Document:

RETURN TO TREASURY AGREEMENT

THIS AGREEMENT is made as of the 21st day of April, 2006

BETWEEN:

            PACIFIC NORTHWEST PRODUCTIONS INC., a corporation formed pursuant to
            the laws of the State of Nevada and having an office for business
            located at 7164 Scott Road, Surrey, B.C. Canada V3W 3M8

            (the "Company")

AND:

            DELJIT BAINS, an individual having an address located at 7164 Scott
            Road, Surrey, B.C. Canada V3W 3M8

            (the "Shareholder").

WHEREAS:

A.     The Shareholder is the registered and beneficial owner of 500,000
shares of the Company's common stock.

B.     The Company has entered into a Share Purchase Agreement with Xian
Tsining Housing Development Co., Ltd., a company formed pursuant to the laws of
the People's Republic of China, and certain other parties (the "Purchase
Agreement").

C.     As a condition to the aforementioned Purchase Agreement, the
Shareholder has agreed to return 500,000 shares of the Company's common stock
(the "Surrendered Shares") held by her to the treasury of the Company for the
sole purpose of the Company retiring the Surrendered Shares.

NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and sum of $1.00 now paid by the Company to the Shareholder, the receipt and
sufficiency whereof is hereby acknowledged, the parties hereto hereby agree as
follows:

SURRENDER OF SHARES

1.     The Shareholder hereby surrenders to the Company the Surrendered Shares
by delivering to the Company herewith a share certificate or certificates
representing the Shares, duly endorsed for transfer in blank, notary guaranteed.
The Company hereby acknowledges receipt from the Shareholder of the certificates
for the sole purpose of retiring the Surrendered Shares.

RETIREMENT OF SHARES

2.     The Company agrees, subject to section 3 hereof, to forthwith after the
closing of the Purchase Agreement to retire the Surrendered Shares which shall
become authorized but unissued.

CONDITION PRECEDENT

3.     Notwithstanding any other provision herein, in the event that the
transactions contemplated by the Purchase Agreement do not close on or before
the deadline set forth in said Purchase Agreement, this Agreement shall
terminate and the Company shall forthwith return to the Shareholder the
certificates representing the Surrendered Shares.

<PAGE>

REPRESENTATIONS AND WARRANTIES

4.     The Shareholder represents and warrants to the Company that she is the
owner of the Surrendered Shares and that she has good and marketable title to
the Surrendered Shares and that the Surrendered Shares are free and clear of all
liens, security interests or pledges of any kind whatsoever.

GENERAL

5.     Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.

6.     Time is expressly declared to be the essence of this Agreement.

7.     The provisions contained herein constitute the entire agreement among
the Company and the Shareholder respecting the subject matter hereof and
supersede all previous communications, representations and agreements, whether
verbal or written, among the Company and the Shareholder with respect to the
subject matter hereof.

8.     This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.

9.     This Agreement is not assignable without the prior written consent of
the parties hereto.

10.    This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.

IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.

                                            PACIFIC NORTHWEST PRODUCTIONS INC.

                                            By:  /s/ LU PINGJI
                                                 -------------------------------
                                                 Lu Pingji,
                                                 Chief Executive Officer

                                                 /s/ DELJIT BAINS
                                                 -------------------------------
                                                 Deljit Bains

                                       2Employment
      Agreement

    

    

    THIS
      EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of April 21,
      2006 (the “Effective Date”) by and between SurgiCount
      Medical, Inc., a
      California corporation, with an office located at 27555 Ynez Road, Suite 330,
      Temecula, California 92591 (the “Company”), and William
      M. Adams,
      an
      individual, with an address 3 Ladbrook Grove, Coto de Caza, California 92679
      (“Individual”).

    

    WHEREAS,
      the Company is in the business of developing, manufacturing and marketing
      patient safety and medical devices; 

    

    WHEREAS,
      Individual has had experience in the operations of businesses conducting sales
      and marketing in the healthcare industry, specifically in businesses
      specializing in disposable medical supplies; 

    

    WHEREAS,
      the Company desires to retain the services of Individual; and

    

    WHEREAS,
      Individual is willing to be employed by the Company.

