assets to, any other entity;
      or

              

      

    

     

    
      
      

    

    
      
        	
              	
                (g)

              	
                declares
      or distributes to all the holders of Common Stock, without their payment
      therefor, (i) a noncash dividend payable in any property or securities of
      the Company (other than Common Stock), or (ii) cash, property, or
      securities (other than Common Stock) pursuant to a spin-off, split-up,
      reclassification, recapitalization, combination of shares, or similar
      rearrangement of the Company’s capital
stock;

              

      

    

    

    then, on
the exercise of a Warrant after the record date or occurrence of each Dilutive
Event, the Registered Owner will be entitled to receive in exchange for the
Warrant Price, in addition to, or in substitution for, each share of Common
Stock otherwise issuable pursuant to the exercise of the Warrant, the additional
or different amount of shares of Common Stock and other securities and property
(including cash) that the Registered Owner would have been entitled to receive
if the Registered Owner had (A) exercised the Warrant immediately before the
record date or occurrence of the first Dilutive Event and had been the record
owner of one share of Common Stock during the period beginning on that date and
ending on the actual exercise date of the Warrant, and (B) had participated in
every ensuing Dilutive Event and retained all shares of Common Stock and all
other or additional securities and property (including cash) receivable during
that period as a result of those Dilutive Events.

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    8.           Warrant
Shares Adjustment.

    

    If the
Company does any of the following dilutive acts (a “Share Adjustment
Event”) at any time after the Original Issue Date:

    

    
      	  	
              (a) 

            	
              issues
      to anyone shares of its Common Stock without
  consideration;

            

    

    

    
      	
               
      

            	
              (b)

            	
              issues
      to anyone any securities that are convertible into, or exchangeable for,
      shares of Common Stock (“Convertible
      Securities”) without consideration;
or

            

    

    

    
      	
               
      

            	
              (c)

            	
              grants
      or issues to anyone any right, option, warrant, or other agreement to
      purchase, subscribe for, or otherwise acquire any shares of Common Stock
      (“Derivative
      Securities”) without
consideration;

            

    

    

    then, in
each case, and regardless of whether the Registered Owner has or exercises any
statutory or contractual preemptive right, the number of shares of Common Stock
then issuable on exercise of a Warrant will be increased simultaneously with the
Share Adjustment Event to the number of shares determined by the following
formula:

    

    
      	
               
      

            	
              NWS
      = [(CSO + WS + NSI) ÷ (CSO + WS)] x WS –
WS

            

    

    

    
      	
               
      

            	
              Where:

            

    

     

    
      	
            	
              
                NWS

              

            	
              =

            	
              The
      number of additional shares of Common Stock issuable on exercise of the
      Warrants as a result of the Share Adjustment
  Event.

            

    

     

    
      	
               
      

            	
              CSO

            	
              =

            	
              The
      number of shares of Common Stock outstanding, excluding (A) the shares of
      Common Stock issuable on exercise of the Warrants, (B) the shares of
      Common Stock issued separately to the original Registered Owner of the
      Warrant on the Original Issue Date in connection with the issuance of the
      Subordinated Note, and (C) any other shares of Common Stock issuable on
      the exercise of any other rights, options, or warrants or on the exchange
      or conversion of any other securities of the
  Company.

            

    

     

    
      	
               
      

            	
              
                WS

              

            	
              =

            	
              
                The
      number of shares of Common Stock issuable on exercise of the Warrant
      immediately before the Share Adjustment
  Event.

              

            

    

     

    
      	
               
      

            	
              NSI

            	
              =

            	
              The
      number of new shares of Common Stock issued in the Share Adjustment Event
      or issuable pursuant to the Convertible Securities or Derivative
      Securities issued in the Share Adjustment
Event.

            

    

     

    All
Warrant share adjustment calculations under this Warrant Certificate are to be
rounded up to the nearest one hundredth of a share.

     

    An
issuance of Convertible Securities that are convertible into, or exchangeable
for, shares of Common Stock without consideration will constitute for purposes
of this Warrant Certificate an issuance of the maximum number of shares of
Common Stock that are issuable on the exchange or conversion of the Convertible
Securities, effective as of the date when the Convertible Securities are sold or
issued.  Similarly, a grant or issuance of Derivative Securities to
purchase, subscribe for, or otherwise acquire shares of Common Stock without
consideration will constitute for purposes of this Warrant Certificate an
issuance of the maximum number of shares of Common Stock issuable pursuant to
the exercise of the Derivative Securities, effective as of the date when the
Derivative Securities were granted or issued.  No further adjustment
of the Warrant Price will be required on the subsequent actual issuance of
shares of Common Stock pursuant to the exercise of the Derivative Securities or
the exchange or conversion of the Convertible Securities.

     

    9.           Warrant Price
Adjustment.

    

    If the
Company does any of the following (a “Price Adjustment
Event”) at any time after the Original Issue Date:

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              (a)

            	
              issues
      to anyone shares of its Common Stock for a purchase price per share lower
      than $2.84 (the “Protected Price”),
      subject to adjustment as provided
below

            

    

    

    
      	
               
      

            	
              (b)

            	
              issues
      to anyone any Convertible Securities that are convertible into shares of
      Common Stock at an exchange or conversion price per share (determined as
      provided below) lower than the Protected Price then in effect;
      or

            

    

    

    
      	
               
      

            	
              (c)

            	
              grants
      to anyone any Derivative Securities to purchase, subscribe for, or
      otherwise acquire any shares of Common Stock at an exercise or purchase
      price per share (determined as provided below) lower than the Protected
      Price then in effect;

            

    

    

    then in
each case, and regardless of whether the Registered Owner has or exercises any
statutory or contractual preemptive right, the Warrant Price then in effect will
be reduced simultaneously with the Price Adjustment Event to a per share price
determined by multiplying the Warrant Price then in effect by the following
fraction:

    

    NWP = OWP
x [(CSO + CSP) ÷ (CSO + CSAP)]

    

    Where:

    

    
      
        	  	
                NWP =
      

              	
                The
      new Warrant Price as a result of the Price Adjustment
    Event.

              

      

    

     

    
      
        	  	
                OWP
      =

              	
                The
      old Warrant Price immediately before the Price Adjustment
      Event.

              

      

    

     

    
      
        	  	
                CSO
      =

              	
                The
      number of shares of Common Stock outstanding, excluding (A) the shares of
      Common Stock issuable on exercise of the Warrants, (B) the shares of
      Common Stock issued separately to the original Registered Owner of the
      Warrant on the Original Issue Date in connection with the issuance of the
      Subordinated Note, and (C) any other shares of Common Stock issuable on
      the exercise of any other rights, options, or warrants or on the exchange
      or conversion of any other securities of the
  Company.

              

      

    

     

    
      
        	  	
                CSP
      =

              	
                The
      number of shares of Common Stock that the purchaser or purchasers of the
      Convertible Securities, Derivative Securities, or shares of Common Stock
      pursuant to the Price Adjustment Event would have received for their
      aggregate investment if the exercise, purchase, exchange, or conversion
      price per share for the shares of Common Stock issued or issuable pursuant
      to the Price Adjustment Event were the Protected Price, instead of the
      lower exercise, purchase, exchange, or conversion price per share actually
      paid or to be paid.

              

      

    

     

    
      
        	  	
                CSAP
      =

              	
                The
      number of shares of Common Stock actually issued or issuable pursuant to
      the Price Adjustment
Event.

              

      

    

     

    All
Warrant Price adjustment calculations under this section are to be rounded down
to the nearest whole cent.

     

    The
Protected Price also will be adjusted following every Price Adjustment Event
according to the formula set forth above, except that “NWP” will refer to the
new Protected Price after the Price Adjustment Event, and “OWP” will refer to
the Protected Price in effect at the time of the Price Adjustment
Event.

     

    A sale or
issuance of Convertible Securities with an exchange or conversion price per
share (determined as provided below) that is lower than the Warrant Price then
in effect will constitute for purposes of this Warrant Certificate a cash sale
or issuance of the maximum number of shares of Common Stock issuable on the
exchange or conversion of the Convertible Securities, effective as of the date
when the Convertible Securities are sold or issued.  Similarly, a
grant or issuance of Derivative Securities with an exercise price per share
(determined as provided below) that is lower than the Warrant Price then in
effect will constitute for purposes of this Warrant Certificate a cash sale or
issuance of the maximum number of shares of Common Stock issuable pursuant to
the exercise of the Derivative Securities, effective as of the date when the
Derivative Securities were granted or issued.  No further adjustment
of the Warrant Price will be required on the subsequent issuance of additional
shares of Common Stock pursuant to the exercise of any Derivative Securities or
the exchange or conversion of any Convertible Securities.  For
purposes of adjusting the Warrant Price to account for a Price Adjustment
Event:

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
               (i)

            	
              the
      exercise price per share of any Derivative Security will be the sum of (A)
      the price per share at which shares of Common Stock are issuable pursuant
      to the exercise of the Derivative Security, plus (B) the consideration per
      share (if any) received by the Company for the grant or issuance of the
      Derivative Security, and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      exchange or conversion price per share of any Convertible Security will be
      the quotient determined by dividing (A) the sum of (1) the consideration
      (if any) received or receivable by the Company for the sale or issuance of
      the Convertible Security, plus (2) the aggregate amount of additional
      consideration (if any) then payable to the Company on the exchange or
      conversion of the Convertible Security, by (B) the number of shares of
      Common Stock then issuable on the exchange or conversion of the
      Convertible Security.

            

    

    

    The value
of any non-cash consideration received or receivable by the Company for the
sale, grant, or issuance of any shares of Common Stock, any Convertible
Securities, or any Derivative Securities will be the fair market value of the
consideration, as determined in good faith by an independent appraisal or by
unanimous approval of the Board of Directors of the Company.

     

    If and to
the extent that shares of Common Stock issuable pursuant to any Derivative or
Convertible Securities are not issued when the exercise, purchase, exchange, or
conversion rights under the Derivative or Convertible Securities expire or
terminate, the Warrant Price will be readjusted to the Warrant Price that would
then be in effect if the Warrant Price adjustment that was made when the
Derivative or Convertible Securities were granted or issued had been made on the
basis of the number of shares of Common Stock actually issued pursuant to the
exercise, purchase, exchange, or conversion rights under the Derivative or
Convertible Securities.

     

    10.           Notice of Dilutive Events and Price
Adjustments.

    

    Whenever
there is an adjustment in the number or kind of securities and other property
(including cash) issuable pursuant to the exercise of the Warrants, the Company
promptly shall deliver to the Registered Owner a notice describing in reasonable
detail the facts requiring the adjustment and the number and kind of securities
and other property (including cash) issuable pursuant to the exercise of the
Warrants after the adjustment.

    

    The
Company shall give the Registered Owner at least 15 days’ advance written notice
of any proposed action that would require an adjustment to either the Warrant
Price or the amount of Common Stock (or other securities or property) issuable
pursuant to the exercise of a Warrant, stating in the notice the proposed issue,
record, or effective date for the action, although any failure to notify the
Registered Owner of a proposed action or any defect in the notice will not
affect the validity of the action.  Concurrently with the occurrence
of a Dilutive Event, a Share Adjustment Event, or Price Adjustment Event, the
Company, at its sole expense, shall cause to be promptly computed in accordance
with the terms of this Warrant Certificate the requisite adjustment to the
Warrant Price or the amount of Common Stock (or other securities or property)
issuable pursuant to the exercise of a Warrant and deliver to the Registered
Owner a certificate that describes the Dilutive Event, Share Adjustment Event,
or Price Adjustment Event requiring the adjustment, sets forth the calculation
of the adjustment, and states the new Warrant Price resulting from the Price
Adjustment Event or the additional number of shares of Common Stock (or other
securities or property) issuable to the Registered Owner pursuant to the
exercise of this Warrant as a result of the Dilutive Event or Share Adjustment
Event.

    

    11.           Listing,
Reservation and Registration of Shares.

    

    The
Company shall list on the NYSE Amex all shares of Common Stock issuable pursuant
to the exercise of the Warrants, and the Company shall maintain that listing
until the Warrants expire or, if sooner, are fully exercised.  The
Company shall reserve from its authorized but unissued shares of Common Stock
and keep available until the Expiration Date, solely for issuance and delivery
pursuant to the exercise of the Warrants, the total number of shares of Common
Stock issuable from time to time pursuant to the Warrants, taking into account
all adjustments pursuant to Sections 7 and 8 of
this Warrant Certificate.  Furthermore, the Company shall take all
necessary or appropriate action to assure that shares of Common Stock that are
issued pursuant to the exercise of the Warrants are validly and legally issued,
fully paid, and nonassessable.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    