    

    NOW,
      THEREFORE, in consideration of the mutual covenants contained herein, and other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties agree as follows:

    

    

    1.
      Employment.
      Individual is hereby employed and engaged to serve the Company as its Chief
      Executive Officer. Individual does hereby accept, and Individual hereby agrees
      to, such engagement and employment. At all times during the term of Individual’s
      employment, he shall serve as a member of the Board of Directors of the
      Company.

    

    2.
      Duties.
      Individual shall be responsible for the overall development and operations
      of
      the Company. In addition, Individual’s duties shall be such duties and
      responsibilities as the Board of Directors shall specify from time to time
      entailing those duties and responsibilities customarily performed by the Chief
      Executive Officer of a company with a sales volume and number of employees
      commensurate with those of the Company. Individual shall have such authority,
      discretion, power and responsibility, and shall be entitled to office,
      secretarial and other facilities and conditions of employment, as are customary
      or appropriate to his position. Individual shall diligently and faithfully
      execute and perform such duties and responsibilities, subject to the general
      supervision and control of the Company’s Board of Directors. Individual shall be
      responsible and report only to the Company’s Board of Directors. Individual
      shall devote his full-time attention, energy, and skill during normal business
      hours to the business and affairs of the Company and shall not, during the
      Employment Term, as that term is defined below, be actively engaged in any
      other
      business activity, except with the prior written consent of the Company’s Board
      of Directors or as set forth below. 

    

    Nothing
      in this Agreement shall preclude Individual from devoting reasonable periods
      required for:

    

    
      	 	
              (a)

            	
              serving
                as a director or member of a committee of any organization or corporation
                involving no conflict of interest with the interests of the
                Company;

            

    

    

    
      	 	
              (b)

            	
              serving
                as a consultant in his area of expertise (in areas other than in
                connection with the business of the Company), to government, industrial,
                and academic panels where it does not conflict with the interests
                of the
                Company; and

            

    

    
      	 	 	 

    

    
      	 	(c)	
              managing
                his personal investments or engaging in any other non-competing business;
                provided
                that such activities do not materially interfere with the regular
                performance of his duties and responsibilities under this Agreement,
                provided that such other activities or engagements are fully disclosed
                in
                writing to the Board of Directors in advance, and provided that such
                activities or engagements do not materially affect the Company’s business
                or the Individual’s ability to provide the services contemplated
                hereunder.

            

    

     

    
      
        1

      

      
         

        
          

        

      

      
         

      

       

    

    
      	 	(d)  	
              Perform
                Individual's necessary duties and responsibilities with Health West
                Marketing on an as-needed basis. 

            

    

     

    3.
      Best Efforts of Individual.
      During
      his employment hereunder, and subject to the provisions and limitations of
      Section 2 above, Individual shall, subject to the direction and supervision
      of
      the Company’s Board of Directors, devote his full business time, best efforts,
      business judgment, skill, and knowledge to the advancement of the Company's
      interests and to the discharge of his duties and responsibilities hereunder.
      Notwithstanding the foregoing, nothing herein shall be construed as preventing
      Individual from investing his assets in any business.

    

    4.
      Employment Term.
      Unless
      terminated pursuant to Section 12 of this Agreement, the term of this Agreement
      shall commence as of the Effective Date of this Agreement and shall continue
      for
      a term of thirty-six (36) months (the “Employment Term”). The Employment Term
      shall end effective at midnight on April 17, 2009 unless extended by the mutual
      written agreement of Individual and Company.

    

    5.
      Compensation of Individual. 

    

    	(a)  	
            Base
              Compensation.
              As
              compensation for the services provided by Individual under this Agreement,
              the Company shall pay Individual an annual base salary of Three Hundred
              Thousand Dollars ($300,000.00) during the Employment Term. The
              compensation of Individual under this Section shall be paid in accordance
              with the Company's usual payroll procedures.

          

    

    	(b)  	
            Bonus.
              In
              addition to the above base compensation, Individual shall be eligible
              to
              receive annual bonuses. Any bonuses awarded to Individual will be paid
              to
              Individual in stock and/or cash on the next scheduled pay date after
              the
              bonus is awarded. Bonuses shall be awarded to Individual in the reasonable
              and good faith discretion of the Board of Directors, subject to the
              financial performance of the Company.