    If there
is a change in control of the Company, or if the Company files for bankruptcy,
the Company will immediately register, on behalf of the Registered Owner, the
sale of the shares of Common Stock issued upon exercise of the Warrants and the
shares of Common Stock issued  in connection with the Subordinated
Note (together, the “Registered Owner Shares”).  Further, in the event
the Company does not pay the interest on the Subordinated Note in full when due
on the first day of each month, as required by the Subordinated Note, or if the
Subordinated Note is not paid in full when due, whether at the Maturity Date or
upon acceleration of the Maturity Date as a result of a Default by the Company,
as required by the Subordinated Note, the Company will immediately register, on
behalf of the Registered Owner, the sale of the Registered Owner
Shares.  The Company’s obligations pursuant to this Section 11 relating
to the registration of the sale of the Registered Owner Shares are as follows:
The Company shall use commercially reasonable efforts to (a) prepare and file
with the U.S. Securities and Exchange Commission (the “SEC”) a Registration
Statement  (the “Registration Statement”) in accordance with the
Securities Act of 1933 as soon as practicable after it is obligated to pursuant
to one of the events described above in this Section 11
(“Registration Event”), (b) have the Registration Statement declared effective
by SEC under the Securities Act of 1933 as promptly as practicable, and in any
event within 90 days after the Registration Event, (c) to respond to comments of
the SEC (if any) in connection with that filing, and (d) take all action
necessary or appropriate to obtain all permits, approvals, and registrations
under applicable state securities or “Blue Sky” laws to ensure that the
Registered Owner’s sale of the Registered Owner Shares complies with those
laws.  The Company shall promptly notify the Registered Owner, after
it receives the information, of the time when the Registration Statement becomes
effective or any supplement or amendment to it is filed with the SEC, the
issuance of any stop order, the suspension of the qualification of the shares of
Common Stock for offering or sale in any jurisdiction, any request by the SEC
for amendment of the Registration Statement, or any comments by the SEC on the
Registration Statement, requests by the SEC for additional information, and all
responses to SEC comments or requests for additional information.

    

    12.           Replacement of Warrant
Certificate.

    

    On its
receipt of reasonable evidence of the loss, theft, destruction, or mutilation of
this Warrant Certificate and (in the case of any loss, theft, or destruction) a
written indemnity agreement from the Registered Owner in favor of the Company,
or (in the case of any mutilation) on surrender and cancellation of the
mutilated Warrant Certificate, the Company shall execute and deliver to the
Registered Owner at the Company’s sole expense a new Warrant Certificate of like
tenor in exchange or substitution for the Warrant Certificate that has been
lost, stolen, destroyed, or mutilated.

    

    13.           Stockholder
Communications.

    

    The
Company promptly (and in any event within ten days thereafter) shall notify the
Registered Owner of any change in the address of its principal office and of
every record date established by the Company for any Dilutive Event, for any
Price Adjustment Event, or for otherwise determining stockholders entitled to
vote at any meeting or to receive payment of any dividend or other distribution,
whether made in cash, property, or securities.  In addition, the
Company promptly (and in any event within ten calendar days thereafter) shall
furnish to the Registered Owner (a) all forms, notices, reports, schedules,
proxy statements, and (b) all notices, reports, statements, and other
communications furnished to stockholders of the Company.  The Warrants
and this Warrant Certificate do not confer on the Registered Owner, however, any
rights as a stockholder of the Company.

    

    14.           Anti-Avoidance.

    

    The
Company shall not avoid or seek to avoid (by merger, dissolution,
reorganization, consolidation, sale of assets, amendment of its Articles of
Incorporation, or any other voluntary act, deed, or means) the performance or
observance of any covenant, condition, or stipulation to be performed or
observed by it under this Warrant Certificate, but shall act in good faith at
all times to carry out all provisions of this Warrant Certificate and to take
all other action that is necessary to protect the rights of the Registered
Owner.  In particular, and without limiting the generality of the
foregoing, the Company shall not do any of the following:

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              (a)

            	
              authorize
      any shares of another class of common stock that has the right, in the
      absence of contingencies, to elect a majority of the directors of the
      Company (even if those voting rights have been suspended by the occurrence
      of a contingency) or to receive all or any portion of the current
      dividends and liquidating distributions of the Company after the payment
      of dividends and distributions in respect of any shares of capital stock
      entitled to preferences; or

            

    

    

    
      	
               
      

            	
              (b)

            	
              sell,
      exchange, or transfer all or substantially all the assets of the Company
      to any other person or effect a share exchange with any other entity,
      unless the acquiring party expressly assumes in writing and agrees to be
      bound by all of the terms of this Warrant Certificate, or unless adequate
      provision is made (as determined in the sole discretion of the Registered
      Owner) in connection with the sale, exchange, or transfer to assure that
      the Registered Owner receives pursuant to the exercise of a Warrant the
      securities and property (including cash) to which the Registered Owner is
      entitled pursuant to the Warrant.

            

    

    

    The
foregoing restrictions are not to be construed, however, to preclude the Company
from entering into a transaction (including a merger, sale of assets, share
exchange, reorganization, or other similar transaction) that would result in a
transfer of all or some of the stock or assets of the Company, unless the
transaction is entered into primarily for the purpose of avoiding the
performance of this Warrant Certificate.

    

    15.           Specific
Performance.

    

    The
Company stipulates that any default or threatened default by it in performing or
complying with any term of this Warrant Certificate will cause irreparable harm
and continuing injury to the Registered Owner for which damages and other
remedies at law will be inadequate.  Consequently, if the Company
breaches or threatens to breach any term of this Warrant Certificate, the
Registered Owner will be entitled, without limiting any other available legal or
equitable remedy, to specific performance of this Warrant Certificate or
injunctive relief without proof of actual monetary damage, and reimbursement
from the Company of all costs (as defined in Section 17 of the Warrant
Certificate) incurred by the Registered Owner in enforcing the terms of this
Warrant Certificate.

    

    16.           Notices.

    

    Any
notice, consent, demand, approval, or other communication that is required or
permitted to be given or delivered by the Company to the Registered Owner, or by
the Registered Owner to the Company, under this Warrant Certificate will be
validly given and delivered only if it is in writing (whether or not this
Warrant Certificate expressly provides for it to be in writing) and delivered
personally, by commercial courier, or by first class, postage prepaid, certified
or registered United States mail (whether or not a return receipt is requested
or received by the Company), and addressed to the appropriate party at its
address that is listed in this Warrant Certificate or that is subsequently
designated by a party to the other party by notice given in accordance with this
section.  A validly given notice, consent, demand, approval, or other
communication will be effective and “received” for purposes of this Warrant
Certificate on the earlier of (i) the day when it is actually received, if it is
delivered personally or by commercial courier or (ii) the fifth day after it is
postmarked by the United States Postal Service, if it is delivered by first
class, postage prepaid, United States mail.  The Company and the
Registered Owner shall promptly notify one another of any change in their
mailing addresses that are listed in this Warrant Certificate.

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    17.           Miscellaneous.

    

    The
validity, construction, interpretation, and enforcement of the Warrants and this
Warrant Certificate are governed by the laws of the State of Delaware and the
federal laws of the United States of America, excluding the laws of those
jurisdictions pertaining to the resolution of conflicts with laws of other
jurisdictions.  A waiver, amendment, modification, or termination of
the Warrants or this Warrant Certificate will be valid and effective only if it
is in writing and signed by the Company and the Registered Owner.  In
any litigation between the Company and the Registered Owner that arises out of
the issuance or exercise of the Warrants, the losing party shall reimburse the
prevailing party on demand for all costs incurred by the prevailing party in
connection with the litigation.  The headings of the sections of this
Warrant Certificate are solely for convenient reference and do not constitute
part of the terms and conditions of the Warrants.  This Warrant
Certificate is binding on the successors and assigns of the Company (by
operation of law or otherwise).  Wherever used in this Agreement, (a)
the word “including”
is always without limitation, (b) neuter words should be construed to included
correlative feminine and masculine words, (c) words in the singular number
include words in the plural number and vice versa, (d) the word “person”
includes a group, trust, syndicate, corporation, cooperative, association,
partnership, business trust, joint venture, limited liability company,
unincorporated organization, governmental authority, as well as a natural
person, and (e) the word “costs”
includes all internal expenses, the fees, costs, and expenses of experts,
attorneys, mediators, witnesses, consultants, arbitrators, investigators,
collection agents, and supersedes bonds that are incurred in connection with
settling,
defending, prosecuting, administering, investigating, preparing to defend or
prosecute, or participating in (as a party, witness, or otherwise) any
proceeding, including trial, appellate, mediation, arbitration, bankruptcy, and
administrative proceedings.  Terms not otherwise defined herein shall
have the meanings attributed to those terms in the Loan Agreement, and those
definitions are incorporated by reference into this Warrant
Certificate.

     

    ORIGINAL ISSUE
DATE:  May __, 2009.

    

    
      
        
          	 
      
	
                  [Signature pages follow]

                

        

      

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    
      
        	
                AEROSONIC
      CORPORATION

              
	 
      
	
                By:

              	
                  

              
	 
      	
                Name:

              	
                  

              
	 
      	
                Title:

              	
                  

              

      

    

    

    WITNESSES:

    

    
      
        	
                  

              
	
                Name:

              	
                  

              
	 
      
	
                  

              
	
                Name:

              	
                  

              
	 
      

      

    

    

    [Signatures
continued on next page]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Name
and address of Registered Owner:

    

    Martin L.
Schaffel

    5308 E.
Longboat Blvd.

    Tampa,
FL  33615

    

    
      
        	
                  

              
	
                MARTIN L. SCHAFFEL

              

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AEROSONIC
CORPORATION

    

    SUBSCRIPTION
NOTICE

    (To be
executed by the Registered Owner)

    

    TO:           AEROSONIC
CORPORATION

    

    The
undersigned registered owner of the accompanying Common Stock Purchase Warrant
(the “Warrant”)
exercises the right to purchase the number of shares of the Common Stock of
Aerosonic Corporation set forth below pursuant to the terms and conditions of
the Warrant and tenders payment of the purchase price for those shares (the
“Purchase
Price”) by the following means:

    

    Single Payment Options
(select
one):

    

    
      	
               
      

            	
               ̈

            	
              The
      undersigned encloses a check or bank draft payable to Aerosonic
      Corporation in the sum of the Purchase
Price.

            

    

    

    
      	
               
      

            	
               ̈

            	
              The
      undersigned instructs Aerosonic Corporation to withhold in full payment of
      the Purchase Price __________ of the shares of the Common Stock that are
      issuable pursuant to this exercise of the Warrant and have an aggregate
      Market Value (as determined pursuant to Section 4 of the Warrant
      Certificate) equal to the Purchase
Price.

            

    

    

    
      	
               
      

            	
               ̈

            	
              The
      undersigned transfers to Aerosonic Corporation in full payment of the
      Purchase Price _________ shares of Common Stock of Aerosonic Corporation
      that are registered in the name of the undersigned, represented by the
      enclosed stock certificate, and have an aggregate Market Value (as
      determined pursuant to Section 4 of the Warrant Certificate) equal to the
      Purchase Price.

            

    

    

    Combination Payment Options
(select
all that apply):

    

    
      	
               
      

            	
               ̈

            	
              The
      undersigned encloses a bank check or bank draft payable to Aerosonic
      Corporation in the sum of $ __________ as a partial payment of the
      Purchase Price.

            

    

    

    
      	
               
      

            	
               ̈

            	
              The
      undersigned instructs Aerosonic Corporation to withhold as partial payment
      of the Purchase Price __________ shares of the Common Stock that are
      issuable pursuant to this exercise of the Warrant and have an aggregate
      Market Value (as determined pursuant to Section 4 of the Warrant
      Certificate) equal to $___________.

            

    

    

    
      	
               
      

            	
               ̈

            	
              The
      undersigned transfers to Aerosonic Corporation as partial payment of the
      Purchase Price __________ shares of the Common Stock of Aerosonic
      Corporation that are registered in the name of the undersigned,
      represented by the enclosed stock certificate, and have an aggregate
      Market Value (as determined pursuant to Section 4 of the Warrant
      Certificate) equal to $
___________.

            

    

    

    Please
issue and register in the name or names stated below and deliver to the address
listed below a certificate or certificates representing the number of shares of
Common Stock to be issued pursuant to this exercise of the
Warrant.  If the number of shares of Common Stock to be issued
pursuant to this exercise of the Warrant is fewer than all the shares of Common
Stock that can be purchased pursuant to the Warrant, please reissue to the
undersigned at the address listed below a new Warrant of like tenor for the
remaining shares of Common Stock that can be purchased under the
Warrant.

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    

    INSTRUCTION:  Include
the following representations and warranties if the issuance of the shares to
the Registered Owner pursuant to the exercise of the Warrant is not covered by
an effective registration statement that has been filed by the issuer with the
United States Securities and Exchange Commission pursuant to the Securities Act
of 1933.