          

    

    	(c)  	
            Stock
              and Stock Options.
              In
              addition to the foregoing compensation, Individual also shall receive
              stock options for the purchase of three hundred thousand (300,000)
              shares
              of common stock of Company's parent company, Patient Safety Technologies,
              Inc. (“PST”), at an exercise price of three dollars and fifty cents
              ($3.50) per share, which options shall be granted and vest annually
              in
              installments of 100,000 shares per year over three (3) years, per the
              following schedule: 100,000 shares to be granted and vest on April
              18,
              2007; 100,000 shares to be granted and vest on April 18, 2008; and
              100,000
              shares to be granted and vest on April 17, 2009. However, all 300,000
              options shall vest immediately in Individual upon a sale or exchange
              of a
              significant portion (50% or more) of the Company's stock, or a joint
              venture by the Company with an unaffiliated entity involving 50% or
              more
              of the Company's stock. Individual shall also receive ten thousand
              dollars
              ($10,000) in restricted stock of PST annually on April 30, 2007, April
              18,
              2008 and April 18, 2009, and Company represents and warrants that PST’s
              Board of Directors has approved or will approve by way of appropriate
              corporate resolution the foregoing awards of restricted stock to
              Individual. The restrictions on Individual's restricted PST stock shall
              be
              no more restrictive than the least restrictive restrictions which exist
              on
              any restricted PST stock awarded or to be awarded to any other employee,
              Officer or Director of Company. Individual shall also receive options
              to
              purchase an additional one hundred thousand (100,000) shares of common
              stock of PST at an exercise price of three dollars and fifty cents
              ($3.50)
              per share, which options shall immediately be granted to and vest in
              Individual upon the occurrence of either of the events set forth in
              Exhibit
              A
              attached hereto. 

          

    

    	(d)  	
            Commission.
              The Company, upon approval of the Board of Directors, will establish
              a
              commission pool for the benefit of its employees. Such commission pool
              may
              be distributed to management and certain other employees (including
              Individual) at Individual’s discretion, with such distributions to be
              determined and made within a reasonable time after the Company’s fiscal
              year end. 

          

    

    6.
      Benefits. Individual
      and his immediate family (i.e., spouse and children) shall also be entitled
      to
      participate in any and all Company benefit plans from time to time in effect
      for
      employees of the Company. Such participation shall be subject to the terms
      of
      the applicable plan documents and generally applicable Company
      policies.

    

    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    7.
      Vacation, Sick Leave and Holidays.
      Individual shall be entitled to three (3) weeks of paid vacation annually,
      with
      such vacation to be scheduled and taken in accordance with the Company's
      standard vacation policies. In addition, Individual shall be entitled to such
      sick leave and holidays at full pay in accordance with the Company's policies
      established and in effect from time to time.

    

    8.
      Business Expenses.
      The
      Company shall promptly reimburse Individual for all reasonable out-of-pocket
      business expenses incurred in performing Individual’s duties and
      responsibilities hereunder in accordance with the Company's policies, provided
      Individual promptly furnishes to the Company adequate records of each such
      business expense.

    

    9.
      Location of Individual's Activities. Individual’s
      principal place of business in the performance of his duties and obligations
      under this Agreement shall be at a location within reasonable driving distance
      of Individual’s home, as determined by the Board of Directors. Notwithstanding
      the preceding sentence, Individual will engage in such travel and spend such
      time in other appropriate locations as may be necessary or appropriate in
      furtherance of his duties hereunder. The Company's location in Temecula,
      California and the Chino, California manufacturing facility shall be deemed
      appropriate locations.

    

    10.
      Confidentiality.
      Individual recognizes that the Company has and will have business affairs,
      products, future plans, trade secrets, intellectual property, marketing plans,
      patents or patents pending, customer lists, and other vital confidential and
      proprietary information (collectively "Confidential Information") that are
      valuable assets of the Company. Individual agrees that he shall not at any
      time
      or in any manner, either directly or indirectly, divulge, disclose, or
      communicate in any manner any Confidential Information to any third party
      without the prior written consent of the Company’s Board of Directors.
      Individual will protect the Confidential Information and treat it as strictly
      confidential. "Confidential Information" shall not include information that
      is
      either publicly available, known outside the Company, or which Company has
      failed to make reasonable efforts to maintain the confidentiality
      thereof.