    

    The
undersigned represents and warrants to you the following: (a) the undersigned is
purchasing the shares of Common Stock issuable pursuant to this exercise of the
Warrant (the “Warrant
Shares”) for its own account, as principal and not as an agent, nominee,
or representative for the account or benefit of another person or entity, and
with the intent of holding the Warrant Shares for investment purposes without
participating, directly or indirectly, in a distribution or underwriting of any
of the Warrant Shares in contravention of the registration requirements of state
and federal securities laws of the United States; (b) the undersigned is able to
bear the economic risk of an investment in the Warrant Shares and has sufficient
knowledge and experience in financial and business matters to be able to
evaluate the merits, risks, and other factors bearing on the suitability of the
Warrant Shares as an investment for the undersigned, and undersigned has been
afforded an adequate opportunity to evaluate the investment in the Warrant
Shares in light of those factors; (c) the acknowledges understands that the
Warrant Shares have not been registered with either the United States Securities
and Exchange Commission (the “SEC”)
under the Securities Act of 1933 or with the applicable regulatory body under
the securities laws of any state of the United States (collectively, the “State Securities
Laws”), including the Securities and Investor Protection Act of the State
of Florida and, therefore, cannot be offered for sale or sold, unless the
transaction is registered under those laws or qualifies for an available
exemption from registration under those laws; (d) the undersigned shall not
offer to sell or sell at any time all or any part of the Warrant Shares, unless
the transaction is registered with the SEC under the Securities Act of 1933 and
the applicable regulatory body under all applicable State Securities Laws or the
undersigned delivers to Aerosonic Corporation an opinion of counsel or other
evidence satisfactory to it that registration is not required under any of those
laws; and (e) the undersigned consents to the placement of the following
restrictive legend on every stock certificate issued to it for the Warrant
Shares:

    

    The
shares of Aerosonic Corporation that are represented by this certificate have
not been registered under either the United States Securities Act of 1933 or the
securities laws of any state of the United States.  These shares
cannot be offered for sale or sold, as a whole or in part, unless the
transaction is registered under the Securities Act of 1933 and every applicable
state securities law or qualifies for an available exemption from registration
under those laws.  As a condition to allowing any transfer of the
securities represented by this certificate, Aerosonic Corporation may require
the transferee or transferor to deliver to it an opinion of legal counsel or
other evidence satisfactory to it that confirms that the transfer has been
registered under all applicable state and federal securities laws of the United
States or is exempt from registration under those laws.

    

    
      
        
          
            	
                    No.
      of Shares: __________

                  	 
      	
                    Purchase
      Price: $
  __________     

                  

          

        

      

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    EXECUTION
CLAUSE – PARTNERSHIP

    

    Date:____________________________

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	 
      	 
      	
                                             
      

                                          
	 	 	 	
                                            (Name
      of Partnership)

                                          
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
                                            WITNESS:

                                          	 
      	 
      	
                                            By:    
      

                                          	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                                            Name:

                                          	 
      
	 
      	 
      	 
      	 
      	
                                            Title:

                                          	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
                                              

                                          	 
      	 
      	 
      	 
      
	
                                            Name:

                                          	
                                              

                                          	 
      	
                                              

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
          
            
              
                	
                          

                      	 
      	
                          

                      
	
                        Name:

                      	 
      	 
      	
                        Street
      Address

                      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                          

                      
	 
      	 
      	 
      	
                          City

                      	
                        State

                      	
                        Zip
      Code

                      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        (          )

                      
	 
      	 
      	 
      	
                        Area
      Code

                      	
                        Telephone
      Number

                      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        Employer
      I.D.
Number

                      

              

            

          

        

      

    

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    EXECUTION
CLAUSE - INDIVIDUAL

    

    
      
        
          
            
              	
                      Date:______________________

                    	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      Joint Subscriber

                    	 
      	 
      	
                      Subscriber

                    	 
      
	
                      (if
      applicable)

                    	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                        

                    	 
      	
                        

                    
	
                      Full
      Name (please print)

                    	 
      	
                      Full
      Name (please print)

                    
	 
      	 
      	 
      	 
      	 
      
	
                        

                    	 
      	
                        

                    
	
                      Signature

                    	 
      	
                      Signature

                    
	 
      	 
      	 
      	 
      	 
      
	
                        

                    	 
      	
                        

                    
	
                      Social
      Security Number

                    	 
      	
                      Social
      Security Number

                    
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        

                    
	 
      	 
      	
                      Street
      Address

                    
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        

                    
	 
      	 
      	
                      City

                    	
                      State

                    	
                      Zip
      Code

                    
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                      (             )

                    
	 
      	 
      	
                      Area
      Code

                    	
                      Telephone
      Number

                    

            

          

        

      

    

    

    
      
        	
                Form of ownership (check one):

              	
                ___  Individual

              	
                ___  Tenants in common

              	
                ___  Tenants by the entirety

              
	  	  	  	  
	  	  	
                ___  Joint tenants with right of survivorship

              

      

    

    

    
      
        
          
            
              
                
                  
                    	
                            Register
      stock certificate

                          	 	
                            Register
      warrant certificate

                          
	
                            in
      the following name(s):

                          	 	
                            in
      the following name(s):

                          
	 
      	 	 
      
	
                              

                          	 	
                              

                          
	 
      	 	 
      
	
                              

                          	 	
                              

                          
	 
      	 	 
      
	
                            Deliver
      stock certificate

                          	 	
                            Deliver
      warrant certificate

                          
	
                            to
      the following address:

                          	 	
                            to
      the following address:

                          
	 
      	 	 
      
	
                              

                          	 	
                              

                          
	 
      	 	 
      
	
                              

                          	 	
                              

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    

    EXECUTION
CLAUSE - CORPORATION

    

    
      
        
          
            
              
                	
                        Date:____________________

                      	 
      	
                          

                      
	 
      	 
      	
                        (Name
      of Corporation)

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        By:

                      	
                          

                      
	 
      	 
      	 
      	
                        Name:

                      	
                          

                      
	 
      	 
      	 
      	
                        Title:

                      	
                          

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        (CORPORATE
      SEAL)

                      

              

            

          

        

      

    

     

    
      
        
          
            
              
                	 
      	 
      	
                          

                      
	 
      	 
      	
                        Street
      Address

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                          

                      
	 
      	 
      	
                        City

                      	
                        State

                      	
                        Zip
      Code

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        (          )

                      	 
      
	 
      	 
      	
                        Area
      Code

                      	
                        Telephone
      Number

                      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                          

                      
	 
      	 
      	
                        Employer
      I.D.
Number

                      

              

            

          

        

      

    

     

    
      
        
          	
                  WITNESSES:

                	 
      
	 
      	 
      
	
                    

                
	
                  Name:

                	
                    

                
	 
      	 
      
	
                    

                
	
                  Name:

                	
                    

                

        

      

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (g)           ASSIGNMENT

    

    For value received, the undersigned
sells, assigns, and transfers unto _______________________ the rights to
purchase up to _________ shares of the Common Stock of Aerosonic Corporation that are
represented by the foregoing Common Stock Purchase Warrant and appoints
________________________ as the undersigned’s agent and attorney-in-fact, with
full power of substitution, to transfer those rights on the books of that
corporation.

    

    Date:                                           

    

    
      
        	
                SIGNATURE
      GUARANTEED:

              	 
      
	 
      	
                  

              
	 
      	
                Signature

              
	 
      	 
      
	 
      	
                  

              
	 
      	
                Full
      Name (please print)

              

      

    

    

    WITNESSES:

    

    
      
        
          	
                    

                
	
                  Name:

                	
                    

                
	 
      	 
      
	
                    

                
	
                  Name:Unassociated Document

    EXHIBIT
10.05

     

    AGREEMENT

     

    THIS AGREEMENT, with Effective
Date of May 7, 2009, is made by and amongst Patient Safety Technologies, Inc., a
Delaware Corporation, (the “Company”), having its principal
offices at 43460 Ridge Park Drive, Suite 140, Temecula, CA 92590, and Steven H.
Kane (“Executive”).

    

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

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

     

    (i)           Any
Person (other than the Person in control of the Company as of the date of this
Agreement, or other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or a company owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), becomes the beneficial
owner, directly or indirectly, of securities of the Company representing more
than thirty five percent (35%) of the combined voting power of the Company’s
then outstanding securities;

     

    (ii)           The
stockholders of the Company approve:

     

    (1)           a
plan of complete liquidation of the Company;

     

    (2)           an
agreement for the sale, license or disposition of all
or    substantially all of the Company’s assets;
or

     

    (3)           A
merger, consolidation or reorganization of the Company with or involving any
other company, other than a merger, consolidation or reorganization that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the combined voting power of the voting securities of the Company (or
such surviving entity) outstanding immediately after such merger, consolidation
or reorganization

     

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

     

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

     

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

    
      
         

      

      
        - 2
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    (g)           “Date of Termination” shall
mean with respect to any purported termination of Executive’s employment,
(i) if Executive’s employment is terminated by his death, the date of his
death, (ii) if Executive’s employment is terminated for Cause or without
Cause by the Company, the date specified in the Company’s notice of termination,
(iii) if Executive’s employment is terminated as a result of a Disability,
the date on which it is finally determined that Executive is Disabled, and
(iv) if Executive terminates his employment for Good Reason or otherwise
voluntarily terminates his employment, the date specified in Executive’s notice
of termination.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        - 3
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    3.           Duties; Scope of Employment;
Compensation and Benefits.

     

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

     

    (b)           Board
Membership.  Executive will continue to serve as a member of
the Board as of the Effective Date, and shall be nominated for each subsequent
period, subject to stockholder approval.  Upon Termination, Executive
will be deemed to have resigned from the Board voluntarily, without any further
required action by Executive.

     

    (c)           Annual Base
Salary.  Executive’s Annual Base Salary shall equal
Three  hundred twenty five thousand Dollars ($325,000). This amount
shall be reviewed annually in January of each year by the Board and, in the sole
discretion of the Board, may be adjusted upward with such adjustments effective
January 1 of the respective year.

     

    (d)           Bonus.  Executive
shall be eligible to participate in the Company’s executive bonus plan in
accordance with the terms of the executive bonus plan; provided, however, that
the minimum target bonus opportunity provided under the executive bonus plan
shall not be less than twenty five percent 25%
of Executive’s Annual Base Salary.

     

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

     

    (f)           Equity Compensation Grants and
Plans.

     

    (iii)           Initial Stock Option Grant.
The Company agrees to grant Executive a stock option (the “Option”)
for two million shares of common stock of the Company (“Shares”).  Upon
the six month anniversary of the Effective Date of this Agreement, 250,000
Shares subject to the Option shall vest and become exercisable and thereafter
the remaining Shares shall vest over a forty-two month period at the rate of
1/48th of the
total Shares subject to the Option per month with 100% of the Option becoming
exercisable on the forty-eighth anniversary of the Effective Date of this
Agreement.  Option price will be set at the average trading price of
the Company’s stock on the Effective Date of the agreement.

    
      
         

      

      
        - 4
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    (iv)           Equity Compensation
Plans.  Executive shall be entitled to continue to participate
in any stock option, restricted stock, stock appreciation rights, or any other
equity compensation plan or program sponsored by the Company or its affiliates
on the same terms and conditions generally applicable to executives of the
Company.  Any equity interests or rights to purchase equity interests
in the Company held by Executive and issued pursuant to an equity compensation
plan shall be administered and subject to the terms of the plan and any
amendments thereto.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (ii)           Upon
any removal or resignation described in Section 4(a)(i) above, the
Executive shall be entitled to receive, upon execution of the Release, for a
period of twelve (12) months a monthly cash payment equal to the monthly portion
of the Executive’s Annual Base Salary in effect immediately before the
Executive’s separation from service (“Termination Annul Base
Salary”).

    
      
        
           

        

        
          - 5
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    (iii)           Upon
any removal or resignation described in Section 4(a)(i) above, the
Executive shall also receive:

     

    (1)           A
pro rated bonus for the year in which the Executive’s termination of employment
occurs.  The pro rated bonus shall be based on the Executive’s highest
target percentage annual bonus for the year in which the Executive’s termination
occurs, multiplied by a fraction, the numerator of which is the number of days
during which the Executive was employed by the Company in the year of his
termination and the denominator of which is three hundred sixty five
(365).  Payment of the pro rated bonus shall be made to the Executive
at the time the Company would have paid a bonus, if any, to the Executive for
services performed for the year in which the Executive’s termination of
employment occurs, but by no later than March 15 of the year following the year
of termination.

     

    (2)           The
Executive shall continue to receive the medical coverage and other health and
welfare benefits in effect at the Date of Termination (or generally comparable
coverage) for himself and, where applicable, his spouse and dependents, as the
same may be changed from time to time for employees generally, for twelve (12)
months from the Date of Termination.  As an alternative to the
foregoing, the Company may elect to pay the Executive cash in lieu of such
coverage in an amount equal to the Executive’s after-tax cost of continuing such
coverage, where such coverage may not be continued (or where such continuation
would adversely affect the tax status of the plan pursuant to which the coverage
is provided).  The COBRA health care continuation coverage period
under Section 4980B of the Code, as amended, shall run concurrently with
the foregoing benefit period.