    

    11.
      Non-Solicitation.
      Individual acknowledges that by virtue of his employment with Company, he will
      gain knowledge of the business conducted by the Company and may have extensive
      contacts with clients and/or customers of the Company. Accordingly, Individual
      agrees that, during his employment with Company and for a period of one (1)
      year
      immediately following termination (voluntary or otherwise) of Individual’s
      employment with the Company, Individual shall not directly or indirectly solicit
      clients or customers of the Company to the extent the existence of such clients
      or customers constitute "Confidential Information" as defined in Section 10
      above. In addition, Individual agrees that for a period of one (1) year
      immediately following termination (voluntary or otherwise) of Individual’s
      employment with the Company, he shall not solicit any Company employee to leave
      the Company’s employ or any Company consultant to sever the consultant’s
      relationship with the Company. 

    

    12.
      Termination.
      Notwithstanding any other provisions hereof to the contrary, Individual’s
      employment hereunder shall terminate under the following
      circumstances:

    

    	(a)  	
            Voluntary
              Termination by Individual.
              Individual shall have the right to voluntarily terminate this Agreement
              and his employment hereunder at any time during the Employment Term.
              Termination of Individual’s employment pursuant to this Section 12(a)
              shall not be effective unless Individual shall have first given Company
              a
              written notice thereof at least 30 days prior to the date of termination
              unless circumstances dictate that such notice cannot reasonably be
              given.

          

    

    	(b)  	
            Voluntary
              Termination by the Company. The
              Company shall have the right to voluntarily terminate this Agreement
              and
              Individual’s employment hereunder at any time during the Employment Term.
              Termination of Individual’s employment pursuant to this Section 12(b)
              shall not be effective unless the Company shall have first given
              Individual written notice thereof at least thirty (30) days prior to
              the
              date of termination unless circumstances dictate that such notice cannot
              reasonably be given.

          

    

    	(c)  	
            Termination
              for Cause.
              The Company shall have the right to terminate this Agreement and
              Individual’s employment hereunder at any time for "cause." As used in this
              Agreement, "cause" shall mean any of the following: Individual’s
              conviction of a felony; Individual’s conviction of any crime that may have
              a material adverse impact on the Company's reputation; Individual’s
              demonstrated criminal misappropriation of funds from or resources of
              the
              Company; Individual’s demonstrated commission of an act of material deceit
              or intentional material misrepresentation with respect to Company;
              or
              Individual’s demonstrated commission of an act constituting fraud or
              embezzlement with respect to the Company. "Cause" shall not be deemed
              to
              exist unless the Company shall have first given Individual a written
              notice thereof specifying in reasonable detail the facts and circumstances
              alleged to constitute "cause," and thirty (30) days after such notice
              has
              been given such conduct has, or such circumstances have, as the case
              may
              be, not either ceased or been remedied or
              cured.

          

    

    
      
        3

      

      
         

        
          

        

      

      
         

      

       

    

    	(d)  	
            Termination
              Upon Death or for Disability.
              This Agreement and Individual’s employment hereunder, and all amounts and
              benefits due Individual hereunder, shall automatically terminate upon
              1)
              Individual’s death or 2) Individual’s disability. In the case of
              Individual’s disability, however, this Agreement shall not terminate
              unless Individual has been disabled and unable to substantially perform
              the duties contained in this Agreement for longer than a period of
              twelve
              (12) months as certified by a qualified physician or panel of qualified
              physicians jointly agreed upon by Company and Individual, and by
              applicable law. 

          

    

    	(e)  	
            Effect
              of Termination.
              In
              the event that this Agreement is terminated pursuant to Section 12,
              all
              duties, responsibilities and obligations of Individual and Company
              under
              this Agreement shall immediately cease, except as set forth below.
              

          

    

    Voluntary
      Termination by Individual.
      In the
      event that this Agreement and Individual’s employment are voluntarily terminated
      by Individual pursuant to Section 12(a), then within 5 business days of the
      date
      of termination Individual shall be paid a cash lump sum equal to all accrued
      but
      unpaid base salary and bonuses through the date of termination, together with
      all accrued vacation pay through the date of termination, if any. Individual
      shall not be entitled to any severance benefits after the date of Individual's
      termination pursuant to Section 12(a). Further, in the event Individual
      voluntarily terminates this Agreement pursuant to Section 12(a), all unvested
      stock, unvested stock options, and/or unearned bonuses will be forfeited.