     

    
      (3)           The
Executive’s stock options will continue to vest for the twelve (12) months
following the date of removal of resignation described in Section 4(a)(i)
above.

    

     

    (iv)
Notwithstanding anything set forth herein to the contrary, in the event that
Executive violates the provisions of Section 5(a) of this Agreement after his
separation from service, the payments and benefits provided under this Section
4(a) shall cease and all obligations of the Company under this Section 4(a)
shall terminate.

    
      
         

      

      
        - 6
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    (b)           Termination for Cause; Voluntary
Resignation Without Good Reason.  In the event that Executive
voluntarily terminates his employment for any reason other than Good Reason or
in the event that Company terminates Executive for Cause no further payments
shall be due under this Agreement, except that Executive shall be entitled to
any amounts earned, accrued or owing but not yet paid under Section 3 above
and any benefits accrued or earned under the Company’s benefit plans and
programs.

     

    (c)           Disability.  In the
event that Executive’s employment is terminated due to Disability, Executive
shall be entitled to receive all of the benefits described in Section 4(a)
above upon execution of a Release except that the monthly payments described in
subparagraph (a)(ii)(1) shall be paid for a period of twelve (12) months
beginning after Executive’s separation from service.

     

    (d)           Death.  If Executive
dies while employed by the Company, the Company shall upon receiving a Release
from Executive’s executor, legal representative, administrator or designated
beneficiary (the “Heir(s)”) pay to the Heir(s), the following:

     

    (i)           The
Heirs shall receive (1) any amounts earned, accrued or owing but not yet
paid under Section 3 above, accelerated vesting of the next six months
stock options held by Executive, and any benefits accrued or earned under the
Company’s benefit plans and programs and (2) a lump sum cash payment equal
to twelve (12) months of Executive’s monthly Annual Base Salary at the rate in
effect immediately before Executive’s termination of employment.

     

    (e)           Compliance with Section 409A of
the Code.  Notwithstanding any other provision of this
Agreement, to the extent that (i) any amount paid pursuant to Section 4 of the
Agreement is treated as nonqualified deferred compensation pursuant to Section
409A of the Code and (ii) Executive is a “specified employee” pursuant to
Section 409A(2)(B) of the Code, then such payments shall be made on the date
which is six (6) months after the date of Executive’s separation from
service.

     

    5.           Non-Competition, Non-Disclosure and
Non-Competition.  In consideration of the promises of the
Company made herein, Executive agrees to the following:

     

    (a)           Non-Competition.  Except
for the furtherance of the interests of the Company, Executive agrees that he or
she will not, during the term of Executive’s employment and for a period
of  one (1) year following the date of termination of employment (such
period, the “Restricted Period”) do any of the following directly or indirectly
within the continental United States, without the prior written consent of the
Company:

     

    (i)           solicit
or call upon, either directly or indirectly, any employee or independent
contractor of the Company to attempt to persuade or induce the employee or
independent contractor to terminate employment with the Company and commence
employment with another entity;

    
      
         

      

      
        - 7
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    (ii)           solicit
or call upon, either directly or indirectly, any vendor, customer, or
prospective customer with whom the Company shall have dealt at any time in
connection with any business which is competitive with the business of the
Company;

     

    (iii)           influence
or attempt to influence any customer or prospective customer of the Company to
terminate or modify any written or oral agreement or course of dealing with the
Company; or

     

    (iv)           own,
manage or operate or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant, or otherwise with, or use or
permit his name to be used in connection with any business or enterprise which
is engaged in any business that is competitive with any business or enterprise
in which the Company is engaged.

     

    (b)           Non-Disclosure.  Executive
agrees not to use or disclose at any time, except with the prior written consent
of the Company, any proprietary, trade secret, or confidential information
relating to the business of the Company, including, without limitation,
information relating to formulas, designs, processes, suppliers, machines,
compositions, improvements, inventions, operations, manufacturing, processing,
marketing, distributing, selling, cost and pricing data, master files, or
customer lists utilized by the Company and all other similar information
material to the conduct of the business of the Company, which is not presently
generally known to the public and which is or was obtained or acquired by
Executive while an employee of the Employer; provided, however, that this
Subsection (b) shall not preclude Executive from (i) the use or disclosure of
such information that presently is known to the public generally or that
subsequently comes into the public domain, other than by way of disclosure in
violation of the Agreement or in any other unauthorized fashion, or (ii)
disclosure of such information required by law or court order, provided that
prior to such disclosure required by law or court order, Executive shall give
the Company three (3) business days’ written notice (or, if disclosure is
required to be made in less than three (3) business days, such notice shall be
given as promptly as practicable after determination that disclosure may be
required) of the nature of the law or order requiring disclosure and the
disclosure to be made in accordance therewith.

     

    (c)           Inventions.  Executive
hereby sells, transfers, and assigns to the Company all of the entire right,
title, and interest of Executive in and to all inventions, ideas, disclosures,
and improvements, whether patented or unpatented, and copyrightable material,
made or conceived by Executive, solely or jointly, during his or her employment
by the Employer that directly relate to methods, apparatus, designs, products,
processes, or devices, sold, leased, used, or under development by the Company,
or that otherwise directly relate or pertain to the business, functions, or
operations of the Company or that arise from the efforts of Executive during the
course of his or her employment with the Employer (the
“Inventions”).  Executive shall communicate promptly and disclose to
the Company, in such form as the Company requests, all information, details, and
data pertaining to the Inventions.  Executive shall execute and
deliver to the Company such formal transfers and assignments and such other
papers and documents as may be necessary or required of Executive to permit the
Company or any person or entity designated by the Company to file and prosecute
the patent applications and, as to copyrightable material, to obtain copyright
thereof.  Any Invention relating to the business of the Company and
disclosed or utilized by Executive within one (1) year following the date of
Executive’s termination of employment shall be deemed to fall within the
provisions of this Subsection (c).

    
      
         

      

      
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    (d)           Acknowledgement.  Executive
acknowledges and agrees that the restrictions contained in the foregoing
covenants are necessary to protect legitimate interests of the Company and
acknowledges that remedies for damages in the event of their violation or
potential violation would be inadequate.  Accordingly, Executive
agrees that the Company shall be entitled to injunctive relief in the event of
any violation by Executive of any provisions of this Section 5.  Such
right to an injunction shall be in addition to, and not in limitation of, any
other rights or remedies that the Company may have.  The period of
time during which the provisions of this Section 5 will be in effect shall be
extended by the length of time during which Executive is in breach of the terms
hereof as determined by any court of competent jurisdiction where the injunctive
relief is sought.