    

    Voluntary
      Termination by Company.
      In the
      event that this Agreement and Individual’s employment are voluntarily terminated
      by Company pursuant to Section 12(b), the Company shall, within 5 business
      days
      of the date of termination, pay Individual (or the trustee of his estate, as
      the
      case may be in the event of death) a cash lump sum equal to all accrued but
      unpaid base salary and bonuses through the date of termination, together with
      all accrued vacation pay through the date of termination, if any, plus severance
      compensation (“Severance Benefits”), as follows:

    

    	1.       
             	
            In
              the event the Company voluntarily terminates this Agreement pursuant
              to
              Section 12(b) prior to the first anniversary date of Individual’s start
              date of employment, Individual will receive Severance Benefits in an
              amount equal to twenty-four (24) months of Individual’s base salary.
              

          

    

    	2.      
              	
            In
              the event the Company voluntarily terminates this Agreement pursuant
              to
              Section 12(b) after the first anniversary date of Individual's start
              date
              of employment, then Individual in shall be entitled to receive Severance
              Benefits in an amount equal to the balance of Individual’s then base
              salary owed for the remainder of the Employment Term.
              

          

    

    Company
      shall pay Individual his Severance Benefits with 5 business days of the date
      Company voluntarily terminates this Agreement pursuant to Section 12(b).
      Individual and Company agree that upon payment of the Severance Benefits,
      Individual and Company will be deemed to have mutually released any and all
      claims each may have against the other up through the date of payment of the
      Severance Benefits. 

     

    Termination
      by Company for Cause.
      In the
      event that this Agreement and Individual’s employment are voluntarily terminated
      by Company for "cause" pursuant to Section 12(c), the Company shall immediately
      (i.e., on the termination date) pay Individual (or the trustee of his estate,
      as
      the case may be in the event of death) a cash lump sum equal to all accrued
      base
      salary and bonuses through the date of termination together with all accrued
      vacation pay through the date of termination, if any. Individual shall not
      be
      entitled to any Severance Benefits after the date of Individual’s termination
      pursuant to Section 12(c). Further, in the event Company terminates this
      Agreement pursuant to Section 12(c), all unvested stock, unvested stock options,
      and/or unearned bonuses will be forfeited. 

    

    
      
        4

      

      
         

        
          

        

      

      
         

      

    

    Termination
      by Company Due to Death or Disability.
      In the
      event that this Agreement and Individual’s employment are terminated pursuant to
      Section 12(d), the Company shall pay Individual (or the trustee of his estate,
      as the case may be in the event of death) a cash lump sum equal to all accrued
      base salary and bonuses through the date of termination together with all
      accrued vacation pay through the date of termination, if any, plus Severance
      Benefits in an amount equal to Individual's base salary for the remainder of
      the
      Employment Term.

     

    13.
      Resignation as Officer.
      In the
      event that Individual’s employment with the Company is terminated for any reason
      whatsoever, Individual agrees to immediately resign as an Officer and/or
      Director of the Company and any related entities. For the purposes of this
      Section 13, the term the "Company" shall be deemed to include subsidiaries,
      parents, and affiliates of the Company. 

    

    14.
      Governing Law, Jurisdiction and Venue.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California without giving effect to any applicable conflicts of law
      provisions.

    

    15.
      Business Opportunities.
      During
      the Employment Term Individual agrees to bring to the attention of the Company’s
      Board of Directors all business, sale, or joint venture proposals that come
      to
      Individual’s attention and all business or investment opportunities of whatever
      nature that are created or devised by Individual and that relate to areas in
      which the Company conducts business and might reasonably be expected to be
      of
      interest to the Company or any of its subsidiaries.

    

    16.
      Individual's and Company's Representations and Warranties.
      Individual and Company hereby represent and warrant that they are not under
      any
      contractual obligation to any other company, entity or individual that would
      prohibit or materially impede each from performing their duties and
      responsibilities under this Agreement, and that each is free to enter into
      and
      perform the duties and responsibilities required by this Agreement. Individual
      further represents and warrants that his contract(s) with third parties do
      not,
      and will not, prohibit or materially impede Individual or Company from
      performing his or its duties and responsibilities under this Agreement, nor
      do
      any such contracts contain language that would prohibit or materially limit
      Company's ability to conduct business with vendors, manufacturing partners
      or
      any third party. Individual further represents and warrants that he has fully
      and completely disclosed the nature and extent of his current contractual
      relationships with any third parties that could or might materially adversely
      impact the Company, including the nature of any such agreements which
      contemplate Individual’s receipt of economic benefits and compensation from any
      third parties. Individual further represents and warrants that he has fully
      disclosed the nature and terms of any existing compensation arrangements that
      Individual has with any third parties or companies affiliated with the Company,
      or with whom the company currently does business or has a contractual
      relationship. Individual represents and warrants that he is not a party to
      any
      confidentiality agreement, non-competition agreement, non-solicitation
      agreement, or other agreement which would materially limit or prohibit the
      conduct of the Company’s business or activities.