     

    (e)           Enforceability and
Understanding.  If any provision of this Section 5 shall be
deemed invalid or unenforceable, either in whole or in part, the Agreement shall
be deemed amended to delete or modify, as necessary, the offending provision and
to reform the terms thereof to render it valid and enforceable.  This
Section 5 contains all the understandings between Executive and the Company
pertaining to the matters referred to herein, and supersedes any other
undertakings and agreements, whether oral or in writing, previously entered into
by them with respect thereto.  Executive represents that, in executing
the Agreement, Executive does not rely and has not relied upon any
representation or statement made by the Company not set forth herein with regard
to the subject matter or effect of this Section 5 or otherwise.

     

    6.           Special Reimbursement - Excise tax
related to Section 4999 of the Code.

     

    (a)           Payment of
Gross-Up.  In the event that Executive becomes entitled to
payments or benefits from the Company (the “Total Payments”) which constitute an
“excess parachute payment” as defined in Section 280G(b) of the Code
subject to the excise tax imposed under Section 4999 of the Code (the
“Excise Tax”), then the Company shall cause a payment to be made to Executive of
an additional amount (the “Additional Payment”) equal to the sum of (i) the
Excise Tax and (ii) such additional sums, such that, after imposition of
the Excise Tax and all taxes, including, without limitation, any income,
employment and other withholding taxes and Excise Tax (and any interest and
penalties imposed with respect thereto) imposed on the amount described in
clauses (i) and (ii), Executive shall receive such payments and benefits
from the Company free and clear of any taxes, other than income, employment and
other withholding taxes that would have been imposed on such payments and
benefits, determined without regard to the imposition of the Excise
Tax.

    
      
         

      

      
        - 9
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    (b)           Administration.  All
determinations under this Section 6 shall be made by the Company’s independent
accounting firm, in their reasonable discretion in consultation with Executive’s
accountants. Executive and the Company shall each reasonably cooperate with the
other in connection with causing or allowing any shareholder vote on the Total
Payments to occur and any administrative or judicial proceedings concerning the
existence or amount of any such subsequent liability for amounts described in
clauses (i) and (ii) in Section 6(a).  The Company shall
solely be responsible for any legal, accounting and other costs and expenses
incurred in connection with such shareholder vote and administrative and
judicial proceedings.

     

    7.           Miscellaneous.

     

    (a)           Indemnification.  Subject
to applicable law, Executive will be provided indemnification to the maximum
extent permitted by the Company’s bylaws, including any directors and officers
insurance policies, on terms no less favorable than any other executive officer
or Director of the Company.

     

    (b)           Legal Costs.  The
Company shall reimburse Executive for reasonable legal fees and expenses
incurred if Executive prevails on any issue which is the subject of such of a
lawsuit or arbitration brought by Executive or the Company as a result of any
dispute with any party (including, but not limited to, the Company and/or any
affiliate of the Company) regarding the provisions of this
Agreement.  Otherwise, Executive and the Company shall be responsible
for its own legal fees and expenses in connection with such
action.  The Company will reimburse Executive for reasonable legal
fees and expenses directly relating to the negotiation of this
Agreement.

     

    (c)           Arbitration.  In the
event of any dispute under the provisions of this Agreement, other than a
dispute in which the primary relief sought is an equitable remedy such as an
injunction, the parties shall be required to have the dispute, controversy or
claim settled by arbitration in California in accordance with the National Rules
for the Resolution of Employment Disputes then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom shall
be selected by the Company and Executive, respectively, and the third of whom
shall be selected by the other two arbitrators.  Any award entered by
the arbitrators shall be final, binding and nonappealable and judgment may be
entered thereon by either party in accordance with applicable law in any court
of competent jurisdiction.  This arbitration provision shall be
specifically enforceable.  The arbitrators shall have no authority to
modify any provision of this Agreement or to award a remedy for a dispute
involving this Agreement other than a benefit specifically provided under or by
virtue of the Agreement.

     

    (d)           No Mitigation.  The
Company agrees that, if Executive’s employment is terminated during the Term,
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to Executive by the Company pursuant to this
Agreement.

     

    (e)           Successors.  In
addition to any obligations imposed by law upon any successor to the Company,
the Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as Executive would be entitled to hereunder if Executive were
to terminate Executive’s employment for Good Reason, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.

    
      
         

      

      
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    (f)           Binding
Agreement.  This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.  If Executive shall die while any amount would still be
payable to Executive hereunder (other than amounts which, by their terms,
terminate upon the death of Executive) if Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of Executive’s estate.

     

    (g)           Notices.  For the
purpose of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below, or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon actual receipt.

     

    (h)           Amendments.  No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by
Executive and such officer as may be specifically designated by the
Company.  No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     

    (i)           Entire
Agreement.  Except as otherwise provided, this Agreement
contains the entire agreement between the parties concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, express or implied,
between the parties with respect thereto.

     

    (j)           Applicable Law.  The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware without regard to the
principles of conflict of laws thereof.

     

    (k)           Captions.  The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.

     

    (l)           Withholding.  Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to
which Executive has agreed.

    
      
         

      

      
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    (m)          Survivorship.  The
rights and obligations of the Company and Executive under this Agreement shall
survive the expiration of the Term.

     

    (n)           Mutual Intent.  All
parties participated in the drafting of the Agreement, and the language used in
this Agreement is the language chosen by Executive and the Company to express
their mutual intent.  The parties agree that in the event that any
language, section, clause, phrase or word used in the Agreement is determined to
be ambiguous, no presumption shall arise against or in favor of either party and
that no rule of strict construction shall be applied against either party with
respect to such ambiguity.

     

    (o)           Validity.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

     

    (p)           Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.

     

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on January 5, 2009.

     

    
      
        	 
      	
                PATIENT
      SAFETY, INC

              
	 
      	 
      
	 
      	
                By:    /s/  John
      Francis

              
	 
      	
                Name:   John
      Francis

              
	 
      	
                Title:  Director

              
	 
      	 
      
	 
      	
                EXECUTIVE

              
	 
      	 
      
	 
      	
                /s/  Steven H.
    Kane

              
	 
      	
                Name:  Steven
      H. Kan

              

      

    

    
      
         

      

      
        - 12
-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00159-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00159-of-00352.parquet"}]]