    

    17.
      Indemnification.

    

    	(a)  	
            The
              Company agrees that if Individual is made a party, or is threatened
              to be
              made a party, to any action, suit or proceeding, whether civil, criminal,
              administrative or investigative (a "Proceeding"), by reason of the
              fact
              that he is or was a director, officer or employee of the Company or
              is or
              was serving at the request of the Company as a director, officer, member,
              employee or agent of another corporation, partnership, joint venture,
              trust or other enterprise, including service with respect to employee
              benefit plans, whether or not the basis of such Proceeding is Individual’s
              alleged action in an official capacity while serving as a director,
              officer, member, employee or agent, Individual shall be indemnified
              and
              held harmless by the Company to the fullest extent permitted or authorized
              by the Company's certificate of incorporation or bylaws or, if greater,
              by
              the laws of the State of California, against all cost, expense, liability
              and loss (including, without limitation, attorney's fees, judgments,
              fines, ERISA excise taxes or penalties and amounts paid or to be paid
              in
              settlement) reasonably incurred or suffered by Individual in connection
              therewith, and such indemnification shall continue as to Individual
              even
              if he has ceased to be a director, member, employee or agent of the
              Company or other entity and shall inure to the benefit of Individual’s
              heirs, executors and administrators. The Company shall advance to
              Individual to the extent permitted by law all reasonable costs and
              expenses incurred by him in connection with a Proceeding within 20
              days
              after receipt by the Company of a written request, with appropriate
              documentation, for such advance. Individual agrees that in the event
              it is
              judicially determined that he was not entitled to be indemnified by
              the
              Company against such costs and expenses, he will repay the Company
              the
              amount of such advances. Nothing in this agreement shall be construed
              to
              limit Individual's rights under California Labor
              Code
              Section 2802, which rights are fully
              preserved.

          

    

    
      
        5

      

      
         

        
          

        

      

      
         

      

       

    

    	(b)  	
            Neither
              the failure of the Company (including its Board of Directors, independent
              legal counsel or stockholders) to have made a determination prior to
              the
              commencement of any Proceeding concerning payment of amounts claimed
              by
              Individual that indemnification of Individual is proper because he
              has met
              the applicable standard of conduct, nor a determination by the Company
              (including its Board of Directors, independent legal counsel or
              stockholders) that Individual has not met such applicable standard
              of
              conduct, shall create a presumption that Individual has not met the
              applicable standard of conduct.

          

    

    	(c)  	
            The
              Company agrees to continue and maintain a directors' and officers'
              liability insurance policy covering Individual to the extent the Company
              provides such coverage for its other executive
              officers.

          

    

    	(d)  	
            Promptly
              after receipt by Individual of notice of any claim or the commencement
              of
              any action or proceeding with respect to which Individual is entitled
              to
              indemnity hereunder, Individual shall notify the Company in writing
              of
              such claim or the commencement of such action or proceeding, and the
              Company shall (i) assume the defense of such action or proceeding,
              (ii)
              employ counsel reasonably satisfactory to Individual, and (iii) pay
              the
              reasonable fees and expenses of such counsel. Notwithstanding the
              preceding sentence, Individual shall be entitled to employ counsel
              separate from counsel for the Company and from any other party in such
              action if Individual reasonably determines that a conflict of interest
              exists or may exist which makes representation by counsel chosen by
              the
              Company not advisable. In such event, the reasonable fees and
              disbursements of such separate counsel for Individual shall be paid
              by the
              Company to the extent permitted by law.

          

    

    	(e)  	
            After
              the termination of this Agreement and upon the request of Individual,
              the
              Company agrees to reimburse Individual for all reasonable travel, legal
              and other out-of-pocket expenses related to assisting the Company to
              prepare for or defend against any action, suit, proceeding or claim
              brought or threatened to be brought against the Company or to prepare
              for
              or institute any action, suit, proceeding or claim to be brought or
              threatened to be brought against a third party arising out of or based
              upon the transactions contemplated herein and in providing evidence,
              producing documents or otherwise participating in any such action,
              suit,
              proceeding or claim. In the event Individual is required to appear
              after
              termination of this Agreement at a judicial or regulatory hearing in
              connection with Individual's employment hereunder, or Individual's
              role in
              connection therewith, the Company agrees to pay Individual a per diem
              sum,
              to be mutually agreed upon in advance by Individual and the Company,
              for
              each day of Individual's appearance and each day of preparation
              therefore.

          

    

    18.
      Notices.
      All
      demands, notices, and other communications to be given hereunder, if any, shall
      be in writing and shall be sufficient for all purposes if personally delivered,
      sent by facsimile or sent by United States mail to the address below or such
      other address or addresses as such party may hereafter designate in writing
      to
      the other party as herein provided.

    

    
      	Company:	
              SurgiCount
                Medical, Inc.

            	
              Individual:

            	 	
              William
                M. Adams

            
	 	
              27555
                Ynez Road, Suite 330

            	
            	 	
              3
                Ladbrook Grove

            
	 	
              Temecula,
                CA 92591

            	
            	 	
              Coto
                de Caza, CA 92679

            
	 	
              Fax:
                (951) 587-6237

            	 	 	 

    

     

    
      
        6

      

      
         

        
          

        

      

      
         

      

       

    

    19.
      Entire Agreement.
      This
      Agreement contains the entire agreement of the parties and there are no other
      promises or conditions in any other agreement, whether oral or written. This
      Agreement supersedes any prior written or oral agreements between the parties.
      This Agreement may be modified or amended, if the amendment is made in writing
      and is signed by both parties. This Agreement is for the unique personal
      services of Individual and is not assignable or delegable, in whole or in part,
      by Individual. This Agreement may be assigned or delegated, in whole or in
      part,
      by the Company and, in such case, shall be assumed by and become binding upon
      the person, firm, company, corporation or business organization or entity to
      which this Agreement is assigned. The headings contained in this Agreement
      are
      for reference only and shall not in any way affect the meaning or interpretation
      of this Agreement. If any provision of this Agreement shall be held to be
      invalid or unenforceable for any reason, the remaining provisions shall continue
      to be valid and enforceable. The failure of either party to enforce any
      provision of this Agreement shall not be construed as a waiver or limitation
      of
      that party's right to subsequently enforce and compel strict compliance with
      every provision of this Agreement. This Agreement may be executed in two or
      more
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument and, in pleading or
      proving any provision of this Agreement, it shall not be necessary to produce
      more than one of such counterparts.

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the day and
      year
      first above written.

     

    

    
      	
              “Company”

            	
              “Individual”

            
	 	 	 
	
              SurgiCount
                Medical, Inc., a California corporation

            	 
	 	 	 
	 	 	 
	
              By:

            	
              /s/
                W.B.
                Horne                                  
                

            	
              /s/
                William M.
                Adams                       
                

            
	 	 	 
	
              Name:

            	
              William
                B. Horne

            	
              William
                M. Adams

            
	 	 	 
	
              Title:

            	
              Chief
                Financial Officer

            	 
	 	 	 
	
              By:

            	
              /s/
                Lynne
                Silverstein                        
                

            	 
	 	 	 
	
              Name:

            	
              Lynne
                Silverstein

            	 
	 	 	 
	
              Title:

            	
              Corporate
                Secretary

            	 

    

     

     

    
      
        7

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      A -IMMEDIATE VESTING OF ADDITIONAL 100,000 OPTIONS 

    

    

    Upon
      the
      occurrence of either of following events, the additional 100,000 Options
      described in Section 5(c) of the Agreement shall immediately vest in
      Individual:

    

    (i)
      A
      sale or exchange of 50% or more of the Company's stock, or a joint venture
      by
      the Company with an unaffiliated entity. 

    

    (ii)
      On
      or prior to December 31, 2008, the Company's cumulative sales from the inception
      of the Company equal or exceed $10 Million. Individual's additional 100,000
      Options described in Section 5(c) of the Agreement shall immediately vest in
      Individual on the date the Company's cumulative sales from the inception of
      the
      Company equal or exceed $10 Million, provided such date is no later than
      December 31, 2008.

     

     

     

     

    
      
        8

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